Transportation | Green World Investor

India Engineering Conglomerates GMR and L&T Raise their Solar Ambitions

14 Jan, 2012

The Indian Solar Power has been one bright spot in the gloomy infrastructure and engineering sectors in 2011. With share prices crashing with growing corruption, land acquisition and financing problems, Solar Energy has surged in India thanks to government support and subsidies . While a number of Green Technology companies have started up to capitalize on the growing renewable energy trend, the established construction companies in India have not been far behind . While utilities like Tata Power, Adani, Reliance Power, NTPC have already built or are setting up power plants based on solar panels , L&T has become a major solar EPC players . L&T is now raising debt with a $100 million issue to fund its solar expansion plans .

The travails of Indian Infrastructure Stocks

India’s Infrastructure Sector which was considered the ideal play on India’s fast growing GDP and its huge infrastructure requirements long commanded nosebleed valuations.While realty stocks which are closely related to the infra ones had long collapsed after the GFC in 2008 ,the infrastructure stocks had retained their preeminence in the stock market rally.However end 2010 and 2011 has seen a vicious change in their fortunes.Stocks like IVRCL,IRB,Punj Lloyd,L&T,Gammon etc have seen their stock prices nosedive.The stocks have corrected far more than the broader market which has itself fallen more than 15% in 2011. The problems related to the infrastructure stocks are varied and they have converged for investors to totally lose confidence in this sector something akin to the realty sector

The GMR Group which has its fingers in a number of sectors has also managed to complete a 25 MW solar pv plant and is looking to set up more . Note other industrial groups particular Mahindra Solar One has also become very aggressive in the solar energy area. With multiple entries into the Indian solar industry, one can only hope that overcompetition does not make solar energy another instanace of the larger electricity industry which is going through a sever downturn.

It plans to grow the installed capacity to 100 mw from 25 now, said the company.GMR has also commissioned its first 25 Mw solar power project Gujarat with a total investment of Rs 360 crore.The project was awarded in October 2010 under the Gujarat SolarPolicy. Power from this plant will be supplied to Gujarat Urja Vikas Nigam Ltd on a 25 year Power Purchase Agreement under the Gujarat State Solar Policy.

GMR Energy is currently operating 808 MW of power projects and is in the process of executing another 7500 mw. “Out of this, 2500 MW capacity will become operational in 2012 through commissioning of Projects at Vemagiri in AP, Kamalanga in Orissa and Warora in Maharashtra,” the company said.

L&T Infra Raising $100 million in External Commercial Borrowings

L&T Infra Finance, a subsidiary of L&T Finance Holdings on Thursday said it has raised close to $ 100 million through the External Commercial Borrowing (ECB) route this fiscal, largely to fund solar power projects.“We have raised $ 100 million through ECB route so far this fiscal, mostly to fund solar power projects,” L&T Head Financial Services, Mr Shiva Rajaraman, told PTI.

List of Top Car Companies and state of Auto Industry in India – Facing Fuel Price,Interest Rate Hurdles –

6 Jul, 2011

Indian Markets

AUTO INDUSTRY IN INDIA

Auto Industry in India is facing the twin problems of Fuel Price Hikes and High Interest Rates which have sharply reduced the growth of the industry.The Indian car companies were riding high in 2010 as the economy grew and many people in India graduated to the middle class.Some companies were showing triple digit growth rate as India become the hottest market in the world.All global car companies were in a rush to expand their India sales and distribution network at any cost.However 2011 has brought them down to earth with almost 50% increase in petrol prices keeping buyers away.On top of that car financing companies have also increased their interest rates for auto loans by around 2-3% which makes the servicing of the EMIs of car loan very difficult.This has made most buyers sit tight and wait for a better environment.The car companies which hiked price to pass on the increasing costs of steel and other commodities are in a pickle.They are being forced to sit on high inventories and can’t afford to give big discounts as well.

The sautomobile industry in India happens to be the ninth largest in the world. It is the fourth largest exporter of automobiles following Japan, South Korea and Thailand. It is the world’s second largest manufacturer of motorcycles, with annual sales exceeding 8.5 million in 2009. Several Indian automobile manufacturers have spread their operations globally. India manufactures over 17.5 million vehicles (including 2 wheeler and 4 wheeler) and exports about 2.33 million every year. India’s passenger car and commercial vehicle manufacturing industry is the seventh largest in the world, with an annual production of more than 3.7 million units in 2010. In the commercial vehicle segment, Tata Motors is leader with a market share of about 64%, whereas Maruti Suzuki is leads the passenger vehicle segment with a market share of 46%. Hyundai Motor India and Mahindra and Mahindra are more interested in expanding their hold in the overseas market. (Source – Wikipedia).

