THE NIFTY FUTURE OUT LOOK....

PHENOMENAL RISE&HIGHs but A Denial for NOW….

The Indian markets have performed stupendously, like a race against all ODDs and against all emerging markets. We are the best performing Indices YTD or for the quarter. The Rise is so phenomenal that no-body expected but few could CASH the opportunity. Now many new entrants are making inquiries and many more are looking as a decent opportunity to make HUGE money to meet their DREAMS.

The fact is that, since January-14, Nifty rose by 20%, Mid-Caps by 30% and Small caps by 55%, some Individual stocks rose by 400-700% from their LOWs. The hype generated now is due to change in the Government, a market friendly team at the top. But the fact is that No-body could SELL the National property via LIBERALIZATION for no reason, nor for a simple cause. The National growth based on immediate requirements and will be judged by prioritising/striking a right balance between “NECESSITY & COMMERCIALIZATION”. The Future is GOOD as huge investments will take place and the results will come in due course of time.

As far as the Stock Markets rise is concerned, a dead cheap stocks are at a historic low was one of the major reasons for FIIs relentless investments. The Global markets are also encouraging and FREE Supply/HIGH Liquidity is driving the markets for NOW. Very few are working on the REAL worth for the paper but relying on the PROJECTIONS. The Nifty is POISED for touching 9000+ as experts are working on the next 3-year EARNINGS and P/E that could safely take us above the above said number. I am not pessimistic but play a realistic role for valuing the Available Opportunity. The main reason for Nifty may seek SOUTHWARD JOURNEY because of looming DROUGHT, Poor Investments made by the CORPORATES in the Preceding/Previous 2-3 years, so NO earnings Surprise by the top companies.

So, the scenario is GLOOM in the Short-term, however the POLICY push can give some bounce but for the next ONE year will be very challenging. The Nifty stocks are moving up but the UN-Winding is a concern. The rise from here may not be that much sharp or serious, from here 2-Ups and 4-5 Downs. Because the FUTURE is promising, on any DEEP cut/ steep fall BULLs take charge to make a comeback to take away the Retail Investors most of the STOP-LOSSES.

THE BLOOM and GLOOM story…..THE MOMENTUM IS HIGH….

THE NIFTY MAY TOUCH 8785-8850 RANGE; BUT VERY LIKELY, IN THE SHORT-TERM LOW MAY  TOUCH 7000, NO SURPRISE EVEN IF IT TOUCHES 6600-6400 RANGE

THE BANK-NIFTY MAY TOUCH 20100-22000 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 12500-800, NO SURPRISE EVEN IF IT TOUCHES 10100-10300 RANGE

THE RELIANCE MAY TOUCH 1450-1550 RANGE;IN THE SHORT-TERM LOW MAY  TOUCH 801-811, NO SURPRISE EVEN IF IT TOUCHES 759-736 RANGE

THE ONGC MAY TOUCH 620-650 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 311-321, NO SURPRISE EVEN IF IT TOUCHES 270 RANGE

THE SBI MAY TOUCH 3850-3950 RANGE, IN THE SHORT-TERM LOW MAY  TOUCH 1920-1950, NO SURPRISE EVEN IF IT TOUCHES 1450-1430 RANGE

THE ICICI MAY TOUCH 2130-2080 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 1180-1220, NO SURPRISE EVEN IF IT TOUCHES 970-950 RANGE

THE RELCAPITAL MAY TOUCH 950-1050 RANGE;IN THE SHORT-TERM LOW MAY  TOUCH 440-415, NO SURPRISE EVEN IF IT TOUCHES 330 RANGE

THE RELINFRA MAY TOUCH 1080-1150 RANGE; IN THE SHORT-TERM LOW MAY  TOUCH 520-540, NO SURPRISE EVEN IF IT TOUCHES 440 RANGE

WE CAN EXTEND AND READ MORE NUMBERS… BUT THE DENIAL IS RIDING HIGH EVEN IN MY MIND…

PLS DON’T BUY NOW UNTIL NIFTY TOUCHES 7250-80 RANGE, BUT THE ACTUAL BUYING IN QUALITY STOCKS SHALL EMERGE FROM 7000 ONLY. THOSE WHO ARE COMPULSIVE, SHALL TAKE A STOPLOSS ROUTE RATHER THAN HOLDING FOR LONGER…THW WAIT MAY BE 3 YEARS…!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

INFOSYS.....UPSET..UBS....

