Government Plans Panel To Assess Fund Needs For Urban Infrastructure
Mint

The Union ministry of urban development is planning to set up a committee to estimate the investments needed for urban infrastructure in the country, even as flow of grants from its flagship Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme for infrastructure development continues to accelerate.

Identifying the quantum of investment that India's cities need becomes even more important as the urban areas' share of the population continues to grow. A little less than 30% of population is classified as urban and is spread over seven cities. By 2030, urban areas are expected to house almost 590 million, or 40% of the population, according to a 2007 United Nations Popula tion Fund report.
Analysts say nobody has a clear fix on the amount of investments urban areas need.

They vary from Rs6 trillion to as much as Rs11 trillion, depending on who you ask. They, however, agree that the scheme, which has a corpus of Rs50,000 crore and runs from 2005 to 2012, will cover only a fraction of the requirement.
Under the scheme, the Centre provides grants of between 35% to 90% of the cost of approved projects, depending on the size of the city, with the state and local governments, or private investors contributing the rest. The scheme covers 63 large cities with population above 500,000 as well as some 5,098 smaller towns.

"There is no accurate indicator on what the capital requirements are for cities in India and what the operations and management require ments will be," said O.P. Mathur, municipal finance expert and principal consultant with National Institute for Public Finance and Policy.
"The group is being set up to do precisely this," said Mathur, who will be a part of the group, which is expected to be headed by Isher Judge Ahluwalia, chairperson, board of governors for Indian Council for Research on International Economic Relations and member, National Manufacturing Competitiveness Council.

"I have estimated the need at $300 billion (Rs11.9 trillion), but in my opinion, this is probably an under estimate," said Ramesh Ramanathan, national technical adviser for the JNNRUM. "I think, when the committee completes its study, we will be in for a surprise.
Right now, we are starving our cities. These are also political issues and to address political issues, we need some kind of a reference point, or a price tag.
Only when we have a number will we know what fiscal handles the cities have and what needs to be done," said Ramanathan, who also writes a weekly column in Mint.

The group will also have members from institutions such as Infrastructure Development Finance Co. Ltd and Infrastructure Leasing and Financial Services Ltd.
"We are setting up a committee for this but it is too early to go into details," said urban development secretary M.Ramachandran.
"The group will look at norms of services (provided by municipalities), expenditure norms, investment requirements and will also address where the money will come from," Mathur added.
A recent Reserve Bank of India study of some 35 municipalities found that all, except seven spent more than they earned in tax revenues. Most cities rely heavily on state and central government budgetary support or borrowings from government-owned home loan and urban development companies, Mathur said.

Steel companies bow to Paswan`s wishes
Business Standard

Firms effect partial rollback of prices.

At the behest of the steel ministry, steel producers on Thursday offered a price cut in the range of Rs 500-1,000 a tonne.

Industry leaders declared the price cut with immediate effect following their meeting with Steel Minister Ram Vilas Paswan here on Thursday.

“The steel minister expressed concerns over the impact of rising steel prices on the common man. We explained the pressure from the rising cost of inputs like iron ore, coal, gas, crude oil, rail and sea freight. However, a voluntary decision has been taken to roll back prices and moderate the impact on consumers,” said Naveen Jindal, executive vice-chairman and managing director, Jindal Steel and Power, on behalf of the steel producers.

The price of TMT bars and rounds have been cut by Rs 1,000 a tonne, while hot rolled coils have been made cheaper by Rs 500 a tonne.

Most steel producers had increased prices by an average Rs 2,500 a tonne with effect from February. In January, prices were hiked by an average Rs 500 a tonne.

Steel producers also put forward their demands for lower excise duty and railway freight on steel. “All producers want the excise duty to come down to 8 per cent from 16 per cent at present,” said Jindal.

“We are concerned with the impact of rising input costs on the profitability of steel producers. Our ministry will write to the finance ministry to lower the excise duty from 16 per cent and to the railways ministry to reduce freight charges,” said Paswan.

Jindal said the price cut would not adversely impact his company’s profitability since the reduction was minor. However, he added that if raw material prices rise further, the company would be compelled to pass the burden on consumers.

“The price hike has impacted users and industries. We support the minister’s efforts to moderate the impact,” said S K Roongta, chairman of Steel Authority of India (SAIL), the country’s largest state-run steel producing company.

Steel cos cut product prices by Rs 500-1,000/tn
Economic Times

As anticipated the hike in the steel prices have been partially rolled back. Steel Minister Ramvilas Paswan has done it again. He has convinced the steel producers to roll back prices. Now, this is up to Rs 1,000 per tonne on TMT construction bars and rounds, and Rs 500 on other steel products with immediate effect. He has proposed to halve excise duty on steel to 8%.

This move follows a meeting of the Steel Ministry with producers. Earlier, the ministry had asked steel producers to discuss their rationale for the steel price hike in January.

CNBC-TV18 understands that last month all steel producers increased prices blaming iron ore and cooking coal prices as the major reasons for the price rise. The average price rise that we saw was about Rs 2,500 to Rs 3,000 per tonne.

