Towards 7th Issue

An effort by Stockyard in association with mantra consulting group www.stockyard.infinities.net

30th June 2008

Issue 7

From Editor’s Desk Dear Friends 7th issue of towards is now in your hands. Hope you would love our endeavor. We, as a nation are at the cross-road. As an economy, as a society, as a culture and most important as a nation are at a stage from where out foresightedness, would determine our growth and our future. At this point in time, our lack of policy initiatives and our weak political-administrative fabric hurts our prospects. However, our people, in the corridors of Parliament House and various policy centers seem not to pay much attention to issues of growth and national security. It hence becomes, imperative that we build up a nation-wide mandate that force decision makers to keep national agendas as the top priority whenever they sit for deciding our fate.

Look at few recent happenings Mr Arjun Singh, our respected HRD Minister has finally vowed that he will spare no chance in spoiling the current premium education system in India. After all, we do not need quality Doctors, Engineers, Managers and Scientists, anymore. All we need is just a vote bank, who always keeps Mr Arjun Singh and his Ideologues in power. Our Minister has come with a new dictate: Reservation for the post of Professors, Research Scholars, Scientists and lecturers in IITs. We do not need good quality teachers in our premier Institutes; all we need is caste-based education system who would never let you be free from all those wicked boundaries.

Politics, caste, vote bank and Chessboard: Where is the Nation, anyway? It has been a difficult fortnight for everyone. Interestingly for most of the people on the planet other than probably a very few punters in Nymex, trading in oil. The fortnight has also been quite favorable for bears on bourses all over the world alike their Indian counterparts who have been shorting the Nifty on every bounce back and made a good fortune for themselves. The political picture at the landscape seems to be quite interesting. As events unfolded this fortnight, it became apparent that crucial policy decisions hinge on petty political considerations and calculations on the chess board at North Block, 10 Janapath and corridors of mighty polity-centers. Is the country of 1 billion is unable to make a conclusive mandate as to whether the Nuke-Deal with USA, 123 agreement and Hyde Act with all its plus-minuses? In fact, the political warlords have forgotten that beside their political ambitions and mathematics, there remains one very important aspect of the deal—about the energy security of nation. We indeed need nuclear energy. Energy security of nation is at stake. In scenario of very high crude prices, which seem to stay high for much longer that anticipated, we need to find ways to reduce our crude dependence. Nuclear Electricity could be a very viable option if tapped in a strategic and sustainable fashion. It hence remains important to enhance all our efforts to secure Uranium resources from all over the world till we equip ourselves with the Thorium –enrichment technology, called Fast Breed Hybrid reactors. Energy security has become very crucial at the time when we have just opened the door of higher growth and fast industrialization. Crude resources globally are fast depleting and if one believes the Energy Watch Group findings, crude will become a scarce energy source ,not much later than 2020.Giving one of the statistical sample of this…”By 2020,World crude production will remain at 27 million barrels per day. Comparing this number with current US consumption of nearly 20 million barrels per day might be more that sufficient to convince you. Add to the fact that by 2020, India and China, put

together would need at least 40 million barrels crude per day, at current utilization rate. World crude supply might not be sufficient to even cater to the demand from these two countries. What is the other prominent source for energy? In India, and also in world, Coal has emerged as the biggest substitute for crude oil as energy source. Now, consider this….India has a huge reserve of 256 billion tonnes of huge coal reserves which is 3rd largest reserve in the world. This might look comforting to you. But look at these few statistics. Our annual coal consumption to the latest figures has been 467 million tonnes per annum for the Year ended 31st March 2008.Around half a billion tones…!!! At an economic recovery rate, our coal reserves would sustain for another 50 years maximum and if we believe that we keep growing at current pace for next 15-20 years, than our reserves would not sustain for more than 20-30 years. This deadline could come down more rapidly as scarce and costly crude oil puts heavier pressure on coal as a substitute. Almost all our electricity consumption is primarily coal based. We need electricity to run our blast furnaces, factory – shops, cranes, bulldozers and most important our mammoth trains. Where will all this electricity comes from…..from fast depleting coal reserves. Crude and coal…the two life-lines of civilization inn our so-called civilized world and more so for our own country are very fast exhausting…….. Come Year 2030……and you hardly have any crude droplets and coal Ashes to get your society running on high-hills. So where is the option….? Option lies in alternative energy. You buy this idea or not….we are about to witness paradigm shifts in the global economy in years to come… If current trends are to be reckoned with…..the trouble is about to boil here from…its not just about few cynical valuation bubbles of sub-prime assets….its not just few commodity cycle pick pressures from flooding Australia and Bio-fuel plantation…its not just global warming and fast depleting ozone layer……..its but much beyond all these…..a culmination of all such small and big factors…… ….the tough days are ahead…if only you could stretch your sinews…you could see the underwritings on the canvass…. If one talks about alterative sources of energy, scenario is equally grimmer. We probably have water, air, and sun-light and at the end nuclear sources, those can give us efficient energy alternatives. We are definitely heading to a world which fulfils its more than 50% energy requirements from Solar, Hydel, Tidal and Nuclear energy. Is given that we will necessarily allocate at least 25% extra energy from Bio-fuel, whether we like it or not……? Crude is not going to support for more than your 25-30% of energy requirements beyond 2030.

So where is the catch…? We are only shifting from one energy form to another…from crude to coal to nuclear, Tidal, Hydel, solar and possibly in a distant future to Hydrogen…the ultimate energy resource….. What is changing…probably nothing…we are probably not in a disturbing volatile zone…just a transition…from one source to another…… What are the downside risks to humanity? And in particular……to the world economy in foreseeable future……..? Actually, the devil lies in the details…..and in this case, it actually lies in the process….which looks not so smooth and painless.

In the process of transition, there will be cycles of unprecedented high energy and commodity prices, which probably now, we are facing. There will be time, when we will have to be extra-cautious in terms of innovation and solutions of problems, those will be too rapid and too swift. With stock markets nose-diving, hydro-carbon prices sky rocketing and prices of basic commodities including that of food going northward, the fear of an economic recession in the global economy is looming large.