Read my Experience in Buying Cheap Car Insurance in India and Electric Car Companies – 4 Weddings and a Divorce

LIST OF CAR COMPANIES IN INDIA –

MARUTI SUZUKI INDIA LTD. – is a subsidiary of Suzuki Motor Corporation, Japan. It was formerly known as Maruti Udyog Limited. It has been the leader of the Indian car market for more than two decades. It has a production capacity of over a 1.2 million vehicles annually at its manufacturing units in Gurgaon & Manesar, New Delhi.The company has plans to expand its manufacturing capacity to 1.75 million by 2013. The recorded a sales of 36,128 crores in 2010-11 & a net profit margin of 6.06% in 2011.
The company offers a wide range of cars across different segments – Maruti 800, Omni and Eeco, international brands Alto, Alto-K10, A-star, WagonR, Swift, Ritz and Estilo, Gypsy, SUV Grand Vitara, sedans SX4, Swift DZire and Kizashi. As a step forward to the environment friendly initiative, Maruti Suzuki introduced factory fitted CNG option on 5 models – Alto, Estilo, Wagon R and Sx4, in August 2010.
In 2010-11, the company sold over 1.27 million vehicles including approximately 1,38,200 units of exports. With this, at the end of March 2011, Maruti Suzuki had a market share of 44.9% of the Indian passenger car market.
HONDA SIEL CARS INDIA LTD. – was incorporated in December 1995 as a joint venture between Honda Motor Co. Ltd., Japan and Siel Limited. The company has an annual capacity of producing 1,60,000 units at its manufacturing units in Greater Noida, UP & Tapukara, Rajasthan.
The company’s product range includes Honda Brio, Honda Jazz, Honda City, Honda Civic and Honda Accord.
MAHINDRA- The company has a growing presence in the automotive industry, aerospace, aftermarket, components, consulting services, defense, energy, financial services, logistics, real estate, retail, and two wheelers. A US $12.5 billion multinational group based in Mumbai, India, with more than 137,000 people in over 100 countries. It has a net profit margin of 8.64% in 2011. The much anticipated Mahindra XUV500 makes its global debut in Pune, India starting at an unbeatable price of Rs. 10.80Lacs replete with cheetah-inspired styling, refinement like never before and enhanced technology and safety features along with luxurious interiors, making the XUV500 an apt choice for sedan and SUV buyers.
Its flagship company Mahindra & Mahindra Limited is the only Indian automobile manufacturer to feature in the top 10 list of the Carbon Disclosure Leadership Index in India – 2010, created by the Carbon Disclosure (CDP). In 2011, Mahindra acquired a majority stake in Korea’s SsangYong Motor Company.
TATA MOTORS – TATA group is a multinational company with different business segments like communications and information technology, automobiles, engineering, materials, services, energy, consumer products and chemicals. 65.8% of the ownership of Tata Group is held in charitable trusts. Tata Motors is India’s largest automobile company, with consolidated net profit of Rs.9,274 crore in 2010–11. It is the leader in commercial vehicles. The company should be given credit of fulfilling a common man’s dream to drive his own car, with the launch of NANO in India. Some of the other passenger vehicles in India are Vista, Indica, Indigo, Aria, Manza, Safari, Sumo, Winger. Ford sold Jaguar & Land Rover in 2008 to TATA Motors. Tata Motors has auto manufacturing and assembly plants in Jamshedpur, Pantnagar, Lucknow, Sanand, Dharwad and Pune in India.
TOYOTA- Toyota is one of the biggest vehicle manufacturers, and one of the most widely known companies, in the world today. As of the end of March 2011, Toyota has 50 overseas manufacturing companies in 26 countries and regions. Toyota’s vehicles are sold in more than 170 countries and regions. Toyota has its presence in India through its manufacturing companies -Toyota Kirloskar Motor Pvt Ltd. manufacturing Corolla, Innova, Fortuner, Etios &
Toyota Kirloskar Auto Parts Pvt Ltd. Manufacturing spare parts in southern India. The other car models manufactured by the company are Ca,ry, Prius, Land Cruiser Prado.