The Steel Minister had asked for the rationale behind it because he feet that the quantum of increase was unjustified.

Steel companies relent, agree to roll back hike
Financial Express

Bowing to steel minister Ram Vilas Paswan's appeal, major steel producers, including Tata Steel, Steel Authority of India Ltd, JSW, Essar and Ispat industries, on Thursday agreed to partially rollback the hike in steel price earlier this month. The domestic steel producers have decided to reduce the prices of TMT bars and rounds by Rs 1,000 and hot-rolled coils by Rs 500.
In February, integrated steel producers had increased the prices of hot and cold rolled coils by Rs 1,500 to Rs 2,500 per tonne, citing high prices of input material in the international market.

This was in addition to steel price hike in January when prices were hiked between Rs 1,000 and Rs 1,500.
The decision to roll back prices was taken after the second meeting, which the steel ministry called. The first meeting on February 12 was inconclusive.
“In the larger interest of the consumers we urged all steel producers to cut prices and they have agreed to reduce the prices of both TMT bars and hot rolled," steel minister Ram Vilas Paswan said after the meeting.

The minister said the price hike, apart from hitting the common man due to its cascading effect on inflation, would also affect many of the downstream consumer industries such as small and medium manufacturers and construction sectors.
Paswan also suggested the industry to maintain transparency in the price hike, besides advising them not to create havoc by predicting that steel prices may harden as it only helps the middlemen.

Paswan, however, assured the industry that he would write to the finance ministry for reduction in excise duty to 8% from 16% currently. The ministry would ask the finance minister to reduce custom duty on iron ore and coking coal from current 2% to 0% and that on scrap from 5% to 0% to help the country meet the target of steel production of 100 MT by 2011.

Steel-makers roll back price hike
Tribune

The domestic steel producers have decided to reduce the prices of TMT bars and rounds by Rs 1,000 and hot-rolled coils by Rs 500.

Earlier this month, the manufacturers had raised the steel prices by Rs 1,500-2,500, which had attracted a lot of attention from consumers.
Emerging from a meeting with the steel producers, Steel Minister Ram Vilas Paswan today said the industry has voluntarily agreed to roll back the increase in the prices of the commodity for the benefit of the common man.
He said since TMT bars were an item of mass consumption, rolling back its price was considered to be necessary.
Paswan pointed out that the price hike earlier this month, apart from hitting the common man due to its cascading effect on inflation, would also affect many downstream consumer industries such as small and medium manufacturers, and constructions sector.
Steel Authority of India Ltd chairman Sushil Kumar Roongta said the steel producers were constraint to increase the prices due to a hike in input costs but have agreed to roll back the prices in the interest of common man.

Jindal Steel and Power vice-chairman and MD Naveen Jindal said that the steel producers have voluntarily agreed to roll back prices to neutralise the impression that they were arbitrarily raising prices.
Expressing concern on rising input cost, he pointed out that the railway freight has also shot up by 50 per cent to 90 per cent while the prices of coking coal and ferroy alloys have also increased considerably. - Bureau Report

Steel majors to roll back prices of TMT bars, coils
Hindu

Steel Minister to discuss increase in freight rate with Railway Ministry Iron ore producers will be consulted over the issue of rising prices
Major steel producers on Thursday agreed on a partial rollback in the prices of TMT bars and rounds by Rs. 1,000 a tonne along with hot-rolled coils (HRC) and other steel products by Rs. 500 a tonne with immediate effect.
The decision by steel majors followed a meeting with Steel Minister Ram Vilas Paswan to discuss the steel pricing issue as the primary producers had hiked their product prices by about Rs. 1,500-2,000 a tonne earlier this month, leading to widespread protests by consumers.

Speaking to newspersons after the meeting, Mr. Paswan noted that the producers had ‘voluntarily’ agreed to roll back a part of the hike in the prices of steel so as to benefit the common man. The price cut, he said, was considered necessary as TMT bars were an item of mass consumption, being an essential construction material.

The meeting was attended by the chief executives of the state-owned Steel Authority of India Ltd. and RINL, along with Tata Steel, Essar Steel, JSW Steel, Jindal Steel & Power and Ispat Industries in the private sector. Preliminary discussions with these major steel producers had already taken place at a meeting under the chairmanship of the Steel Secretary on issues concerning steel prices.
The price hike effected earlier this month, Mr. Paswan pointed out, was affecting several downstream industries, small and medium manufacturers and the construction sector, apart from burdening the common man owing to its cascading inflationary effect.

During the discussion, SAIL Chairman S. K. Roongta noted that the producers were forced to increase steel prices owing to the hike in input costs. However, they were ready to roll back the prices in the interest of the common man. Naveen Jindal of Jindal Steel and Power also pointed out that the voluntary price cut was to negate the impression that the price hike effected earlier was arbitrary. The railway freight, he said, had shot up by 50-90 per cent while prices of coking coal and ferro alloys had also gone up substantially.
Mr. Paswan declared that for lowering input costs, his Ministry would take up the issue with the Finance Ministry and press for reducing the excise duty on steel to eight per cent from 16 per cent and also discuss the increase in freight rate with the Railway Ministry. The Finance Ministry had also been requested to abolish the duty on scrap steel and coke. The problem of rising ore prices, he said, would also be taken up with the iron ore producers.

