Indian shipping companies formerly traded primarily in cotton, pepper, and other spices, but now the shipping industry has grown in expanse and stature. India has a vast 7500 kilometer coastline, and the country also has had a rich maritime history dating back thousands of years. The Indian shipping industry consists of 616 ships, with a total capacity of 6.62 million tons Gross Registered Tonnage (GRT). 258 ships belonging to different shipping companies are involved in overseas trade and the rest ply inland routes. Some major shipping companies dominate the shipping industry sector. They are the public sector company, The Shipping Corporation Of Indi, and the private sector companies like Great Eastern Shipping, Essar Shipping, Chowgule Shipping and Varun Shipping.
India's shipping industry has hit rough weather in recent times. Even with the rapid increase in import-export trade in this sector, the shipping sector and ports have not gained. The situation is ironic because it was in India (Lothal) around 2500 BC that the world's first tidal dock was built.
Balakot and Dwarka were other major ports. India had established trade with Mesopotamia and also with the west. Over the years, India has offered free and fair competition to all shipping companies over the years.
In the past two years, the global oil trade and overall growth in trade have helped Indian shipping companies to improve their financial performance. The International Maritime Organization (IMO), the shipping regulatory authority, has imposed strict regulations on the shipping industry which have helped the industry's growth prospects. Moreover, creation of ITT and the implementation of tonnage tax in the previous budget have increased the profit percentages of the companies. Other issues, like freight rates, demand for tonnage, and profitability are closely linked to the general progress of the shipping companies.
The Indian National Shipowners Association wants customs duty exemptions for imported ship spares and ship repair equipments. They also want the 5% customs duty to be exempted for certain categories of vessels. Another of their demands is equality of income tax treatment of both Indian and foreign flagged ship seafarers.
Twice in the history of Indian shipping companies, in 1995-96 and 1999-2000 the tonnage crossed 7 million GRT. The recent freight market upsurge has prompted ship owners to go on an acquisition spree. At the same time, the tanker market has also witnessed a huge rise in rates. It is expected that the Indian fleet will cross the 10 million GRT mark. It was almost the golden era of Indian shipping industry.
The major sea ports of India are at Navi Mumbai, Haldia, Paradwip, Vishakahpatnam, Chennai, Tutikorin, Cochin, Mangalore, and Kandla.
Video-Frieghter Tour Assocham foresees Rs 90,000-crore investment in state’s port sector
Express News Service Tags : Associated Chambers of Commerce, Industry of India, ahmedabad Posted: Sat Oct 16 2010, 05:49 hrs
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has predicted development of 30 new minor ports along the 1,600-km coastline of the state at an estimated investment of Rs 90,000 crore in the next five years.
Addressing mediapersons on ‘India’s ports, shipping and maritime logistics’, Assocham Gujarat chairman Sunil Kakkad, co-chairperson Bhagyesh Soneji and secretary general D S Rawat, said this would be possible with the state government’s proposed policy of facilitating the landlocked states of northern and central regions to develop dedicated ports on Gujarat coastline.
They said states like Delhi, Punjab, Haryana, Himachal Pradesh, J&K, Uttar Pradesh, Uttarakhand, Madhya Pradesh, Chhattisgarh and Rajasthan had expressed interest in setting up their own ports to meet the needs of business and industry in their states. Assocham, they said, has also recommended adopting a Gujarat-like strategy for development of ports in other coastline states. There are already 43 major and minor ports in the state.
According to them, setting up of new ports would also generate new employment opportunities. Going by the fact that a minor port provides direct and regular employment to at least 500 people and indirect employment in port-related services and logistics would be about 1,500, it would create new job opportunities for at least 60,000 people in the next five year.
At the same time, they said there was acute shortage of trained port staff in the country and with the setting up of new ports, establishing training institutions to produce skilled manpower for port related operations would also be required, thus creating further job opportunities.
They, however, added that certain policy changes at national and state levels were required to facilitate speedy development of ports sector. At present, a number of parallel agencies at the centre and states exercised powers to regulate the port industry, and Assocham wants the government to set up a single body for the purpose.
Another major policy change that Assocham has recommended is the separation of port authority and port operations for realising the growth potential of the sector.
Shipping-Classified The Indian shipping industry is broadly classified into shipbuilding & transportation. Deadweight tonnage (also known as deadweight) is a measure of how much mass or weight of cargo or burden a ship can safely carry. Deadweight tonnage is the sum of the weights or masses of cargo, fuel, fresh water, ballast water, provisions, passengers and crew. The major types of ships are Panamax, Supramax, Handymax, Ultra Large Crude Carrier, Very Large Crude Carrier, etc. Baltic Exchange Dry Index provides an assessment of the price of moving the major raw materials by sea. Taking in 26 shipping routes measured on a time charter and voyage basis, the index covers Handymax, Panamax, and Capesize dry bulk carriers carrying a range of commodities including coal, iron ore and grain. The ship classification is done based on Dead Weight Tons. Capesize 100,000+ DWT; Panamax 60,000-80,000 DWT; Supramax 45,000-59,000 DWT; Handysize 15,000-35,000 DWT. About 90% of world trade is carried by the international shipping industry. Shipping is regulated globally by the International Maritime Organization (IMO). The major ports in India are Chennai, Cochin, Ennore, Jawaharlal Nehru, Kolkata , Haldia, Kandla, Marmugao, Mumbai, New Mangalore, Paradip, Tuticorin & Visakhapatanam. hide
Video-Launching of Ship at ABG Shipyard Surat Recommended Stock-ABG Shipyard ABG Shipyard Ltd., the flagship company of ABG group was incorporated in the year 1985 as Magdalla Shipyard Pvt. Ltd. with the main objects of carrying Shipbuilding and Ship Repair business. In a span of 15 years from the year 1991, the company has achieved the status of the largest private sector shipbuilding yard in India with satisfied customer base all around the world. The registered office and the yard are situated at Surat in the state of Gujarat and the corporate office is in Mumbai.