Testimony of Nation’s top Scientist: K.Kasturirangan, Ex.Chief, ISRO, Director: National Institute of Advanced Studies (NIAS): Father of Modern space mission of India “It is very critical for India to have this deal fructify if we want to have 60,000-100,000 MW of nuclear power in our energy mix in the next 25 to 50 years. India had recognized three decades ago that nuclear power would have to be an important component of the country’s energy mix. “From the available uranium resources in our country, nuclear power can only yield a maximum of 10,000 MW of power, which is less than three percent of the power generated.” “We started with a pressurized heavy water reactor that needed uranium with enrichment that was not high. With such a reactor, we realized that generating more than 10,000 MW of power would be difficult. “So we wanted to look for an area which could give us the maximum of a nuclear fuel - which is thorium,” adding that India had 40 percent of the world’s thorium reserves. To reach the thorium stage, India needed top technology, which it could get only if it signed the deal with the US. India has its indigenous capabilities (to develop its nuclear power programme). This has to develop on its own and is a must. But developing indigenous capabilities to global levels would need enormous research. We can go about it through a negotiated process. Or else, the most that can happen is they (the US) will pull out of the deal. Even then we can develop our programme with help from other countries. So what are we gaining and what are we losing?” “My concern is whether India will lose its status of an economic power in Asia that it has gained by the high levels of growth we are maintaining now. If you can’t maintain this power, where the need to talk about autonomy (in nuclear security) is and such issues,”.

Lead Indicators of world Econom Japan has raised its reading for economic growth in the first quarter, driven up by a strongerthan-expected increase in capital investment. Japan revises up economic growth in first quarter to 4 percent, but outlook is gloomy Economists warned the world's No.2 economy could slow to a standstill later this year. Japan's gross domestic product or the total value of the nation's goods and services, in the January-March period grew at an annual pace of 4.0 percent, up from an initial estimate of 3.3 percent. From the previous quarter, GDP grew 1.0 percent, better than the 0.8 percent first announced. Business investment in factories and equipment increased 0.2 percent from the previous quarter, much better than a preliminary reading of a 0.9 decline. Despite the more robust figures, economists warned that global economic uncertainties and rising commodities prices could bring a halt to Japan's six-year economic expansion. Takehiro Sato, chief economist for Morgan Stanley in Tokyo, called the January-March period an "outlier" and predicts "virtually zero growth" ahead in Japan. He pointed to rising energy costs oil prices hit a record high near $140 per barrel last week as the biggest risk facing the country. "If oil prices remain at this level, I'm pretty concerned about demand sustainability in Asia," Sato said. Japan's current account surplus, the broadest barometer of trade, contracted 29.6 percent in April the steepest fall in more than five years. For the fiscal year ended March, Japan's economy grew 1.6 percent.

Its Oil,Oil,Oil……..No where!!!!! International Energy Agency: May Oil Report Prices surged to almost $140/bbl on 6 June following comments by an Israeli official that an attack on Iranian nuclear facilities was “inevitable” and came against a tight supply background with no clear sign of the usual second-quarter crude oil stockbuild. Global oil product demand is expected to average 86.8 mb/d in 2008, 80 kb/d below last month’s estimate, following the reduction of price subsidies in several non-OECD countries. Global growth is cut even more steeply by 230 kb/d to +0.9% or +800 kb/d when historical upward revisions to 2006 and 2007 data are factored in. Global oil supply rebounded by 490 kb/d in May to average 86.6 mb/d, lifted by higher OPEC crude supply. The rise however comes after extensive downward revisions to 1Q08 non-OPEC production and lower biofuels and NGLs for the rest of this year. Despite this, a recovery in non-OPEC output is forecast for the second half of 2008. OPEC May crude supply averaged 32.3 mb/d, 395 kb/d above April, on higher output from Saudi Arabia, Nigeria, Angola and with Iraqi output at a six-year high. Higher output and field commissioning delays push effective spare capacity below 2 mb/d. The call on OPEC crude and stock change in 2008 is revised up 300 kb/d to 31.6 mb/d. OECD oil stocks fell 8.1 mb in April to 2,562 mb, in stark contrast to the typical build. An 11 mb draw in US gasoline stocks removed the large 1Q08 surplus while crude and distillate cover tightened in Europe and North America. Total oil cover remains above average at 53.4 days. Global refinery throughput increased by 0.2 mb/d in May to 73.3 mb/d, as strong US, Russian and Middle Eastern crude runs more than offset the decline in Chinese and European throughputs. Non-OECD regions could also drive 3Q08 global crude throughputs to 75.7 mb/d, 2.1 mb/d higher than 2Q08 and 1.0 mb/d higher than 3Q07.

OPEC chief appeals for calm over oil:

According to OPEC's Secretary General the record-high crude oil price was unbearable and did not reflect any shortage of supply in the market. Abdullah al-Badri also called for measures to curb market speculation, a factor OPEC says is sending prices to unjustified levels. "The situation is unbearable as far as we are concerned. I want to say, there is no shortage now and in the future." "We are not happy with the current level of price for one reason. It has nothing to do with the fundamentals," he said. "Speculators are playing a big role in high oil prices. Also there are other considerations, the value of the dollar and the geopolitical situation." OPEC is pumping 32.2 million barrels per day (bpd), more than estimates of demand for its oil in 2008. In support of his point that prices are being driven by factors other than supply, Badri said world consumption of 87 million bpd is smaller than the value of trading in oil-related financial instruments. Badri said the "paper market" equaled about 1.36 billion bpd and he was critical of investment banks, some of whose forecasts for rising prices have been partly credited for sending oil to new peaks. "Their practice at this time is not in favor of producers and consumers," he said. "We really cannot be guided by one or two speculators." OPEC, which currently has 13 member-countries, was willing to raise production if needed, although there was no demand for extra barrels. "Nobody is asking for oil at this time. We are checking with our member countries. There is no queue for oil," he said. The IEA on Tuesday cut its forecast for world oil demand growth in 2008 by 230,000 bpd to 800,000 bpd, citing the impact on consumption of fuel subsidy cuts in Asia.

Oil seen hitting $150 this summer: Goldman analyst

Oil prices are likely to hit $150 a barrel this summer season, the global head of commodities research at Goldman Sachs said on Monday, as tighter supplies outweigh weakening demand. "I would suggest that the likelihood of that happening sooner has increased tremendously ... sometime in summer," Jeffrey Currie told an oil and gas conference in the Malaysian capital, referring to oil at $150 a barrel. Goldman Sachs, the most active investment bank in energy markets and one of the first to point to triple-digit oil more than two years ago -- a once unthinkable level -- said last month oil could shoot up to $200 within the next two years as part of a "super spike." Forecasts that oil could head towards $150 and above have multiplied over the past month as prices broke through several records, the latest being last Friday, when oil soared more than $11 a barrel on Friday, its biggest one-day gain ever. Oil hit an all-time high of $139.12 on Friday on the back of a weak U.S. dollar and mounting tensions between Israel and Iran. Goldman Sachs forecast almost a month ago that U.S. crude would average $141 a barrel in the second half of 2008, up from a previous projection of $107, due to tight supplies.

