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Steel industry will see shift in market share: JSW Steel

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JSW Steel sees an opportunity as a market share shift takes place in the steel industry with the MSME and secondary producers not being able to ramp up in these challenging times.

In an interview with IANS, Seshagiri Rao, Joint Managing Director, JSW Steel and Group CFO, said the company has given a guidance for 16 million tons of steel production and 15 million tons of sales.

“Whatever we are down in quarter one, we will be able to make up in the remaining three quarters,” he said.

Rao added that JSW has a history of delivering 4 million tons every quarter, repeatedly quarter after quarter. “Notwithstanding slow recovery in domestic demand, we are geared to deliver what we committed in the guidance,” he said. He said April was a washout for the company due to the Covid-19 lockdown.

JSW Steel Ltd is the flagship company of the diversified $12 billion JSW Group which has a leading presence in sectors such as steel, energy, infrastructure, cement, sports, among others.

Rao said that demand has been recovering month after month and while in April, it was 9 per cent of normal, it went up to 35 per cent in May and 55 per cent in June. “There is a steady improvement in demand and gradual recovery in demand will happen. If there is a shortfall in domestic demand, then it will be exported.”

Flagging an important dynamic in steel production, he said that in the first quarter, crude steel production was down by 43 per cent but six major players delivered 74 per cent of production.

“MSMEs, secondary players, in these challenging times are not able to ramp up capacity like they used to,” he said. In the steel sector, 60 per cent production is with primary, or big, players, and 40 per cent is with secondary players.

However, now, 60 per cent of the players are producing 75 per cent of the steel. “So because of this change, there will be a shift in the market share of the industry. While some gradual recovery will happen, big players will take the market share. This is where the opportunity lies for JSW,” Rao said.

JSW will close the proposed acquisitions of Asian Colour and Bhushan Power and Steel in the current financial year, Rao said. In the case of BPSL, three litigations are in the Supreme Court, which are crucial for the company’s plan.

On the domestic steel demand trends, he said that forecasts for Indian steel demand vary from a fall of 8 per cent to 18 per cent, which is a very wide range.

“My view is a 9 per cent fall in steel demand. Last year, the demand was 100 million tons and this year, it will be 90-95 million tons. I don’t think a fall of 18-20 per cent will happen,” Rao said.

On the Covid-19 incident in the JSW site in Vijaynagar, Rao said the recovery rate is 80 per cent and other staff are also healthy and active. Around 700 cases were detected and the company took all preventive measures to ensure that the employees are safe and the
plant also functions normally.

The number of employees critical for operating the plant were moved to the township and the factory was sealed and that’s how the spread of the infection was controlled, he added.

JSW has forecast an improvement in overseas operations in US and Italy from the next quarter.

On the trend of Indian companies buying overseas assets, Rao said that whichever companies have ventured outside India, there are very few examples that are successful.

He added that given the trend happening globally of supply chain realignment, it will give a huge scope for a quantum jump of the Indian growth story. He said there is opportunity in India itself and a lot of groups will refocus on India.

Rao added that the JSW is working hard to deliver the guidance for the fiscal. It expects to become profitable in the next nine months. The target is to complete the balance projects and acquisitions.

“This year is a year of consolidation. We see a lot of hope next year. JSW will add capacity to 25 million tons next year from 18 million tons currently. Backward integration of iron ore is planned next year. Next year, we will see growth. There are a lot of positives in next nine months and (we are) getting ready for the growth next year,” Rao said.

The company reported crude steel production of 2.96 million tonnes, with average capacity utilisation of 66 per cent for the quarter – as compared to an average utilisation of 46 per cent for the Indian steel industry.

Business

Cryptocurrency Hyper Fund under govt scanner

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The government is keeping a close eye on cryptocurrency floating in the market based out of the country folowing alert that agencies responsible to check financial fraud are watching a company called Hyper Fund.

Sources said Hyper Fund, a DEFI by Hyper Tech Group has come under the radar recently. The Group claims to have launched the Hyper Fund to provide a decentralized financial infrastructure. Hyper Fund was announced in mid-2020.

As per the company website it is led by Ryan Xu, however, with the Multi-Level Marketing (MLM) model Hyper Fund has been luring investors with higher returns and such offerings, a common practice under Ponzi Schemes, that got the authorities alerted in the first place.

According to sources, complaints against such Funds have started pouring in several states. In India, the RBI, Union Finance Ministry and SEBI had warned people against cryptocurrency trading. The RBI is planning to launch India’s official digital currency- E Rupee soon.

The Finance Ministry has clarified that Virtual currencies are also not legal tender. Hence, VCs are not currencies. The RBI has also clarified that it has not given any licence/ authorization to any entity/ company to operate or deal with Bitcoin or any virtual currency.

In June 2018, Amit Bhardwaj was arrested at the Delhi Airport by Pune police along with his brother Vivek Bhardwaj in connection with an alleged Ponzi scheme. Bhardwaj, started his own bitcoin mining operations and allegedly cheated more than 8,000 people to the tune of Rs 2,000 crore from across the country.