Our Shipyard has state of the art, manufacturing facilities including a “Ship-lift Facility” with a lift capacity of 4500 tons, side transfer facilities, CNC plasma cutting machine, Bending rolls, Hydraulic press, Cold shearing machine, Frame bending machine and steel processing machinery. The Shipyard also has blasting shop and fabrication shop covered in 4 bays of 150 x 30 M each equipped with 20T EOT Cranes. The manufacturing process is in line with world-class standards and the Yard is certified by DNV for ISO 9001:2000.
During past decade, the Shipyard has constructed and delivered One Hundred four(104) Vessels including Specialized and Sophisticated vessels like Interceptor Boats, Self Loading and Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, etc. for leading companies in India and abroad.
ABG Shipyard has successfully delivered 2 Nos. Interceptor Boats (45 knots vessels) in Aluminium hull with Water Jet Propulsion to the Indian Coast Guard, 2 x 4000 DWT Cement Carriers for Cement Ambuja International, Mauritius, 4 x 50T Bollard Pull SRP Tugs for Wijsmuller, Holland (An A.P.Moller & Co.). The most recent deliveries have been 4 x 60.8M Anchor Handling Tugs / Supply Vessels & 1 x 42M Well Head Maintenance Vessel (Aluminium Hull) for Halul Offshore, Doha, Qatar, 1 x 50M Well Test / Supply Vessel and 1 x 56M Well Test / DPS-2 Vessel for Al Mansoori Production Services, Abu Dhabi, 3 x 47M – 80T Multipurpose Vessel for Lamnalco Group, Sharjah, 4 x Utility Vessel for Zamil Operation & Maintenance Company Ltd., 1 No. 60.8M Diving Support Vessel – DP1 Halul Offshore Co., Doha are ready for delivery and 1 No. 83.5M Dynamic Positioning – DP2 Type Vessel with Diesel Electric Propulsion for Consolidated Contractors Construction Co., UAE.
The Yard has recently been awarded an order for 2 Nos. 53M – 90T B. P. ASD Vessels from Lamnalco Group, UAE. We have also received Orders for 1 No. 90M Pipe Lay Barge, 5 Nos. 61M Anchor Handling Tug Supply Vessels and 1 No. 78M DPS-2 Diving Support Vessel from Maridive, Egypt, 3 Nos. 94M Pollution Control Vessels for Indian Coast Guard,
4 Nos. Articoupled Barges for Essar Shipping, 4 Nos. 63M Anchor Handling Tug Supply Vessels from Seatankers Management Co. Ltd., Norway and 1 No. 60.8M Offshore Supply / Supply Vessel from VROON B. V., Netherlands. ABG Shipyard Ltd is also proud of getting a prestigious order for 500 passenger vessel from the Administration of Andaman and Nicobar Administration, Port Blair, which is under construction presently.
The Yard has Multiple Building Berths, 2 Dry-docks, 125 m x 22.5 m X 5.6 m Fitted with Computerised Synchronous Shiplift Platform, of 4500 Tonnes Lifting Capacity and 155 m X 30 m x 7.5 m, Graving Drydock served by 80-T Goliath Crane span 50 m, height 35 m. and substantial cranage like NCK Rapier 150T Capacity, Tata P & H Make, 60-T Capacity, HM Make, 50-T Capacity, PPM 80T Capacity. The “Shiplift Facility” enables the yard to simultaneously build and repair many vessels and gives the yard a tremendous logistical advantage and flexibility.
The Shipyard has executed many prestigious Shipbuilding and Ship-repair contracts against stiff International Competition for both Export and Domestic Markets. All these vessels have performed very well, thus establishing its reputation for building and delivering vessels of the best quality at competitive prices and delivery periods. The Ship Repair Division has successfully repaired and refurbished Dredgers, Ethylene Carriers, Bulk Carriers, Offshore Supply Vessels and Coast Guard Vessels.
The path of progress from the Shipyard’s pioneering work to its leading position today has been achieved by the superior quality of its products and services, the high productivity of its operations and the innovative spirit and integrity of its people.
We are now setting-up a new shipyard with state of art manufacturing facilities including Two (2) Nos. 400 Mtrs. long Newbuilding dry-docks allowing us to build all kinds of vessels upto 120000 DWT.