World Energy Outlook A projection into Future

Energy security is the key for economic security. Economies run on energy. To keep fuelling your blast furnaces, your vessels, out business jets and your countless of machines, you need fuel. We see clouds of doubt hovering over our economic growth. High crude and coal prices pose very serious threat to our nation’s and in fact global economy. We are here, focusing on few key statistical data and some of the projections of future, going into 2030,to explain various alternatives for energy net.

We are projecting various energy sources in future energy basket of the world. Liquid fuel would remain main source of fuel till 2030 immediately followed by coal and natural Gas. We believe, Renewable and Nuclear sources would still not be able to increase substantially, partly due to lack of proper infrastructural build-up and partly because of insufficiency of resource utilization. Coal, we believe, is fast becoming a very reliable and strong substitute for Oil. Because of high abundance and geographical diversity ,coal has become a very reliable substitute for oil in countries like India, where 85% of electricity is coal based. Governments in countries like India & South Korea are also in the process of setting up various coal to liquid programs where in coal would be used to convert into liquid oil for being used in place of Oil.RIL,TATASASOL,and JSW have already shown their interest in this regard. However coal, again is a limited resource.India,with 256 billion tones of coal(3rd biggest in world),consumes around 450 million tones of coal every year at current consumption rate which is only going to increase

In future. Hence coal can not remain our prime energy source for much longer. However when comparing with China, our consumption stands nowhere. China, alone consumes about half of world’s total consumption. World economic growth has always been subject to scenarios and conditions. While projecting in future, we are taking three different growth rates. In all these scenarios, energy usage would differ widely and the range of difference could also vary substantially.

In these three growth scenarios, Oil, as a prime mover of energy, will also differ widely in terms of production as well as consumption. Hence, the crude oil prices would also be quite volatile and probably show different moods and varieties. In higher crude oil scenario (which is essentially high growth scenario for world economy) crude prices should intrinsically move to the levels of $ 120+ per barrel. A kind of similar pattern, we are probably witnessing now, as a very high growth in countries like China and to very lesser extent, India, is supposed to be the main cause of high energy and commodity prices. However, we do not held countries like India and China for the mess-of-affairs in world energy stage as we believe ,these are developed nations like USA & EU to be majorly blamed for. Putting statistics more explicit, Out of total world consumption of 87 million barrels per day, USA alone consumes 20 million barrels per day with EU consuming another 23 million barrels per day.

China, along with rest BRIC consumes around 26 million barrels per day where in India’s share is only 2.6 million barrels per day. However, we definitely envisage a scenario, where in due to very high commodity and energy prices, world economy growth would be tempered substantially. We see a downside risk for the global economy in general and for Countries like India in particular. In current circumstances, India is at a very unfortunate condition. India does not have energy security for countries like Brazil, Russia and China, neither it has financial muscles like countries such as Japan, USA, EU and Middle East. We see highest amount of risk to India, if crude and commodity prices do not come down substantially. We therefore believe that Indian economy has a very serious challenge for growth going into future.

Real Estate Numbers says it all! If we look into the price correction of real estate companies that we believe is a kind of reflection as to what is happening in realty sector for now.

Company

June 18 price 52-wk high 52-wk high date % change

Ansal Infras

102.85

469

13-Dec-07

-78.1

Parsvnath Dev

168.3

598

7-Jan-08

-71.9

Omaxe

176.95

613

13-Dec-07

-71.1

Jaiprakash Asso

182.1

510

4-Jan-08

-64.3

Unitech

200.25

546.8

2-Jan-08

-63.4

Brigade Enterp

168.5

428

1-Jan-08

-60.6

Gammon India

337.45

845

4-Jan-08

-60

DLF

492.35

1225

15-Jan-08

-59.8

HDIL

590.5

1432

10-Jan-08

-58.8

HCC

116.5

278.9

2-Jan-08

-58.2

The large shareholder-owners of some of these listed real estate developers have apparently been pledging shares they own to financiers in exchange for loans. With sales not as brisk as in the years 2006 and 2007, cash flows are not as per expectations. And, to add to the woes of the real estate industry, many developers had already committed to larger projects. They now need to pay for this new land and the initial cost of development to get the land into some sort of "build-able" shape, says an expert looking into the sector. Property developers are borrowing money at interest rates ranging from 35% to 50% per annum. Their "normal" interest rates range from 18% to 24% per annum. The higher borrowing is due to the slowdown in sales and larger commitments.

Demand has declined because property prices are no longer affordable. Demand has also been hit by the fact that banks are closing down their home loan lending departments. But the supply juggernaut keeps on rolling. There are 50 to 70 million square feet of new construction coming up in Bangalore, Calcutta, Hyderabad, and Pune to name a few cities. Developers who have built maybe a total of 5 million square feet in the past decade have plans to build 50 million square feet in the next 3 years.

Unitech Results: Abysmal performance Unitech has posted 50.76% fall in net profit to Rs 175.84 crore on 14.08% decline in total The large-cap company had underperformed the market over the past one month till 26 June 2008, declining 24.69% compared to the Sensex’s decline of 12.73%. It had also underperformed the market in the past one quarter, declining 36.29% compared to Sensex’s decline of 11.91%. The company has an equity capital of Rs 324.68 crore. Face value per share is Rs 2. The current price of Rs 181.85 discounts its Q3 December 2007 annualised EPS of Rs 9.09, by a PE multiple of 20. Unitech’s net profit rose 4.79% to Rs 1030.68 crore on 14.24% increase in total income to Rs 2969.72 crore in the year ended March 2008 over the year ended March 2007. In May 2008, Unitech's subsidiary got approval from Department of Telecommunications (DoT) for 4.4 MHz of Spectrum in 1800 MHz GSM band in respect of Orissa service area. In January 2008, the company’s subsidiaries received letter of intent from DoT for providing Unified Access Services in all the 22-telecom circles across the country. Unitech is engaged in civil engineering, construction and housing development projects. It has also undertaken the construction of thermal power, steel and petrochemical plants and public utility buildings for a number of reputed public and private sector companies.

Indian Economy Growth Story turning a nightmare FDI in India: Who is leading the pack? According to the AIM study on 'State wise Investments', Orissa topped the chart claiming almost 30% of the total investments announced during the January to March 2008 quarter totaling to INR 3,25,285 crore. West Bengal and Andhra Pradesh followed with the CAPEX announcements of nearly INR 67,361 crore and INR 58,226 crore. Home to huge iron ore and coal reserves, Orissa has emerged as a preferred destination for the players in steel producers. They intend to invest as much as INR 45,000 crore to install steel plants with aggregate capacity of 18.5 million tonne. The major players having lined up CAPEX announcements in the state were Vedanta Resources, TATA Steel, Mesco Steel and Bhushan Steel.

