Jitendra Kumar Gupta's blog

Weak global demand softens steel Jitendra Kumar Gupta / Mumbai June 04, 2010, 0:45 IST An economic revival and a pick-up in demand helped steel companies to report better results, in addition to significant improvement in the operating margins for the quarter as well as the year ended March. Although things had been better compared to last year, steel prices have fallen by about 15 per cent recently, due to concerns over global demand and China’s calibrated economic slowdown and monetary tightening, with pressure on the raw material front. Thus, global steel supplies, earlier estimated at par with consumption at 1,229 million tonnes (mt), could see some surplus this year, as well as in 2011. This, in turn, could lead to further easing of steel prices. Not surprisingly, the stocks of metal companies, especially steel producers, have been under pressure. The BSE Metal index is down over 13 per cent in the past month as compared to the Sensex’s 0.4 per cent decline. Chan

Higher focus on road projects and geographical diversification after the group restructured itself is now paying IVRCL Infrastructures (IVRCL) rich dividends. On Tuesday, IVRCL Group won the largest toll-based road project of Rs 3,100 crore from the National Highways Authority of India (NHAI), involving construction of 122.06 km of road from the Maharashtra-Goa border to the Goa-Karnataka border. After the restructuring of the group companies and business portfolio, IVRCL’s 80.5 per cent-owned, listed arm IVRCL Assets & Holdings (earlier known as IVR Prime) acts as a developer/owner of all infrastructure assets, whereas the construction, or the EPC work, is undertaken by IVRCL Infrastructures. So, like other BOT (build-operate-transfer) assets, while the new project will be developed and owned by IVRCL Assets, IVRCL will undertake construction work estimated to be worth about Rs 2,200 crore (spread over three-four years). Strong revenue visibility IVRCL is among the leading player

Lacking power Jitendra Kumar Gupta / Mumbai June 2, 2010, 0:57 IST Suzlon Energy’s stock has significantly underperformed the indices in the last one year, as well as the recent past. After the announcement of a poor March quarter result on Saturday, its stock fell by about nine per cent. The company reported a significant decline in revenues, along with a loss of Rs 983 crore in 2009-10 (Rs 188 crore for the March quarter). More important, in terms of volumes, the company could manage sales of 1,460 Mw in 2009-10 due to delays and postponing of projects, which significantly lowered its earlier guidance of 1,900-2,100 Mw. Low visibility Suzlon’s woes seem far from over. Among key concerns is the decline in its order book (pending orders) to 1,126 Mw in May 2010, compared to 1,463 Mw at the end of 2008-09. Out of the current order book, about 900 Mw of orders are to be delivered in the current year. Should the flow of new orders remain weak (a good probability), it

Jitendra Kumar Gupta / Mumbai June 1, 2010, 1:00 IST World over, the markets have fallen visibly in the last few weeks due to concerns over the euro crisis, China’s move to tighten liquidity and, more recently, the standoff between North and South Korea. In an interview with Jitendra Kumar Gupta, Standard Chartered Bank’s Group Head of Financial Markets, Lenny Feder, shares his views on these concerns and the outlook for global and Indian markets. Edited excerpts: Is the correction in the Indian markets justified? This crisis has demonstrated that business models that don’t make fundamental sense will fail. India is better positioned than most countries, given the drivers of economic growth and prudent regulation by policy makers. Also, given the turmoil, there has been some sell-off in Indian equity. But, not nearly as sharply as in China. This is a reflection of the more domestic nature of India’s economy and lack of property-led bubbles here. While fiscal deficit is a