McLeod Russel India Ltd. (MRIL), the world’s largest tea plantation company, is engaged in cultivation, production and marketing of tea. The company produces over 70 million kilos of tea from 53 tea estates in 34,000 hectares land spread across Assam and West Bengal. The company operates in India and outside India and accounts for approximately 7.7% of the total tea production in India and approximately 2% of the global tea production.

 
Investment Rationale

• Indian tea prices are expected to rise 15-20 percent in 2009-10 due to absence of winter showers in the growing regions and a crop shortage from Kenya due to a drought and political unrest. Domestic consumption, which is rising at an annual rate of 3-3.5 percent, and firm export demand despite the global recession, are expected to boost prices further.

• The company has increased its exposure in the Middle East, especially Iran, which is predominantly the market for orthodox teas and that is also helping company’s exports. The company is also expected to benefit from its increased presence in the orthodox tea market, as price realisation is 20-25 rupees per kg higher than CTC (crush, tear, curl) variety of tea. McLeod will export over 30 million kgs in 2009, an 11 percent rise from 27 million kgs last year, as overseas demand turns to India in the wake of a shortfall in main rival Kenya.

• McLeod Russel, which recently forayed into Vietnam with purchase of 100% stake in Phu Ben Co., is now looking at Africa for further acquisitions. The company’s aim is to have 15-20 mn kgs of production from overseas over the next 5-10 years. The company has a capex plan of 200-250 million rupees for FY2010.

• The company has asked the Vietnamese Government for an additional 1,000 hectares to step up its production. At present, its production in Vietnam is about 4.5 million kg annually, spread over 1,000 hectares and the company is likely to double its production in Vietnam over the next five years. 

• In 2008-09, McLeod Russel’s total production jumped to 81.5 million kg, including 4.5 million kg from Vietnam. According to company’s management, the figure should be around 84 million kg in 2009-10. 

• Riding on the tea price boom, MRIL clocked a 61.48% rise in its net profit for the quarter ended December 31, 2008. The net profit soared to Rs 48.59 crore for the Q3 of FY09 as compared to Rs 30.09 crore in the corresponding period of the previous year.

§ China,
§ Canada,
§ Japan,
§ South Korea,
§ Spain

The Asia pacific region holds the maximum share in the world zinc production as it has the highest smelter capacity in the world. China is the world leader in both the production of the metal as well as the mine production.

Production of zinc in India
India was one the first countries that started the process of extracting and smelting zinc. Since that time, the country is producing this metal and is one of the oldest countries to do that. Though, India is not a leading player in the production zinc but it is moving in the direction to get self reliant in this context. India has approximately 4.3% share in the total zinc smelter capacity in the Asia pacific region. The largest company, which was indulged in the production of zinc, is a public sector company named Hindustan Zinc Limited. But now, ever since the company got privatized, the Indian industry is completely in the hands of the private sector. It can be said that the zinc industry in India, after privatization, is heading towards a major expansion programme.

The major zinc mines in India which were under the control of the company are

§ Rampura Agucha mine
§ Rajpura Dariba mine
§ Zawar mine

The smelting plants in India engaged in the production of zinc metal are

§ Chanderia Lead Zinc Smelter (CLZS) – Rajasthan
§ Debari Zinc Smelter (DZS) – Rajasthan
§ Vizag Zinc Smelter (VZS) – Andhra Pradesh
§ Binani Zinc Smelter – Kerala

Major uses of zinc are

ä Anti-corrosion coatings on steel (galvanizing)

ä Precision components (die casting)

ä Construction material.

ä Brass-pharmaceuticals and cosmetics

ä Micronutrient for humans, animals and plants

Zinc Batteries
Zinc based energy systems have tremendous advantages including high specific energy, recyclability, safety and zero emissions. Its not surprising then that zinc is used in the manufacture of a variety of battery chemistries, both primary and rechargeable, consumer and industrial.
The most well known of these chemistries are the primary zinc-carbon and alkaline batteries, which together dominate the standard AAA, AA, C and D size consumer battery market. Zinc/Air and Zinc/Silver batteries are also widely used in the electronics industry to power hearing aids, wrist watches, calculators and the like. Industrial Zinc/Silver and Zinc/Nickel batteries are of critical importance in a variety of aeronautic and military applications; while larger Zinc/Air cells have been developed to power electric vehicles and Remote Area Power Supply (RAPS) installations.