States

Prominent Sectors

Total

Amount

Share

3,25,285

Orissa

Steel, Power, Oil & Gas

92,035

28.3%

West Bengal

Metals, Oil & Gas, Steel

67,361

20.7%

Andhra Pradesh

Oil & Gas, Real Estate, Pharma

58,226

17.9%

Chhattisgarh

Power, Steel

34,587

10.6%

Punjab

Power

14,650

4.5%

West Bengal attracted about 21% of the of the total capital outlay proclaimed across India over the same time period. The sectors that drew maximum CAPEX announcements were metals and oil & gas. A sum of INR 20,000 crore is planned to be spent in each of the sectors by the Vedanta Group and Cals Refineries. Steel players too lined up almost INR 11,900 crore for setting up of steel plants in the state. Other major sectors were ports & shipping with INR 2,000 crore and power with INR 1,010 crore. Apart from the INR 1,010 crore in power projects, corporate also intend to invest in captive power projects in West Bengal. Andhra Pradesh received 18% of the CAPEX planned by the industry over Q4 of 2007-08. Nearly 90% of the funds flowing to the state were allocated to the oil & gas sector. The sector majors envisaged to invest close to INR 52,000 crore in the state. While Hinduja Group in association with ONGC intends to set up a refinery in Kakinada, Reliance Industries would invest in the development of Krishna Godavari Basin. Chhattisgarh was host to outlay plans of about INR 34,587 crore, as per the CAPEX announcements. Most of the capital spending was proclaimed in the sectors of power and steel. The planned investment in these sectors was INR 17,375 crore and INR 16,000 crore. TATA Steel and Gujarat Mineral Development Cooperation were among the major investors planning to deploy funds in the steel and power sectors of Chhatisgarh. About INR 1,200 crore would flow into real estate for building up of townships.

The corporate India plans to spend a total of INR 14,650 crore in the state of Punjab. As per the corporate announcements made over the last quarter of the financial year 2008, almost INR 14,000 crore may be incurred in setting up of thermal power projects across the state. GVK Power & Infrastructure was the main investor. India’s 6 core sector output growth dips in September 2007: It is reported that India's infrastructure sector has grew by a modest 6% in September 2007 as against a healthy pace of 10.6% in the September 2006. This is slower than an upwardly revised reading of 9.2% in August 2007.

Union ministry of commerce & industry said that the index for 6 key industries, which contribute 26.7% to the overall industrial growth, has increased to 225.9 in September from 213.1 in September 2006. The infrastructure index comprises 6 core industries of crude oil, petroleum refinery, steel, cement, coal and electricity and accounts for 25% of the index of industrial production. Union government has announced that industrial output grew at the slowest pace in 11 months in September 2007. During April to September 2007, 6 core infrastructure industries registered a growth of 6.6% as against 8.7% during the April to September 2006 period. Performances of 6 infrastructure industries are as follows: Sector

Weight

Sep '06

Sep '07

Apr-Sep '06

Apr-Sep '07

Crude Oil

4.17%

9.4%

-0.7%

4.1%

0.7%

Petro Refinery

2.00%

13.4%

6.9%

12.3%

9.8%

Coal

3.22%

-0.8%

6.2%

5.3%

2.8%

Electricity

10.17%

11.5%

4.3%

6.7%

7.6%

Cement

1.99%

16.5%

5.0%

10.6%

8.3%

Finished Steel

5.13%

10.6%

10.3%

12.2%

6.6%

Overall

26.68%

10.6%

6.0%

8.7%

6.6%

Source: Concerned ministries, departments & organizations

HOT Stocks in cold weather Sujana Metals Sujana Metal Products, belongs to Sujana group of companies is aiming to achieve one million tonne finished steel capacity after completing the planned integration activities. A part of backward integration had already been started, according to R. K. Birla, Managing Director. Mr. Birla said the company hoped to achieve 50 per cent backward integration through acquisitions and expansion of billet making facilities at the end of Phase-I in December this year. In Phase-II, by June 2010, the group will achieve expansion of balanced finished capacity and complete the backward integration, including creation of five lakh

tonnes of sponge making capacity, said Hanumantha Rao, Director (Finance). The growth plans of Sujana Metal Products hinge on higher percentage of value added products (entire range of structural steel and ready to use steel), forward integration and completion of backward integration upto the stage of iron ore mining. The group has presence in key sectors such as steel, telecom, transmission towers, infrastructure areas. Sujana Metal has acquired five steel companies in the last 12 months for a total value of Rs. 250 crore.

Rohit Ferro Tech Rohit Ferro Tech Ltd has signed the required definitive agreements with the PT Pacific Samudra Perkasa of Indonesia towards the 60% economic interest in its two mining companies PT Palopo Indah Raya and PT Bara Prima Mandiri as per the terms of the MOU entered into earlier.

Sadbhav Engineering Ahmedabad based Sadbhav Engineering Ltd has entered into an agreement to acquire 74% stake in Ocean Bright Corporation Ltd, a Company incorporated in Hong Kong through its 100% subsidiary Sadbhav Natural Resources Pvt Ltd. Ocean Bright Corporation Ltd directly and through its subsidiaries holds 100% stake in the following prospecting rights and prospecting licenses in Mozambique. License for prospecting of iron ore and copper in 24,400 Hectares of land in Tete Province of Mozambique License for prospecting of lime stone in 24,740 Hectares of land in Nampula Province of Mozambique. Right for prospecting of minerals for coal in 5320 Hectares of land in Manica Province of Mozambique

Mr Nitin Patel ED of Sadbhav told that “Under the deal, Sadbhav will pay up to USD 25 million for prospecting, and subsequently share up to USD 40 million of gains once and if all the mines become operational. The amount to be paid for the acquisition completely depends on the mines' prospecting results and quality linkages.” Sadbhav, which focuses on construction projects in the road and irrigation segment, currently gets about 12% to 14% of revenue from contract mining for other Indian companies. It has now decided to tap the sector directly, given the rising demand for coal and iron ore from power and steel plants in India. We also looked at sites in Indonesia and South Africa, but based on the location and government concessions.” NIIT Technologies The Company’s poor 4QFY08 results were below estimates on account of forex losses. Company’s IT services top line grew 7% while revenues from BPO operations were down by 10% quarter on quarter. Further, EBIDTA margins remained almost flat despite rupee depreciation. The company has reiterated that it remains unaffected by US economic issues till date. It says that new order intake is higher and the India business (although lower margin ) is growing faster.