What has upset UBS about Infosys that others have failed to see?UBS' report differs from others as it takes a business call on Infosys rather than one based on quarterly numbers and guidanceShishir Asthana  |  Mumbai  

May 8, 2014 Last Updated at 09:26 IST

Nearly a month after Infosys announced its march quarter results, one of the biggest foreign broking houses in the country, UBS has downgraded the stock. While the downgrade to Sell is not uncommon, the fact that the target price has been slashed by nearly 30 per cent is rare. UBS earlier had a price target of Rs 4,050 which has now been slashed to Rs 2,750. Infosys presently trades around the Rs 3,070 range .
What is important to note is that out of the 63 analysts tracking Infosys (as per Bloomberg data) only three have a Sell rating on the company. UBS is now the fourth. Around 75 per cent of the analysts have a Buy recommendation while remaining have a Hold recommendation on the company. UBS is the biggest broking house that is bearish on the stock and one that has the lowest price target.
So what is it that UBS (Indian broking firm Ambit already has Sell rating on the stock) has seen that other broking outfits have not.
UBS has broken down the business of software companies into different verticals and identified areas where growth is expected. The UBS report written by Diviya Nagarajan says that the next wave of growth for large Indian IT vendors will be led by infrastructure services and business process outsourcing (BPO).
Infosys has less than 15 per cent of its revenues coming from these segments as compared to 25-35 per cent for TCS and HCL Tech. Infosys has just started focussing on these segments, but UBS believes that the slow growing application business of Infosys which contributes 85 per cent of the revenue will remain a drag. The company has already indicated through its commentaries that it has trouble jumpstarting growth in its base segment.
The other issue is of attrition. Apart from Ambit and now UBS most of the other broking firms have highlighted the attrition problem as a footnote. Ambit (Read here) was the first to say that Infosys was living in denial when they clarified that the loss of senior management officials and overall attrition is not hurting the company. UBS has gone a step further and cited the case study of Wipro and how constant management churn since 2005 has played a major role in decline of Wipro's market share.
To make matters worse for Infosys, TCS has played a smart game by hiking wages by 10 per cent for offshore employees and 2-4 per cent for onsite ones as compared to 6-7 per cent and 1-2 per cent respectively for Infosys. Attrition rate at Infosys is at its all time high with the company losing nearly one-fourth of its FY13 employee base in FY14, says UBS. The wage differential between the two companies and softer revenue outlook by Infosys is expected to further spike attrition in the company.
While most of the other analysts are saying that Infosys will beat its guidance, UBS feels that high attrition level will impact revenue acceleration and limit the company's ability to beat its revenue guidance of 7-9 per cent (which is much lower than the nearly 14 per cent growth projected by Nasscom, the face of the industry) despite improving demand and a currency advantage.
Concerns on Infosys' operations have been raised by other analysts too, but none of them had summed it up and been brave enough to go against the consensus opinion. JP Morgan which has a Overweight rating and a price target of Rs 4,000 on Infosys in its April 23, 2014 report on India IT Services highlighted the leadership role of TCS over its peers, especially Infosys. The report observed that TCS was defining the agenda through its forward commentary in contrast to the commentary of others playing catch-up. While TCS has a longer term plan of entering hardly penetrated markets like Japan and strengthening its presence in digital and SMAC (Social media, Mobile, Analytics and Cloud Computing), Infosys and Wipro are still talking on the need to improve win rates in large deals, in other words, operational issues.
Jefferies in its coverage on Infosys with Buy rating and a lower price target of Rs 3,675 (from its earlier target of Rs 4,170) highlighted the concerns of the company. The report said that Infosys was at a stage where most of its financial metrics are at their worst. Growth has been volatile, margins have fallen by 450 basis points in 13 quarters. Yet the Buy recommendation was based on the reset of expectations for next year, an improvement in growth or margins. The report says that turnaround hopes are hinged on Chairman Murthy.
It is the hope of Murthy working his magic that is preventing most of the analysts to see beyond the quarterly numbers. Where UBS' report differs from others is its business call on Infosys rather than one based on quarterly numbers and guidance. Share price movement of Infosys shows that the market seems to have respected that.
http://www.business-standard.com/article/markets/what-has-upset-ubs-about-infosys-that-others-have-failed-to-see-114050800303_1.html

KARVY-PENALIZED-IRREGULARITIES..

SEBI penalises Karvy Stock Broking in IPO irregularities case

PTI

MUMBAI, MAR 16:  

In a major order with regard to the IPO scam of 2003-2005, SEBI has barred Karvy Stock Broking Ltd (KSBL) from taking up any new assignment or launching new schemes for six months in respect of its role as a stock broker.

