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India Capital Goods Sector----------------------------------------------------------------------------------
Environmental approvals gaining traction
● Investors, over the past few months, have been concerned on the
delay in approval of several projects, on account of issues with
environmental approvals. We, however, note that positive news
flow on the approvals front has been gaining ground with MoEF
(Environment ministry) recently approving several large projects.
● Notable projects approved include, Posco’s Rs500 bn steel
project in Orissa, JSPL’s Rs250 bn integrated steel project in
Orissa, Bedabahal UMPP in Orissa worth Rs200 bn, 16 projects
of Coal India (CEPI score eased to 75 from 70), SAIL’s mining of
iron ore in Chiria mines, Areva’s 10GW nuclear project in
Maharashtra and Rs90bn worth Mumbai Airport project. We
understand that several more projects are under review for
approvals.
● The read from the approval of these large projects is that
directionally policy is taking a more favourable view on investment
projects given the impact of delays on economy. From a sectoral
perspective, we acknowledge this positive trend, and believe that
if these bottlenecks (including Land) are eased further, the sector
derating (from 23x to 17x) over the past quarter could reverse.
● While investors may still wait for the actual order momentum to
improve, we believe that these trends atleast ensure that the
visibility on pool of orders up for bid over the next 12M increases,
and help support the current valuations for the sector.
Posco project approved
MoEF has approved Posco’s Rs500 bn 12 MT integrated steel plant in
Orissa (in Jan). Over 28 conditions have been attached to the project
which includes a steel plant, captive power plant and a minor port. It is
also envisaged that about 2% of annual profits will have to be diverted
to development of local community.
News reports also indicate that a decision on diversion of forest land
is still pending and an assurance has been sought from the Orissa
government on implementation of the Forest rights act.
JSPL project approved
JSPL’s integrated steel (6 mtpa) and 100 MW captive power plant has
been approved by MoEF on 14 February, with six conditions. The
conditions include use of coal gasification technology, dry quenching
of coke and use of fly-ash for brick and cement manufacturing.
This project valued at Rs250 bn project was issued a show cause
notice in November last year, for non compliance of environmental
clearances that was accorded to the plant in CY07.
SAIL mines (iron ore) approved
SAIL has been given approval to extract iron ore from Chiria mines in
Jharkhand. This is an important development, as around 40% of the
iron ore requirements of SAIL will be met from the Chiria mines over
the next 50 years. The company is expected to invest Rs51 bn to
mine the ore.
Coal India’s 16 projects approved
News reports suggest that MoEF has approved 16 projects of Coal
India. MoEF agreed to increase the CEPI threshold to 75 points from
the existing 70 points which helped in getting these approvals.
CEPI is a new metric introduced in December 2009 for measuring
pollution levels in 88 industrial clusters. Air, water and land pollution
are measured and combined into CEPI score out of 100. CEPI above
70 was assessed “Critical”. It is a cluster level consolidated measure,
and not industry-specific. Environmental clearances held back for all
pending projects in the 43 of the 88 clusters that were declared
Critical (Extracted from detailed note on CEPI, dated 3 Jan 2011, titled
Understanding CEPI; hurdles don't seem insurmountable, authored by
Neelkanth Mishra).
The fate of several projects stuck in designated no-go areas is also
expected to be decided soon – these pertain to an estimated 50 GW
worth power projects. (includes approvals for 40 private sector
projects).
Orissa’s UMPP worth Rs200 bn approved
The MoEF has approved the UMPP in Orrisa worth Rs200 bn. The
UMPP in Orissa (Bedabahal) was stuck for approvals for over an year,
as two of its three coal blocks had fallen in no-go areas. Two more
UMPP’s are expected to be awarded this year. One is in (Surguja)
Chhattisgarh and the other in Tamilnadu (Cheyyur).
Areva’s nuclear project
MoEF gave environmental clearance to Areva’s 10 GW Jaitapur
nuclear power project in Maharashtra. The Rs600 bn two phase
project has been granted approvals subject to 35 conditions.
The first phase is expected to be completed within the next 3-4 years,
and the rest will be completed by CY18. The project cost is expected
to be Rs100 mn per MW. Land issues though could still delay the
project, as locals are concerned about the impact of radiation on the
surrounding ecosystem.
Mumbai airport
Approval for construction of Mumbai’s second airport was also
granted in 3Q this year. This project is expected to cost ~Rs90 bn with
the first phase (10 mn p.a.) expected to be completed by FY14-15.
This project has already got delayed by over three years.
