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Increased capex to boost domestic steel demand, generate employment: Steel industry.

The increased capex allocation of Rs 10 lakh crore announced in the Union Budget will lead to a pick up in demand for steel and generate employment in the country, the steel industry said on Wednesday. Finance minister Nirmala Sitharaman tabled the Union Budget for 2023-24 in Parliament.

 

"A significant 33 percent increase in capital expenditure to Rs 10 lakh crore -- 3.3 percent of the GDP -- thrust to fast-track infrastructure development, and the highest ever Rs 2.40 lakh crore for railways will translate into robust domestic steel demand, thus spurring private investments and job creations," it is said.

 

First- and last-mile connectivity for sectors like steel, ports, coal, etc., with an investment of Rs 75,000 crore, will improve logistics efficiency, it is said.

 

The Chairman of Metals and Minerals Committee, PHDCCI, and Group CEO, Metals & Mining, Essar Capital, said the overall capital outlay of Rs 13.7 lakh crore would spur the growth of the infrastructure and construction sector in the country, and the direct beneficiary of which will be the domestic steel industry.

 

The finished steel consumption is expected to be 118 million tonnes (MT) in the fiscal year. It will reach 132 MT in the following 2023-24 financial year.

 

 JSW Group Chairman Sajjan Jindal said: "The 40 percent increase in the income tax rebate limit from Rs 5 lakh to Rs 7 Lakh is a huge comfort that this budget has given to our middle-income group and is a great step to strengthen their finances."

 

Terming the scheme to support central and state government and municipalities in replacing their old polluting vehicles as a "master stroke," he said it would boost the manufacturing sector, primarily driven by the auto industry, and bring more efficient machines onto the road.

 

"This government has been giving a huge push to the infrastructure upgradation of our nation, and an increase in spending on road and rail infrastructure is a testament to their philosophy. This will help maintain the momentum of our economic growth, contrary to the world scenario," it is said.

 

"There is a more holistic focus on logistics with significant investments in the railways and proposed work on coastal shipping. The Budget also assigns resources for the long-term and important transition to a greener future. The support to the tourism sector and MSMEs were also much needed as these sectors suffered the most during covid," it is said.

 

Managing Director, Jindal Steel & Power Limited (JSPL), said the government has continued to put focus on infrastructure and construction with a budgetary allocation of Rs 10 lakh crore. This augurs well for the steel and cement industry. These industries will also benefit from the focus on rail and transport infrastructure projects and budgetary allocation to improve urban infrastructure in tier 2 & tier 3 cities.

 

Secretary-General and Executive Head of the Indian Steel Association said, "We got a pro-growth budget with a significant push to capital expenditure to boost the economy. The Budget will steer India toward sustainable development, with a strong focus on infrastructure spending and financial support to MSMEs."

 

CMD, Kamdhenu Ltd, said: "The announcements related to 50 additional airports, heliports, water aerodromes, and advanced landing zones to be revitalized will provide the push for the infrastructure sector, which in turn will create steel demand."

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Fuel subsidies are back: Oil companies will get Rs 30,000 cr for holding petrol and diesel prices.

The Union Budget for 2023-24 will dole out Rs 30,000 crore to state-owned fuel retailers to make up for the massive losses they ran because of holding petrol and diesel prices despite the rise in cost in a bid to help the government contain inflation. Finance Minister Nirmala Sitharaman has allocated the money under the head of "capital support to oil marketing companies." It did not explain why the blue-chip, cash-rich oil PSUs should need capital support.

 

Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) haven't changed petrol and diesel prices since April 6, 2022, despite input crude oil prices rising from USD 102.97 per barrel that month to USD 116.01 per barrel in June and falling to USD 80.92 per barrel this month.

 

They were holding prices when input cost was higher than retail selling prices leading to the three firms posting net earnings loss. They posted a combined net loss of Rs 21,201.18 crore during April-September despite accounting for Rs 22,000 crore announced but have yet to pay LPG subsidy for the past two years.

 

That freeze had led to record high losses of Rs 17.4 per liter on petrol and Rs 27.7 a liter diesel for the week ended June 24, 2022. However, subsequent softening led to losses on petrol being eliminated and diesel coming down to Rs 10-11 a liter. Retail rates have yet to be changed when oil prices well to help the oil companies recoup the massive Rs 50,000 crore under-recovery they ran for holding costs.

 

Sabyasachi Majumdar, Senior Vice President & Group Head - of Corporate Ratings, ICRA Limited, said the budgetary allocation towards capital support to oil marketing companies (OMCs) is Rs 30,000 crore as against the industry's ask of Rs 50,000 crore to compensate for losses incurred on the sale of auto fuels and LPG.

 

"The Government of India, in October 2022, approved a one-time grant of Rs 22,000 crore to PSU OMCs for losses incurred on the sale of LPG, which only partially compensates for the losses incurred," it is said.

 

International oil prices have been turbulent in the last couple of years. It dipped into the negative zone at the start of the pandemic in 2020. It swung wildly in 2022 -- climbing to a 14-year high of nearly USD 140 per barrel in March 2022 after Russia invaded Ukraine, before sliding on weaker demand from top importer China and worries of an economic contraction.

 

But for a nation that is 85 percent dependent on imports, the spike meant adding to already firming inflation and derailing the economic recovery from the pandemic.

 

So, the three fuel retailers, who control roughly 90 percent of the market, froze petrol and diesel prices for the most extended duration in at least two decades. They stopped daily price revision in early November 2021 when rates across the country hit an all-time high, prompting the government to roll back a part of the excise duty hike it had effected during the pandemic to take advantage of low oil prices.

 

The freeze continued into 2022, but the war-led spike in international oil prices prompted a Rs 10 a liter hike in petrol and diesel prices from mid-March before another round of excise duty cut rolled back all of the Rs 13 a liter and Rs 16 per liter increase in taxes on petrol and diesel affected during the pandemic.

 

That followed the current price freeze that began on April 6 and continues.

 

Majumdar said the budgetary allocation for DBT on LPG (domestic) sales is low at Rs 180 crore in ICRA's opinion, which would be a risk for public sector OMCs in case international crude oil or LPG prices rise.