GENERAL MOTORS- It is a company of diverse brands, selling over 7.5 million vehicles in over 120 countries worldwide. General Motors India Private Limited is a partnership between General Motors(50%) and SAIC(50%). In 1994 GMIPL was formed as a joint venture, owned 50 percent by Hindustan Motors and 50 percent by General Motors, to produce and sell Opel branded vehicles. GM bought out the Hindustan Motors interest in 1999. It is the 5th largest automobile manufacturing company in India after Maruti Suzuki, Hyundai, Tata Motors and Mahindra. Chevrolet, Spark, Beat, Aveo, Tavera, Cruz are some of the well known brands from this company. It operates vehicle manufacturing plants in Halol, Gujarat and Talegaon Dabhade, Maharastra and a large technical center in Bangalore. The annual production capacity of its Halol and Talegaon Dabhade Manufacturing Plants is around 385,000 vehicles.
FORD – Ford Motor Company is the world’s second largest automaker with approximately 350,000 employees, and operating in more than 200 markets on six continents.Ford India Private Limited is a wholly owned subsidiary of the Ford Motor Company in India. it operates in India through Ford India Pvt. Ltd. head quartered in Chengalpattu, Tamil Nadu. It is the sixth largest car manufacturer in India after Maruti Suzuki, Hyundai, Tata, Mahindra and Chevrolet. The company is committed towards total customer satisfaction & pollution control. The company manufactures cars – Fiesta & Figo (hatchback) & SUVs -Endeavour. In the year 2010, FIPL recorded sales of 83,887 vehicles and registered a sales growth of 172%.
MERCEDES-BENZ – Mercedes-Benz has been associated with India for more than 50 years. The business in India covers local production of Mercedes-Benz cars, making available imported Mercedes-Benz cars, Commercial Vehicle operations, Global sourcing of auto components & research and development. The various series of Mercedes cars are C,CL,CLS,E,GL,M,SL & SLK Class. The Mercedes-Benz brand is known for its fascinating details, innovative power and unmatchable design. It has a variety to offer ranging from cars of automotive history design or sporty or multimedia entertprovides options. Mercedes provides a comprehensive brand experience.
VOLKSWAGEN – With its headquarters in Pune, Maharashtra (India), the Volkswagen Group is represented by three brands in India: Volkswagen, Audi and Skoda. Its headquarters is in Pune, Maharashtra & it has completed 10 years of its Indian journey. It began its Indian journey with the Skoda brand in 2001 & expanded its business line with Audi and Volkswagen brand in 2007. Each brand has its own character and operates as an independent entity in the market.
Volkswagen has nine brands globally – Audi, Bentley, Bugatti, Lamborghini, Scania, Seat, Skoda, Volkswagen Commercial Vehicles (Volkswagen Nutzfahrzeuge) and Volkswagen Passenger Cars. The product range extends from low-consumption small cars to luxury class vehicles and trucks. The Group operates 60 production plants around the world. In total more than 370,000 employees produce more than 26,600 vehicles or are involved in vehicle-related services each working day.
HYUNDAI – Hyundai Motor India Limited (HMIL) is the second largest car manufacturer in India. It is the fastest growing automobile manufacturer in India. It is a wholly owned subsidiary of Hyundai Motor Company (HMC), South Korea and is the largest passenger car exporter. HMIL presently markets 7 models of passenger cars- Santro, i10, i20, Accent, Verna, Sonata Transform and the SUV segment includes the Santa Fe. The other models are Elantra, Eon,Getz.
The annual production capacity is 600,000 units. Its manufacturing plant is near Chennai & the second plant came up in 2008. Its research and development facility is located in Hyderabad. It is the number one exporter of passenger car of the country & achieved the figure of 10 lakh cars export in just over a decade. HMIL currently exports cars to more than 115 countries across EU, Africa, Middle East, Latin America and Asia Pacific. In calendar year 2010, HMIL grew by 7.8% cumulatively registering total sales of 603,819 units of which domestic sales accounted for 356,717 units & Overseas sales accounted for 247,102 units.