Zinc Use in Brass

The Brass Family
Brass is not a single unique metal. Rather, the brasses comprise a family of copper-base alloys in which zinc is the principal alloying element. The amount of zinc present in these alloys ranges from 10% to more than 40%. Besides its traditional use for door handles, lighting fixtures and decorative objects, brass is now an increasingly popular material with architects, interior designers and consumers.
Brass has a warm, natural colour and feel. Brass is also a hygienic material – when used for handles, railings and hardware, it has the added benefit of being bacteriostatic. The names given to alloys in the brass family are, in some cases, as colorful as the metals themselves. Historically and technically, brass is defined as any alloy in which the principal constituents are copper and zinc. Thus, all brasses contain zinc, although other elements may be present. That convention notwithstanding, design parlance collectively identifies all of these alloys as “bronzes”, mainly because of their similar uses, colors and weathering characteristics. For example, designers and architects speak of “white bronzes”, “yellow bronzes”, “statuary bronzes” and even “green bronzes” (after weathering). In fact, the majority of the metals so identified are brasses, or alloys of copper and zinc.Cast brasses offer almost infinite possibilities for artistic expression, not simply for statuary, but as decorative hardware, innovative plumbing fixtures and architectural details. Moreover, cast brasses can be selected by color to match – or contrast – the colors of most wrought brass alloys, an important advantage.

Ageless beauty
The brasses we normally think of are bright yellow in color. Brasses can retain that color indefinitely if properly protected with suitable finishes, but the way brasses change color as they age opens an entirely new dimension to their use in architecture. The very pleasing – and from a corrosion standpoint, very protective – natural patinas that brasses assume as they age have become synonymous with durability and lasting quality. Architects, designers and sculptors take creative advantage of brass’s gradual change in appearance to underscore the timelessness of their structural creations.
Today, it is possible to accelerate brass’s ageing process through the application of chemical treatments. These “artificial patinas” create within hours the protective mineral surface finishes that would take decades to form in nature. Alternatively, durable lacquers and polymeric laminates are now available that can retain the natural beauty of new metal for years, whether indoors or exposed to the atmosphere. The recent development of extremely age-resistant protective finishes, including powder coatings and vapor-deposited organic coatings, is one of the major driving forces behind brass’s growing popularity. Interestingly, some architects have found that the combination of aged patinas and bright “new” metal finishes is especially appealing. The variety of surface finishes and colors available in brass is one more expression of the metal’s almost endless variety.

Environmentally friendly
Finally, it is important to understand that brass is an environmentally friendly metal. Its constituents, copper and zinc, are produced today by energy-efficient processes. More important, though, is the fact that brass is one of the most thoroughly and efficiently recycled of all industrial metals. When brass articles are no longer needed, they are almost never discarded, and brass rarely, if ever, finds its way to a landfill. Rather, brass is remelted and reprocessed to “new” brass many times over. It is simply too valuable to throw away. The efficient recycling process has been going on for thousands of years.

Zinc Compounds
In the chemical industry zinc is used in the form of zinc powders and dusts. These are prepared by pulverizing a stream of molten metal in a jet of compressed air or water. The difference between powder and dust is essentially a matter of fineness, dusts being finer. They are used to purify solutions by cementation or to achieve other reductions. Special grades of zinc powders are also used in alkaline batteries as well as in certain button cells. The electrochemical properties of zinc account for its essential role as a negative electrode in dry (or Leclanché) batteries.
Zinc oxide ZnO, the most widely used zinc compound, is produced by two different methods: the direct or American process, which starts from oxidized materials and involves a reduction step with carbon, followed by oxidation of the zinc vapor in air, and the indirect or French process, which starts from zinc metal and gives a higher purity end product. Zinc oxide is used in the vulcanization of rubber, as well as in ceramics, paints, animal feed and pharmaceuticals, and many other products and processes. A special grade of zinc oxide has long been used in photocopiers. The oxide is also used in varistors (that provide protection against over-voltages). Zinc sulphide ZnS mixed with barium sulphide is used as a white pigment known as lithopone. ZnS is also used as a detector of alpha rays, which render it luminescent.
ZnS and the selenide ZnSe are used in infrared optics. Zinc salts have various applications: zinc chloride in the textile industry, in the manufacturing of Leclanché batteries, and as a scaling flux in galvanizing; zinc sulphate in agriculture and animal feed; zinc phosphate to passivate steels, etc. Organic salts of zinc are used in paints, and zinc stearate is used in the preparation of plastics as well as in powder metallurgy

Zinc Die Castings

Introduction
Die Castings are among the highest volume, mass-produced items manufactured by the metalworking industry. From bathroom fixtures and door and window hardware to office equipment and tools as well as automotive and countless electronic components, zinc castings are truly everywhere and positively impact our lives on a daily basis.

