VITAL INDUSTRY UPDATES – 01/07/2015

July 1, 2015 12:09 pm Published by

Basmati exports hit on high cost of processing & low realisation

Though Basmati exports suffered a marginal fall in 2014-15 in value terms, the shipments declined sharply by 7.5 per cent, mainly due to surplus supply, according to data compiled by the Agricultural and Processed Food Products Export Development Authority (Apeda).

Iran, the biggest importer of Indian Basmati, had bought lesser quantity in the past 18 months, largely due to political reasons. Shipment to that country fell by 39 per cent in value terms to $1,108 million in 2014-15 as against $1,835 million in the previous year, while volume-wise, shipments dropped to 935,568 tonnes from 14,40,654 tonnes, traders said.

 “The government of Iran takes a rice import decision based on the current paddy crop. Since September is the normal harvesting season, any decision on bilateral rice import will be taken only around that time. Normally, they reduce Customs duty on import from the Most Favoured Nation. So, we will have to wait a couple of months for any purchase agreement to get signed with India,” Mr Ajai Sahai, Director-General of Federation of Indian Export Organisations (Fieo), said.

 However, exports to Saudi Arabia rose to 966,931 tonnes worth $1,188 million in 2014-15, from 826,289 tonnes valued at $1,109 million in 2013-14.

 “Global prices of rice have declined to the level of 2008. Emergence of some competitors has also lowered Basmati demand from India’s perennial importers. Importing countries are holding back Indian rice imported earlier and are now disposing that inventory instead of ordering new quantities,” Mr Sahai added.

 

Meanwhile, exports to the US also declined to 80,540 tonnes valued at $132.30 million in 2014-15, from 103,378 tonnes worth $143.88 million in 2013-14.

 “Basmati rice exporters are bleeding due to high cost of processing and low realisation. Cost of paddy procurement for 1121 variety of Basmati stood at Rs 40,000 a tonne. On processing, Basmati manufacturing cost works out to Rs 70,000 a tonne. Further incurring cost on exports should yield at least $1,800 a tonne,” a senior official of All India Rice Exporters’ Association (AIREA) noted.

 

Cochin Port to improve cargo unloading methods

Cochin Port is seriously planning to improve methods of unloading cargo by introducing more automated facilities in view of the increasing labour shortage which was felt recently while handling 31,000 tonnes of wheat from Australia, an official said.

The automated facilities such as silos and pneumatic pump systems would make it smoother to handle cargo, especially bulk foodgrains which are currently carried out using labour-intensive techniques, the official said.

 With facilities such as silos, the importers could undertake ship-to-shore unloading not only efficiently, hygienically and without operations getting disrupted by rains, it would also minimise wastage associated with handling foodgrains through ship cranes, pay loaders, open trucks, etc.

 The Port is ready to lease land for 30 years to develop such facilities and provide necessary infrastructure support which would also facilitate containerised movement of such bulk cargo.

 The Port has decided not to further promote bulk arrival of wheat and related commodities in view of the labour shortage, it is learnt.

 

 

RINL eyes capacity expansion of 16 mn tonnes by 2025

Rashtriya Ispat Nigam Limited (RINL), the corporate entity of Vizag Steel, is chalking out plans to expand capacity to 16 million tonnes per annum (mtpa) by 2025 with an investment of Rs 35,000 crore, a a top official said.

P Madhusudan, CMD, RINL, said the present capacity of 6.3 mtpa would be increased by 1 mt by 2018 through modernisation of the existing capacities.

“By 2025, RINL has corporate target to achieve 16 mtpa. The current 6.3 mtpa will become 7.3 mtpa through modernisation by 2018. After that, in two phases, we want to grow up to 16 mtpa,” Madhusudan told PTI.

“Each million tonne would cost about Rs 4,000 crore. Another 9 mt to be taken in two phases would cost about Rs 35,000 crore,” he said. He said the capex for the current fiscal is Rs 1,402 crore and the PSU is confident of achieving that.

 

The steel maker had earlier said it had fixed the target of 5 mt of hot metal, 4.9 mt of liquid steel and 4.3 mt of saleable steel production and turnover of around Rs 18,000 crore.

On the tie-up with Power Grid for making Transmission Line towers, he said the proposed JV would be investing Rs 330 crore in the first phase and a similar amount in the second phase.

The new JV company will set up a Transmission Line Tower (TLT) manufacturing unit in Visakhapatnam.

 

“The Transmission Tower Unit with an annual capacity of 1,20,000 tonnes will be set up with an investment of around Rs 330 crore in the first phase. In the second phase, it is planned to have rolling mills which will enhance the total capacity to 1,80,000 tonnes per annum of transmission line tower parts,” he explained.

 

The CMD further said the JV will have the benefit to procure black angles from RINL. Consultant MECON has already prepared the Techno Economic Feasibility Report. Land has already been earmarked for the project by RINL.

JSW Group Plans to invest Rs 10,000 crore for expansion of its ports’ capacity

Sajjan Jindal’s JSW Group plans to shape its ports business into a major player in the next five years, becoming the only Indian conglomerate that can pose a challenge to the Adani Group’s steep rise in this sector.

 

The steel-to-energy behemoth, along with its partners, plans to Rs. 10,000 crore to expand its ports even as it plans to increase capacity more than six times to 200 million tonne (MT) by 2020. “We at JSW don’t set up any goals that are easily achievable. We are not a very large port company today but our ambition is to convert it into one of the major port companies in India,” Chairman Sajjan Jindal said.

 

Apart from the Rs. 10,000-crore organic expenditure, Jindal is looking at acquisitions on the east coast to speed up the process of achieving the 200 MT target. It is scanning major and non-major ports, across Andhra Pradesh, Odisha and Tamil Nadu.

The group, through its subsidiary JSW Infrastructure, already operates two ports in Maharashtra and two cargo berths in Goa. It is also building a terminal in Odisha’s Paradip Port.


“If we have to grow from 33 MT to 200 MT, we will have to grow at 25% compounded annual growth rate every year. For that, brownfield expansions, some acquisitions, addressing connectivity to attract third party cargo, growing the scale to accommodate larger ships: these are our plans,” JSW Infrastructure Chief Executive BVJK Sharma told ET in an exclusive interview.

The Adani Group operates India’s largest port company, Adani Ports & SEZ, which has more than 300 MT of cargo carrying capacity at eight locations. The company is also in the process of building and acquiring more capacity on the east coast as it recognises the country’s crying need for mechanised ports as old ports struggle to accommodate growing volumes.

JSW may list JSW In frastructure once it grows to a significant size. “We should come up to a reasonable level compared with our steel and energy businesses that are already listed,” said Sharma, adding that the company will have to reach an Ebitda (earnings before interest, tax, depreciation and amortisation) of at least Rs 1,000 crore and a market valuation of Rs 12,000 crore before it considers a public share sale.

JSW Infrastructure posted Ebitda of Rs 350 crore last year and hopes to touch Rs 500 crore this financial year. It recently signed a concession agreement with the government to build a railway line connecting its Jaigarh Port in Maharashtra with Konkan Railway.

JSW is looking to build or acquire the first phase of ports wherever its steel, power and cement plants are coming up, Sharma said. It will then create additional capacity for outsiders. The group wants to bring captive cargo contribution down to 50% from 60% at present by 2020.

There are concerns that if the India growth story does not play out as expected, ports could be staring at redundant capacities and high debt. Many private ports on the east coast are struggling to attract shipping lines. However, JSW is not too concerned as it expects to have almost 80 mt of group cargo by 2020 to rely on.

 

 

 

 

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This post was written by Atlantic Admin