Steel industry strikes deal to cut prices in exchange for duty drop
Mint

Government keen to keep steel prices down as elections loom but ore, freight, transport costs are going up
Seven steel companies agreed on Thursday to reduce prices of construction materials, such as high-strength thermomechanically treated (TMT) ribbed bars and steel rounds used in the construction of apartment blocks and shopping malls, by Rs1,000 per tonne. Hot-rolled coil prices would be brought down by Rs500 per tonne.

The announcement was made by member of Parliament and managing director of Jindal Steel and Power Ltd, Naveen Jindal, in the presence of Union steel minister Ram Vilas Paswan, who had called a meeting to review prices to try and “protect” consumer interests. The populist gesture comes as eight states are expected to hold elections this year, including three next month. Steel prices are set in the open market, but the ministry does plead, from time to time, with industry leaders to ask for consumer relief.
On roll: The SAIL Bhilai plant. The cost of production has been low for steel manufacturers such as SAIL that also own ore mine.
Propelled by a building boom, average steel prices have risen steadily in recent months by Rs5,000-7,000 per tonne in 10 months. The price of hot-rolled coils, which are used to make cars, refrigerators and industrial pipes, has surged 8-9% to more than Rs37,500 a tonne. The spot price of wire bars used in construction is Rs36,250 a tonne.

In a meeting held in the Capital, Paswan raised concerns about rising inflation. He assured industry leaders he would request the finance minister to halve excise duty from 16% for the industry and request a removal of import duty raw materials such as coke and metal scrap. “We must be transparent in letting our consumers know why the prices are going up,” he said.
Fuelled by worldwide demand and rising input costs, prices of domestic long products such as wire rods and bars surged 26-27% over 10 months.
Shortage of steel helped turn India into a net importer for the first time this year, while surging input costs squeezed third quarter profit margins of several domestic firms that have no ore mine of their own. Iron ore is a key ingredient in making steel.
Ore costs have risen 150% from $60 (Rs2,382 today) in March to $150 in December. Coking coal costs have similarly climbed 37% in five months. Ferro manganese has shot up by 40%, from Rs43,000 to Rs62,000 a tonne.
Big producers have a virtual monopoly in hot-rolled coils production and account for 30% of the total production of 18.8 million tonnes of construction steel.

Rising production costs affect companies’ profitability as haves and have-nots: those who have their own mines and those who don’t. Steel Authority of India Ltd (SAIL), the country’s largest state-owned steel producer, and Tata Steel Ltd, the cheapest producer, both of which have ore mines, have seen third quarter profits grow; SAIL’s net profit grew to Rs1,935 crore during the period, up from Rs 1,471 crore. Tata Steel’s profit remained flat with a marginal rise; it reported a profit of Rs1,068.5 crore compared with Rs1,063 crore last year. Several others without ore leases have taken a hit; Ispat Industries Ltd saw a third quarter loss of Rs35 crore and while JSW Steel Ltd’s profit was 10% lower this year.

Some view the latest call from the government to reduce prices as meddlesome, even as companies have unequal advantage over resources.
“The government is asking us to reduce prices but the government is itself pushing up prices of iron ore, increasing rail freight, demurrage and transport costs,” said a Mumbai-based Ispat executive on condition of anonymity.
In a note to the media, Moosa Raza, president of steel lobby Indian Steel Alliance, said, “It would be difficult for the steel manufacturers to absorb all the cost… The need of the hour is to enable the industry to expand by assuring them iron ore security.”
Recently, National Mineral Development Corp. Ltd raised prices of ore fines and lumps by 47% and 22-33% , respectively. Most producers who do not own mines buy ore at a lower contractual rate of Rs1,785 a tonne, according to an NMDC official. Paswan said he will call a meeting before NMDC announces the next price increase in April.

The cost of production for different companies varied according to whether they own a mine or not. Companies such as Tata Steel, which has both iron ore and coking coal mines, worked out to as about Rs19,000-Rs20,000 in the last financial year. For SAIL, it was about Rs18,000 a tonne. For other companies such as JSW Steel and Ispat Industries, it ranged between Rs19,000-Rs 19,500 a tonne, according to data available with Macquarie Securities ( India) Pvt. Ltd.
With raw material prices up, costs to Tata Steel and SAIL have risen to roughly Rs23,000 and Rs22,000 a tonne, respectively. “Costs are up by $100 (just under Rs4,000) a tonne for companies without iron ore or coking mines,” said Rakesh Arora, associate director at Macquarie Securities.

“After taking a hit on the third quarter profits, companies are raising prices to recoup. But the real picture will be clear after they enter into long-term pricing contracts for coking coal in March,” he said.
But many say the real answer to rising prices is more production. “There is an absolute shortage of steel. If prices touch Rs 40,000 a tonne, people would still buy it as it will have to absorb any price,” said Ahmed Shah Firoz, a steel and minerals consultant in New Delhi. “But the long-term implications are that it will raise infrastructure costs and slow implementation of projects.”