Mandatory Ethanol Blending in India is a Dumb Idea pandering to Vested Interests (sugar industry)

1 Jun, 2011

Biofuels,Climate Change,Energy,Fossil Fuels

The Government on India is proposing to introduce mandatory blending of ethanol in transport fuels to the extend of 5%.This means that the major transport fuel providers like IOC,BPCL and other will have to ensure that 5% of the petrol they sell will be mixed with 5% ethanol.The US is the biggest user of mandatory blending which has recently come under harsh criticism.The reasons given for supporting blending is that it reduces the requirements of fossil fuels which leads to lower carbon emissions,improves energy security and reduces pollution.However none of these advantages are seen in real life.In fact it has the massively negative consequence of increasing food prices which leads to the starvation of the poor globally.The Corn Industry in the USA has become a major lobbying force which makes the US government persist with the policy resulting in sharp increase in corn prices to the detriment of consumers.

India’s Economic Advisory Council too has questioned the wisdom of ethanol blending saying the proposal would work only if there was adequate supply of ethanol.The sugar industry says there is enough ethanol while the advisory council says its not.The facts seem to suggest that the shortfall will be around 40-50% leading to huge windfall gains for the Sugar Industry.My view is that the government should wait for advancements in third generation biofuels before subsidizing and supporting blending of ethanol in transport fuels.Already algae based biofuel startups like Solazyme are making good progress in commercializing fuels from materials which do not endanger global food security.

Biofuels from Crops – Bad Solution to Climate Change

Biofuels from Crops can never be a meaningful answer to the problems of Climate Change and Global Warming due to the fact that

A large part of the world’s 6 billion population lives in hunger
Water and Land needed for Crops are becoming a Scarce Resource as per capita consumption and population both rise
Inevitable Increase in Crop Prices increases the Raw Material prices
Growing Demand for Biofuels lead to deforestation perversely contributing to Global Warming

USA Renewable Fuels Standards (RFS)

The Energy Policy Act of 2005 (EPAct 2005, P.L. 110-58), established the first-ever Renewable Fuels Standard (RFS) in federal law, requiring increasing volumes of ethanol and biodiesel to be blended with the U.S. fuel supply between 2006 and 2012.The Energy Independence and Security Act of 2007 (P.L. 110-140, H.R. 6) amended and increased the RFS, requiring 9 billion gallons of renewable fuel use in 2008, stepping up to 36 billion gallons by 2022.The US (EPA) has approved the sale of 15% ethanol fuel blends (E-15), an action that US energy officials immediately criticized as a bad policy meant to curry favour with voters.

Note USA is a huge food surplus country with massive quantities of corn being produced every year which makes it feasible for it to implement a dumb policy,however India does not possess such agricultural riches to implement mandatory blending of biofuels.

C Rangarajan questions the rationale behind Ethanol Blending Plan

The Prime Minister’s Economic Advisory Council has questioned the rationale behind mandatory doping of 5% ethanol in petrol, saying there is “a mismatch” between the objectives cited for pushing the programme and the empirical evidence supporting them. The council, headed by former Reserve Bank of India governor C Rangarajan , has asked the government to reconsider the programme or at least not make it binding for now.

The ministry had argued that mixing of ethanol in petrol was an environment-friendly initiative, which would save the country foreign exchange, provide energy security and benefit the sugar industry. Experts, however, said the proposal would work only if there was adequate supply of ethanol, opinion on which is divided. The chemicals and alcohol industry says there is not enough ethanol for everyone and it would be forced to import if ethanol was diverted for blending. Tamil Nadu has already banned supply to the ethanol blending programme and Bihar is understood to have “unofficially” discouraged it.

A government constituted panel, headed by Planning Commission member Saumitra Chaudhuri, has also questioned ethanol availability. Chaudhuri is also a member of the Economic Advisory Council. However, five of the eight members of the Chaudhuri panel had opposed sectoral allocation of ethanol, including to the ethanol blending programme. The council has also opposed direct ethanol manufacture from sugarcane on account of food security concerns. Ethanol is currently produced as a byproduct of sugar manufacturing.

Shipping Companies in India – Rough Weather for India’s underperforming Ship Industry

7 May, 2011

Uncategorized

The shipping industry is fundamental to international trade, being the only practicable and cost effective way means of transporting large volumes of many essential commodities and finished goods. Although maritime transport has generally been associated with the carriage of high-volume, low-value goods such as iron ore and coal, over recent years the share of low-volume, high-value goods such as manufactured goods carried by sea has been growing. This shift is a function of global and regional GDP growth and a growing dislocation between the locations of resources, manufacturing bases and key areas of consumption. . During the past three decades, the annual average growth rate of world seaborne trade is estimated to have been 3.1% per annum. There are four main segments in the shipping industry: bulk carriers, which transport such raw materials as coal and grain; tankers, which transport such cargo as crude oil, petroleum products and chemicals; container vessels, which transport freight shipped in containers; and gas tankers which transport mostly liquefied petroleum gas (or “LPG”) and LNG.(Source: UNCTAD )