However, this order would not be given effect for a period of four weeks from the date of its receipt by KSBL, according to a direction of the Securities Appellate Tribunal (SAT).

In a case involving large-scale irregularities in 21 IPOs during 2003-2005, SEBI found that KSBL “failed to maintain high standards of integrity and further indulged in manipulation and malpractice and thereby violated the code of conduct” specified in its broker regulations.

The six-month prohibition order would also apply to the contract or launch of a new contract by KSBL, while it would also not be allowed to take new clients or customers during this period in respect of its stock brokerage business.

In his order dated March 14, SEBI’s whole-time Member Prashant Saran said, “I note that while the enquiry officer has exonerated KSBL from the charge that it is not a fit and proper entity, the enquiry officer has recommended that the certificate of registration of the noticee as a stock broker be suspended for a period of three months.

“As stated above, in a case where there has been widespread market abuse, the role of one entity should not be seen in isolation and the collective roles and activities of all the entities concerned should be seen.

“I also note the submission that the noticee was restrained from indulging in proprietary trading for a period of 14 months. On considering the totality of the facts and circumstances, the interest of the securities market, the market participants and my observations/findings and the restrictions on proprietary trading already suffered by the noticee, I am of the view that the following order would meet the ends of justice,” he added.

During the hearing, KSBL submitted that the alleged irregularities occurred in its Ahmedabad office and there were no findings in respect of other branches and that all their other branches had been conducting their business in compliance with the rules, regulations laid out and therefore any restraint on the entire operations would not be proper.

“In this regard, it needs to be noted that the certificate of registration granted to a stock broker is for his stock broking business and therefore any violation or misdemeanour on its part would attract penalty, if required, against its business as a whole.

“Given the large-scale abuse of the market and the role of the entities of the Karvy Group including the noticee, as discussed above, I do not find it appropriate to only restrain the stock broking business of the noticee in a particular branch,” Saran said in his order.

(This article was published on March 16, 2014)

http://www.thehindubusinessline.com/markets/sebi-penalises-karvy-stock-broking-in-ipo-irregularities-case/article5791643.ece

ABOUT INDIA SPECTRUM AUCTION...

What is Spectrum auction all about? A primer on the ongoing spectrum auction, its process and how it would impact the companies Shishir Asthana | Mumbai February 7, 2014 Last Updated at 10:42 IST 

One more round of spectrum auction has brought the telecom sector back in news. Telecom sector stocks have been volatile as competitive bids have raised the spectrum auction prices. The sector creates a sense of awe on account of technical jargons surrounding it. The entire auction process throws up an image of a Bollywood movie where business men and women are trying to outbid each other. Nothing could be further from the truth. 

Here is an attempt to demystify the sector, understand what is spectrum, why and how are they being auctioned and how would it impact the companies who are the winners and what does it mean to the losers. First let’s understand what is being sold -- Spectrum. We were first introduced to spectrum in school when we saw that seven colours were produced when a white light hits a glass prism. In simple terms, spectrum can be considered as a range of all lights of various wavelengths. But light is part of a larger spectrum called the electromagnetic (EM) spectrum. EM spectrum has in it a range of similar EM radiations like visible light, infrared light, ultraviolet light, X-rays and the one that is useful to us here is radio waves. As these are all radiations, they travel and spread as they go. Waves are defined by attributes of wavelength (length of the wave), amplitude (height of the wave) and frequency (number of cycles per seconds). Radio waves are those that have frequency of 3 kHz (3000 cycle per second) to 300 GHz (3 billion cycles per second). Audible frequency for human is between 20 Hz to 20,000 Hz. Consider waves moving around us at different speeds (frequencies) between 3 kHz and 300 GHz. Different frequencies are utilised for different purposes. The Radio FM stations air their channels around the 100 MHz frequencies. Out of these, government of India has selected two -- 900 MHz and 1800 MHz to be auctioned to telecom companies. Higher frequencies can carry more data per second. As in case of radio, any company winning the licence of using a frequency has a natural monopoly over the band. 

By auctioning spectrum, government is actually attempting spectrum management. Like land, mineral, oil, gas and water are exclusive property of a state, so is radio frequencies. Government manage these frequencies, as it is scarce, for various uses like telecom, radio, television and defence. Increasing applications and new technologies such as 2G, 3G and 4G has further created a need for more spectrum. Within each frequency, government splits it up into circles (cities or states) and divides it to various users.

