Cement price hikes in April indicative of better volume and profitability

,” the report said.
An Edelweiss survey showed cement offtake was robust in the East, stable in the North, and marginally weak in Uttar Pradesh due to sand shortage. Cement demand will rise 5-6% as the government awards more road projects, said K.K. Maheshwari, managing director of UltraTech Cement Ltd, India’s largest cement maker.
For the first time since 2001, cement production declined year on year in FY2017, following the government’s demonetisation exercise. Prices fell as well. Prices have now rebounded to pre-demonetization levels in April after being negatively impacted in the West, East and South regions, rating agency ICRA Ratings said.
With the impact of demonetization gradually subsiding, cement prices have reached the pre-demonetization levels in April 2017 in most markets,” said Sabyasachi Majumdar, senior vice-president and group head at ICRA Ratings. “Going forward, we expect prices to be supported by a marginal improvement in capacity utilisation. The slowdown in new capacity addition and improvement in the supply-demand scenario in FY18 should support capacity utilization levels and thereby cement prices.”
The cement sector is seeing early signs of increase in demand after a short-lived decline and prices of the commodity are likely to rise, Mint had reported on 23 March.
Despite assuming flat volume growth for the sector, first quarter earnings are likely to surprise positively driven by price hikes, PhillipCapital India said in a 27 April report.
“Given a favourable demand scenario, we understand cement prices have been raised across pockets by about 10% and further price hikes of 3-5% cannot be ruled out in May 2017. After the monsoon arrives, cement prices are unlikely to be increased until the end of H1FY18,” the report said. Even if prices were to drop, they would still be 5-6% above March prices, it said.
With the current cement prices, first quarter (April-June) sector Ebitda (earnings before interest, taxes, depreciation and amortization) per tonne is likely to improve by 20-40% quarter-on-quarter and by 15-20% year-on-year, PhillipCapital said.
Most dealers are hopeful that demand will pick up and eventually drive up prices further prior to monsoon, according to the Edelweiss report. “Overall, higher cement prices year-on-year at the outset of FY18 suggest positive price/volume trade-off and better profitability for players in upcoming interims, it said.

Sale of Khadi products rises 33% to Rs 2,005 crore in FY17

New Delhi: The sale of khadi products rose 33 per cent year-on-year to Rs 2,005 crore (US$ 312 million) in 2016-17, as against a sale of Rs 1,510 crore (US$ 235.2 million) a year ago. The Khadi and Village Industries Commission (KVIC) expects the sales to exceed its target of Rs 5,000 crore (US$ 779 million) in 2018-19. The KVIC is setting up export cells to promote overseas sales of the products. The overall sales of khadi and village industries grew 24 per cent to around Rs51,996 crore (US$ 8.1 billion) in 2016-17, and the production increased by 23 per cent to Rs 42,506 crore (US$ 6.62 billion) during the year.

Govt explores buy and lease strategy to boost electric vehicle usage

New Delhi: The government is exploring a strategy to task a company with buying electric vehicles (EVs) in bulk and then leasing them to companies such as taxi aggregators, in an attempt to bring down the cost of such vehicles.
The strategy is to encourage more manufacturers to make electric vehicles. The number of electric vehicle purchases may range between 200,000 and 1 million.
The government has been exploring the leasing model for electric vehicles, Mint reported on 15 April.
“There is a lot of interest in this plan. At least two companies each from the private sector and public sector space have evinced interest,” said a person involved with the government’s electric vehicles push. He declined to name the firms.
SoftBank Group Corp. chairman Masayoshi Son said in a statement in December that ANI Technologies Pvt. Ltd, which runs cab-hailing service Ola, in which the Japanese firm is an investor, may introduce a fleet of 1 million electric cars in partnership with an electric vehicle maker and the government.
“Volumes help in reducing costs. We are also looking at improving km per kilowatt hour (kWh) and efficiency of electric vehicles in terms of motor, tyres, aero dynamics and lightweight material,” said the person quoted above.
The National Democratic Alliance (NDA) government is exploring measures ranging from leasing of electric vehicles to transferring technology to firms for commercial production of lithium-ion batteries developed by the Vikram Sarabhai Space Centre for use in automobiles. It is also exploring a strategy that involves reducing the battery size to bring down electric vehicle prices.
According to the business plan for electric autos and buses reviewed by Mint, the battery cost is expected to be Rs18 per km, with the charging cost per km being Rs0.99.
Abdul Majeed, partner and national auto practice leader, PricewaterhouseCoopers, said, “It sounds like a good step aimed in the direction of bringing some momentum to the sales of electric vehicles. It will help build scale. Once scale gets build, rest of the issues such as infrastructure challenges, etc., will be taken care of.”
Shifting to electric vehicles will check pollution and reduce fuel imports. India’s energy import bill is expected to rise from around $150 billion currently to $300 billion by 2030. The centre has set a target of 6 million electric vehicle sales by 2020.
Queries emailed to the spokespersons for NITI Aayog, department of heavy industry; and ministries of road transport and highways, and new and renewable energy on Sunday evening remained unanswered.
The electric vehicle programme is slowly coming together. The Economic Times newspaper on 25 April reported that Indian Institute of Technology-Madras professor Ashok Jhunjhunwala will spearhead the government’s electric vehicle programme.
While Bharat Heavy Electricals Ltd (Bhel), India’s largest power generation equipment maker, wants to manufacture electric vehicles such as buses, cars, two-wheelers and boats, Power Grid Corp. of India Ltd, the power transmission utility responsible for establishing green energy transmission corridors, is considering setting up charging stations for electric vehicles.

