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Tata Steel expecting capital expenditure to touch Rs 9,000 cr mark in FY20

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steel major, however, will take a cautious approach at the capital allocation for the next financial year, they said

Ltd is expecting its capex during the current fiscal to touch the Rs 9,000-crore mark, company sources said.

The steel major, however, will take a cautious approach at the capital allocation for the next financial year, they said.

The steel maker had, earlier, said that it would revise the planned capital expenditure for the 2019-20 to Rs 8,000 crore from Rs 12,000 crore for the group.

In the third quarter, company had spent about Rs 2,777 crore, taking the total capital expenditure to Rs 7,762 crore during the first nine months of the current fiscal, sources said.

The company had invested around Rs 1,367 crore for its India operation, including about Rs 935 crore expenditure for its Kalinganagar plant in Odisha, they said.

“A part of the capex is committed to Europe. Thus, the actual spending will be higher. By the year-end, the capex will be around Rs 9,000 crore.

“But (we are) looking at the capital allocation very sharply for the next year and it would depend on how the markets play out over the next few months,” sources said.

They said the company has prioritised the pellet plant and the cold-rolling mill.

“The pellet plant will help us to bring down costs while the cold-rolling mill to add value to the product mix…We maintain our target to commission the same in about a year from now,” the company had informed the analysts.

For other projects, the steel maker will phase it out depending on the market conditions, soures added.

First Published: Sun, February 16 2020. 15:32 IST

Source: Business Standard

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HAMISH MCRAE: Soon we will need to get on the road to recovery

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At a human level, the coming weeks remain utterly uncertain as this catastrophe continues to unfold. 

But at a financial and economic level, we may be beginning to understand what might happen through the spring and summer. 

Some parts of our economy may come through in reasonable shape. 

Others will struggle to regain pace even as the threat from the virus recedes. We saw the markets trying to make sense of this last week. It was a roller-coaster ride for equities. 

Stocking up: Food suppliers and drug manufacturers are doing better than tourism and travel

Stocking up: Food suppliers and drug manufacturers are doing better than tourism and travel

Stocking up: Food suppliers and drug manufacturers are doing better than tourism and travel

They swung from despair to a realisation that, come the autumn, there would still be a functioning world economy – and then back again to despair. 

People would need to buy the products and services that companies provide. 

There was also a recognition that some enterprises would fare better than others. 

Obviously food suppliers and drug manufacturers would do better than tourism and travel, but also those with hefty cash balances would do better than those with huge borrowings. The rule applies to everyone. 

This is a good time to have cash in the bank. But suppose you are (still) asset rich but are feeling the squeeze?

It is a practical question for a lot of businesses. For example, Tata announced on Friday that it will spin off Jaguar Land Rover from its Indian truck business so that the UK car side can seek ‘strategic alliances’ with other companies. 

It is also a practical question for a lot of households. You were thinking of selling the house and moving, maybe raising some funds. Well, that is not going to happen for a while.

 The Government has recognised that lenders face many requests to suspend mortgage payments from borrowers under stress, and to ease the pressure on them have told buyers to hold off. The market is in practice frozen. 

Housing is itself a huge sector and when home sales tank that also has a knock-on effect. As anyone who has moved home knows, you end up spending money on a string of other things, from furnishings to kitchens to the trampoline for the kids. 

So another chunk of economic activity, alongside pubs, restaurants, many retailers and so on, goes into the deep freeze. 

When markets cannot function properly it is better to shut them down. But it is also important to get them functioning again as soon as possible. There is the challenge. We have to get things going again as soon as we can. Some sectors will bounce back. 

Just because someone has to postpone a house move does not mean that they don’t want to move at all. 

They will want new stuff to put in the house when they do. So I expect the housing market to recover fairly quickly. 

But other sectors will struggle to regain traction. I expect the airlines to suffer for a long time, as people realise they don’t need to travel so much for business and don’t want to travel so much for leisure. 

The Government and the Bank of England are doing the right thing, pumping up the economy in all sorts of ways. 

But they can’t kick-start economic recovery by making us spend money that we no longer have or don’t want to part with after the health crisis is over. 