Patni Computers The company’s buyback offer at Rs 325 per share would support the price which is quoting at a huge discount to its peers in the IT sector. “At the CMP of Rs 241.2, the stock is trading at forward PE of 9.9 times for CY08E and 8.9 times for CY09E. It is, in fact, trading at a substantially higher discount of around 43% when compared to the industry average, says the report. Based on DCF valuation, the brokerage has arrived at a target price of Rs 320. According to the report, the company’s non-US revenue increased by 11.8% quarter on quarter, improving the revenue contribution to 23.4%. It has recorded modest revenue growth of 2.3% quarter on quarter at Rs 6,933.5 million, led by volume growth with marginal changes in pricing.

Corporate Radar Rio Tinto seeks diamond mining lease in India UK-headquartered Rio Tinto said on 23 June it has submitted mining lease applications for its Bunder diamond project in Madhya Pradesh. The mining giant is expecting environmental approval from the Madhya Pradesh government soon for a 10-tonne-per-hour dense media separation plant, which would allow processing of bulk samples at the project site. Rio Tinto in a regulatory filing here said it expects to spend about Rs135 crore to support continued evaluation of the deposit. The company has already spent more than Rs75 crore till date on evaluating the deposit. “Diamonds are a significant part of the history of India and an important product for Rio Tinto. We have spent more than Rs100 crore ($25 million) in the last six years on diamond exploration and evaluation in India, and remain excited about the prospects for the Bunder project,” managing director of Rio Tinto in India, Nik Senapati, said. The application for mining leases is confirmation of our commitment to both mining in India and the global diamond industry,“ he said. Till date, work on the diamond project at Bunder has covered mapping, 48 drill-holes and five surface bulk samples. Drilling is continuing and further surface bulk sampling to support diamond valuation is underway. “The exploration target for diamond mineralisation at the Bunder project of 40-70 million tonnes at a grade of between 0.3 and 0.7 carats per tonne. The targeted diamond grades are at least three times greater than the grade of the Panna mine, India’s only other hard rock diamond mine,” the filing said. (Mint) Bharat Petro, Videocon eye stake in Mozambique block Bharat Petroleum Corp and Videocon Industries Ltd are close to buying a 20% stake in Mozambique’s Rovuma Offshore Area 1 block from US firm Anadarko Petroleum Corp., sources at the two Indian firms said. Indian and Chinese firms have been aggressive in recent years in bidding for global exploration and production assets, as the Asian rivals look to secure energy supplies to satisfy their fast-growing economies. Indian oil firms have been intensifying their efforts to boost oil production abroad to make up for stagnating domestic output. “We have negotiated and it is agreed now,” said an official at one of the companies. The proposed deal was confirmed by another source at the second Indian firm. Currently, Anadarko owns 56.5% of the asset, while Canada’s Artumas Group Inc has 8.5%, Japan’s Mitsui & Co Ltd 20% and Empresa Nacional de Hidrocarbonetos de Mozambique 15%. A spokesman for Videocon declined to comment, while a spokesman for BPCL could not comment immediately. “The acquisition will help the two firms in the long run and strengthen their oil and gas portfolio. This will help them in securing supplies,” said Rohit Nagraj, a senior research analyst at Angel Broking in Mumbai. State-run BPCL, India’s second-biggest refiner, said earlier this month it would spend up to $200 million in the current financial year to March, targeting small stakes in overseas oil and gas assets. Videocon, a diversified group whose businesses range from power to home appliances, and Bharat Petro Resources Ltd, the exploration unit of BPCL, are equal partners in a consortium that will buy the holding in the offshore exploration block. Last year, the two firms together bought EnCana Corp.’s stakes in 10 Brazilian deepwater offshore exploration blocks in four concessions. They are also partners in a block in a joint development area between East Timor and Australia, and a separate asset in Oman. BPCL has stakes in 24 oil and gas blocks in India and abroad. (Mint)

Oil shock may hit cargo-shipping industry: experts A steep hike in global oil prices may take a toll on the shipping industry of the country, experts feel. “In the past, whenever the oil prices have hiked such rapidly, inevitably the shipping industry suffered. If world trade suffers, the depression sets in affecting the shipping industry,” former Secretary, Ministry of Shipping, M P Pinto told PTI. The world has seen such a phenomenon on two occasions—first, during the oil shock of 1973 and second in 1979 when trade went through crisis—he added. A container is off-loaded from a ship docked at Jawaharlal Nehru Port , Navi Mumbai. Globally, the cargo shipping industry has a fleet size of 55,000 and employs 1.2 million people on-board. Globally, the cargo shipping industry has a fleet size of 55,000 and employs around 1.2 million people on-board. Pinto said the industry might be able to bear the current shock as the situation is fine across the world. “When world trade shrinks, we suffer, but currently Asian countries are doing better. There is momentum in world trade,” he said. The former Secretary said if recession sets in, it will be difficult for ship-owners, as the order-books of most shipyards are full till 2012. The cargo shipping industry stakeholders and experts, who have converged in Goa to participate in the Indian Maritime Labour Convention (2006) conference and fifth regional seafarers welfare meeting, said the industry is at its prime. “Very few vessels have been scrapped. World trade is booming and the industry currently needs more numbers of officers and seafarers, “ Dani Appave, senior maritime specialist from International Labour Organisation (ILO), commented.“However, the situation may change in a few years’ time,” he feared. The International Labour Organisation (ILO) during its 2006 Geneva conference has adopted a new chapter for maritime sector that will provide a comprehensive labour charter for seafarers. Appave said only three nations have currently ratified the convention—Bahamas, Martial Islands and Liberia. The three contribute 20% of the world’s shipping cargo trade. The convention will come in force after 30 ILO member-states ratify it with a total of at least 33% of world’s gross tonnage, he added. The ILO has initiated the programme to enact legislation so that the convention is adopted giving security to the seafarers. “One way is to sensitize stakeholders. There could be issues with ship-owners but ultimately you need to amend the act,” Pinto said. Indian shipping is governed by the Merchant Shipping Act, 1958, which has been amended several times. “The convention needs to be ratified and embedded in the current law,” he said. Indian shipping industry is the seventeenth largest in the world which handles 9.12 million gross registered tonnage (GRT). (Mint)