 

The allocation to Indian Strategic Petroleum Reserves (ISPRL) is Rs 5,000 crore for building crude oil reserves. The increase in essential customs duty on Naphtha would benefit the refiners as it would increase their sales realizations on domestic sales, it was added.

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Decarbonizing India's steel sector: opportunities and challenges.

The National Green Hydrogen Mission, approved by the Union Cabinet earlier this month, identifies a significant role for green hydrogen in decarbonizing the steel sector to meet India's climate goals.

 

Steel is a crucial sector of the Indian economy. India is the world's second-largest producer of crude steel and the second-largest consumer of finished steel. In FY 21-22, the sector contributed approximately 2% to the country's GDP and provided about 20 lakh jobs. Moreover, the industry is set for significant growth: the National Steel Policy has set a target to reach 300 million tonnes (MT) of annual production by 2030 from the current level of 120 MT.

 

 At the same time, it is also an emissions-intensive sector. Direct emissions (not counting emissions from purchased electricity use) from iron and steel production stood at approximately 270 million tonnes of carbon dioxide equivalent (MTCO2e) in 2018, comprising about 9% of total national greenhouse gas emissions. Under a business-as-usual scenario, emissions could increase to around 563 MTCO2e in 2030, with the sector's share in national emissions growing to 14%.

 

 

Given this context, efforts to reduce emissions in this sector are essential to put India on a pathway to achieve its net-zero 2070 target. Decarbonizing the steel sector is also necessary from the perspective of the emerging regulatory landscape internationally. For example, the European Union (EU) is set to charge a tariff on carbon emissions from steel imports from 2026 under its Carbon Border Adjustment Mechanism (CBAM), which is expected to be equal to the carbon price paid by European producers in the EU carbon market. As of 2019, the average emissions intensity of Indian steel was approximately 2.06 tonnes of carbon dioxide (TCO2) per tonne, compared to the global average of roughly 1.45 TCO2 per tonne. This could put Indian steel exports at a disadvantage. Without an additional effort to decarbonize, Indian steel exports to the EU could fall by as much as 58% under a CBAM scenario in 2030 (compared to a no-CBAM baseline).

 

 

Existing measures aimed at increasing energy efficiency, such as the Perform Achieve and Trade (PAT) Scheme, or for promoting greater resource efficiency and material circularity, such as the Steel Scrap Recycling Policy, will play an important role in halting the growth of emissions in the short-term. However, they will need to be improved to achieve the deep decarbonization required in the medium to long term. Hydrogen-based production technologies and carbon capture and storage (CCS) will likely play a significant role in helping the sector reduce its long-term emissions.

 

 

The scope for adopting these technologies depends on how steel is produced. There are two primary production routes: the Blast Furnace (BF) route, where coke is the primary fuel, and the Direct Reduced Iron (DRI) route, where the power can be coal or natural gas. India presently produces around 90% of crude steel through the BF and coal-based DRI routes (with an approximately equal share between the two routes). While hydrogen can potentially replace coal or gas in the DRI process entirely, it has a limited role in substituting coke in the BF route. Therefore, a net-zero production scenario for the sector would require a complete transition to green hydrogen-based DRI steel production and the development of CCS options for the BF route.


Industry players have begun exploring the role of both technologies. For example, Tata Steel installed a 5 tonnes per day (TPD) carbon capture plant in Jamshedpur in 2021, while Jindal Stainless Limited (JSL) has announced its intention to set up a green hydrogen plant. However, there are challenges in scaling up these net-zero technologies.

 

 

The first is cost. Do global estimates suggest that the investment for setting up DRI steel plants with upstream green hydrogen generation could reach? 3.2 Lakhs/tonne ($4,000/tonne). Additionally, the cost of green hydrogen at? 300-400/kg ($3.75-$5/kg) is higher than the cost of grey hydrogen at? 160-220/kg ($2-$2.75/kg). Similarly, CCS plants have a high capital cost. Are capital costs approximate for a plant of 1 million tonnes per annum (MTPA) capacity (required for a 1 MTPA BF plant)? 800-1,000 crores ($100-$125 million).

 

 The second is supporting infrastructure. A good support network for hydrogen storage, production, and transportation must be needed. This network infrastructure will have to be scaled significantly to ensure that the green hydrogen demand of approximately 8 MT by 2050 from the sector is met. For CCS, there needs to be more data on the availability of potential geological storage sites and their capacities. A comprehensive national study to assess these capacities is required. Use cases also need to be more robust in scaling up CCS technology.

 

 

The next decade will be crucial for developing confidence in these technologies through pilots and demonstrations and creating the supporting infrastructure for their scale-up. Targeted policy support will help de-risk investments in these technologies and bring out the benefits of economies of scale. The recently announced National Green Hydrogen Mission, which provides financial support? One thousand four hundred sixty-six crores ($183.25 million) for pilot programs across sectors, including steel, is a promising step in this direction. International regulations, such as the CBAM, can provide further impetus to the private sector to accelerate the transition to green steel. To ensure India maintains its global competitiveness in the steel sector while meeting its sustainability goals, industry, and policy action will be essential.

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Budget measures to help India's metal industry outshine China & the world.

The steel industry is one of India's core industries, contributing slightly more than 2% of the GDP. The Indian steel sector outlook, on the back of strong domestic demand from the government and private sectors, is likely to remain firm amid concern about global demand uncertainties in the current fiscal.

 

The demand projection for the sector is looking strong as the Central Government focuses on strengthening the domestic manufacturing base under the Aatmanirbhar Bharat program presents a substantial opportunity for steel production and consumption in India.

 

The production-linked incentive scheme, which intends to incentivize the additional steel production in India, is expected to boost particular steel demand in Automobile & Auto components, consumer durables, solar equipment, telecom, etc. Opportunities in different-different Sectors like Automotive, Capital Goods, Infrastructure, airports, Railways, Power, etc. Moreover, over the long term, the National Steel Policy envisions doubling India's per capita steel consumption to 160 kg in the next ten years from the current 77 kg.

 

It is expected that global demand and prices will remain strong as China will no longer add 50-60 million tonnes to its capacity annually. That country may not export significantly higher quantities to disrupt steel prices globally.

