1. Mining Moguls
The unexpected winding up of the Shah Commission, which was investigating illegal mining, may have raised environmentalists’ eyebrows, but the Indian mining sector is looking forward to a better year. Mining had stalled for about two years, hurting mining and steel companies like Sesa Goa and JSW Steel. Karnataka has taken steps to open over 90 mines cleared by the Supreme Court. Sesa Goa, owned by billionaire Anil Agarwal, now has the go-ahead for a lapsed mining lease in Goa. The mine has a capacity to produce 2.3 million tonnes of iron ore a year and will help Agarwal get back into business. This is also good news for JSW and smaller sponge iron manufacturers that operate in the state who were forced to cut production because of raw material shortage.
Prospects for miners in Goa might not be as sanguine. In late 2013, the Supreme Court kept the ban on Goa’s iron ore mining but allowed sale of a stockpile of 11 million tonnes. The mining ban, various estimates say, has cost the Indian government $10 billion in revenues in the last two years. But with gradual easing over the next two years, most companies will likely regain lost ground.
2. Tata Steel
A better-than-expected performance in the first two quarters of FY14 has led to hope of a turnaround at Tata Steel. Profits rose to Rs 917 crore, compared to a loss of Rs 364 crore a year earlier. The most encouraging sign is a rise in demand in European economies, including the UK which has most of Tata Steel’s units.
The optimism is shared by European rival ArcelorMittal. Both companies hope that the two-year slump in steel demand is over. Efforts to lower costs are relentless—Tata Steel is estimated to have saved Rs 380 crore in the first quarter. The European steel federation, Eurofer, had warned of subdued demand in 2013; it has forecast a better 2014. Tata Steel has also fared better in its domestic operations, thanks to a weaker rupee that limited imports. Margins improved after the company raised prices in India. It helps that recently appointed managing director, TV Narendran, is reorganising the management in India. However, the largest Indian steel company still faces challenges: It has a debt of about Rs 64,000 crore and its most ambitious project, the Kalinganagar plant in Odisha, is racing to meet its completion deadline of October 2014. In Europe, Tata Steel announced another 500 job cuts.
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(This story appears in the 10 January, 2014 issue of Forbes India. To visit our Archives, click here.)
Environmental safety and development has to go hand in hand.There has to be a golden mean to achieve both development and environmental safety.The administration has to achieve this fine tuning.But if in the name of environmental safety they try to extract their cut from every deal there will be chaos and doom.on Jan 4, 2014