RCom, MTN may clinch deal in 1st week of July Anil Ambani-led Reliance Communications and South Africa's MTN are likely to finalize a deal by the first week of July, with the former expected to hold about 40 per cent stake in the estimated $ 70 billion merged entity. According to sources close to the development, both companies have been engaged in exclusive talks since the last week of May. A final shape to the deal may surface at the end of the 45-day exclusivity agreement that ends on July 8. Asked about the details of the merged entity, sources said final details are still being worked out, but hinted that Anil Ambani would end up holding between 34 to 40 per cent stake in the merged entity in which Reliance Communications would become MTN's subsidiary. MTN is also understood to have taken a legal opinion on the issue raised by elder Ambani sibling Mukesh, who had claimed right of first refusal in case Reliance Communications sells majority stake in favour of MTN. The respective teams from MTN and Reliance Communications have travelled to India and South Africa for carrying out due diligence of the companies, sources said, adding that the negotiations so far have been progressing well. Earlier in a letter to MTN, RIL had warned that it would take legal recourse and claim damages if MTN became party to violation of the right of first refusal. (BS) St Gobain to invest Rs 1000 cr in new plant India's largest float glass producer Saint-Gobain Glass India today announced plans to set up a new world-class glass making complex in Bhiwadi in Rajasthan with an investment of Rs 1000 crore and capacity to produce 300,000 tonnes annually. The new plant is expected to be commissioned in the first quarter of 2010. Announcing the company's plans in Chennai today, R Santhanam, managing director of St Gobain Glass India said that the move to build the second plant in Rajasthan was driven by proximity to customers, raw material and intention to shave off 15 per cent of the cost that is accounted by logistics. "Glass is a very logistics intensive business. We are building our new plant outside Tamil Nadu to save this cost by being closer to the customers. This however does not mean that the Chennai facility will not be expanded in the future." The new plant is part of the company's plans to become a Rs 5000 crore business by 2013, when the Bhiwadi plant will reach the level of full capacity utilization. The company in 2007 had achieved a topline of Rs 1943 crore. With the new plant in place, the total capacity of the company will reach 750,000 tonnes. The Chennai facility has six units -- two float glass lines, one each of mirrors, automotive, laminated and coating lines. Phase one of this plant saw an investment of Rs 500 crore and another Rs 1000 crore was added in the second phase of expansion, taking the company total investment in India to Rs 1500 crore. The funding pattern for the new facility in Rajasthan has not been decided yet. "We have the options of borrowing locally or in Europe," said Anand Y Mahajan, General Delegate, South Asia for Campaign de Saint-Gobain. The maiden venture of St Gobain in India was funded by equity and the second and third phases by a mix of debt and equity, said company executives. Santhanam said that glass consumption in India is set to rise significantly in India. From a per capita consumption of 0.41kg in 1999, it is set to rise to 1.05 kg by 2009. "Glass being a completely recyclable the trend of sustainability and green movement is also become a key driver for this industry," said. Upcoming solar photovoltaic plants in the country could also be a major consumer of glass in the future, he added. St Gobain Glass India is part of French group St Gobain which as last recorded turnover of Euro 43.4 billion and an operating profit of Euro 4.1 billion. (BS)

Tech Mahindra bags Telecom New Zealand deal Mumbai-based IT solutions and services provider to the telecom industry Tech Mahindra, bagged the Next Generation Telecom (NGT) retail transformation program for Telecom New Zealand. The deal is in the range of $20 million to $30 million (around Rs 85 - 128 crore). As a part of the deal Tech Mahindra will take responsibility for program management and end to end systems integration on the NGT program. The NGT program is expected to run for a number of years, with customers starting to see new products and services within two years. C P Gurnani President, International Operations, Tech Mahindra, said, "Telecom New Zealand has a clear objective to transform its businesses and push itself to the forefront of the global telecommunications industry. The retail transformation of Telecom is an essential part of that, and we are excited to be partners in this major program of work." Paul Reynolds, CEO, Telecom New Zealand said, "This deal is a significant step forward in the transformation of Telecom. We are delighted to have secured the services of Tech Mahindra, a global leader in business transformation who is renowned throughout the communications industry." (BS) ONGC to exit Kakinada refinery, GMR to take over Infrastructure Company GMR will replace Oil and Natural Gas Corporation (ONGC), the country's largest oil and gas producer, in the proposed Rs 31,000 crore refinery and petrochemical plant at Kakinada in Andhra Pradesh, after the oil company found the project to be non-profitable venture. ONGC had also asked the Andhra Pradesh government for tax incentives of Rs 16,000 crore over eight years to make the project viable. The state government, however, declined. ONGC, which signed an agreement with the Andhra Pradesh government in September 2006 to set up the refinery, says that the project would have been a non-profitable one. "It is a non-profitable business and that is why we have kept out of it," said a top ONGC official who did not want to be named. A GMR spokesperson in Bangalore said the company had not yet received any official communication from ONGC. Neither he, nor ONGC, disclosed how much GMR would pay to ONGC. The originally planned 7.5 million tonne per annum (mtpa) refinery was re-planned with a capacity of 15 mtpa after the smaller refinery was found to be financially unviable. "Even the larger refinery was unviable. Refineries are not our business. We will continue to concentrate on exploration and production," said the ONGC official. ONGC, which had 46 per cent stake present in the refinery and petrochemical project through its subsidiary Mangalore Refinery and Petrochemicals (MRPL), had asked the Andhra Pradesh state government for fiscal benefits worth Rs 16,000 crore over eight years. "The state government was not willing to give us that incentive, and we were not willing to go ahead without the incentive. So they wanted us out and we obliged," the ONGC official said. The Andhra Pradesh government was keen that the refinery be set up. Chief Minister YS Rajasekhar Reddy had urged Prime Minister Manmohan Singh and Petroleum Minister Murli Deora to convince ONGC to execute the project after ONGC found the refinery unviable after many studies were conducted.