 

However, India Ratings and Research (Ind-Ra) has maintained a "neutral outlook" on the steel sector for FY23, given high raw material inflation that would result in elevated prices and moderation of volume and margin. With the massive availability of minerals in the country, the metal sector is expected to play a significant role in the country's ambitious plans of a sea of-reliant India and USD 5 trillion economies by 2024-25.

 

 Further, the ongoing reduction of China's real estate sector, slower-than-expected private consumption recovery, and the continuing tension between Russia and Ukraine have limited the growth prospect. The world is paying a heavy price for Russia's war in Ukraine. It is a humanitarian disaster, killing thousands and forcing millions from their homes.

 

 The war has also triggered a cost-of-living crisis, affecting people worldwide. When coupled with China's zero-COVID policy, the war has set the global economy on a course of slower growth and rising inflation. Growth is set to be markedly weaker than expected in almost all economies.

 

We hope for an increased allocation of products from the steel sector to be covered under the PLI Scheme giving the industry a much-needed boost. We also hope there is an increased focus by the govt. To scale up the infrastructure sector in the country, which will have a positive domino effect on the steel sector. A reasonable budget for National Highways will also translate into a positive for us, further propelling the sector's growth.


The industry is already under a lot of pressure due to the raw material price hike; the measures stated above will only help the industry look forward to a healthy growth trajectory for both the industry and the economy.

 

The essential positive factor for India is its large and fast-growing middle class, which is helping to drive consumer spending. The country's consumption expenditure is expected to double from $1.5 trillion in 2020 to $3 trillion by 2030. The government's production-linked incentive (PLI) scheme is expected to provide a thrust to the manufacturing sector in FY2022 and FY2023.

 

The domestic steel industry, which grew between 5% to 7% on a year-on-year basis, is expected to play a more significant role in enabling India to achieve the 5 trillion economy target by 2025. The recent government policy announcements about railways, roads, civil aviation, gas pipelines for affordable housing, and increased budgetary allocation to this sector would support a relatively solid demand recovery and drive the need for iron & steel products.

 

So it is pivotal that we have a reasonable budget to help us pip China in the Steel production and consumption race. We remain confident that the Govt. will take the necessary measures to help us achieve that, with the Union Budget being a key component in achieving the objective.

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Rajasthan to have 13 new industrial areas along the Mehsana-Bathinda gas pipeline route.

Rajasthan State Industrial Development and Investment Corporation (RIICO) will develop about 13 new industrial areas along the Mehsana-Bathinda gas pipeline route to give a push to the industrial infrastructure in the state, an official said. These areas will be the hub of furnace-based industries, requiring cost-effective fuel for their production. The gas pipeline will fuel the furnaces, ovens, boilers, turbines, and heaters.

 

Authorized by the Petroleum and Natural Gas Regulatory Board (PNGRB), Gujarat State Petronet Limited installed the 1,650-kilometre gas pipeline, out of which 1,334 km pipeline passes through Rajasthan. The gas pipeline has recently been charged with natural gas, Veenu Gupta, Additional Principal Secretary, Industries and Commerce Department, said in a statement.

 

She said that the state is making significant efforts to strengthen the gas grid in Rajasthan to foster green energy and reduce the cost of operations for industries.

 

Rajasthan is the second-largest natural gas-producing state in India.

 

Shivprasad Nakate, Managing Director of RIICO, said that the Mehsana-Bhatinda gas pipeline in the state would be advantageous for industrial units for the sectors like ceramic, glass, metal casting, textile, cement, automobile, fertilizer, refinery, and steel, among others.

 

Both existing and upcoming industrial areas by the RIICO, next to the Mehsana-Bhatinda gas pipeline, would not only generate fresh job opportunities in the state but also boost the state's revenue, thereby aiding in its overall development, Nakate said.

 

 Within a 5-kilometer buffer zone of the gas pipeline at Udwariya, Pipela Rohida (Abu Road), Bevanja Extension (Ajmer), Renewal (Jaipur North), Bichon (Jaipur Rural), and Malsisar (Jhunjhunu), six industrial areas are proposed.

Additionally, RIICO is looking into the possibility of creating an industrial area in Srinagar (Sawai Madhopur) within a 10-kilometer buffer zone of the pipeline.

 

Similarly, a 25-km buffer zone of the pipeline is being considered by RIICO for the development of six industrial areas at Kalesara, Masuda (Ajmer), Kankani (Boranada), Manda Phase-4 Extension (Jaipur North), Bittan (Jaipur Rural), Padarli-Sindran-Rani (Pali).

 

The 63 RIICO industrial areas near the gas pipeline in Abu Road, Ajmer, Churu, Jaipur, Jhunjhunu, Pali, Rajsamand, Sikar, and Sriganganagar are already functional. Therefore, industrial units operating in these existing industrial areas across the state will significantly benefit.

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ONGC Arun Kumar Singh is now CEO as well.

More than a month after Arun Kumar Singh was appointed chairman of India's largest oil and gas producer ONGC, the retired BPCL head is also the company's CEO, according to a stock exchange filing by ONGC. A chairman and managing director have traditionally headed the oil and Natural Gas Corporation (ONGC). It, however, had a part-time head after Shashi Shanker superannuated on March 31, 2021.

 

The government December 7, named Arun Kumar Singh, who had retired as head of Bharat Petroleum Corporation Ltd (BPCL) a few months back, as the chairman of ONGC but not as its managing director.

 

Now, he has been appointed the CEO of the company as well.

 

"In continuation of our communication dated December 7, 2022, regarding the appointment of Arun Kumar Singh as chairman of the company. It is informed that the Board, at its meeting held on January 24, 2023, has appointed Singh as Chief Executive Officer (CEO). Accordingly, Singh is designated as chairman & CEO of the company," ONGC said in a stock exchange filing.

 

Singh, 60, has been appointed for a three-year tenure with effect from the date of his assumption of charge of the post, according to a DoPT order. He took charge on December 7, 2022.

 

A mechanical engineer from the National Institute of Technology, Patna, Singh was the Director (Marketing) of Bharat Petroleum Corporation Ltd (BPCL) from October 2018 to September 2021, after which he was elevated to chairman and managing director of the company.

 

Singh retired as BPCL head 13 months later, in October 2022, after attaining a superannuation age of 60 years.

 

This is the first instance of a retired executive being appointed as the head of a Maharatna PSU.