The auction process The present auction is being conducted online and is termed as a Simultaneous Multiple Rounds Ascending (SMRA) e-auction. Government hopes to raise Rs 48,000 crore through this auction by giving away 403.2 MHz in the 1,800 MHz band and 46 MHz in the 900 MHz band. The spectrum available for licencing will be valid for 20 years. Bidders have a choice of paying the full amount upfront or defer it by paying 33 per cent of bid amount in 1,800 MHz and 25 per cent of bid amount in case of 900 MHz within 10 days of auction close. There is a moratorium of 2 years of payment of balance amount which shall be recovered in 10 equal annual instalments which will attract an interest of 10 per cent. Each applicant has to apply along with Earnest Money -- in the form of a bank guarantee, which changes as per circles as prescribed by the government. 

There are two stages in the auction – Clock stage and Frequency Identification Stage. The clock stage will establish the bidders and number of blocks to be awarded in each service area while the second stage will identify specific frequency blocks for the winning bidders. Auctions on both the spectrum bands are being conducted simultaneously. In the clock stage, bidding proceeds in rounds where bids can be placed for some or all service areas. Bidders will be informed about the Clock Round Price per block for each of the service areas in both the bands where spectrum is put to auction. In each round, the bidder’s choice will be a ‘Yes/No’ if he agrees to bid at the Clock Round Price. If the answer is Yes, he then has to select the number of blocks in the area. In 1,800 MHz blocks of 200 kHz are on sale while in 900 MHz, each block size is of 1MHz. In the first Clock round, the price per block will be the reserve price. In subsequent rounds, the Clock Round price will be determined by the excess demand in the previous Clock Round. The Clock Rounds will continue until demand can be satisfied within each and every service area in each of the bands. Price increments will not be more than 10 per cent of the previous Clock Round. What does it mean for the winners and losers? While the winners get the exclusive right to use the spectrum, those who have lost the bid in that area will not be able to operate in it. They will not be able to get subscribers in the area where they do not have a licence. However, if a consumer has a connection of the particular telecom operator and travels to an area where the operator is not present, he will be charged interconnect user charges. Why are the bids so competitive? For the serious players it makes sense to have a pan India presence, which is why we see aggressive biddings in the present auction rounds as Vodafone and Bharti’s licenses are expiring in some of the metros. What makes this auction all the more interesting is that a new player Reliance Jio, the telecom arm of Reliance Industries is applying for the licence and would like to get the maximum possible licences across the country. The number of spectrum he wins will impact his pan India roll out plan.

How do spectrum prices impact consumers? There are two ways a telecom company can recover their investment in getting the spectrum license. First is by increasing their consumer base and second is by increasing their tariffs. For an existing player, increasing customer base is difficult in the current scenario, thus the only option left is to increase tariffs. But that's easier said than done given the current competetive scenario. Companies are thus introducing new applications to supplement their revenue. 

http://www.business-standard.com/article/companies/what-is-spectrum-auction-all-about-114020700227_1.html

POWER TRANSMISSION...A BIG OPPORTUNITY..!!!!!!!!!!!

Gridlock could idle big chunk of 25,000 MW

Noor Mohammad | New Delhi, Bhopal | Updated: Feb 03 2014, 01:23 IST

A clutch of power plants coming up in Orissa and Chhattisgarh may have to grossly underutilise their capacities over the next three years, resulting in generation losses in excess of Rs 1 lakh crore for these private sector players, an unfortunate situation in a country starved of electricity.

The plants could be compelled to run at below full capacity because the likely delay in the setting up of the transmission network to wheel the power to open-access consumers in the northern and western regions of the country. The potential surplus power from these plants with a combined capacity of 25,000 MW, and involving investments over Rs 1.25 lakh crore, can’t be sold in the two coal-bearing home states due to the lack of demand. The bulk of the power from these plants was meant to be sold outside these states.

These plants are being developed by private players that include Jindal Steel, Sterlite Energy, KSK Energy and Visa Power. The developers have booked 24,000 MW transmission capacity with central transmission utility Power Grid Corporation of India under long-term open access for wheeling power to consumers in the northern and western regions.

Half the planned capacity has already been commissioned but the transmission bottleneck has meant the plants are running at a plant load factor (PLF) of 30-50%, much lower than the 85% normal capacity utilisation. The projected loss in generation, consequently, could be to the tune of 3,720 MW in 2013-14. That translates into a revenue loss of Rs 10,400 crore if the cost of electricity is taken at Rs 4 a unit.