The refinery and petrochemical is being implemented by Kakinada Refinery and Petrochemicals (KRPL), in which MRPL had 46 per cent stake, IL&FS 51 per cent stake and the Andhra Pradesh government 3 per cent stake through Kakinada Seaports. KRPL's shareholding will now be restructured with GMR controlling 51 per cent stake, IL&FS and the Kainada Seaports holding 46 per cent and the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) the remaining 3 per cent stake. Even though ONGC had found the refinery unviable, various companies such as the Hinduja group, Reliance Industries and Essar Oil had shown interest in the refinery and petrochemical project. The project was initially conceptualised by then ONGC chairman and managing director Subir Raha, who is currently employed by the Hindujas. "The refinery is very feasible as its products can be exported to the East Asian countries. Kakinada also has a port which will facilitate import of crude oil and export of petroleum products," said a Delhi-based analyst who advises oil companies. The refinery is being planned in a special economic zone land for which has already been acquired. The refinery will also be part of a Petroleum, Chemical and Petrochemical Investment Region (PCPIR) which runs from Vishakapatnam to Kakinada, a distance of around over 150 kms. (BS) Gammon begins work at Mumbai Port The Gammon-Dragados consortium, which is developing the offshore container terminal of Mumbai Port Trust, today began operations at the terminal inside the port. The Mumbai Port Trust was running the container terminal till now. As part of an agreement to build the offshore container terminal, MPT has transferred control of the container terminal to Gammon-Dragados. Both the companies have floated a special purpose vehicle called Indira Container Terminal in which both have 50 per cent share each. The container terminal currently handles about 1 lark TEUs per annum and it is expected to go up to 1.5 lakh TEUs by the end of two years. Simultaneously, the consortium would also begin work on the offshore container terminal at a cost of Rs 1,228 crore and would take three years to complete. "Mumbai Port started handling containers way back in 1968. The plan for a new container terminal was conceived in 1990s and now it has finally taken off. We are in the right place at the right time," MPT Chairman Rani Jadhav said at a function here. While the consortium would build the terminal, the port would provide supporting infrastructure such as dredging and navigational aids, filling up of two docks and laying of tracks for rail container depot, she said. "The Mumbai region, which includes Mumbai Port Trust and JNPT, handles 60 per cent of the country's container traffic," she said, adding once the offshore terminal comes in place, it would handle 1.5 million TEUs. (BS) Powergrid to get $600 mn loan from World Bank, ADB Powergrid Corporation of India (PGCIL), the country's largest electricity transmission utility is seeking another $600 million (Rs 2,400 crore) loan from the World Bank and the Asian Development Bank (ADB) by the end of the current financial year (2008-2009) to part fund its numerous transmission projects across the country and thus increase its transmission capacity from 67,000 circuit kilometres at present to above 72,500 circuit

kilometres. "From the total $600 million, $400 million will be received from the world bank and the balance $200 million from the ADB," said a senior official of the Navratna PSU. The government of India guaranteed loan agreement is a part of the World Bank's long term partnership formed in 1989 with the company. Of the total power generated in the country, about 45 per cent is transmitted through Powergrid's transmission network and in a bid to further enhance its transmission capacity; the company is planning to add an additional 5,500 circuit kilometres of transmission lines along with 6,285 mega volt amperes (MVA) of transformation capacity in its network in the current financial year. The company is hoping to achieve a total turnover of about Rs 5,400 crore compared to Rs 5,081 crore posted in 2007-2008. The ambitious plan however, is expected to require massive investments. "We are planning to invest around Rs 8,000 crore in our transmission projects by the end of the current year, 70 per cent of which - Rs 5,600 crore - will be met through loans" the official said. The company had signed loan agreements with the two multilateral agencies this year for receiving $ 1,000 million (Rs 4,000 crore) loans - $600 million from the World Bank and $400 million from the ADB - to meet its funding requirements for various transmission projects which include providing transmission facilities for ultra mega power projects too. The transmission giant had invested about Rs 6,000 crore last year (2007-2008) for increasing its asset base to a total of Rs 35,000 crore as compared to Rs 29,000 crore in 2006-2007. The company's long term plan outlay however includes investing about Rs 55,000 crore by the end of the current plan period (2007-2012), out of which 30 per cent will be generated through the company's internal resources and the balance 70 per cent will be received through debt. This investment plan includes ramping up the inter-regional power transfer capacity of the national grid from 17,000 mw at present to above 37,000 mw by the end of the year 2012. For the financial year ended March 2008, the transmission giant recorded a 17.8 per cent increase in net profit at Rs 1448.47 crore on the back of greater asset commissioning and more revenues from its telecom and consultancy businesses. From its telecom business, Powergrid received revenues of Rs 124 crore during 2007-08, up from Rs 77 crore in previous year. The company also recorded revenues of Rs 250 crore as consultancy fee during the year, compared to Rs 226 crore in 2006-2007. (BS) Sanwaria Agro Oils plans Rs 110 cr expansion Itarsi-based Sanwaria Agro Oils, a Rs 950 crore firm, has earmarked a sum of Rs 110 crore for adding 1,500 tonne per day (TPD) soybean crushing capacity in the current financial year. The company, which currently, has a crushing capacity of 2,150 tpd, will opt for organic as well as inorganic routes to increase its capacity. "We will increase our capacity by 1,000 tpd via Greenfield expansion and the rest by acquiring a plant in Madhya Pradesh," said Anil Agrawal, director, Sanwaria Agro Oils. The Greenfield mode will require Rs 100 crore, which will be funded through debts as well as equity and the acquisition, will cost us Rs 10 crore which will be managed by our internal accruals, he added. Both the expansion plans will be commissioned by the last quarter of FY09. At present, the company has its own units in Mandideep and Itarsi in Madhya Pradesh with a total capacity of 1,500 tpd. It also has a leased unit of 650 tpd at Vidisha in the state.

The company processed 300,000 tonne of soybean in the previous financial year and hopes to crush over 400,000 tonnes in the current financial year. Out of the total revenue of Rs 950 crore 20 per cent came from edible oil, 60 per cent from de-oiled cakes and rest from trading activities. The company expects its revenue to rise 50-60 per cent in FY09, driven by the increase in its crushing capacity. The company also hopes to improve operating margins by focusing on value-added products. The company also plans to increase it distribution network from the existing six states to ten states by the end of the year. (BS) Pyramid to consolidate stake through open offer On the back of recent slump on the stock markets, media and entertainment house Pyramid Saimira Chairman and Managing Director P S Saminathan is mulling over to make an open offer to consolidate his stake in the company. Last week, Saminathan had already acquired 4.85 per cent stake from Nirmal Kotecha, an independent Director in the promoter's group increasing his stake to 22 per cent in the company out of a total of 54.19 per cent stake of the promoters. "... I am evaluating the option of acquiring more and if it happens, then it will be through an open offer," Saminathan told PTI. He, however, said plans to consolidate a further 20 per cent stake in the company would completely depend on the market conditions and on what rate the open offer would be. On his recent acquisition of 4.85 per cent stake from one of the promoters, Saminathan said: "It was a real opportunity for such a consolidation as the market was very down. I acquired 13.7 lakh shares for Rs 250 per share, that is at a total investment of Rs 34.25 crore." The company is also planning to come out with an initial public offer to raise up to Rs 225 crore from the capital market for its film production arm, Pyramid Saimira Production International, by the end of next month. "The prospectus is ready and we will file it with the Sebi by the end of July. We are just waiting for the market to recover," the Saminathan said. The company plans to dilute 12-15 per cent of promoters holding through the IPO, he added. (BS) JK Tyre acquires 100% stake in Mexican co JK Tyre and Industries has acquired 100 per cent shares of Tornel, the Mexican Tyre company, along with its subsidiaries, for Rs 270 crore. Strategic location of Mexico offers Tornel free access to the NAFTA trade block and emerging economies of central and southern America. Post-acquisition, collective capacity of JK Tyre has risen to 940 tonne per day from 650 tonne earlier. This makes JK Tyre, India's largest four wheeler tyre company. The takeover of Tornel will enable JK Tyre to optimize on cost, products and manufacturing facilities. (ET) TATA Steel plans to feed SEA rebar mills hit by export tax Due to Indian government's recent decision to retain export duty on semi finished products while exempting flat products, TATA Steel will lose its synergies with its South East Asian subsidiaries like NatSteel and Millennium. The Jamshedpur plant of TATA Steel has recently started rolling out 2 million tonnes additional billets to be sent to its subsidiaries in Singapore and Thailand. This will be value added and sold in the emerging markets but with 15% export duty it will add costs for TATA Steel to the tune of USD 345 million per annum.