Why Zinc Castings?
For countless decorative and functional applications no other material and process can match the properties and economics of zinc die casting. Zinc casting alloys are stronger than reinforced molded polymers and zinc’s hardness, self lubricating properties, dimensional stability and high modulus make it suitable for working mechanical parts, such as gears and pinions, that would be less durable if molded from polymers. Zinc’s excellent thermal and electrical conductivity, as well as precise casting tolerances, make it an ideal material choice for heat sinks, electrical components and applications requiring electromagnetic shielding. Zinc can be cast at moderate temperatures thus providing significant energy and processing savings over other metals and engineering alloys.Zinc castings also accept a broad assortment of finishes allowing almost any desired aesthetic characteristic and coating durability to be achieved. For example, zinc castings can be made to look like solid gold, weathered brass, stainless steel, and even leather And, because of zinc’s density, cast zinc parts provide a feel of substance and durability that simply cannot be matched by plastic components.

Key Advantages of Zinc Casting Alloys include

Process Flexibility:
Virtually any casting process can be used with zinc alloys to satisfy virtually any quantity and quality requirement. Precision, high-volume die-casting is the most popular casting process. Zinc alloys can also be economically gravity cast for lower volumes using sand, permanent mold, graphite mold and plaster casting technology.

Precision Tolerances:
Zinc alloys are castable to closer tolerances than other metals or molded plastics, therefore presenting the opportunity to reduce or eliminate machining. “Net Shape” or “Zero Machining” manufacturing is a major advantage of zinc casting.

Strength & Ductility:
Zinc alloys offer high strengths (to 60,000 psi) and superior elongation for strong designs and formability for bending, crimping and riveting operations.

Toughness:
Few materials provide the strength and toughness of zinc alloys. Impact resistance is significantly higher than cast aluminium alloys, plastics, and grey cast iron.

Rigidity:
Zinc alloys have the rigidity of metals with modulus of elasticity characteristics equivalent to other die castable materials. Stiffness properties are, therefore, far superior to engineering plastics.

Bearing Properties:
Bushing and wear inserts in component designs can often be eliminated because of zinc’s excellent bearing properties. For example, zinc alloys have outperformed bronze in heavy duty industrial applications.

Easy Finishing:
Zinc castings are readily polished, plated, painted, chromated or anodized for decorative and/or functional service.

ThinWallCastability:
High casting fluidity, regardless of casting process, allows for thinner wall sections to be cast in zinc compared to other metal.

Machinability:
Fast, trouble-free machining characteristics of zinc materials minimize tool wear and machining costs.

Low Energy Costs:
Because of their low melting temperature, zinc alloys require less energy to melt and cast versus other engineering alloys.

Long Tool Life:
Low casting temperatures result in less thermal shock and, therefore, extended life for die casting tools. For example, tooling life can be more than 10 times that of aluminum dies.

Galvanizing:
For over a century, zinc has enhanced the longevity and performance of steel. Zinc coatings provide the most effective and economical way of protecting steel against corrosion which, left unchecked, is estimated to cost an industrialized country’s economy at least 4% of GDP each year. Zinc-coated or galvanized steel offers a unique combination of properties unmatched by any other material. These include:

High strength, Formability, Lightweight, Corrosion resistance, Aesthetics Recyclability

Low cost
For this reason, galvanized steel sheet is an ideal material for a multitude of building and manufacturing applications – from automobiles to household appliances to residential, commercial and industrial construction.

Barrier Protection
Zinc coatings provide a continuous, impervious metallic barrier that does not allow moisture to contact the steel. Without moisture, there is no corrosion, except in certain chemical atmospheres. The effectiveness of zinc coatings in any given environment is directly proportional to coating thickness. Coating life is determined by the coating corrosion rate, itself a function of many factors such as time, composition of the atmosphere and the type of coating. In situations of outdoor exposure, the acidity level of rain will influence the zinc corrosion rate. With indoor exposure – ventilation ducts, floor decks and steel framing, for example – moisture may also be present. In industrial indoor situations, the atmosphere may be corrosive. Thus the type and weight of coating required depends both on the service life needed and the exposure conditions. Corrosion resistance of coatings can also be improved by using a zinc alloy coating, such as Galfan® or Galvalume®, or by applying paint topcoats. These two methods, individually or together, are recommended for exposed sheet applications where enhanced corrosion protection is required.