 

 A search-cum-selection committee, constituted by the oil ministry, had zeroed in on Singh after interviewing six candidates on August 27, 2022.

 

 Singh was already selected to head the Petroleum and Natural Gas Regulatory Board (PNGRB) before the August 27 interviews.

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Natural gas prices have crashed 50% in less than a month, and now an energy CEO is ringing the alarm.

Natural gas prices have plunged over the past month as an unusually warm winter hits both the US and Europe, denting demand for the heating source.

 

That has one energy CEO ringing the alarm bell, advocating measures for the natural gas industry to take to avoid the same fate of oil companies during the years-long shale bust that started in late 2014.


The decline in natural gas prices has been swift, with the commodity dropping 51% in just under a month.


US natural gas prices fell from just under $7.00 per million British thermal units in mid-December, to $3.22 today. The decline is even worse from a mid-August peak, with prices down 68% from $10.03 per million British thermal units. Benchmark European natural gas futures also fell 50% over the past month.


Natural gas prices soared in 2022 as Europe raced to fill up its reserves ahead of winter as Russia reduced its supplies amid growing tensions over Moscow's war on Ukraine. But with homeowners using less gas so far this season, demand is down and supply is up, creating a potent catalyst in moving prices lower.


To stem a further decline, Chesapeake Energy CEO Nick Dell'Osso is urging his industry to scale back on its growth and reduce gas supplies to help balance out supply and demand.


He said natural gas prices are sending a "very clear signal" to the industry that production needs to fall. "Growth in gas supply is not needed in the short term. We do think the industry should acknowledge that and may reduce growth in the near term," Dell'Osso said in an interview on Wednesday, according to Bloomberg.


Chesapeake could now be close to launching a stock buyback, Bank of America analyst Doug Leggate said in a note, mimicking a tactic used after the shale bust.


The company sold some south Texas shale operations for $1.4 billion to Wildfire Energy this past week and will use proceeds to clean up its balance sheet. BofA thinks Chesapeake paying off debt will help set up bigger returns to shareholders.


If so, Dell'Osso is taking a page from the playbook that big oil used to slow production growth.


As fracking launched the US oil shale boom in the mid-2000s, more and more energy companies raced to buy up shale assets and pump as much oil as possible. But after OPEC in 2014 refused to trim its output to offset soaring shale growth, the flood of new supply caused oil prices to enter a six-year bear market that hurt corporate profits.

Now, big oil is focused less on supply growth and more on profit growth — and rather than reinvest the bulk of its profits into producing more oil, it's paying record dividends to shareholders and launching share buybacks.


A dip in supply would help Chesapeake and the rest of its industry better navigate the recent slump in natural gas prices. And to do that, their priorities need to shift away from production growth and toward profits. A cold spell would help too.

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India's natural gas imports to rise on lower global prices - Petronet LNG.

India's liquefied natural gas (LNG) imports are set to recover as global prices ease, the chief executive of the country's top gas importer, Petronet LNG Ltd, said.

 

Asian spot LNG prices have fallen due to mild weather in Europe and ample inventories, from an average of $30-$35 per million British thermal units (mmBtu) in the December quarter to around $17/mm Btu, it is said.

India wants to raise the share of gas in its energy mix to 15% by 2030 from 6.2%. However, a spike in global gas prices last year, triggered by the Russia-Ukraine conflict, cut demand for cleaner fuel from price-sensitive Indian customers.

 

 "Now the export cargoes are hovering at $17 (million British thermal units). We expect that we will get the movement of more cargoes coming to our country." Singh said at the company's earnings press conference.

"In previous months, it was a lot of volatility," he added.

 

According to government data, India's gas imports in October and November declined by about a fifth to about 1.8 million tonnes from this fiscal year's peak of 2.2 million tonnes in May. Data for December has yet to be released.

 

Due to low local demand, Petronet operated its 17.5 million tonnes a year Dahej LNG terminal on the west coast at 68% capacity in the December quarter. It is said that cap It is said that capacity use has improved to 81% and is expected to rise further as global prices ease gas, mostly procured under long-term deals with Qatar and Australia, to Indian energy companies for sale to end-users. These companies have also booked capacity at Dahej to import gas directly.

 

In the previous quarter, Petronet levied an 8.5 billion rupee ($104.80 million) penalty on Indian companies for not taking the committed volumes of gas from its Dahej import facility, Singh said. ($1 = 81.1050 Indian rupees).

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Nick Walker is the new CEO of Vedanta Cairn Oil and Gas.

On Thursday, Vedanta's Cairn Oil & Gas announced Nick Walker's appointment as the new chief executive officer (CEO) of the company. In a statement, the company said the work is effective January 5.

 

"Before this appointment, Walker was president and chief executive officer at Lundin Energy, one of the leading European independent E&P companies," it is said.

 

Having worked previously in companies like BP, Talisman Energy, and Africa Oil, he has over 30 years of diverse international experience in technical, commercial, and executive leadership roles.

 

He will be the sixth CEO of the company since mining billionaire Anil Agarwal-led group bought the company from Scottish explorer Cairn Energy plc, now known as Capricorn Energy plc, in 2011.

 

Walker comes into Cairn Oil & Gas after Prachur Sah quit the firm to join Indus Towers Ltd (formerly Bharti Infratel Ltd) as managing director and CEO, effective January 3, 2023.

 

Rahul Dhir, the company's first CEO who oversaw its listing and development of India's most significant oil discovery in Rajasthan, quit the company in August 2012. His successor P Elango resigned in May 2014, while the third CEO, Mayank Ashar, resigned in May 2016. After that, Sudhir Mathur left in April 2018. Sah was appointed deputy CEO in October 2020.

 

Announcing the appointment of the new CEO, Anil Agarwal, Chairman of Vedanta Resources Ltd, said, "We welcome Nick as the CEO for Vedanta's Cairn Oil & Gas business and look forward to him driving the company's growth in years to come. Nick's global experience and incredible track record in the energy sector will provide the right expertise as Cairn embarks on the next phase of growth and sustainability."

 

Walker will lead all aspects of Cairn's strategy, including developing strategic alliances with global partners to fast-track business delivery.

 

The statement said he would drive the adoption and deployment of best-in-class oil and gas technologies and processes, focusing on innovation and digitalization for business transformation.