Largest Private Sector Shipbuilding Yard in India Certified by DNV for ISO 9001 - 2000
Shipyard has received All India Trophy for Highest Exporters in Recognition of outstanding Contribution to Engineering Export from Govt. of India - Ministry of Commerce.
Delivered 104 specialized and sophisticated vessels.
90% of the vessels built in last two years were exported.
State of the art manufacturing facilities
Competitiveness in the Global markets in terms of Price, Quality and Delivery.
Order in hand over Rs. 12,500 crores.
19/11/2010 Fundamental
LTP-402
FV-10
BV-211
EPS-45
PE-8.9
Industry PE-7.97
SHARE HOLDING PATTERN-30/09/2010
Total Share -5,09,21,801 Nos.
Promotors-Indian -57.09 %
Non Promors -18.69 % [MF-UTI-0.29/BK-Inst-Insurance-5.97/FII-12.43]
• In 2007 the World Crude Steel output reached 1343.5 million metric tons and showed a growth of 7.5% over the previous year. It is the fifth consecutive year that world crude steel production grew by more than 7%. (Source: IISI) • China remained the world’s largest Crude Steel producer in 2007 also (489.00 million metric tons) followed by Japan (112.47 million metric tons) and USA (97.20 million metric tons). India occupied the 5 th position (53.10 million metric tons) for the second consecutive year. (Source: IISI) • The International Iron & Steel Institute (IISI) in its forecast for 2008 has predicted that 2008 will be another strong year for the steel industry with apparent steel use rising from 1,202 million metric tonnes in 2007 to 1,282 million metric tonnes in 2008 i.e. by 6.7%. Further, the BRIC ( Brazil, Russia, India and China) countries will continue to lead the growth with an expected increase in production by over 11% compared to 2007. Domestic Scenario • The Indian steel industry have entered into a new development stage from 2005-06, riding high on the resurgent economy and rising demand for steel. Rapid rise in production has resulted in India becoming the 5 th largest producer of steel. • It has been estimated by certain major investment houses, such as Credit Suisse that, India’s steel consumption will continue to grow at nearly 16% rate annually, till 2012, fuelled by demand for construction projects worth US$ 1 trillion. The scope for raising the total consumption of steel is huge, given that per capita steel consumption is only 40 kg – compared to 150 kg across the world and 250 kg in China. • The National Steel Policy has envisaged steel production to reach 110 million tonnes by 2019-20. However, based on the assessment of the current ongoing projects, both in greenfield and brownfield, Ministry of Steel has projected that the steel capacity in the county is likely to be 124.06 million tonnes by 2011-12. Further, based on the status of MOUs signed by the private producers with the various State Governments, it is expected that India’s steel capacity would be nearly 293 million tonne by 2020. Production • Steel industry was delicensed and decontrolled in 1991 & 1992 respectively. • Today, India is the 7th largest crude steel producer of steel in the world. • In 2008-09, production of Finished (Carbon) Steel was 59.02 million tonnes. • Production of Pig Iron in 2008-09 was 5.299 Million Tonnes . • Last 5 year's production of pig iron and finished (carbon) steel is given below: (in million tonnes) Category - 2004-05/ 2005-06/ 2006-07/ 2007-08/ 2008-09 Pig Iron - 3.228/ 4.695/ 4.993/ 5.314/ 5.289 Finished Carbon Steel - 40.055/ 44.544/ 55.416/ 58.233/ 59.02
Demand - Availability Projection • Demand – Availability of iron and steel in the country is projected by Ministry of Steel annually. • Gaps in Availability are met mostly through imports. • Interface with consumers by way of a Steel Consumer Council exists, which is conducted on regular basis. • Interface helps in redressing availability problems, complaints related to quality. Steel Prices • Price regulation of iron and steel was abolished on 16.1.1992. Since then steel prices are determined by the interplay of market forces. • There has been an up-trend in the domestic steel prices since 2006-07 and the trend accentuated since January this year. • Rise in raw material prices, strong demand in the international and domestic market and up-trend in the global steel prices have been some of the reasons cited by the industry for increase in the steel prices in the domestic market. • The mismatch in demand and supply is considered to be the main reason on the demand side for the rise in steel prices. Honourable Steel Minister has held discussion with all major steel investors including Arcellor-Mittal, POSCO, Tata Steel, Essar, Ispat and also SAIL, RINL to explore the possibility of expediting the ongoing as well as envisaged steel projects. • The Government also took various fiscal and other measures for stabilizing the steel prices like exempting pig iron, non alloy steel and steel making inputs like zinc, ferro-alloys and metcoke from customs duty; withdrawing DEPB benefits on export of various categories of steel products and bringing back railway freight on iron ore from classification 180 to 170 for domestic steel producers. • In May 2008, the Government imposed 15% export duty on semi-finished products, and hot rolled coils/sheet, 10% export duty on cold rolled coils/sheets and pipes and tubes and 5% export duty on galvanized steel in coil/sheet form in order to further curtail rising prices and increase supply of steel in the domestic market. Imports of Iron and Steel • Iron and Steel are freely importable as per the extant policy. • Last five years import of Finished (Carbon) Steel is given below:- Year Qty. (In Million Tonnes) 2004-2005 2.109 2005-2006 3.850 2006-2007(Partly estimated) 4.436 2007-08 6.581 2008-2009-(Partly estimated) 5149 Exports of Iron and Steel • Iron and Steel are freely exportable.