Commerce and Industry Minister Smt. Nirmala Sitharaman has said that India should take lead in making quality products available to world at an affordable price

New Delhi: Commerce and Industry Minister Smt. Nirmala Sitharaman has said that India should take lead in making quality products available to world at an affordable price. Inaugurating the 4th National Standards Conclave organized by the Department of Commerce in association with CII, BIS, EIC, FSSAI, APEDA and NABCB she emphasized while standards as signifying quality are important but they also need to be affordable for manufacturers to comply and consumers to buy. She said Prime Minister’s ‘Zero Effect Zero Defect’ idea aims at exactly this. She cited The Mangalyan launch costing and worldclass quality is a prime example of quality with affordability.
Commerce and Industry Minister appreciated that a ‘standards strategy document’ is going to be the possible outcome of this conclave however, she emphasised that long term strategy should not lose sight of immediate challenges. Smt. Sitharaman stated that any national strategy for standards should be able to factor in technology to disseminate any change in import requirements in foreign countries so that our exporters are well prepared to overcome those barriers. This dissemination has to be in regional languages. She said this has become critical as number of notifications in WTO have increased and many deal with standards .
The Minister highlighted the issues confronting agriculture sector, where the nature of standards set in international bodies often militate against the Indian varieties. She stressed that International standards especially in food produce must value variety over homogeneity and India must participate actively in such Standards setting. When Sanitary and Phyto-Sanitary (SPS) controls are put on agro products, like mango or grapes unilaterally, they hurt our farmers. Similarly, the Maximum Residue Limits (MRLs) of certain pesticides or biocides are altered too quickly in the foreign markets and farmers are taken by surprise. So, efforts must be put to create quick information system for such farmers and exporters. She hoped that the proposed strategy would provide a guide or a kind of framework so that we avoid such crises at negotiation stage it self.
The Minister also launched the India Standards Portal – a one stop portal for all information on Standards, Technical Regulations, conformity assessment & accreditation practices, and the related bodies in India and adivsed that portal should also help exporters to identify regulations in various countries abroad.
In his address, Mr. R V Deshpande, Minister for Large and Medium Industries and Infrastructure Development, Government of Karnataka, highlighted the strategy adopted by his state to put in place a robust standards eco system. These include besides providing incentives to the industrial units adopting standards, insistience on procurement of products and services which conform to the standards, ensuring infrastructure is available in the state and focus on Research and Development.
Ms. Rita Teaotia, Secretary, Department of Commerce highlighted the legislative reforms that have been happening as a result of series of national and regional Conclaves. She stated that since the last edition of the Conclave, the new BIS Act had been passed and the Consumer Protection Act is also proposed to include a new chapter on Product Liability. This would help strengthen the standards ecosystem in the country. She also noted that for the first time, standards in the services sector were getting attention. She suggested that there was a need to develop a National Strategy for Standards as well as Vision Document for the same.
Ms. Alka Panda, Director General, Bureau of Indian Standards (BIS) highlighted the role that the BIS was playing in the development of standards in the country. Mr. Adil Zainulbhai, Chairman, Quality Council of India stated that there was a need to work with Small and Medium Enterprises (SMEs) to help improve their standards. He also spoke of the need to create a standards compliance system which was easy to comply with and emphasized that standards should be seen as an opportunity rather than as a threat.
Mr. Rakesh Bharti Mittal, President Designate, and Mr. Chandrajit Banerjee, Director General of CII also spoke in the inaugral affirming Industries’ commitment to graduate to a high Standards regieme in the country.
Mr. Sudhanshu Pandey, Joint Secretary, Department of Commerce, Ministry of Commerce and Industry proposed the Vote of Thanks.