 

"Cairn Oil & Gas is committed to increasing India's domestic crude oil and gas production with a vision to contribute 50 percent of India's production and adding reserves and resources.

 

 "As one of the fastest developing economies, India is seeking to achieve energy self-sufficiency through a marked reduction in oil imports which currently account for 85 percent of national consumption," it is said.

 

India produced 22.1 million tonnes or 442,000 barrels per day of crude oil during the first nine months of the current fiscal year, according to official data from the Union Ministry of Petroleum and Natural Gas.

 

Vedanta, in a stock exchange filing on January 3, 2023, giving out production numbers, stated that its oil and gas production during the October-December quarter was 144,789 barrels per day.

 

 Vedanta Ltd is a subsidiary of Vedanta Resources Ltd.

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India's Steel Production Will Be 117-119 MT In FY23.

Steel production and consumption in India increased by 5.7 percent and 11.5 percent, respectively, during the first nine months of FY23 (April to December), according to a report released by CareEdge Research.


According to the rating agency, India's steel production in FY23 will be in the 117-119 million tonne range, up 3-5 percent yearly. The CareEdge Research further stated that the consumption growth would be solid at 10-12 per cpercentY23, supported by an increase in infrastructure investment and government policy assistance.


The research added that the healthy domestic demand outlook would likely benefit steel players. To serve the growing domestic demand, local steel production will grow backed by sustained high-capacity utilization.


Steel exports fell 54 per percent on year in the first nine months of FY23, owing to sluggish global demand and a 15 percent levy imposed on steel goods from May 2022 to November 2022.


India became a net importer of steel in Q3FY23, with exports falling 38 percent yearly. According to the data, imports in crescent 70 percent during the same period.


The analysis predicts that international steel prices will stay high due to high input costs, especially iron ore and coking coal, and prolonged geopolitical instability. Domestic prices are likewise rising with global pricing, underpinned by strong domestic demand.

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India is now buying 33 times more Russian oil than a year earlier.

India bought a record amount of Russian oil last month, importing a whopping 33 times more than a year earlier.

 

 The world’s third-biggest crude importer purchased an average of 1.2 million barrels a day from Russia in December, according to data from Vortex. That’s 29 per cent more than in November.

 

The country is now easily India’s most significant source of oil after overtaking Iraq and Saudi Arabia several months ago.

 

Indian refiners have been lapping up cheap Russian crude since the invasion of Ukraine caused many buyers to shun the shipments.

 

The sharp increase in December likely results from deepening discounts due to additional sanctions from the G-7 and European Union, including a $60-a-barrel price cap.

 

“Russia has likely offered its crude at an attractive discount to Indian refiners, which have surpassed China as the largest importer of Russian crude,” it is said. It is said that India has stepped up imports of other Russian grades like Arco, Sakhalin, and Varandey in recent months.

 

India meets more than 85 per cent of its oil demand via imports, which makes it highly vulnerable to price volatility. The state-owned refiners, who the government has prevented from raising pump prices of diesel and gasoline since May, have increasingly favoured cheaper Russian imports.

 

Imports from India’s two other leading suppliers also increased last month. According to Vortex, purchasing from Iraq climbed 7 per cent to around 886,000 barrels a day, while those from Saudi Arabia increased 12 per cent to about 748,000 barrels a day.

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The U.K. Not To Impose 4% Countervailing Duty On Certain Indian Steel Products.

The U.K. has agreed not to impose a 4% countervailing duty on certain Indian steel products, a move which would help domestic traders increase shipments, a senior government official said on Monday.


The U.K.'s decision not to impose the CVD on Indian steel bars and rods follows bilateral meetings at the World Trade Organisation in Geneva.


 India's trade defense wing has held bilateral meetings at WTO and argued against the extension of CVD against Indian exporters.

TDW argued that there was no injury to the British domestic industry and requested the U.K. to reconsider the imposition of the duty, the official said.


"So the U.K. has agreed that no injury is being caused to their domestic industry, and this 4% duty would go away. It will help our exporters get greater market access there," the official said.


Similarly, India has successfully persuaded the U.S. department of commerce to significantly reduce the anti-dumping duty on certain Indian quartz surface products.


 In June 2022, the U.S. proposed a duty rate of 161.56%.


 "Due to India's interventions, it has been brought down to 3.19%," the official said, adding now, Indian exporters will become competitive in the U.S. market.


 In 2017-18, India exported these goods worth Rs 264 crore to the U.S., which rose to Rs 3,500 crore in 2021. The U.S. imports these goods worth around Rs 24,000 crore.


 In another case, the U.S. department of commerce has imposed 13% CVD on Indian sodium nitrite, but due to the intervention of India's trade defense wing, it has now reduced to 2.4%.

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Rajnath Singh launches 'Soul of Steel' initiative to promote high-altitude endurance and adventure.

Defence Minister Rajnath Singh on Saturday launched an initiative called 'Soul of Steel' that seeks to promote high-altitude endurance and adventure in Uttarakhand's Garhwal Himalayas. The adventure challenge, spearheaded by a group of veterans, is also to ensure tourism and boost the economy in the mountainous region of Uttarakhand.

 

A total of 12 Indian participants and six international teams will participate in the around-three-month challenge.

 

During his visit to Uttarakhand, the defence minister also launched a website for volunteers to sign up for various adventure activities under the 'Soul of Steel' challenge.

 

The Indian Army is supporting the adventure challenge.

 

 Singh also flagged off the 'Road to the End', a 460-km-long car rally, as part of the initiative.

 

 The rally will reach its destination in the Garhwal Himalayas near Niti village in Chamoli district in the next three days, according to the defence ministry.

 

The 'Soul of Steel' is being organized by CLAW Global, a group of veterans.

 

 "Soul of Steel is a unique blend of specialized skills including high-altitude mountaineering, extreme cold survival, psychological endurance and physical toughness," it is said.

 

 

The challenge opens the domain of niche military skills to an average youth who wishes to challenge his physical and psychological limits, said another organization member.

 

 Through traditional and modern standards, participants will be selected through a detailed screening and training model.

 

 The total cost of the project is around Rs 30 crore.

 

During the program, the official said that they would be trained to operate beyond the assumed limits of their body to discover the limitless realms of their mind, consciousness and spirit.