India’s Shipping Industry

At the end of 1951, India had five Major Ports with a throughput of 20 million tonnes per annum. Over the next three decades, India’s throughput increased to 78 million tonnes per annum.By 2010,India had 12 Major Ports, and these ports achieved a total throughput of 561 million tonnes per annum . The traffic at Indian ports has grown at a compound annual growth rate of 7.4% during the period from 1994 to 2010.Shipping plays an important role in India’s economy. Approximately 95% of the country’s import and export merchandise trade by volume, and 70% by value, is moved by sea.During this period, the Indian merchant shipping fleet grew from 59 vessels of 192,000 GT (Gross Tonnage) in 1947 to 1007 vessels of 9.61 million GT as of June 30, 2010.

India’s Merchant Fleet transports less than 1/10th of the Sea Borne Trade

Approximately 9.5% of India’s overseas trade is carried by the Indian merchant fleet. Historically, there has been a significant gap between growth in India’s overseas trade and available tonnage in the Indian merchant fleet. As a result, the share of Indian overseas trade being shipped by the Indian merchant fleet has declined. The tanker industry is the most voluminous element of global seaborne trade.

Issues with India’s Shipping Industry

India’s Shipping Industry has constantly declined despite the Indian economy growing by almost 8-10% in the past 5 years .Indian Flag Vessel marketshare has reduced to under 10% in 2010 from 37%.It is because the Shipping Industry suffers from a lack of good companies . The largest company is the state owned SCI which has been tardy in expanding capacity to take advantage.Recently SCI has given orders to increase fleet capacity by more than 50%.Government policies have also been not too favorable despite shipping being a very strategic industry from the point of view of defense.Note in times of war the country’s merchant fleet forms one of the most important weapons in the arsenal needed for logistics and transportation of war materials and personnel.

Note Shipping is a cyclical industry and currently the industry is facing rough weather as the global shipping industry is facing a supply glut.However that’s no reason for Indian shipping industry to face a trough as its marketshare remains quite low.Unlike other sectors like autos,steel,oil and gas,the shipping industry has failed to compete and as a result has become a minnow in its own backyard.

