Saturday, 01 Oct 2011
Moneycontrol.com reported that the new Mining Bill cleared by the Indian union cabinet today could impact bottom lines of metal companies in India as these companies will now have to share 100% royalty with affected locals in the region, Coal India Limited’s profits could be dented at significant levels as coal miners will now compulsorily have to share 26% of its profit after taxes to the affected tribals.
If the bill is passed, an estimated amount of INR 10,000 crore will be generated per year from miners and an average amount of INR 180 crore to INR 200 crore will be distributed among District Mining Foundations of 60 mineral rich districts in India.
Analysts quickly did a preliminary analysis on the kind of impact it will have on miners and metal sector.
Mr Bhavesh Chauhan from Angel Broking told moneycontrol.com, “As per our estimates, the EPS of metal companies is expected to be lower by 8% to 13%, while for Coal India the EPS could potentially decline by 17%. But Coal India can do some damage control as it has the cushion to pass on the additional burden to its customers as its sells coal at a price lower than global benchmarks, but metal miners do not enjoy this privilege.”
Khandwala Securities said “We expect EPS of all integrated players in metal space which includes TATA Steel, SAIL, Sterlite, Hindustan Zinc and Hindalco to be impacted by 5% to 20% depending upon their mining integration. But Coal India is expected to be impacted majorly as it is already facing employee cost pressure of around 40% of its total revenues in FY11 and revision in wages in 12th plan will put further pressure on the company earnings. Going ahead, companies might hike prices.”
Edelweiss Securities said “Profits of non coal mining companies (including integrated metal/ cement companies) could be impacted to the tune of 3% to 16% with Hindustan Zinc being hit the most and JSW Steel the least.”
Mr Tarang Bhanushali of IIFL said “The move is all set to push down profits of major mining and power companies. Most of the coal companies will be going for a downgrade.” The EPS impact on Coal India would be around 13% to 14%.”
(sourced from moneycontrol)
Moneycontrol.com reported that the new Mining Bill cleared by the Indian union cabinet today could impact bottom lines of metal companies in India as these companies will now have to share 100% royalty with affected locals in the region, Coal India Limited’s profits could be dented at significant levels as coal miners will now compulsorily have to share 26% of its profit after taxes to the affected tribals.
If the bill is passed, an estimated amount of INR 10,000 crore will be generated per year from miners and an average amount of INR 180 crore to INR 200 crore will be distributed among District Mining Foundations of 60 mineral rich districts in India.
Analysts quickly did a preliminary analysis on the kind of impact it will have on miners and metal sector.
Mr Bhavesh Chauhan from Angel Broking told moneycontrol.com, “As per our estimates, the EPS of metal companies is expected to be lower by 8% to 13%, while for Coal India the EPS could potentially decline by 17%. But Coal India can do some damage control as it has the cushion to pass on the additional burden to its customers as its sells coal at a price lower than global benchmarks, but metal miners do not enjoy this privilege.”
Khandwala Securities said “We expect EPS of all integrated players in metal space which includes TATA Steel, SAIL, Sterlite, Hindustan Zinc and Hindalco to be impacted by 5% to 20% depending upon their mining integration. But Coal India is expected to be impacted majorly as it is already facing employee cost pressure of around 40% of its total revenues in FY11 and revision in wages in 12th plan will put further pressure on the company earnings. Going ahead, companies might hike prices.”
Edelweiss Securities said “Profits of non coal mining companies (including integrated metal/ cement companies) could be impacted to the tune of 3% to 16% with Hindustan Zinc being hit the most and JSW Steel the least.”
Mr Tarang Bhanushali of IIFL said “The move is all set to push down profits of major mining and power companies. Most of the coal companies will be going for a downgrade.” The EPS impact on Coal India would be around 13% to 14%.”
(sourced from moneycontrol)
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