 

 The project aims to train prospective athletes who wish to compete in this first-of-its-kind international challenge, another member of CLAW Global said.

 

"In this challenge, the toughest will compete, few will sustain, the best will win but everyone will evolve," it is said.

 

 The entire Soul of Steel event will be filmed and presented as a series to inspire a global audience.

 

 The training program will equip the participants with specialist skills, including mountaineering and survival skills, advanced medical skills, self-defense techniques, physical fitness, psychological resilience and endurance.

 

The training will take place in two stages at the biomes established at Gamshali, among other sites leading up to the final challenge at the Nanda Devi National Park, the member said.

 

 He said the Soul of Steel event would lay the foundation to leg adventure sports potential of remote areas of India, boost tourism, engage the youth in skill-based certification programs for gainful employment, and promote active environmental conservation.

 

 It is said that it will stage Uttarakhand on the global tourism map for adventure tourism.

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India and Guyana to join forces in oil and gas.

India and Guyana have agreed to cooperate in the oil and gas sector, including long-term crude purchases from the South American country and investment in its upstream sector.

 

 Oil minister Hardeep Singh Puri met Guyana president Mohamed Irfaan Ali on Thursday.

 

"The leaders agreed on direct government-to-government cooperation across the entire spectrum of the oil and gas sector including increased long-term offtake, participation in exploration and production activities in Guyana, technical cooperation in the midstream and downstream sector and capacity building," the oil ministry said in a statement.

  

The ministry said the leaders agreed to set up two technical teams to take forward these discussions. It added that the contours of future cooperation would be finalized during Guyana's vice president Bharrat Jagdeo's visit to India in February.

 

A contract was also signed between Guyana Power and Gas Inc, a wholly-owned company of the government of Guyana, and Engineers India Ltd for providing consultancy services for a 300 MW power plant project in Guyana.

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Supply chain alternative to lifting local steel prices from Dec lows.

The steel sector in India is expected to see healthy traction owing to supply chain alteration, according to the latest report by rating agency CRISIL.

 

"Global steel prices (free-on-board, China) are set to stabilize in calendar 2023 on-year, after falling over 40 percent to USD 570-590 per tonne in December 2022 from the early-April peaks of USD 1,000 per tonne on tepid steel demand," it is said.

 

Following the global trend, domestic steel prices are expected to soften only a minimal 2-4 percent on-year (for flat steel) in fiscal 2024, after seeing a decline of over 30 percent last December from the historical highs of April, it is said.

 

According to Crisil, flat steel prices had climbed 25 percent in just two months at the onset of the conflict between Russia and Ukraine. Still, they cooled off due to a drop in raw material prices, the imposition of export duty by the government of India, and rising stock levels. However, prices are again set to turn the corner as steel producers face rising input costs.

 

A large part of this is because the Indian steel industry imports 90 percent of its coking coal requirement, majorly from Australia.

 

"While coking coal prices were on a declining trend for the majority of this fiscal, short-term volatility was observed in anticipation of supply chain disruptions. Easing China's unofficial ban on Australian-origin coal import will not only add to further volatility but also alter the supply chain, yet again. While there are reports that three power plants and a steel player in China have already been given the go-ahead to purchase Australian coal, more entities are likely to be allowed," it is said.

 

Since China's unofficial ban, Australian miners and traders have redirected supplies to other Asian and South American destinations. China, on its part, has come to rely on Russian and Mongolian coking coal supplies. These reasons, along with the flattish demand growth forecast in China despite its government's real estate push, will prevent a significant rally in Australian coking coal prices in 2023.

 

"Anticipation of China-Australia coal trade resumption had already driven coking coal prices beyond $300 per tonne by late December. But with the Chinese new year nearing, an uptick in trade volumes between Australia and China is expected only beyond March 2023. However, any major imports by China are anyways unlikely, given that Chinese steel mills have already adjusted to Russian and Mongolian coal over the past two years, which comes at a healthy discount to landed Australian coal. With coal production in Australia unlikely to see any sharp increases due to environmental concerns, coking coal prices are set to stay elevated in 2023 around the $250-300 mark," it is said.


The CRISIL report highlights that along with coking coal, domestic iron ore prices have also steadily risen since the withdrawal of export duty, effective November 2022. Since then, the National Mineral Development Corporation has raised iron ore fines prices by over 30 percent. It is expected that prices are only set to move up further, with expected healthy domestic demand in a pre-election year and improving global iron ore prices, which also rose 20 percent over the past two months.


"Long steel prices for secondary players are also expected to see a small decline, driven by falling thermal coal prices, which, in turn, will drive primary TMT prices lower by an expected 1-3% next fiscal," it was added.

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Fitch sees risks to India's target of raising natural gas' energy share.

Price volatility and infrastructure constraints will challenge India's target of increasing the share of natural gas in its primary energy to 15 percent by 2030 from 6 percent in 2017, Fitch Ratings said in a new report Tuesday. "Progress on the target has been minimal - 6 percent share in 2021 - as natural gas growth has not managed to outpace total energy growth," it said.

 

 This is despite resilient demand from city gas distribution (CGD) networks and rising domestic production.

 

Prime Minister Narendra Modi had in 2017 set a target of raising the share of natural gas in the primary energy consumption basket to cut down emissions.

 

However, the demand for the fuel is rising at a slower rate, with current growth rates only around 53 percent of levels required for the country to meet a 15 percent gas use target. Gas demand by 2030 will only reach 326 million standard cubic meters per day at current 4-5 percent growth rates, much lower than the 611 mmscmd of consumption needed to meet the 15 percent energy mix goal.

 

"We believe that natural gas demand from price-sensitive industrial and power sectors may be limited in times of rising prices, as they switch to cheaper alternate fuels in the absence of robust emission norms," it said. "Gas adoption for mobility and household fuel may also slow when its price benefit against alternate fuels decreases."

 

 It saw inadequate gas pipeline network and expectation of execution delays in some under-construction projects may limit natural gas demand growth to lower than its intrinsic levels, even in times of low prices.

 

Underutilized existing liquefied natural gas (LNG) import infrastructure may slow new CAPEX in the near to medium term, creating temporary bottlenecks in case demand increases sharply.

 

High gas prices and customers switching to alternate fuels may squeeze developers' returns and new CAPEX plans.

