Equity Research Report By Ways2Capital 01 Oct 2014

INDORE, India - Oct. 1, 2014 - PRLog -- NSE WEEKLY NEWS UPDATE

✍Coalgate verdict: Metal companies stand to lose investment; Jindal Steel to be among worst affected:

The Supreme Court's order cancelling coal block allocation has served a knockout punch to metal manufacturers who stand to lose substantial investment in pre-development activities. Out of 218 coal blocks in question, the power sector accounts for 95 and steel companies 69 blocks. The court cancelled 214 coal blocks while letting off two operated by Reliance Power and one each by state-run NTPC and Steel Authority of India.

Jindal Steel and Power Ltd (JSPL) is perhaps among those corporates that will be worst affected by the court decision. Its entire production of 12 million tonnes (mt) is from coal blocks allocated after 1993. According to industry estimates, the company's cost on coal will go up by almost Rs 1,700 per tonne. This is because captive coal costsRs 800 per tonne while in electronic-auction, it costs Rs 2,500.

✍7 companies to lose coal output of 20m tonnes/year:

Naveen Jindal-owned Jindal Steel & Power (JSPL), Kumar Mangalam Birla-promoted Hindalco Industries, Manoj Gaur's Jaiprakash Power and Sanjiv Goenka-led CESC are among the seven firms that will lose access to their producing coal blocks after the Supreme Court's landmark judgment on Wednesday to cancel 214 of the 218 coal blocks, terming their allocation 'illegal'.

The other companies that will lose their producing coal assets include Monnet Ispat, Prakash Industries and Usha Martin. These seven companies lose a combined coal mining capacity of over 20 million tonnes per annum.

Besides Hindalco, Tata Steel, Usha Martin, JSPL, Balco, Nalco, JSW Steel and Monnet Ispat will also lose their coal mines. These companies have heavily invested in these mines and the production was likely to start soon. These include Hindalco's Mahan, Tata Steel's Ganeshpur, Usha Martin's Lohari, JSPL's Jitpur Utkal B1, JSW Steel's Rohne, Monnet Ispat's Utkal B2, Nalco's Utkal E and Balco's Durgapur 2 coal blocks.

✍R-Power, Jaypee’s $2 billion deal is off:

Anil Ambani-owned Reliance Power's agreement to buy three hydel power assets of Jaiprakash Power Ventures limited (JPVL) with an aggregate capacity of 1,791 mega watts (MWs) for Rs 12,000 crore ($2 billion) has fallen through a day ahead of the end of the exclusivity period of the memorandum of understanding (MoU). The deal, which was inked in July, was not finalized due to prevailing regulatory uncertainty and tariff issues.

This is the second time that the deal to buy the three assets of Jaypee group has fallen through and will be a major setback for the debt-laden group trying to sell assets to cut debt. The group, which has over Rs 56,000-crore debt, plans to trim it by Rs 15,000 crore in the current fiscal.

✍Reliance Industries to raise $800 million from Korea Exim to fund Reliance Jio:

Reliance Industries Ltd (RIL),is raising $800 million from Korea Exim (K-Exim) in order to finance purchase of telecom equipment from Korean vendors such as Samsung by Reliance Jio (RJio), the telecom arm of the retail to petroleum giant, indicating that the much awaited rollout of telecom services by India's largest private company is gathering pace. The company may launch services in the first quarter of 2015, according to analysts.

✍ JSW to buy Jaypee's 3 power units:

A day after Jaypee Group's arrangement with Anil Ambani's Reliance Group for the sale of its power units collapsed, the Manoj Gaur-led conglomerate has struck a deal with the Sajjan Jindal-owned JSW Group.

Mumbai-based JSW Group's energy arm has agreed to buy three operational power units with aggregate capacity of 1,891 MW from Jaypee Group for anundisclosed amount as the diversified enterprise looks to boost its energy business.

JSW Energy said that it has signed a binding memorandum of understanding with Jaypee Group's listed energy arm Jaiprakash Power Ventures for the 100% acquisition of the 300-MW Baspa-II hydro electric plant, 1,091-MW Karcham Wangtoo hydro electric unit and 500-MW Bina thermal power plant.

✍R-Power, Jaypee’s $2 billion deal is off:

Anil Ambani-owned Reliance Power's agreement to buy three hydel power assets of Jaiprakash Power Ventures limited (JPVL) with an aggregate capacity of 1,791 mega watts (MWs) for Rs 12,000 crore ($2 billion) has fallen through a day ahead of the end of the exclusivity period of the memorandum of understanding (MoU). The deal, which was inked in July, was not finalized due to prevailing regulatory uncertainty and tariff issues.


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