The damage is particularly severe for small businesses and the self-employed, and they are the beating heart of the economy. 

So the initiative of Rishi Sunak to target support for this sector is truly welcome. But it is not easy. As the Chancellor pointed out, the Government cannot save every business. 

It cannot pretend that the shutdown will have no impact, and even the businesses that do scramble through will not get back to where they were for perhaps a couple of years. Businesses fail even in the best of times. 

The plan is not perfect, but we should not let the perfect get in the way of the good. 

After the financial crash of 2008-9 and the subsequent bank rescues, a senior official at the Bank of England said to me: ‘We didn’t do it well, Hamish, but we did it just well enough.’ Fingers crossed, the Government is doing this one just well enough. 

Yes, the off-licence is essential 

I was relieved to see that off-licences are deemed essential retail services. 

One of the ways we will keep sane in our self-isolation is to make sure we have regular chats every evening to our friends and families. 

I find they work a lot better with a glass in the hand.

THIS IS MONEY PODCAST

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Discoms’ outstanding dues to power gencos rise nearly 32% in January

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Power producers’ total outstanding dues owed by distribution firms rose nearly 32 per cent to Rs 88,311 crore in January 2020 over the same month previous year, reflecting stress in the sector.

Distribution companies (discoms) owed a total of Rs 67,012 crore to power generation companies in January 2019, according to portal PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators).


The portal was launched in May 2018 to bring in transparency in power purchase transactions between the generators and discoms.


In January 2020, the total overdue amount, which was not cleared even after 60 days of grace period offered by generators, stood at Rs 76,192 crore as against Rs 51,453 crore in the same month of the preceding year.

According to the latest data on the portal, outstanding dues in January has decreased over the preceding month. In December 2019, the total dues of discoms stood at Rs 86,948 crore.


However, the overdue amount in January increased over the preceding month, from Rs 75,930 crore in December 2019.

Power producers give 60 days to discoms for paying bills for the supply of electricity. After that, outstanding dues become overdue and generators charge penal interest on that in most cases.


In order to give relief to power generation companies (gencos), the Centre enforced a payment security mechanism from August 1, 2019. Under this mechanism, discoms are required to open letters of credit for getting power supply.


The central government has given three months moratorium to discoms for paying dues to power generating companies (gencos) in view of lockdown till April 14 to contain COVID-19 across the country. The government has also waived off the penal charges for late payment of dues in the directive issued earlier this week.


Discoms in Rajasthan, Uttar Pradesh, Jammu & Kashmir, Telangana, Andhra Pradesh, Karnataka and Tamil Nadu account for the major portion of dues to power gencos, the data showed.


Overdues of independent power producers amount to 25.94 per cent of the total overdue of Rs 76,192 crore of discoms in January. The proportion of PSU gencos in the overdue was 39 per cent.


Among the central public sector power generators, the NTPC alone has an overdue amount of Rs 11,007.50 crore on discoms, followed by NLC India at Rs 4,731.13 crore, Damodar Valley Corporation at Rs 4,614.49 crore, NHPC at Rs 2,548.85 crore and THDC India at Rs 2,129.53 crore.


Among private generators, discoms owe the highest overdue of 3,421.68 crore to RKMP (RKM Powergen Pvt Ltd) followed by Adani Power at Rs 3,201.68 crore, Bajaj Group-owned Lalitpur Power Generation Company Ltd at Rs 2,212.66 crore and GMR at Rs 1,930.16 crore.


The overdue of non-conventional energy producers like solar and wind, stood at Rs 6,618.20 crore in January.

First Published: Sun, March 29 2020. 17:25 IST

Source: Business Standard

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Rural wages in West Bengal set to take a hit as migrant workers return home

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At Gobardhanpur, one of the last of West Bengal’s villages falling in the deltaic Sundarban region, there is a deep fear of outbreak among locals. In just two days, March 19 and 20 , and before interstate train services were suspended on March 21, hundreds of arrived in the area mostly from southern states, say locals.

“Two days prior to lockdown, close to 100 people came to two villages here. The villagers immediately informed the local administration, which instructed these to stay at home. Now villagers are keeping a strict vigil on their movements,” says Biswadip Sahu, a fisherman at Gobardhanpur.