• Advance Licensing Scheme allows duty free import of raw materials for exports. • Duty Entitlement Pass Book Scheme (DEPB) introduced to facilitate exports. Under this scheme exporters on the basis of notified entitlement rates, are granted due credits which would entitle them to import duty free goods. The DEPB benefit on export of various categories of steel items scheme has been temporarily withdrawn from 27th March 2008, to increase availability in the domestic market. • Exports of finished carbon steel and pig iron during the last five years and the current year is as : Exports (Qty. in Million Tonnes) Year -Finished (Carbon) Steel - Pig Iron 2004-2005 4.381- 0.393 2005-2006 4.478- 0.440 2006-2007 (Prov.estimated) 4.750 -0.350 2007-2008 4.627 -0.560
2008-2009 (Prov.estimated) 3.482 -0.350 Levies on Iron and Steel SDF LEVY- This was a levy started for funding modernisation, expansion and development of steel sector. The Fund, inter-alia, supports : 1. Capital expenditure for modernisation, rehabilitation, diversification, renewal & replacement of Integrated Steel Plants. 2. Research & Development 3. Rebates to SSI Corporations 4. Expenditure on ERU of JPC o SDF levy was abolished on 21.4.94 o Cabinet decided that corpus could be recycled for loans to Main producers o Interest on loans to Main Producers be set aside for promotion of R&D on steel etc. o An Empowered Committee has been set up to guide the R&D effort in this sector. o EGEAF – Was a levy started for reimbursing the price differential cost of inputs used for engineering exporters. Fund was discontinued on 19.2.96. Opportunities for growth of Iron and Steel in Private Sector The New Industrial Policy Regime The New Industrial policy has opened up the iron and steel sector for private investment by (a) removing it from the list of industries reserved for public sector and (b) exempting it from compulsory licensing. Imports of foreign technology as well as foreign direct investment are freely permitted up to certain limits under an automatic route. Ministry of Steel plays the role of facilitator, providing broad directions and assistance to new and existing steel plants, in the liberalized scenario. The Growth Profile (i) Steel The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized/expanded, a large number of new/greenfield steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies.
At present, total (crude) steel making capacity is over 34 million tonnes and India, the 8th largest producer of steel in the world, has to its credit, the capability to produce a variety of grades and that too, of international quality standards. As per the ratings of the prestigious " World Steel Dynamics", Indian HR Products are classified in the Tier II category quality products – a major reason behind their acceptance in the world market. EU, Japan have qualified for the top slot, while countries like South Korea, USA share the same class as India.
(ii) Pig Iron In pig iron also, the growth has been substantial. Prior to 1991, there was only one unit in the secondary sector. Post liberalization, the AIFIs have sanctioned 21 new projects with a total capacity of approx 3.9 million tonnes. Of these, 16 units have already been commissioned. The production of pig iron has also increased from 1.6 million tonnes in 1991-92 to 5.28 million tonnes in 2002-03. During the year 2003-04, the production of Pig Iron was 5.221 million tonnes.
VIDEO-STEEL MAKING PROCESS
Financial Year '09 • India is currently the fifth largest steel-producing nation in the world with production of over 54 million tonnes (MT). However, it has a very low per capita consumption of steel of around 46 kgs as against an average of 198 kgs of the world. This wide gap in relative steel consumption indicates that the potential ahead for India to raise its steel consumption is high • Being a core sector, steel industry tracks the overall economic growth in the long term. Also, steel demand, being derived from other sectors like automobiles, consumer durables and infrastructure, its fortune is dependent on the growth of these user industries • The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore is also available in abundant quantities. This provides major cost advantage to the domestic steel industry, with companies like Tata Steel being one of the lowest cost producers in the world. • However, Indian steel companies have to bear additional costs pertaining to capital equipment, power and inefficiencies (low per employee productivity). This has resulted in the erosion of the edge they would have otherwise enjoyed due to availability of cheap labour and raw materials. • The government reinstated basic customs duty on steel imports in order to protect India from dumping of cheap steel products. It has also provided series of benefits to auto, housing and real estate sector in order to counter the slowdown in the economy. Supply With trade barriers having been lowered over the years, imports play an important role in the domestic markets. Demand The demand is derived from sectors that include infrastructure, consumer durables and automobiles. Barriers to entry High capital costs, technology. Bargaining power of suppliers The government’s move on railway freight costs and grid power costs would determine the final price of the metal. Bargaining power of customers High, presence of a large number of suppliers and access to global markets. Competition High, presence of a large number of players in the unorganized sector. • The steel sector witnessed a mixed performance in FY09 wherein during the first half it experienced an extraordinary spurt in demand backed by expansion of key consumer sectors. However, the second half experienced a significant demand contraction on account of the global financial crisis. Thus overall, India’s crude steel production grew by 1.2%YoY to 54.5 MT. While the global steel industry continued to reel under the recessionary trends in the developed economies, domestic steel demand remained less affected, mainly steered by growth in