Cathodic Protection
Another outstanding protection mechanism is zinc’s remarkable ability to galvanically protect steel. When base steel is exposed, such as at a cut edge or scratch, the steel is cathodically protected by the sacrificial corrosion of the zinc coating adjacent to the steel. In practice, this means that a zinc coating is not undercut because the steel cannot corrode adjacent to a zinc coating. This contrasts with paint and aluminum coatings where the corroding steel progressively undercuts the surrounding barrier film. The extent of this cathodic protection is determined by the type of coating, its thickness and that of the underlying steel, as well as by the area of damage. When painted zinc-coated steel is scratched, zinc protects both the underlying steel from corrosion and the overlying paint coat from lifting.

Zinc Sheet
Zinc sheet is used extensively in the building industry for roofing, flashing and weathering applications. Architectural alloys generally contain copper and titanium and are produced in the form of sheet, strip, plate and rods and are used as such, or cut and formed to desired shapes, such as gutters, cornices and pipes. Zinc sheet is also used in graphic art to make plates and blocks, as well as battery cans and coinage. Today, zinc sheet is typically produced by continuous casting/rolling. Zinc is melted in an induction furnace, and the molten metal is poured between the two endless bands of a Hazelett machine, where it solidifies. The continuous ‘ingot’ delivered at the other end can be more than 1 m wide and from 10 to 20 mm thick. The endless strip is fed continuously to a rolling mill, which reduces the thickness to the desired level in successive passes, after which it is cut to size and coiled.

Zinc and Crops
Zinc is essential for the normal healthy growth and reproduction of plants, animals and humans. When the supply of zinc to plants is inadequate, crop yields are reduced and the quality of crop products is often impaired. Zinc is required in small but critical concentrations to allow several key plant physiological pathways to function normally. These pathways have important roles in: Photosynthesis and sugar formation, Protein synthesis Fertility and seed production Growth regulation Defense against disease.

Hydrogen can be produced from zinc using solar power
Hydrogen is considered by many as the pollution-free fuel of the future, except that producing it still involves burning fossil fuels. Scientists at the Weidman Institute in Israel have discovered a clean, safe and inexpensive way to produce hydrogen, using solar energy to produce zinc from zinc oxide

Zinc Applications: First & End Uses
Over 7 million tons of zinc are produced annually worldwide. Nearly 50% of the amount is used for galvanizing to protect steel from corrosion. Approximately 19% are used to produce brass and 16% go into the production of zinc base alloys to supply e.g. the die casting industry. Significant amounts are also utilized for compounds such as zinc oxide and zinc sulfate and semi-manufactures including roofing, gutters and down-pipes.

Zinc recycling process

Zinc Recycling
At present, approximately 70% of the zinc produced worldwide originates from mined ores and 30% from recycled or secondary zinc. The level of recycling is increasing each year, in step with progress in the technology of zinc production and zinc recycling. Today, over 80% of the zinc available for recycling is indeed recycled. Zinc is recycled at all stages of production and use – for example, from scrap that arises during the production of galvanized steel sheet, from scrap generated during manufacturing and installation processes, and from end-of-life products.

The Zinc Recycling Circuit
Zinc-coated steel and other zinc containing products are slow to enter the recycling circuit due to the very nature of their durability. The life of zinc-containing products is variable and can range from 10-15 years for cars or household appliances, to over 100 years for zinc sheet used for roofing. Street lighting columns made of zinc-coated steel can remain in service for 40 years or much longer, and transmission towers for over 70 years. All these products tend to be replaced due to obsolescence, not because the zinc has ceased to protect the underlying steel. For example, zinc coated steel poles placed in the Australian outback a hundred years ago are still in excellent condition (3).
The presence of zinc coating on steel does not restrict steel’s recyclability and all types of zinc-coated products are recyclable (4). Zinc coated steel is recycled along with other steel scrap during the steel production process – the zinc volatilizes and is then recovered.
Zinc coated steels are easily collected and treated in existing process streams. The Electric Arc Furnace (EAF) is the most widely used process for recycling zinc-coated steel. The high temperatures cause zinc – which is volatile at high temperatures – to leave the furnace along with other gases. The gas stream is treated and the zinc collected in the dust, of which zinc (18-35%) and iron are the main constituents. These dusts undergo an enrichment process in a rotary kiln, known as a Waelz kiln. This leads to the production of zinc oxide, which in turn becomes a raw material for the production of zinc metal. Several new technologies are in use or under development for processing EAF dusts and the valuable metals they contain.