Organic product export expected to surge

New Delhi: Export of organically made products, both food and nonfood, is likely to grow threefold in the four years to 2020, following the government's relaxation on quota limits.
According to the Agricultural & Processed Food Products Export Development Authority (Apeda), Indian farmers produced around 1.35 million tonnes (mt) of certified organic products in 2015-16 which include all varieties of food products namely sugarcane. Of this, export was 263,687 tonnes, worth $298 million (~1,900 crore).
Through a notification dated April 19, the Directorate General of Foreign Trade liberalised the quantitative restrictions on export of such products.
“Perhaps the government had imposed such restrictions for ensuring food security at home. But, these were only discouraging farmers from intensifying work on organic products. We, therefore, had urged the government to liberalise the restrictions,” said Manoj Menon, executive director of Indian Competence Centre for Organic Agriculture, a Bengalurubased network.
It believes the overall market of ~4,000 crore under the organic value chain would hit ~10,000 to 12,000 crore by 2020, with similar increase in export.
While export of organic wheat, non-basmati rice, edible oils and sugar have been exempted from all annual quantitative ceilings with immediate effect, those on pulses and lentils has been increased from 10,000 tonnes to 50,000 tonnes.
Farmer export is largely to Europe, Canada and West Asia. Oilseeds were half of India’s overall organic export, followed by processed food products at 25 per cent.
“Farmers tend to see low productivity and thereby low income for at least three years if they switch, from conventional or hybrid farming. Since organic farming does not use chemicals and fertiliser, the only way farmers can be compensated is through premiums for their produce. In fact, Indian organic products like tea, vegetables and pulses fetch much higher premium from markets abroad than conventional and hybrid products there,” said a senior industry official. The difference is up to 100 per cent.
With around 50 per cent of market share, America is the biggest market for global organic produce, worth $80 billion. The area under organic certification in India was 5.71 million hectares in 201516. Of this, about a fourth (1.49 million hectares) was cultivated area and the rest (4.22 million hectares) came under forest and wild areas, used for collection of minor forest produce.

Indian companies in UK reach annual growth rate of 31%

London: Nearly 800 Indian companies based in the UK have a combined revenue of £47.5 billion, are the second-largest employers, and 55 of the fastest growing companies achieved an average annual growth rate of 31%, a new analysis released Wednesday said.
The analysis, titled ‘India Meets Britain Tracker 2017: The Latest Trends on Indian Investment in the UK’ by London-based consultants Grant Thornton and CII revealed the scale of contribution of Indian companies to the British economy.
Anuj Chande, head of South Asia at Grant Thornton, said at the release: “The UK remains a highly attractive destination for Indian investors. The Modi government’s pro-business agenda is creating the right environment for Indian businesses to pursue and realise growth at home and overseas.”
The report monitors Indian businesses here with an annual revenue growth of 10% or more. Of the 55 that made the list of fastest growing companies, 23 are new entrants while 32 featured in last year’s list.
According to the report, just under half of the companies included in this year’s tracker recorded a 25% growth rate or above.
Datamatics Infotech Ltd topped this year’s list with a growth rate of 103%.
Companies from the technology and telecoms, and pharmaceuticals and chemicals sectors make up 31% and 24% of the list respectively. These are sectors where businesses are continuing to find growth opportunities by diversifying into new spheres of activity.
The business services sector entered the top three for the first time with an 11% growth rate, up from 6% in 2016 and just 3% in 2015. London continues to strengthen its dominance as the leading destination for Indian investment in the UK. Of the fastest-growing Indian companies, 44% are now based in the capital, up from 39% last year and 25% in 2015, the report said.
The UK has long been the preferred European destination for FDI from India. Out of the 845 FDI projects made by Indian companies in 16 European countries since 2003, over 45% have been in the UK.
Shuchita Sonalika, head of CII UK, said: “The report identifies £4.25 billion of new investment last year by Indian companies, and further jobs being created as part of their continued investment programmes.