This figure could reach Rs 52,400 crore in FY16 if transmission projects don’t take off. The 10 750-kV inter-regional transmission lines connecting Jharsuguda in Orissa with Aurangabad in Maharashtra via Bhopal were expected to be commissioned by end of March but are now likely to slip by one to two years primarily due to issues relating to diversion of forest land.All companies, except central sector PSUs, are required to provide alternative land for afforestation while acquiring forest land to set up projects.

Alarmed at the prospect of these generation projects becoming unviable due to inter-regional power transmission constraints, the Association of Power Producers ( APP) has written a letter to power secretary PK Sinha, asking for an expeditious resolution to problems hampering the transmission projects.Banks and financial institutions that funded the power plants could end up taking a hit if these projects are stranded. “These generation capacities are in the process of being put up in Orissa and Chhattisgarh by 26 generating companies. Though 50% of the capacity has become operational, despite the availability of coal, the plants are forced to operate at a sub-optimal PLFs primarily due to inter-state transmission bottlenecks. It would be a major loss for the consumers and disastrous for the developers and lenders if these projects remain underutilized due to these bottlenecks,”Ashok Khurana, director general, APP, said in the latter sent to the power secretary.

Khurana added: “Since identifying land for compensatory afforestation is proving to be a generic and major hindrance impacting most of these inter-state transmission lines being developed, it is requested that the projects may be treated at par with PSU projects for compensatory afforestation like ultra mega power power projects.”

http://www.financialexpress.com/news/gridlock-could-idle-big-chunk-of-25000-mw/1222641/0

5 Yrs of Service- ask for Gratuity Benefits..!!!!

Know your gratuity benefits

ANAND KALYANARAMAN

If you stay on with your employer for 5 years or more, you will be entitled to gratuity when you resign, retire or are retrenched.
Job-hopping can increase your pay, but good old loyalty also has its perks. Stay on with your employer for five years or more, and you are entitled to gratuity when you resign, retire or are retrenched. This monetary reward to be paid by your employer in recognition of your years of service is mandated by the Payment of Gratuity Act. Most establishments employing 10 or more workers fall under the Act.
The amount you get as gratuity depends on the number of years you have served and the last drawn monthly salary. Roughly, you get half a month’s Basic and DA for every completed year of service. Here’s the formula to calculate gratuity: (Number of years of service) * (Last drawn monthly Basic and DA) *15/26. So, if you have served 30 years and draw monthly Basic and DA of Rs 20,000 when you leave the job, you get gratuity of Rs 3,46,154 calculated as (30 * 20,000 *15/26). Your employer can choose to pay you more but the maximum amount of gratuity according to the Act cannot exceed Rs 10 lakh. Amount paid above this will be in the nature of ex-gratia — something voluntary and not mandated according to law.
If you serve more than six months in the last year of employment, it is considered as a full year of service. For instance, if your tenure is 30 years and 7 months, the years of service for gratuity calculation will be rounded off to 31. But if you serve 30 years and 5 or 6 months, then the number of years of service will be considered as 30.
Waiving the rule
Going by the book, gratuity is payable only if you have been with the employer for five years or more. But this rule is waived if an employee dies or is disabled. In such cases, gratuity is paid to the nominees or to the employee, even if the tenure is less than 5 years.
Even employees not covered under the Payment of Gratuity Act are entitled to gratuity. But in such cases, the formula for gratuity calculation differs. It is computed as the (number of years of service) * (average monthly salary in the last 10 months of employment) * (15/30). This computation makes the gratuity amount lesser than that under the Act. For instance, in the above example, an employee not covered by the Act will be entitled to Rs 3,00,000 as gratuity, calculated as (30 * 20,000 * 15/30). This is Rs 46,154 lower than employees covered under the Act are entitled to. Another difference is that only fully completed years of service are considered in the calculations, and partial service in the last year, even if it in excess of six months, is ignored. For instance, service of 30 years and 7 months, will be considered as 30 years and not 31 years.
Another positive is the favourable tax treatment that gratuity receipt enjoys. Tax treatmentIf you are a government employee, then the entire amount you get is exempt from tax. If you are not a government employee but are covered under the Act, you get tax deduction for an amount which is the lower of the following:
a) Actual gratuity received
b) 15 days Basic and DA for each completed year of service (according to calculations in the example above)
c) Rs 10 lakh
Say, in the instance above, your employer paid you gratuity of Rs 5,00,000, which is more than the Rs 3,46,154 actually payable under the law. You will enjoy tax deduction on Rs 3,46,154 and the surplus Rs 1,53,846 will be subject to tax. Note that the total tax deduction on gratuity amounts received, including those from previous employers in earlier years, cannot exceed Rs 10 lakh.
Employees not covered under the Payment of Gratuity Act are also entitled to tax deduction on the amount they receive. The deduction rules are similar to those applicable for employees covered by the Act.
anand.k@thehindu.co.in(This article was published on December 21, 2013)

http://www.thehindubusinessline.com/features/investment-world/know-your-gratuity-benefits/article5487047.ece

Sweet pill for sugar mills ....