 

 Still, the operationalization of new CGD networks, the price advantage of natural gas against other fuels, and increased adoption of the fuel to comply with pollution norms would support long-term NG demand from CGDs, it is said.

 

"We also expect increasing domestic natural gas production, on the ramp-up in operations at India's complex deep-water gas fields, to support consumption in the near to medium term," it said.

 A government-appointed panel has recommended changes to the domestic gas pricing formula, including introducing a floor and ceiling price for gas from legacy fields while continuing the existing ceiling for the gas price from challenging fields.

 

"We believe that any change in the pricing formula remains subject to further government deliberations around considerations of incentivising upstream capex, curtailing inflation and minimising government subsidies while maximising returns, and promoting natural gas as a fuel," it is added.

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Global news of industrial policy's demise was vastly exaggerated

The only significant policy initiative the post-pandemic Indian economy has seen from the Government has been an openness to use Industrial Policy as a tool for economic development. This has predictably elicited howls of protest and indignation from Economists who have classified this "inward" view of the economy as a violation of the Washington Consensus, which recommends free trade, strong institutions, and a mildly indifferent government as the only cure to poverty and lack in less developed economies. India's policy initiatives, radical by historical standards, have been criticized on three grounds. One, Industrial Policy has historically failed. Second, Industrial policy fails because bureaucrats cannot allocate resources as well as markets can and hence can't pick "winners." And lastly, for the above two reasons, Industrial Policy is essentially a "Freebie" scheme that allows large industrialists/monopolists to extract rents from the state.

 

While these arguments are repeated ad nauseam at every forum, very little evidence is provided to support them. Let us first examine the assertion that Industrial Policy has failed historically. This argument is backed by pointing to the rapid improvement in living standards of many countries (predominantly Western) under a free trade regime. Several things could be improved in this argument. The primary one is that for a less developed country to draw lessons from developed countries, it should look at policies employed by developed countries when they were underdeveloped and not when they had already industrialized. Empirically, all advanced economies have aggressively and sometimes violently used Industrial Policy to achieve industrialized status.

 

While this holds for all developed countries, in the interest of space, let us look at the case of the two bastions of free trade and capitalism, the UK and the US. No Industrial policy tool is as hated and scorned by free trade economists as Tariffs. Yet the UK and US were heavy users of tariffs to protect their infant industries when underdeveloped. In a brilliant book, "Kicking Away the Ladder," Ha Joon Chang shows that average import tariffs on manufactured goods in the UK were 55% until 1820 when the UK acquired technological and industrial dominance worldwide. A vital feature of the UK tariff policy was to allow duty-free import of raw materials but impose heavy tariffs on finished goods to encourage value addition in the UK. Heavy restrictions were imposed on finished imports from colonies like India (Calico Act). British merchandise was given duty-free access to Indian markets in the spirit of 18th-century "Free Trade." The result was the total decimation of the Indian Textile Industry which was widely acknowledged as the most sophisticated in the world, and the emergence of Manchester as a textile cluster, with 45% of British textile exports going to India. Many other non-tariff instruments were also used to promote domestic industry, such as the Navigation Act, which mandated that trade with Britain must be conducted on British ships.

No other country in the world has used tariffs for industrialization like the land of the free - The United States of America. So pervasive was Industrial Policy in the 19th and early 20th century the US that Economic historian Paul Bairoch calls America the "Mother Country and the Bastion of Protectionism". Alexander Hamilton, one of the founding fathers of America and the first Secretary of the Treasury, wrote a magnificent treatise on Industrial Policy in general and Tariffs in particular as a tool for development. He christened it "The Report on Manufactures." America doggedly followed the treatise for much of its history. It had close to 50% tariffs on manufactured goods till the 1940s when its Industrial dominance became unchallenged, and it could afford to promote "free trade." In 1875, the US had a per capita GDP that was 3/4th of the UK, then the wealthiest country in the world and yet it had tariffs of 50%. Compared to this, when India joined the WTO, it had to bring down its Tariffs to 32% despite having a per capita income that was a tiny fraction of the US.

Another feature of the US Industrial Policy was technology theft and weak copyright laws. Free Trade economists have the knack of getting their knickers in a twist over the violation of IPR by less developed countries like India. Yet the US, till 1891 (when it was relatively affluent), did not acknowledge foreign copyrights, and US "inventors" could make merry with alien technology behind a protective tariff wall. These anecdotes do not even scratch the surface of the scale and scope of Industrial policy that was employed by developed countries when they were in the same or even a much higher state of development than India. Even now, not taking into account the half a trillion in Industrial subsidies through the recently promulgated IRA and CHIPS Act, America spends close to 1% of its massive 23 trillion GDP on Industrial policy. An oft-repeated quip about American Industrial Policy is that America's most excellent Industrial Policy is to convince the world that it does not have an Industrial Policy.

 

In sum, unlike free trade economists would have us believe, Industrial policy is not back in fashion. This is because Industrial policy was always in style. It was and remained an integral part of any country's development strategy. Doubts about its utility are quite misplaced since the world's most significant economies have used it and continue to use it aggressively. There are several examples of countries that have failed to develop without a coherent Industrial policy (India) but no example of a country that has achieved advanced status without it. The standard strategy followed by these advanced countries has been to use Industrial policy to achieve technological dominance and then advocate free trade from a position of industrial suzerainty to the detriment of less developed countries like India.

 

While India is late to this game, a coherent Industrial policy is critical to our ambitions. The second part of this article will explore in detail the strategic design of Industrial policy and features/instruments of the Industrial approach that differentiates resounding success (Japan, Korea, Taiwan) from pleasant mediocrity (Thailand, Malaysia) and lessons for us from these cases.

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India's Finished Steel Exports Fell 54% From April-Dec.

During the first nine months of the fiscal year, which began in April 2022, India's finished steel exports more than halved, per government data.


Between April-December, exports decreased by 54.1 percent to 4.74 million tonnes as demand plummeted in key international markets and mills struggled to increase shipments in the wake of the recent removal of an export tax.


From April to December, the nation that produces the second-most crude steel globally was a net exporter of the alloy.


Following Russia's invasion of Ukraine, significant steelmakers had intended to increase their share of the global market; however, the higher levies rendered shipments unattractive. In May, New Delhi increased export taxes on eight steel intermediates by 15 percent.