List of the major shipping companies in India

Shipping Corporation of India Ltd SCI is India’s largest shipping line by tonnage deriving most of its revenues from oil/gas transport.SCI like other shipping companies has faced a very bad 2009 due to the sharp contraction in world trade and dropping in shipping rates.However results have started to improve with the improvement in the world economy and it is returning to its normalized sales and profits. As the country’s largest shipping line, the SCI owns and operates around one-third of the Indian tonnage, and has operating interests in practically all areas of the shipping business; servicing both national and international trades. In 2010, the Company owned 18 bulk carriers consisting of 15 Handymax and three Handysize vessels & the total quantity of crude oil transported by the Company was about 24.89 million metric tons. SCI’s owned fleet includes Bulk carriers, Crude oil tankers, Product tankers, Container vessels, Passenger-cum-Cargo vessels, Phosphoric Acid / Chemical carriers, LPG / Ammonia carriers and Offshore Supply Vessels. SCI recently came out with a FPO to increase the public shareholding.
Great Eastern Shipping Company Limited is India’s largest private sector shipping company.The company has two main business: shipping and offshore. The shipping business is involved in transportation of crude oil, petroleum products, gas and dry bulk commodities. The offshore business services to the oil companies in carrying out offshore exploration and production activities, through its wholly owned subsidiary Greatship (India) Limited.The company has been trying to list Greatship through an IPO The dry bulk fleet stood at six vessels aggregating 0.41 million deadweight tonnage, with an average age of 13.6 years as of March 2010.
Essar Shipping Ports & Logistics is an integrated logistics solution provider with investments in ports and terminals, logistics services, sea transportation and oilfield drilling services.It is a part of the Essar Group one of India’s largest business conglomerates with interests in Steel,Oil and Gas etc. It is one of India’s largest operators of ports and are building a cargo-handling capacity (dry, bulk and liquid cargo) of over 150 million tonnes. The Company, through its wholly owned subsidiary, Essar Logistics Limited (ELL) provides project cargo, transshipment, lighterage and trucking services to steel mills and oil refineries. Essar Shipping Ports & Logistics Limited, through its subsidiary, Essar Bulk Terminal Limited (EBTL), commissioned its all weather deep draft dry bulk port of 30 million tons per annum capacity in 2010. The Company operated the 46 million metric tons per annum liquid terminal on the west coast of India as on 2010. The company owns a diverse fleet of 27 vessels, and 12 new building vessels are on order at an investment of over USD 1.8 billion.
Varun Shipping Company Limited - Varun is a private sector shipping company in India with a fleet of 20 vessels, in the LPG and crude oil sectors. The Company owns/operates a fleet often liquefied petroleum gas (LPG) carriers, including eight mid-size Gas Carriers, one Large Gas Carrier and one Very Large Gas Carrier, which have been deployed on a mix of time charters and spot charters with charterers, such as Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited, Reliance Industries Limited and Pertamina. In the crude oil sector, the Company owns three double hull Aframax crude oil tankers, which are placed in the Sigma Tanker Pool, trading globally. In the offshore support services sector, the Company owns/operates a fleet of seven Anchor Handling Towing and Supply vessels, which are deployed on time charters and spot charters both in India and overseas.Varun’s freight and charter hire income for the year 2010 was Rs. 6,662 million and its net profit was Rs. 125 million. Varun has a track record of being profitable and distributing dividends uninterruptedly to its shareholders for the past 26 years.Varun is the second largest owner of tonnage in the global mid- size fully refrigerated LPG carrier fleet category and owns 12.7% of the total tonnage in that category. Globally, in the fully refrigerated LPG carriers category, Varun is also the fourth largest owner in terms of number of vessels and sixth largest in terms of cargo carrying capacity.
Mercator Lines Ltd – Mercator is India’s second largest private sector shipping company with diversified interests ranging from Shipping, Coal, Dredging and Offshore Oil and Gas services. The shipping segment includes tankers, such as very large crude carrier (VLCC), Suezmaz, Aframaxes, product tankers and chemical tankers. Its bulk carrier fleet consists of geared and gearless Panamaxes, and Kamsarmaxes and very large ore carrier (VLOC). The offshore segment includes jack-up rigs, oil and gas exploration. As on 2010, the Company owned total 11 vessels of aggregate tonnage of 1,033,708 deadweight (DWT) and three chartered-in vessels of aggregate tonnage of 260,165 DWT.

Uses of Coal – Electricity,Steel and Cement Biggest Users of Coal

9 Apr, 2011

Coal

Coal is one of the cheapest and most important sources of energy, responsible for 41% of electricity production worldwide.The Pros of Coal are most evident in Electricity Generation where it continues to grow at a sharp pace in countries like India and China. In many important countries like India,China,Germany,USA,Coal is the primary source of electricity and energy.Other smaller countries also heavily rely on coal for example Poland 94% , South Africa 92%, China for 77% and Australia for 76% of Electricity.Coal has played this a pivotal role in the development of mankind and his progress into the Industrial Age.Coal is an essential raw material and fuel for important global industries like Cement and Steel.Different qualities of Coal are used for different purposes.For example coking coal with higher carbon percentage is used in Steel Production while Thermal Coal is used in Production of Electricity.It was during the Industrial Revolution in the 18th and 19th centuries that demand for coal surged. Coal is responsible for almost a quarter of the global energy production,41% of the Electricity Production and more than 60% for Steel Making.Here is a list of the Major Uses of Coal

Electricity Production – Coal is mainly used as Fuel to generate Electricity through combustion. Approximately 6.8 Billion Tons of Coal was consumed and that is expected to keep on increasing at around 1.5-2% per year in the next 20 years.Steam coal, also known as thermal coal, is used in power stations to generate electricity.
Steel Production – Steel Industry is the second largest user of Coal after the Electricity Industry.More than 600 million tons of Coal were used to produce more than 1 Billion Tons of Steel.Coal is an essential raw material along with iron in the production of steel which is one of the useful metal products used by man today.Coking Coal is a solid carbonaceous residue derived from low-ash, low-sulfur bituminous coal.Metallurgical coke is used as a fuel to smelt Iron in the Furnace.This Cast Iron which is produced is further refined to make Steel.Around 0.63 tonnes of coke produces 1 tonne of Steel
Cement Industry - Coal is used as an energy source in the cement industry. Large amounts of energy are required to produce cement. Kilns usually burn coal in the form of powder and consume around 450g of coal for about 900g of cement produced.By-products generated from burning coal in coal-fired power plants such as fly ash, bottom ash, boiler slag and flue gas desulphurisation gypsum are also used in Concrete Production (source WCA). Fly ash can be used to replace cement in concrete
Paper Industry and Aluminum Industry – Both these industries require large amounts of Fuel and Energy.Coal being the cheapest energy resource forms an essential input to these industries.The price and availability of Coal is an important factor in the growth of these industries
Chemicals and Pharma Industry – Several chemical products can be produced from the by-products of coal. Refined coal tar is used in the manufacture of chemicals, such as creosote oil, naphthalene, phenol, and benzene.
Coal Gas and Coal Liquid as Transportation Fuel - Current Transportation Industry does not make much use of Coal as Fuel.However the increasing cost of Oil has made it economical to consider converting Coal into Gas and Liquid which can be used to power vehicles,ships etc.