Bank credit demand up 5.5% in FY18's first fortnight: RBI data

Mumbai: Bank credit demand in India rose 5.52 per cent to Rs 76.31 trillion (US$ 1,192.34 billion) in the fortnight ending April 14, 2017, up from a six decade low of 5.08 per cent amounting to Rs 72.31 trillion (US$ 1,130 billion) as on April 15, 2016, according to the Reserve Bank of India (RBI). Bank's outstanding credit during the fiscal year 2016-17 stood at Rs 78.81 trillion (US$ 1,231.41 billion), as compared to Rs 75.01 trillion (US$ 1,172 billion) as on April 1, 2016. The deposits in banks in the first fortnight of fiscal year 2017-18 rose 11.59 per cent to Rs 105.92 trillion (US$ 1,655 billion) as against Rs 94.92 trillion (US$ 1,483.13 billion) a year ago.

India to become major wind energy hub: Tanti

New Delhi: Falling tariff is not the only trend that renewable energy is witnessing. Suzlon, the domestic market leader in wind equipment manufacturing, expects global vendors to come to India to tap 60 gigawatts (Gw) of additional wind capacity that the government is aiming to achieve by 2020.
In an interview to Business Standard, Tulsi Tanti, chairman and managing director, Suzlon, said, “India will be a large hub for wind manufacturing in five years on the strength of its domestic demand. It will be like China that has a 20 Gw domestic solar market and, therefore, promoted manufacturing in their country. Now, the global market is dominated by four Chinese companies.”
Solar equipment manufacturing, however, is unlikely to pick up in India as Chinese imports are more cost-effective, Tanti said. “Unless a solar manufacturer comes in the entire value chain of production, right from polysilicon, is not likely to work out,” he added.
Tanti does not see any need for incentives for wind equipment manufacturers, except for exports. “The government should give five per cent of an exporter’s logistics cost as incentive. The propelling factors include coming up of faster bidding by nine wind potential states. They are estimated to bid out 600-800 megawatt (Mw) each. Another 6-Gw capacity in the current year is likely to be bid out by the central government for non-wind potential states to enable them to meet their renewable purchase obligation. Besides, 10 Gw will come up in the captive market, while 50 Gw will be through investment by financial institutions,” he said.
He said that instead of incentivising manufacturers or developers, state distribution companies that meet their renewable purchase obligation norms should be given performance-based incentive. It could be 50 paise per unit (kilowatt hour). “This could be funded from the clean energy cess,” he said.
Asked for his views on the Union government’s plan to compensate states for revenue shortfall on account of the goods and services tax through the clean energy cess, he said the corpus was large enough to meet the need for performance-based incentive, compensation to states and also the special requirements of coal-bearing states. The corpus roughly has Rs 54,000 crore currently. Tanti said he did not see the tariffs for solar or wind going down further unless the interest rates come down. On his company’s debt situation, he said they had been able to bring down their debt level by $1 billion through the conversion of foreign currency convertible bonds.
Suzlon also announced its wind turbine of hub height of 120 metre and 2.1 Mw capacity achieved 42 per cent plant load factor in its first 12 months of operation at the Jamanwada site in Gujarat’s Kutch district.
The prototype was commissioned in March 2016.
The PLF is 20 per cent higher than what was achieved by another turbine in its first 12 months at the same location.