Although the taxes were eliminated in November, mills have complained that it has been difficult to regain market share in established regions, such as Europe.


Between April-December, India's completed steel production climbed 5.7 percent to 87.9 million tonnes, while its consumption increased by 11.5 percent to 85.5 million tonnes.


During that time, India imported 4.4 million tonnes of finished steel, an increase of 27.4 percent from the previous year. Production of crude steel increased by five percent to 92.5 million tonnes.

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KG basin to drive ONGC’s production growth in 2023, say analysts.

State-run Oil and Natural Gas Corporation (ONGC) is expected to see an uptick in production in 2023 with the commencement of projects including the Krishna-Godavari (KG) basin and Sagar Samrat.


The oil giant recently announced that its offshore drilling rig ‘Sagar Samrat’ was commissioned as a Mobile Offshore Production Unit (MOPU) on 23 December 2022.


Analysts are upbeat about the performance of ONGC this year and expect the company’s production to rise. “Sagar Samrat is expected to add ~6,000 barrels of oil per day (bopd) from WO-16, which is ~1-2 percent of ONGC’s existing oil production from domestic blocks. Much more important would be the developments in the KG basin, expected to add 10 percent of existing oil and 20 percent of existing gas production for ONGC,” Swarnendu Bhushan, Oil & Gas Analyst, Institutional Equities, Motilal Oswal Financial Services Ltd, told Moneycontrol.


The Sagar Samrat MOPU will handle up to 20,000 barrels per day of crude oil, with a maximum export gas capacity of 2.36 million cubic meters per day, ONGC said in a press release. The MOPU is also expected to add 6,000 bbls/day (barrels per day) of oil to ONGC’s production in the coming days, the company added.


Sagar Samrat, a jack-up rig, was converted into a MOPU and installed close to the WO-16 wellhead platform on 16 April 2022 for the production, processing, and transportation of oil and gas from the WO-16 Cluster. WO-16 is a cluster of four marginal fields in the Arabian Sea at a water depth of 75-80 m and 130 km from Mumbai which is about 40 km from Mumbai High.


With expectations of the commencement of operations from ONGC’s much-delayed project in the KG basin in the Bay of Bengal, the production growth of the oil giant is anticipated to rise in 2023.


“The decline in oil and gas production came in the backdrop of delays, especially in KG-DWN-98/2. However, with its completion standing at 76 percent as of October ’22, the visibility of first oil from KG-DWN98/2 and rise in gas production appear much stronger,” it is said.


ONGC was initially expected to begin gas production from the Cluster-II fields of the KG-DWN-98/2 or KG-D5 project in June 2019, while oil production was anticipated to begin in March 2020. However, the company missed the deadlines. It blamed the coronavirus restrictions, engineering changes, and project execution challenges.


“ONGC’s MoU targets (standalone, excluding JV share) of 21mt (+8 percent YoY) of oil and 24.3 bcm (billion cubic meters) of gas (+18 percent YoY) are ambitious and predicated on the commencement of KG 98/2 asset after two years+ of delays. With an estimated ~12 mmscmd (million metric standard cubic meters per day) of gas and ~40,000 b/d (barrels per day) of oil production expected by FY25E, the KG asset will account for ~2 mtoe (million tonnes of oil equivalent) of oil and most of ~5 bcm/y gas output boost expected by FY25E,” said ICICI Securities in a note.


India’s crude oil production had fallen 2.67 percent in the fiscal year 2022 as ONGC missed production targets. In FY22, ONGC produced 19.45 million tonnes of crude oil, 13.82 percent lower than the target.


ONGC expects oil production to rise to 22.823 million tonnes and gas production to 22.099 bcm in the current fiscal year, the company’s management told investors in a call.


Analysts also expect the trend to be reversed in 2023 on account of the productivity boost from the KG basin.


“The much-awaited KG-DWN-98/2 is forecasted to reverse this trend from May ’23 by adding peak oil production of 40-45,000 bopd and peak gas production of ~10-12 mmscmd (both by FY25). At the peak, this field would add ~10 percent to ONGC’s domestic oil production and ~20 percent to its current domestic gas production,” it is said.

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Rama Steel reached a new milestone, recording the highest sales volume in Q3.

In intraday trade, shares of Rama Steel Tubes rose 5% to a new high of Rs 185.10 after the business reported its largest sales volume of 53,216.16 tonnes for the December quarter. The shares of a company that manufactures steel pipes and tubes surpassed INR 184.65, a high it reached on December 15, 2022. The S&P BSE Sensex, in contrast, was down 0.07% at 61,127. April through December of FY23 saw a 9-month sales volume of 131,824.79 tonnes compared to 71,071.35 in FY22. The management anticipates that the completion and ramp-up of new capacity expansion at the Khopoli Plant in Maharashtra will result in a further increase in sales volume during the fiscal year FY23.

 

The stock increased by 75% during the last three months, compared to the S&P BSE Sensex's 8% growth. Furthermore, compared to the benchmark index's 16% rise over the previous six months, it soared by 138%. The company's board granted Shankar Sharma, an investor, 1.625 million convertible warrants on a preferential basis on October 12, 2022, at an issue price of INR 112.50 per warrant (plus a premium of INR 111.50). The company stated that upon payment of the final 7% of the issue price, the warrants empower the holder to exercise an option to convert and obtain one equity share having a face value of INR 1, each fully paid up against each warrant within 18 months of the date of allocation.

 

Rama Steel Tubes concentrates on opportunities for business growth from government initiatives like housing for all, affordable housing, smart cities, the national highway development programme, the Swachh Bharat mission, NAL Se JAL, the Jal Shakti Scheme, the RGGVY (Rajiv Gandhi Grameen Vidyutikaran Yojana), the DDUGJY (Deen Dayal Upadhyaya Gram Jyoti Yojana), etc. The business also enters several niche sectors, including supplying steel pipes and tubes to city gas distribution systems and solar energy generating plants.

 

Given its strong brand awareness, pan-Indian operations, variety of product offerings, and extensive dealer network, favourable macroeconomic conditions would boost its competitiveness. Long-standing connections with customers and suppliers, continued capacity development, and new product lines will allow the business to see higher growth in the future.

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