Sweet pill for sugar mills in higher ethanol blending cap

fe Bureau | New Delhi | Updated: Dec 12 2013, 15:57 ISTSUMMARYCash-starved sugar mills stand to gain an annual Rs 7,500 crore if an informal group of ministers

Cash-starved sugar mills stand to gain an annual Rs 7,500 crore if an informal group of ministers’ recommendation to double the mandatory blending of ethanol with petrol to a 10:90 ratio were to be implemented. This assumes that raising the blending limit will stir competition among industrial consumers, paving the way for the diversion of some molasses, even with sucrose content, towards the bio-fuel production and drive up prices of ethanol and sugar by 10% each.
Considering that the country needs 244 million tonnes of cane with an average recovery rate of 10% to produce the predicted sugar output level of 24.4 million tonnes for 2013-14, this benefit, albeit indirect, will translate into roughly R31 per quintal of cane.
However, there would still be a viability gap for sugar mills, especially those in Uttar Pradesh where the state-advised price (SAP) of R280/quintal for cane is way above the “viable price” of R225 as per the formula mooted by the C Rangarajan panel.
It is another matter though that considering the experience so far, 10% ethanol blending is an idea easier proposed than implemented. Ethanol content in petrol in India is projected to be just 2% this fiscal, even though 5% blending was first approved a decade ago.
Factoring in a direct benefit of R2.25 per quintal on interest-free loans recently announced by the Centre as well as an additional R11.03 per quintal incentive provided by the UP government in the form of a waiver of entry tax, purchase tax and society commission, the supposed indirect benefit of R31 per quintal from the 10% blending programme could significantly bridge the gap between the current viable price and SAP in the state.
Once endorsed by the Cabinet, the suggestion of the panel led by agriculture minister Sharad Pawar could provide sugar mills R7,050 crore more a year on a consumption level of 23.5 million tonnes if prices of the sweetener move up by 10% from the current R3,000 per quintal. Moreover, mills may get an additional R441 crore even on a supply of 105 crore litres for the current 5% blending limit if ethanol prices rise 10% from the average rate of R42 per litre, as offered against the last tender finalised by oil marketing companies (OMCs) in August.
However, the price of ethanol for the additional supplies of 105 crore litres to realise the 10% blending target will have to rise significantly to make it viable for mills, said Abinash Verma, director-general of the Indian Sugar Mills Association (ISMA). This is because to generate the additional quantity while keeping supplies steady for other consuming sectors — including chemical and potable alcohol industries — the mills have to produce ethanol from even B-heavy molasses, which also contain some sugar content. Currently, mills produce ethanol from C-heavy molasses after extracting the optimum amount of sucrose content.
The diversion of B-heavy molasses into ethanol production for an additional 105 crore litres will result in a reduction of sugar production by 1.7 million tonnes, according to sugar analysts.
To offset mills against the reduction of sugar stocks, OMCs have to offer at least Rs 50 per litre of ethanol, one of them said.
However, reducing sugar production by 1.7 million tonnes will have an indirect benefit for the industry in the form of cutting the current glut in supplies and preventing a sharp downward spiral in prices. It will generate up to Rs 5,500 crore of cash from ethanol sales for the industry, which has been marred by a liquidity crunch due to excess stocks and low realisations from sugar sales as demand stays steady while raw material costs remain elevated. Of course, it would save some interest costs for mills over and above the benefits mentioned above.
However, senior industry executives, while hailing the government’s move to raise the blending limit, have expressed doubts over the actual implementation of the progamme any time soon. This has also cast serious doubts over the government’s target of 20% mandatory blending by 2017.
While OMCs blame lack of adequate supplies for their inability to implement the programme, producers say the “slow and delayed” action by OMCs in floating and finalising tenders are to be blamed for this. The government’s latest deadline of June 30, 2014, for the strict implementation of the 5% blending has already expired, making deadlines irrelevant.
http://www.financialexpress.com/news/sweet-pill-for-sugar-mills-in-higher-ethanol-blending-cap/1206580/0