Narendra Modi underlines consolidated approach to complete infra projects

New Delhi: Prime Minister Narendra Modi has directed the secretaries of infrastructure ministries to adopt a “consolidated approach” to existing projects and work on them by adhering to strict deadlines.
The PM’s remarks were aimed at ensuring that “no de-duplication of work is done” and that ministries work in collaboration as there were some reports of ministries not following an “integrated approach,” said a senior government official requesting anonymity.
Modi, who was undertaking a review of infrastructure projects including roads, railways, airports, ports, digital and coal sectors on Tuesday evening, told the officials that it was the time to deliver results. The meeting attended by top officials of the prime minister’s office, NITI Aayog and all infrastructure ministries continued for around four-and-a-half hours. NITI Aayog CEO Amitabh Kant gave a presentation on the status of infrastructure development of various projects.
Modi later tweeted, “Progress in road construction, particularly in rural areas is gladdening. Progress in highways sector is also showing great improvement.”
“In railways, we are exceeding targets in laying of new rail lines. Over 1,500 unmanned level crossing have also been eliminated in 2016-17,” he said, adding: “Aviation sector is buzzing with enthusiasm. We discussed how Regional Connectivity Scheme is going to positively impact travelers.”
During the review, Modi directed the think tank NITI Aayog to examine global standards in the application of technology in infrastructure creation and their feasibility in India so that the country can start adopting global standards and have a world-class infrastructure. He also said the government should use new technologies for road and highway construction to expedite projects.
Apart from updates on regular targets, Modi was briefed on the progress of some important projects such as the Eastern Peripheral Expressway, Char Dham, Quazigund-Banihal Tunnel, Chenab railway bridge, the Jiribam-Imphal project, and the Regional Connectivity Scheme which will connect 43 destinations by air, including 31 destinations that are currently not served by air transportation.
In his presentation, Kant said that under the Pradhan Mantri Gramin Sadak Yojana (PMGSY), the ministry of rural development has achieved its highest ever average daily road construction rate of 130km. The rate of construction has led to the addition of 47,400km of road under the scheme in 2016-17, connecting around 11,641 additional habitations. He added that the pace of four- and six-lane national highways construction is also improving, with 26,000km of highways built in 2016-17.
The PM was told green technology such as waste-plastic, cold-mix, geo-textiles, fly-ash, iron and copper slag had been used in around 4,000km of rural roads and that this was being given a further push.
Modi directed efficient and stringent monitoring of rural roads so that construction and quality were not compromised.
For the railway sector, Modi asked the railways ministry to focus more on non-fare revenue and speed up work on redevelopment of railway stations so that deliverables are visible. He was told that 953km of new lines were laid in 2016-17 as against a target of 400km. Similarly, track electrification of over 2,000km and gauge conversion of 1,000km were achieved in the same period.
For ports, Modi stressed better outcomes for the turnaround time of ships and clearance for EXIM cargo as the sector saw the highest-ever capacity addition of 100.4 million tonnes per annum in major ports during 2016-17.

Amazon Prime a key differentiator for the US e-commerce firm in India

Bengaluru: Amazon’s flagship membership programme Prime, which has helped the e-commerce giant lock in millions of online users in the US, is proving to be a key differentiator for the retailer in India as well, a report said.
Data from the report by market researcher RedSeer Consulting, shows the number of Prime subscribers in India rose rapidly during the October-December quarter, reaching 5-6 million at the end of December.
Prime now accounts for nearly a third of Amazon’s active customer base with 25-30% of Indian customers opting for it, the report said. These estimates include paying and non-paying subscribers.
Prime subscribers spend at least 15% more than non-Prime customers and place more orders on an average every month, the data shows. They seem to be more satisfied as well: according to RedSeer, average Net Promoter Score (NPS)—an indicator of customer satisfaction—for Prime customers in India was 40% against 24% for non-Prime customers.
In less than nine months since Prime launched in India, it accounts for one out of every three orders that Amazon delivers to customers—highlighting how consumers are increasingly paying for quicker and more reliable deliveries and hence are increasing their online spending budgets on platforms that offer such membership programmes.
Prime has become a key lever for Amazon in its battle against arch-rival Flipkart. A significant part of Prime’s growth is also being driven by its online video streaming service, which competes with Netflix and Hotstar.
The Indian numbers mirror a phenomenon that Amazon first witnessed in its home market, the US, when it first launched Prime in 2005. Over the last decade, Prime became one of the biggest levers of Amazon’s growth in the US, as the online retailer sold more to existing customers, who typically ended up shopping more from Amazon after signing up for Prime.
“We’ve seen a big rise in frequency as well as a big lift in actual order values from Prime customers,” Akshay Sahi, head of Amazon Prime in India, said in an interview with Mint earlier in April. “What happens is, apart from mobile phones, any of the other categories are not one-time purchase categories. Because you just keep buying more and more of those things. Your fashion budget will move more towards Amazon, your electronics budget will move more towards Amazon, your consumables budget moves more towards Amazon because of the loyalty you have and the experience you enjoy and the programme that you’re a part of.”
Last July, Amazon India launched its annual Prime membership programme in more than 100 cities, offering one-day and two-day delivery on hundreds of thousands of products and exclusive discounts for an initial price of Rs499 per year.
Prime was the single biggest-selling product among the 15 million units sold on Amazon India during a five-day sale in October. Amazon expanded the service by adding video content in December through Amazon Prime Video, pitting it against Netflix and Hotstar.
Prime’s success in India may force arch-rival Flipkart to re-think its strategy towards paid subscription services. So far, Flipkart has not actively promoted its own loyalty programme for consumers, as the e-commerce firm privately believes that Indian shoppers typically don’t care or pay for delivery and convenience or content.
“Flipkart is missing out big-time by not promoting its own membership service as aggressively as Amazon. They still have an opportunity to educate customers and offer them that option of quicker and cheaper deliveries, but they have to get into this game quickly,” said Harminder Sahni, founder and managing director, Wazir Advisors, a consulting firm.