Hiron Raut, along with nine others arrived at his native Buraburir Tat, a village adjacent to Gobardhapur, some 10 days back from Kerala, where he was earning Rs 600-900 a day as a construction worker. His savings will soon be exhausted and he stares at an uncertain future. The government has announced an aid of Rs 1,000 a month to daily wage earners in the state.

“Whatever money we had will be exhausted in the next 15-20 days. I don’t know how I will survive after that. I am not sure how long the government will support us,” says Raut.

The thousands of workers returning home to amid the pandemic are being seen as a liability and unwelcome guests in their own homes. Meanwhile, the distress in rural economy is already visible.

“Many small grocery shops in rural areas have permanently shut down as they are unable to buy essential food items at high price from big traders. This rural distress might assume mammoth proportions. As far as these are concerned, they are quite prone to exploitation as there will be an oversupply for labour in rural areas,” said Dilip Benerjee, an Ashoka fellow who has studied migration pattern in

“The migrant workers who are now back home are seen as huge burden on the local economy. They don’t have requisite skills to be employed in agriculture,” says Aniruddha Dey, Executive Director, Professional Institute for Development & Socio Environmental Management (PRISM), an environment consultancy firm.

Indrajit Das, a textile worker in Tamil Nadu, fears he will be forced to take up farming, the only source of livelihood at Chimta in the Sundarbans, a village that is yet to get a power connection.

“It will be a big challenge for me to take up farming, as I have never done it before. But I will be forced to now, if things remain like this for long,” says Das.

However, Das considers himself lucky to have come back home. His fellow workers informed him from Chennai a day ago that they were having tough time getting meals twice a day.

“Many of my friends could not come back and said they were having a difficult time getting full meals. Workers from Bengal will not be helped in Tamil Nadu,” he says.

“This pandemic is mostly an urban phenomenon and people rushed to rural areas as they saw safe havens in them. But due to the sudden increase in labour supply, the market wages, including those in agriculture, will come down. These people would now depend upon MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) for work, but the worrying fact is that on an average in the past four years, employment under MNREGA was provided for just 40-45 days in a year. Besides daily wages are much lower than agriculture wages,” says K R Shyam Sundar, professor of human resource management at Xavier Institute of Management, Jamshedpur.

According to Census data 2011, West Bengal ranked fourth among states on outward migration. The numbers have only risen since.

In the last two decades, West Bengal has had a massive wave of outward migration, especially to Kerala, Tamil Nadu, Delhi and Maharashtra. With factories and tea gardens closing down, farm income falling and storm Aila ravaging a large part of deltaic West Bengal in 2010, migration gradually became a norm

“In 2001, West Bengal was net positive in terms of migration, but by 2011, it turned net negative. Long-term policy failure, demographic transition that added a large young population and agrarian stagnation led to this wave of outward migration, and it has been growing,” says Rabiul Ansary, assistant professor, department of geography, Utkal University.

The business of migration is itself an industry in parts of rural Bengal.

“Wherever people got easily absorbed, they went. There are agents who act as mediators for providing jobs to young people, especially school dropouts in their early teens. Those who go as migrant workers, themselves become agents after a few years,” says Dey.

While a construction worker in the southern states can earn as much as Rs 500-900 a day, in West Bengal, agriculture yields not more than Rs 200-300 per day.

“These people came in a jiffy and many didn’t even get time to collect dues from their employers. They can barely survive for 20-25 days,” says Pranabesh, a social worker with Sundarban Green Environment Association.

In North Bengal, another emigration hotspot, many women left home to work as domestics in north Indian states. Unlike the men, not many have been able to return home amid the pandemic.

“Many workers wanted to come back, but couldn’t. Several people came in trucks, and Police took them to local hospitals for check-up. Now, tea workers also apprehend that once the gardens open, they will not be paid for days. There is also a fear that many migrant workers will not get jobs for long, as they might be ostracized due to social distancing,” said Nita Dhar, senior programme coordinator, PRISM.

As the world awaits the end of the global pandemic, rural Bengal sees a recession unfolding bit by bit.

First Published: Sun, March 29 2020. 15:57 IST

Source: Business Standard

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