semi urban and rural areas. Also, the various monetary and fiscal packages announced by the government helped the domestic steel industry to counter the slowdown and thus the demand started reviving upwards from the fourth quarter onwards. • Domestic steel prices and international steel prices experienced a divergent trend in FY09. While during the first half, international prices touched an all time high levels backed by robust demand, the second half witnessed more than 50% fall in the prices on account of significant contraction in demand due to the global credit crisis. Raw material prices like iron ore and coking coal also experienced a similar trend. It may be noted that most of the domestic steel players entered into an annual contract for coking coal in June-July 2009 when prices were at their peak. Hence the industry experienced a severe pressure on the margins. • As per the World Steel Association’s forecasts, global steel consumption is projected to decline by around 14.9% in 2009 led by US (-36.6%), Europe (-28.8%), CIS (-23.7%) and Japan (-20.4%). Also, the world’s largest steel producer China is projected to experience a decline of 5% in steel usage. However, India is the only country that is projected to witness a growth of around 2% in 2009. The global steel industry is expected to recover in 2010 on the back of government stimulation packages, the continued stabilisation of financial systems and a return of consumer confidence. • Also, the domestic steel sector may face threat from cheap imports, now that the import duties on steel in India being amongst the lowest in the world. Import pressures could consequently lead to pressure on margins of the domestic companies on account of lower steel realisations. However, if the Indian government increases the import duty on steel products, domestic steel industry could get protection to an extent. But since India has already agreed to the WTO norms, it might become difficult for the government to increase duties substantially. • Going forward, we remain apprehensive about the continuation of the strong performance by steel companies. We believe that volume growth would be visible in the years to come, largely due to the continuation of infrastructure spending (including housing), strong demand from the auto sector, which could help in driving demand for value added steel products like CR (cold roll) steel and exports. We expect realisations to remain under pressure on account of excessive supplies. However, a recovery in steel prices could be sooner if steel producers across the globe take continuous efforts at curtailing production. • The government over the last couple of years has continued to lay emphasis on continuation of infrastructure activities in the country. Increased spending on infrastructure will be a key positive for the steel sector as the demand for steel will get a boost. The continuance of tax sops to the housing sector is another positive for steel demand.
Quaterly Result Jindal Saw to announce Q2 results on Nov 08, 2010 Jindal Saw Ltd has announced that a meeting of the Board of Directors of the Company will be held on November 08, 2010, inter alia, to consider the Unaudited Financial Results for the second quarter ended September 30, 2010 (Q2). The Board will consider a proposal to demerge the investment undertaking of the Company into a wholly-owned subsidiary of the Company, pursuant to a scheme of arrangement and demerger under Section 391-394 of the Companies Act, 1956 and other applicable laws. The stock was trading at Rs.227.60, up by Rs.0.80 or 0.35%. The stock hit an intraday high of Rs.234.40 and low of Rs.225.55. The total traded quantity was 6.14 lakhs compared to 2 week average of 1.83 lakhs.
Overview -Jindalsaw The most wonderful aspect of the O.P. Jindal group that is most readily visible to the eye is that there appears to be little scope for the four brothers to get into a succession tangle. The late O.P. had apparently done his homework well, before passing on. At least this is the clear message that wafts across from the Pritviraj Jindal point of view, on a perusal of the Jindal SAW annual report. The Jindals are primarily in the steel business, period. The brothers Jindal, Pritviraj, Sajjan, Ratan and, Naveen, run a clutch of steel companies. But if one looks at the investment portfolio of Jindal SAW, it is quite evident that this company does not have any visible interlinkages with the other major companies in the group, run by the other three siblings. If it has, then the linkage can only be through the several investment companies, that are its subsidiaries, or through other mysterious investment companies to which it has advanced moneys, but in which the parent has no direct stake per-se. In any event, the innards of these investment companies are not available for public scrutiny. The suffix SAW If one is wondering as to how Jindal affixed the name SAW as a suffix, well, it is an acronym for Submerged Arc Welded - which the management claims involves complex technology. The company is primarily in the business of making steel pipes, of the seamless and the non seamless variety, and comprising of all shapes and sizes. It caters to the needs of the oil and gas transport industry, and water and sewage transport. Its applications are also in industrial piping. A large canvas if one may say so. As a lateral diversification, it has mothered a new entity called Jindal ITF - this acronym stands for Infrastructure, Transport, Fabrication. ITF in turn has spun off four companies - Jindal Water Infrastructure, Jindal Waterways, Jindal Urban Infrastructure and, Jindal Rail Infrastructure. As the names suggest, they are into total water solutions, logistics, and local cargo movement, converting solid waste into power, and fabrication for the transportation sector. But being of recent vintage and acutely capital intensive to boot, they are all as yet to get off terra firma. (Also stay tuned to these johny come lately's sponging off the mother unit for some time to come). As a part of the waterways project, Jindal Waterways now has 7 ships and one barge for domestic intermodal operations. Touchy notes to the accounts Some of the notes to the accounts regarding the subsidiaries are very revealing. 