Export tax to hit slab supply to JSW US plate mill Indian government's recent decision to retain export duty on slabs and other semi finished products while exempting flat products would hit JSW steel very hard. Slabs made at JSW Steel's Vijaynagar plant are sent to its newly acquired steel mill in the US to be rolled into plates for feeding pipe mills. As per report, JSW Steel sends 40,000 tonnes of slab every month to the US and with the export duty of 15% on current slab price of USD 1000 per tonne the implication runs to USD 6 million per month. Mr Sheshagiri Rao director finance at JSW Steel said that "We will talk to the government in this matter because due to this we may lose a huge sum of money." Corus Strip to hike UK flat products by GBP 150 per tonne Corus Strip Products announced that it will increase the basis prices of its flat rolled products in the UK by at least GBP 150 per tone. The release said that “Corus Strip Products will increase the basis prices of its flat rolled products in the UK by at least GBP 150 per tonne for Hot Rolled, at least GBP 175 per tonne for Cold Reduced and at least GBP 200 per tonne for Hot Dipped Galvanized and Aluminized, for all orders acknowledged for delivery from 30th June. The increases follow on from Corus Strip Products prices announcements for mainland Europe in May.” A new price extras list is effective from the same date. It added that “Recognizing the significant increase in fuel costs, distribution prices will increase by 6%. At the same time, as the direct consequence of a series of unprecedented increases in raw material costs, Corus Strip Products is discussing with its customers the consequences of the extreme cost increases in relation to current annual contracts.” ArcelorMittal sees 153 million steel shipments in 2012 Reuters reported that Arcelor Mittal expects its steel shipments to total 153 million tonnes in 2012 versus 116 million in 2007. ArcelorMittal in a slides presentation to investors outlined that it expects that its iron ore production to reach 110 million tonnes by 2012 and approximately USD 500 million related to full benefit from merger synergies to impact 2008. ArcelorMittal reached at the end of the first quarter of 2008 its target of delivering more than USD 1.6 billion of synergies from the merger of former rivals Arcelor and Mittal Steel. Iron ore price negotiations - Indian export tax to support freight premium It is reported that Indian government’s move of imposing 15% ad valorem export tax on all grades of iron ore from last weekend, is likely to support the quest of freight premium by Rio Tinto and BHP Billiton. The increased tax scheme would total USD 21 per tonne on current FOB price of USD 140 per tonne. Market insiders predict that the Indian ore export duty would not impact on spot ore imports market in short term and the policy would be felt 6 months or 1 year later. But the fact is that the actual effect on Indian iron ore miners would to a small extant only as 62% plus grade iron ore was already attracting INR 300 per tonne (USD 7) and the Rupee appreciation by about 7% would nullify it further by USD 10. Iron ore oversupplied in China - CISA According to Mr Luo Binsheng vice chairman of China Iron & Steel Association, Iron ore is oversupplied in China's market by 23.45 million tonnes in the first four months while on the global stage demand and supply is generally balanced or a little toward oversupply. Calculations based on the steel output show that iron ore consumption went up by 27.11 million tonnes in the world in the first four months with 19.2 million tonnes absorbed by China 70.82% of the additions. He said that "We can conclude from the data that the global

supply and demand market for iron ore appears in basic balance in January to April and also signs of slight oversupply, which will remain and develop in the future months." Over 70% of world iron ore trade controlled by the top three ore miners, Vale, BHP Billiton and Rio Tinto. Chinese steel mills should pay high attention to the global supply and demand changes, be alert to avoid the adverse effects raised by speculation and energetically uphold the normal order of the international iron ore trading market. Indian iron ore spot prices remain firm last week The China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters has released the average reference prices for import transactions of Fe 63.5% Indian iron ore concluded last week on June 12th 2008. Delivery Price Change Delivery FOB Indian port CIF Chinese port

Price USD 135-USD 140 USD 180-USD 185

Change None None

The CCCMC reference prices are average prices for import transactions of Fe 63.5% Indian iron ore concluded the week prior to issuance date of such reference prices. The reference price practice is intended to regulate the domestic trading of Indian iron ore and avoid speculation on the raw material for China's booming Orissa Mining Corp tendering iron ore fines & lumps Bloomberg reported that Orissa Mining Corporation is seeking buyers for iron ore lumps and fines. According to a tender document, bidders have until June 24th 2008 to submit offers for the purchase of 114,500 tonnes of iron ore lumps and until June 25th 2008 for 90,000 tonnes of iron ore fines. Orissa Mining Corporation said that its fines have iron ore grades ranging between 60% and 64% and its lump grades are between 62% and 66.5%. Costs offsetting tremendous growth in mining revenues - PwC According to PricewaterhouseCoopers, despite the 32% growth in revenues for the world's 40 largest miners last year, their average 38% rise in costs is cutting into margins and in some cases preventing majors from continuing to fund projects only through cash flow. Mr Colin Becker PricewaterhouseCoopers Santiago based partner at a press conference in Chilean capital Santiago said that "The costs of expansion projects have risen greatly and forced these companies for the first time in many years to seek outside financing.” Mr Becker also highlighted that in 2007 the combined market cap of the 40 top miners grew 54%, compared to a 22% growth rate in 2006 and 72% in 2005. He said that "We are talking about constant and extremely significant growth rates adding that last year the mining industry rivaled other sectors that previously had much greater market capitalizations and growth rates.”However, Mr Becker specified that the immense expansion of mining in 2007 was heavily concentrated among diversified companies and iron ore producers. As for the geographical distribution of the top 40 miners, last year companies from the BRIC countries (Brazil, Russia, India and China) were relatively more significant. According to PwC, last year's mammoth growth has prompted the CEOs of the world's top miners to agree that analysts continue to undervalue mining companies and the potential of commodities prices.