Coal is also used in thousands of other applications and products like soap,fibre making,rayon,cooking fuel etc.

Summary

Coal has myriad number of uses primarily as a source of fuel and as a rich carbon source.Coal continues to be an essential enabler of the Industrial Revolution playing an important part in the lynchpin industries of Cement and Steel.It will also continue to be the largest source of electricity production till renewable energy costs become sufficiently low to compete with thermal power production.

List of India Machinery/Capital Goods/Engineering Manufacturers/Stocks – Set to Capitalize on Infra Growth

19 Mar, 2011

Areva,Energy,GE,Siemens,Suzlon

India’s Economy is being hampered in its growth trajectory by lack of infrastructure which is leading to supply side problems.India suffers woefully from a lack of roads,electricity,ports etc. and almost a trillion dollars is going to be spent in the next few years as demand outstrips supply.India’s Machinery and Capital Goods Industry is set to capitalize on this strong growth and is already seeing massive orders which are 2-3 years worth of their annual revenue.While the stock valuations of the capital goods equipment manufacturers has come down a bit from the heavy days of 2008,they are still quite high reflecting the strong growth potential.India’s Engineering Industry is also composed of a number of smaller manufacturers that export light engineering equipment worth several billion dollars mostly to developing countries.India’s Machinery Sector is composed of a mix of government owned and private companies as well as the giant capital goods MCN conglomerates like Areva and others.Here is a list of the major Indian equipment manufacturers.

India’s State Owned Companies

BHEL- with a market cap of around Rs. 94,000 core, is the largest engineering & manufacturing enterprise in India.The state owned giant is a capital goods colossus and has the biggest marketshare in the electricity producing equipment industry.The company has also been ramping up its international operations. It earned a revenue of Rs. 90,000 crore with a net profit margin of 15% (Dec ’10). BHEL’s operations are organised around three business sectors, namelyPower, Industry Including Transmission, Transportation and Renewable Energy – and Overseas Business.

Bharat Electronics Ltd( BEL) – This is another state owned companyestablished by the Indian Government to meet the specialised electronic needs of the Indian defence services. $3 billions is the market capitalization of this company which has shown impressive stock price appreciation.One of the best ways to play the Indian Defence Sector.. The company also produces consumer products like Electronic Voting Machines, Solar Powered LED-Based Traffic Signal Lights, Simputers and Set Top Boxes.BEL offers contract-manufacturing services for both domestic and international customers. The revenue earned in Dec ’10 was Rs.1,400 crores & Net profit margin was 12%.

BEML - The company was also known formerly Bharat Earth Movers Limited was established as a Public Sector Undertaking for manufacture of Rail Coaches & Spare Parts and Mining Equipment. The Company has a market capitalisation of $500 million & earned revenues of Rs. 3,500 crores (2009-10) with a net profit margin around 8% (Dec’10). Its three major Business verticals viz., Mining & Construction, Defence and Rail & Metro.

Foreign Companies

Siemens – German Conglomerate Siemens with annual 20 Billion Euros in revenues is fast expanding in the Indian market.The company is looking to delist from the Indian market which has a $6 billion listed subsidiary.Siemens is like ABB,Alstom not only a leader in electrical equipment but also in Lighting (OSRAM),Green Building Solutions,Energy Transmission and Distribution

ABB - ABB, the European Giant which was formed by merger of Asea and Brown Boveri in 1989 .The company which generated over $30 billion in revenues in 2009 with a roughly 10% Net Profit Margin is a leader in Power Systems,Network Management,Electricity Transmission and Distribution.Like Siemens,ABB is looking to delist its Indian arm from the Stock Market.All MNCs are looking to ramp up their Indian operations to take part in the growth as developed world faces low to no growth due to the GFC.Infrastructure is a particularly lucrative sector with an estimated $500 Billion required over the next 5-10 years.