'The company has unquoted investments of Rs 3.1 bn in subsidiary companies which have accumulated losses as per the latest balance sheet - considering the long term strategic and future prospects, no provision is necessary'. 'An amount of Rs 2.2 bn is outstanding from subsidiary companies which have accumulated losses'. The total advances to subsidiaries at year end in reality however were Rs 6 bn. The latter figure excludes an inter-corporate deposit (name of beneficiary not known) of Rs 1.3 bn at year end. The parent indeed has very deep pockets, and is not shy of sticking its neck out. And, with the American and Dubai subsidiaries also picking up steam, the parent can be counted on to dig ever deeper into its cash lode, to cater to the insatiable demands of these foundlings. The American and Dubai subsidiaries will directly cater to the demand germinating from these two regions - which implies heavy capex for a start. The most eyebrow raising revelation is the rather casual declaration, that the year end balances of the debtors, creditors, and other advances, are subject to confirmation by the counter parties. This is a primary audit requirement, and especially so, given the humungous size of its operations. We seem to wallow in a 'chalta hai' attitude to any matter of import. Expanding in all directions In tandem with the related diversifications, the company is pumping up the adrenaline by expanding its own capacities to manufacture iron and steel pipes, and, anticorrosion coating on steel pipes, which are its bread and butter revenue generators. So much so, that the recently expanded capacities completely outstrips the company's ability to find a market for its produce. Steel pipe capacity utilization was a mere 47% of stated capacity while the anticorrosion unit was flogged at only 44% of capacity. However, what is left unsaid here is that the production during the year was in itself higher by 35% and 42% respectively, over that of the preceding year. But looking at it another way, the plants were also being operated at less than half their stated capacity, to generate revenue. What allows the company to get away with rapid expansion, in anticipation of a bigger market in the offing, is twofold. On the one hand it ekes out sufficient margins on its produce, enabling it to generate sufficient cash flow from operations. But more importantly it manages its debt funding in a very tricky but patented manner, made famous by the late Dhirubhai Ambani. Given its brand equity in the market it has little difficulty in issuing convertible debt and then converting this debt into equity at a stratospheric premium. The trick of course is to ensure that its share price is maintained at an attractive price level prior to the date of exercising this option, in order to entice the holder of the debt to exercise the option, and after exercising the option, to keep the ex-right price in high orbit. Managing its debt In FY10 for example, it converted debentures worth Rs 2.1 bn into equity by issuing a mere 13 m shares of Rs 2 each, or for the equivalent of the face value of Rs 26 m. That is money for jam. But wait, there is more to come. It will convert foreign currency bonds (FCCBs) to the tune of Rs 3.3 bn in 2011 into equity shares of Rs 2 each at a premium of Rs 133 per share. So the management has its work cut out for it. One could therefore expect the company to post ‘good’ returns in the current year too. The alternative to conversion is not an attractive option for the issuer’s point of view. The holders have the option of redeeming the debentures at a premium to the issue price, you see. There was a significant shift in the manner in which its sales were realized. With the market within the country suddenly growing, the company affected 60% of its sales by value within the country, with the balance accounted for by export sales. In the preceding year the percentage figures were 44% and 56% respectively. What can however affect its profitability ratios significantly is the forex factor, as 70% of the raw materials that it consumes by value is imported. Favorable market forces at play In tandem with the higher production and sales was the favorable movement of market forces, as its operations suddenly moved into another gear. The net cash generated from operations rocketed to Rs 18.1 bn from Rs 3.9 bn in the preceding year, thanks to higher production and higher price realizations on the one hand, and the market forces moving in its favor on the other. A sharp favorable turn on the working capital front (inventories, debtors) contributed Rs 7.2 bn cash against a negative flow of Rs 2.3 bn in the preceding year. That worked out to a turnaround of Rs 9.5 bn in fund flow. It is indeed amazing that the working capital market conditions can change so abruptly. The Subsidiary logjam The most interesting aspect of this company as with most other large family owned enterprises is the significant play of subsidiaries and affiliates which are christened as investment companies. Jindal Saw is no exception here. In 2009 one of its wholly owned subsidiaries, Highgate Consultants, which is in the business of finance and investments merged with the parent. This subsidiary was no waif by any yardstick, judging from the massive transfer of its accumulated profits of Rs 4 bn into the reserves of the parent company. But in the current year this merged unit does not appear to have generated any much income, judging either from the sales income schedule, or from the other income schedule. Then there are its many other offspring, some of whom are subsidiaries, some not. Hexa Securities, and S.V. Trading for example. The name given to the latter gives no clue of its possible occupation but the parent is quite partial to the latter. It had an outstanding of Rs 3.8 bn from the latter at