The conditions for approvals suggest that 678 ha of mangroves will
have to be replanted, and instead of two rivers that were required to
be diverted only one will be done. About 310 ha will be declared as a
no development zone
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Capital Goods Sector----------------------------------------------------------------------------------
Environmental approvals gaining traction
● Investors, over the past few months, have been concerned on the
delay in approval of several projects, on account of issues with
environmental approvals. We, however, note that positive news
flow on the approvals front has been gaining ground with MoEF
(Environment ministry) recently approving several large projects.
● Notable projects approved include, Posco’s Rs500 bn steel
project in Orissa, JSPL’s Rs250 bn integrated steel project in
Orissa, Bedabahal UMPP in Orissa worth Rs200 bn, 16 projects
of Coal India (CEPI score eased to 75 from 70), SAIL’s mining of
iron ore in Chiria mines, Areva’s 10GW nuclear project in
Maharashtra and Rs90bn worth Mumbai Airport project. We
understand that several more projects are under review for
approvals.
● The read from the approval of these large projects is that
directionally policy is taking a more favourable view on investment
projects given the impact of delays on economy. From a sectoral
perspective, we acknowledge this positive trend, and believe that
if these bottlenecks (including Land) are eased further, the sector
derating (from 23x to 17x) over the past quarter could reverse.
● While investors may still wait for the actual order momentum to
improve, we believe that these trends atleast ensure that the
visibility on pool of orders up for bid over the next 12M increases,
and help support the current valuations for the sector.
Posco project approved
MoEF has approved Posco’s Rs500 bn 12 MT integrated steel plant in
Orissa (in Jan). Over 28 conditions have been attached to the project
which includes a steel plant, captive power plant and a minor port. It is
also envisaged that about 2% of annual profits will have to be diverted
to development of local community.
News reports also indicate that a decision on diversion of forest land
is still pending and an assurance has been sought from the Orissa
government on implementation of the Forest rights act.
JSPL project approved
JSPL’s integrated steel (6 mtpa) and 100 MW captive power plant has
been approved by MoEF on 14 February, with six conditions. The
conditions include use of coal gasification technology, dry quenching
of coke and use of fly-ash for brick and cement manufacturing.
This project valued at Rs250 bn project was issued a show cause
notice in November last year, for non compliance of environmental
clearances that was accorded to the plant in CY07.
SAIL mines (iron ore) approved
SAIL has been given approval to extract iron ore from Chiria mines in
Jharkhand. This is an important development, as around 40% of the
iron ore requirements of SAIL will be met from the Chiria mines over
the next 50 years. The company is expected to invest Rs51 bn to
mine the ore.
Coal India’s 16 projects approved
News reports suggest that MoEF has approved 16 projects of Coal
India. MoEF agreed to increase the CEPI threshold to 75 points from
the existing 70 points which helped in getting these approvals.
CEPI is a new metric introduced in December 2009 for measuring
pollution levels in 88 industrial clusters. Air, water and land pollution
are measured and combined into CEPI score out of 100. CEPI above
70 was assessed “Critical”. It is a cluster level consolidated measure,
and not industry-specific. Environmental clearances held back for all
pending projects in the 43 of the 88 clusters that were declared
Critical (Extracted from detailed note on CEPI, dated 3 Jan 2011, titled
Understanding CEPI; hurdles don't seem insurmountable, authored by
Neelkanth Mishra).
The fate of several projects stuck in designated no-go areas is also
expected to be decided soon – these pertain to an estimated 50 GW
worth power projects. (includes approvals for 40 private sector
projects).
Orissa’s UMPP worth Rs200 bn approved
The MoEF has approved the UMPP in Orrisa worth Rs200 bn. The
UMPP in Orissa (Bedabahal) was stuck for approvals for over an year,
as two of its three coal blocks had fallen in no-go areas. Two more
UMPP’s are expected to be awarded this year. One is in (Surguja)
Chhattisgarh and the other in Tamilnadu (Cheyyur).
Areva’s nuclear project
MoEF gave environmental clearance to Areva’s 10 GW Jaitapur
nuclear power project in Maharashtra. The Rs600 bn two phase
project has been granted approvals subject to 35 conditions.
The first phase is expected to be completed within the next 3-4 years,
and the rest will be completed by CY18. The project cost is expected
to be Rs100 mn per MW. Land issues though could still delay the
project, as locals are concerned about the impact of radiation on the
surrounding ecosystem.
Mumbai airport
Approval for construction of Mumbai’s second airport was also
granted in 3Q this year. This project is expected to cost ~Rs90 bn with
the first phase (10 mn p.a.) expected to be completed by FY14-15.
This project has already got delayed by over three years.
The conditions for approvals suggest that 678 ha of mangroves will
have to be replanted, and instead of two rivers that were required to
be diverted only one will be done. About 310 ha will be declared as a
no development zone
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