Areva - This French owned Nuclear Giant has a market cap of around $1.2 billion in India and earned a revenue of Rs.1,300 crores with a net profit margin was 6% in Dec ’10. The company operates mainly in the transmission and distribution solutions to improve network stability and make electricity available everywhere. The major products are Substation equipment, such as high and medium voltage transformers, circuit breakers, disconnectors and instrument transformers.Network management, protection and control solutions.It also provides Network consulting and Asset Management

Alstom Projects - Another Foreign Subsidiary ,Alstom in India has operates in engineering, manufacturing, project management and supply of power generation equipment with a market capitalisation of $800 million It also has a significant presence in the transport sector in India providing railway equipment and technology solutions. The revenue generated was Rs. 350 crores & the net profit margin was around 4% in Dec’10.Alstom’s major industrial presence in India has become a platform for exports, producing equipments and systems for large projects for the power sector.

General Electric has also a major presence in the Indian markets alongwith others though it is not listed on the Indian markets

Indian Private Companies

Larsen & Toubro – L&T which is one of the largest companies in India with diverse interest across sectors like construction,real estate,technology,capital goods equipment etc. is one of the highest quality companies as well.The company has made a plan to spin off its divisions into separate listed companies as its size has become too unwieldy.One of the best quality construction companies in the country,it possesses skills which other companies don’t.The company also has high corporate governance standards and is professionally managed.L&T is the second biggest engineering company in India with a total value of $20 billion.

Suzlon Energy - Suzlon,the Indian Wind Turbine making company has languished in red ink since the beginning of the Global Financial Crisis in 2008.The company started by Tulsi Tanti in 1995 was a shining example of Asian CleanTech with a 10% global marketshare and ranking amongst the top 5 Wind Turbine Makers .Suzlon buoyed by its success had bought controlling equity stakes in Turbine Gears producer Hansen Transmission and European Wind Turbine producer Repower.With the 2 biggest markets of USA and China dominated by domestic players,Suzlon has become a shadow of its former self.The company continues to operate at a below breakeven level despite order book improving slowly.RePower is a bright spot with a good order book and gaining strong traction for its larger turbines.It has a marketcap of ~$2 billion which gives it an enterprise value of ~$2.75 billion.

Crompton Greaves - is fast growing private company present in electrical, industrial and consumer products and solutions . The revenue as on Dec ’10 was Rs. 1,400 crores & Net profit margin was 13%. With a market cap of $3.5 billion, the company has a diverse portfolio of products, from high-end power and industrial equipments and solutions, to consumer products and home appliances.CG is present in three business segments, viz. Power Systems, Industrial Systems and Consumer Products.

Thermax Ltd. - Another major private company like Crompton and Greaves,Thermax provides a range of engineering solutions to the energy and environment sectors. The company has a market cap of around $1.5 billion and produces a range of boilers and thermal oil heaters, energy chillers and exhaust gas boilers. Thermax is also a major manufacturer of energy efficient and environment equipment such as biomass boilersT.hermax has formed technology partnerships with global majors, like Babcock & Wilcox (USA), Kawasaki Thermal Engineering (Japan), Balcke Durr (Germany), Eco-Tech (Canada) and Georgia Pacific (USA).The company earned revenue of Rs. 1,200 crore with a net profit margin of 8% (Dec ’10).

Lakshmi Machine Works Ltd. – LMW has a market cap of $500 million and a major manufacturers of the of Textile Machinery. LMW has 60% market share in the domestic Textile Spinning Machinery Industry. It earned a revenue of Rs.490 crores with a net profit margin of 9% (Dec’10).LMW’s Global presence has grown over the years, with a market presence not only in developing countries, but also in Europe. The only company in Asia outside Europe to manufacture OE products for Mikron of Switzerland.

Havells India - This company is one of the largest electrical and power distribution equipment manufacturer with products covering the entire gamut of household, commercial and industrial electrical needs. It has a market cap of $900 million. Havells owns global brands like Crabtree, Sylvania, Concord, Luminance, Linolite, & SLI Lighting. The company generated revenues of Rs. 700 crores with a net profit margin of 8% (Dec’10).

Other major private companies are Usha Martin,Praj Industries,Punj Lloyd,BGR Energy etc.

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