year end, against an outstanding of a much lower Rs 1.7 bn from the former. Then there are some seven other investment companies to which it has made advances to (not very significant amounts though) with no repayment schedules factored in. The interesting part of this deal is that the parent does not appear to have any direct investment in these companies. One guess is that these companies are merely some sort of investment fronts of the parent. It will help if managements were a little more forthcoming, on such seeming subterfuges. Not that these subsidiaries in to-to do much on the sales generation front. Jindal SAW has provided the brief balance sheet details of 18 subsidiaries. Of these a mere 9 contribute to the turnover. The combined value addition of these siblings toted up to Rs 3.3 bn. But since they are not yet able to stand firmly on their spindly legs the profit before tax of the combined entity is less than that of the stand alone parent. Prie Movement LTP- Rs. ON 29/10/2010 30 Days- High-234; Low- 209; Average-221; Avg.High-229; Avg. Low-214; PRICE HISTORY 2001-Rs. 37- 249 2008-Rs.218-1221 2009-Rs.136- 993 Last Month -Octorber -Open-216; High-234; Low-209; Close -217 H-L=25 Previous Month -September -Open-204; High-221; Low-202; Close -214 H-L=19 Current Year - 2010 -Open-189; High-234; Low-167; Close -217 H-L=67 52 Week - Stock Split-Open-715; High-993; Low-167; Close -217 FUNDAMENTAL
2005-2010 Income Statement-Cr. Operating Income -2314-6787 Cost of Sales -2045-5974 Operating Profit - 267-1265 Net Profit - 100-876
Net Operating Income/Share -Rs.247 Free Reserves/Share -Rs.125 Net Profit Margin -4-12% Reported Return On Net Worth - 20% Owners Fund as % of total Source – 80%
FUNDAMENTAL ANALYSIS A method of evaluating a security that entails attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and company-specific factors (like financial condition and management). The end goal of performing fundamental analysis is to produce a value that an investor can compare with the security's current price, with the aim of figuring out what sort of position to take with that security (underpriced = buy, overpriced = sell or short). This method of security analysis is considered to be the opposite of technical analysis. Fundamental analysis is about using real data to evaluate a security's value. Although most analysts use fundamental analysis to value stocks, this method of valuation can be used for just about any type of security. For example, an investor can perform fundamental analysis on a bond's value by looking at economic factors, such as interest rates and the overall state of the economy, and information about the bond issuer, such as potential changes in credit ratings. For assessing stocks, this method uses revenues, earnings, future growth, return on equity, profit margins and other data to determine a company's underlying value and potential for future growth. In terms of stocks, fundamental analysis focuses on the financial statements of the company being evaluated. One of the most famous and successful fundamental analysts is the Oracle of Omaha, Warren Buffett, who is well known for successfully employing fundamental analysis to pick securities. His abilities have turned him into a billionaire. VIDEO-Fundamental Analysis-Part-2
A. MARKET VALUE 1. The current quoted price at which investors buy or sell a share of common stock or a bond at a given time. Also known as "market price".
2. The market capitalization plus the market value of debt. Sometimes referred to as "total market value". In the context of securities, market value is often different from book value because the market takes into account future growth potential. Most investors who use fundamental analysis to pick stocks look at a company's market value and then determine whether or not the market value is adequate or if it's undervalued in comparison to it's book value, net assets or some other B. FACE VALUE-[FV] The nominal value or rupee value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate. For bonds, it is the amount paid to the holder at maturity (generally Rs.100). Also known as "par value" or simply "par". In bond investing, face value, or par value, is commonly referred to the amount paid to a bondholder at the maturity date, given the issuer doesn't default. However, bonds sold on the secondary market fluctuate with interest rates. For example, if interest rates are higher than the bond's coupon rate, then the bond is sold at a discount (below par). Conversely, if interest rates are lower than the bond's coupon rate, then the bond is sold at a premium (above par). C. BOOK VALUE-[BV] 1. The value at which an asset is carried on a balance sheet. To calculate, take the cost of an asset minus the accumulated depreciation. 2. The net asset value of a company, calculated by total assets minus intangible assets (patents, goodwill) and liabilities. 3. The initial outlay for an investment. This number may be net or gross of expenses such as trading costs, sales taxes, service charges and so on. Also known as "net book value (NBV)". In the U.K., book value is known as "net asset value". 4. Book value is the accounting value of a firm. It has two main uses: More 1. It is the total value of the company's assets that shareholders would theoretically receive if a company were liquidated. 2. By being compared to the company's market value, the book value can indicate whether a stock is under- or overpriced. 3. In personal finance, the book value of an investment is the price paid for a security or debt investment. When a stock is sold, the selling price less the book value is the capital gain (or loss) from the investment. D. PE RATIO-[Price Earning Ratio] A valuation ratio of a company's current share price compared to its per-share earnings.
Calculated as:Market Value Per Share/Earnings Per Share[EPS] For example, if a company is currently trading at Rs.43 a share and earnings over the last 12 months were Rs.1.95 per share, the P/E ratio for the stock would be 22.05 (Rs.43/Rs.1.95).
EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters. Also sometimes known as "price multiple" or "earnings multiple". In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's usually more useful to compare the P/E ratios of one company to other companies in the same industry, to the market in general or against the company's own historical P/E. It would not be useful for investors using the P/E ratio as a basis for their investment to compare the P/E of a technology company (high P/E) to a utility company (low P/E) as each industry has much different growth prospects. The P/E is sometimes referred to as the "multiple", because it shows how much investors are willing to pay per dollar of earnings. If a company were currently trading at a multiple (P/E) of 20, the interpretation is that an investor is willing to pay Rs.20 for Rs.1 of current earnings. It is important that investors note an important problem that arises with the P/E measure, and to avoid basing a decision on this measure alone. The denominator (earnings) is based on an accounting measure of earnings that is susceptible to forms of manipulation, making the quality of the P/E only as good as the quality of the underlying earnings number. E. EPS-[Earning Per Share] The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Calculated as: [Net Income-Dividends on Preffered Share]/Average Outstanding Shares When calculating, it is more accurate to use a weighted average number of shares outstanding over the reporting term, because the number of shares outstanding can change over time. However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the period. Diluted EPS expands on basic EPS by including the shares of convertibles or warrants outstanding in the outstanding shares number. Earnings per share is generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio. For example, assume that a company has a net income of R.25 million. If the company pays out Rs.1 million in preferred dividends and has 10 million shares for half of the year and 15 million shares for the other half, the EPS would be Rs.1.92 (24/12.5). First, the Rs.1 million is deducted from the net income to get Rs.24 million, then a weighted average is taken to find the number of shares outstanding (0.5 x 10M+ 0.5 x 15M = 12.5M). An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation. Two companies could generate the same EPS number, but one could do so with less equity (investment) - that company would be more efficient at using its capital to generate income and, all other things being equal, would be a "better" company. Investors also need to be aware of earnings manipulation that will affect the quality of the earnings number. It is important not to rely on any one financial measure, but to use it in conjunction with statement analysis and other measures.
VIDEO-Fundamental Analysis-Part-3
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TECHNICAL ANALYSIT-BUYOR SELL
VIDEO-TECHANICAL ANALYSIS TECHNICAL ANALYSIS A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity.
Technical analysts believe that the historical performance of stocks and markets are indications of future performance.
In a shopping mall, a fundamental analyst would go to each store, study the product that was being sold, and then decide whether to buy it or not. By contrast, a technical analyst would sit on a bench in the mall and watch people go into the stores. Disregarding the intrinsic value of the products in the store, the technical analyst's decision would be based on the patterns or activity of people going into each store.
CHART A price chart is a sequence of prices plotted over a specific time frame. In statistical terms, charts are referred to as time series plots. – On the chart, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal axis) represents the time scale. Prices are plotted from left to right across the x-axis with the most recent plot being the furthest right. Technicians, technical analysts and chartists use charts to analyze a wide array of securities and forecast future price movements. The word "securities" refers to any tradable financial instrument or quantifiable index such as stocks, bonds, commodities, futures or market indices. Any security with price data over a period of time can be used to form a chart for analysis. While technical analysts use charts almost exclusively, the use of charts is not limited to just technical analysis. Because charts provide an easy-to-read graphical representation of a security's price movement over a specific period of time, they can also be of great benefit to Fundamental. A graphical historical record makes it easy to spot the effect of key events on a security's price, its performance over a period of time and whether it's trading near its highs, near its lows, or in between. Here will be explaining the construction of line, bar, candlestick charts. Although there are other methods available, these are 3 of the most popular methods for displaying price data. Line Chart Some investors and traders consider the closing level to be more important than the open, high or low. By paying attention to only the close, intraday swings can be ignored. Line charts are also used when open, high and low data points are not available. Sometimes only closing data are available for certain indices, thinly traded stocks and intraday prices.
Bar Chart Perhaps the most popular charting method is the bar chart. The high, low and close are required to form the price plot for each period of a bar chart. The high and low are represented by the top and bottom of the vertical bar and the close is the short horizontal line crossing the vertical bar. On a daily chart, each bar represents the high, low and close for a particular day. Weekly charts would have a bar for each week based on Friday's close and the high and low for that week. Bar charts can also be displayed using the open, high, low and close. The only difference is the addition of the open price, which is displayed as a short horizontal line extending to the left of the bar. Whether or not a bar chart includes the open depends on the data available. Bar charts can be effective for displaying a large amount of data. Using candlesticks, 200 data points can take up a lot of room and look cluttered. Line charts show less clutter, but do not offer as much detail (no high-low range). The individual bars that make up the bar chart are relatively skinny, which allows users the ability to fit more bars before the chart gets cluttered. If you are not interested in the opening price, bar charts are an ideal method for analyzing the close relative to the high and low. In addition, bar charts that include the open will tend to get cluttered quicker. If you are interested in the opening price, candlestick charts probably offer a better alternative.
Candlestick Chart Originating in Japan over 300 years ago, candlestick charts have become quite popular in recent years. For a candlestick chart, the open, high, low and close are all required. A daily candlestick is based on the open price, the intraday high and low, and the close. A weekly candlestick is based on Monday's open, the weekly high-low range and Friday's close. Many traders and investors believe that candlestick charts are easy to read, especially the relationship between the open and the close. White (clear) candlesticks form when the close is higher than the open and black (solid) candlesticks form when the close is lower than the open. The white and black portion formed from the open and close is called the body (white body or black body). The lines above and below are called shadows and represent the high and low.