He has lodged a complaint with the Delhi Police special cell, alleging that he received an extortion call and was asked to pay protection money on September 6, 2021. He had setup multi-level marketing (MLM) scam by luring investors to give him Bitcoins in return for promised higher returns, police had alleged.

Regulators in UK have issued warning against such fund and the Financial Conduct Authority (FCA) have warnings issued for both Hyper Fund and Fund Advisor.

On its website, which was first published on in March 23 ,2021 and later updated on August 31, the FCA said, “We believe this firm may be providing financial services or products in the UK without our authorisation. Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised or registered by us. This firm is not authorised by us and is targeting people in the UK.”

Warning investors about such fund, it further said: “You will not have access to the Financial Ombudsman Service or be protected by the Financial Services Compensation Scheme (FSCS), so you are unlikely to get your money back if things go wrong.”

The Website used by these companies as per FCA ar http://thehyperfund.online, https://thehyperfund.com/

Decentralised Finance (DEFI) offering through blockchain technology by HyperTech Group, which is said to be based out from Hong Kong, as sources said Indian Regulators and Authorities have started monitoring the situation.

Following the measures taken by financial regulators such as the US Security and Exchange Commission and the UK’s Financial Conduct Authority, Indian regulators and enforcement authorities have started monitoring investment in Hyper Fund — a Decentralised Finance offering through blockchain technology by HyperTech Group.

Globally, Financial regulators acknowledge the fact that Ponzi scheme organizers often use the latest innovation, technology, product or growth industry to entice investors and give their scheme the promise of high returns. Potential investors are often less skeptical of an investment opportunity when assessing something novel, new or “cutting-edge.” On its website, Hyper Fund claims to be �The Strongest Rocket in Blockchain Finance’

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Greed & Fear: Profit booking, global volatility to impact stock moves

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Sky-high valuations along with global tapering fears will impact stock market movements during the upcoming week.

Accordingly, market observers, pointed out high possibility of profit booking led slide on the back premium valuations and likely absence of positive domestic triggers.

Nonetheless, key indices — S&P BSE Sensex and NSE Nifty50 — are expected to reach new intra-day record highs of 60,000 points and 18,000-mark, respectively.

Last Friday, the Sensex closed at 59,015.89 points after making an intra-day record high of 59,700, while Nifty ended the day’s trade at 17,585.15 points.

It had breached the 17,790 level intra-day on last Friday.

“Broad market correction amidst high volumes gives the first hint of distribution,” said Deepak Jasani, Head of Retail Research, HDFC Securities.

“An adverse US Fed meet outcome next week could accelerate the correction that is typical in September, especially in the US markets.”

According to Motilal Oswal Financial Services’ Retail Research Head Siddhartha Khemka: “Valuations are not comfortable and hence could lead to bouts of profit booking. The weak global cues on account of worry over slower economic growth and rising Delta variant cases globally would keep market oscillating between greed and fear.”

“Nervousness would be seen in the market next week ahead of Federal Reserve and ECB meeting, which could provide some indications on when the central banks will start withdrawing their monetary stimulus and start raising interest rates eventually.”

Any timelines for tapering measures in the US can potentially drive FPIs (Foreign Portfolio Investors) away from emerging markets such as India.

Significantly, the recent sizeable inflow of FPI funds has been credited to have lifted the domestic markets to record high levels.

In addition, Geojit Financial Services’ Research Head Vinod Nair said: “In the coming week, the global focus will be on the policy meetings of a few central banks including the Fed.”

“With weak US job data and inflation increasing at a slower pace, Fed is not expected to hint on taper plans in the upcoming meeting.”

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Covid might shift India’s growth model

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 The Covid-19 pandemic could act as an inflection point to shift India’s growth model from being consumption driven to investments-led.

In its Ecoscope report, Motilal Oswal Financial Services, said: “With Covid-19 hurting India’s ‘Household’ (HH) and ‘Government’ sectors adversely, the continuity of strong consumption growth is in question.”

“On the contrary, with listed companies’ financial positions improving and an uptick in household investments in the Real Estate sector (called physical savings), the narrative of investment-led recovery is gaining momentum.”

The report prescribed that various economic participants – households, governments, listed companies, and unlisted corporates — to increase their fixed asset investments in the immediate future based on their financial position.

At present, the listed and unlisted corporate sector accounts for only about half of total investments in India.

The ‘HH’ sector including unincorporated enterprises accounts for 35-40 per cent in India’s investments, while the remaining 12-13 per cent is contributed by centre and states governments.

Besides, the report cited that demand environment is expected to remain subdued due to weak financial position of ‘HH’ and government sector.

“Despite household investments picking up strongly in 2HFY21, given that Indian households bore the maximum brunt of Covid-led losses in CY20 (and CY21), we believe household spending would remain subdued over the next few years.”

It further pointed out that unless ‘HH’, ‘Unlisted Corporate’, and government sectors can improve their financial positions — leading to a demand uptick — a strong revival in investments seems challenging.

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