INVESTMENT RATIONALE

§ Co. plans to put 3,000 MW capacities on commercial generation during the year. Out of this, 1,000 MW capacity has already been put on commercial generation at Sipat (500 MW) and Kahalgaon (500 MW). The remaining 2,000 MW to be put under commercial operation will include 2 units of 250 MW each at Bhilai, one unit of 500 MW at Sipat and 2 units of 500 MW each at Kahalgaon.

§ Capacity utilization (PLF) of coal based power plants reached 92.24 per cent in 2007-08 compared to the national PLF of 78.61 per cent.

§ NTPC has been on a rapid expansion spree over the past few years, during which, it invested around Rs 23,000 crore in fixed assets. Since it also generated cash of Rs 24,000 crore from operations, it did not have to raise extra cash from other sources. The company plans to invest nearly Rs 13,600 crore during FY09, over and above an investment of Rs 8,200 crore in FY08. Currently, a capacity of 16,180 mw is under construction, including 3,750 mw in JV companies, which will be completed by FY12. Of this, 2,800 mw will be completed in FY09, which can add about Rs 700 crore to the bottomline.

§ The company is developing three hydel power plants, totalling 2,000 mw, as a diversification move.

§ An important element of its operations is that it is selling power at Rs 1.84 per unit, as per the rules laid down by the power regulator, which is much lower than the spot price. As the market is freed up over a period of time, the company stands to gain the most.

§ While its expansions may require high leveraging, NTPC looks well-placed with a reasonable debt-equity ratio of 0.52. This contrasts with a debt-equity ratio of 2.3, which is allowed for a generation company. This leaves enough room for the company to raise debt, if required.

§ NTPC is planning to use inland waterways to transport imported coal from seaports to its power stations in an effort to limit the transportation costs, for which it has joined hands with Inland Waterways Authority of India.

§ Co. is participating in the entire value chain of power development to contribute to the Government’s commitment of providing power for all by 2012.

§ NTPC has formed a JV with BHEL, incorporated as ‘NTPC BHEL Power Projects Private Limited’ for manufacturing balance-of-plant (BoP) equipments and main-plant equipments. This JV will also operate in the EPC space.

§ Company has another JV incorporated as “BF NTPC Energy Systems Limited” with Bharat Forge. This will also help in meeting requirement of balance of plant equipment.

§ NTPC has formed a JV with Bihar State Electricity Board under the name Nabinagar Power Generating Company on Sept.’08 for setting-up of a coal based power project having capacity of 1980 MW (3 X 660 MW) and operation & maintenance thereof at Nabinagar in district Aurangabad of State of Bihar.

The balance of payments comprises the current account, the capital account, and the financial account.

-The current account consists of the goods and services account, the primary income account and the secondary income account.
-The financial account records transactions that involve financial assets and liabilities and that take place between residents and nonresidents.
-The capital account in the international accounts shows (1) capital transfers receivable and payable; and (2) the acquisition and disposal of nonproduced nonfinancial assets.

The Current Account
The difference between a nation’s total exports of goods, services and transfers, and its total imports of them. Current account balance calculations exclude transactions in financial assets and liabilities. The current account is used to mark the inflow and outflow of goods and services into a country. Earnings on investments, both public and private, are also put into the current account. Within the current account are credits and debits on the trade of merchandise, which includes goods such as raw materials and manufactured goods that are bought, sold or given away (possibly in the form of aid). Services refer to receipts from tourism, transportation (like the levy that must be paid in Egypt when a ship passes through the Suez Canal), engineering, business service fees (from lawyers or management consulting, for example), and royalties from patents and copyrights. When combined, goods and services together make up a country’s balance of trade (BOT). The BOT is typically the biggest bulk of a country’s balance of payments as it makes up total imports and exports. If a country has a balance of trade deficit, it imports more than it exports, and if it has a balance of trade surplus, it exports more than it imports.

Receipts from income-generating assets such as stocks (in the form of dividends) are also recorded in the current account. The last component of the current account is unilateral transfers. These are credits that are mostly worker’s remittances, which are salaries sent back into the home country of a national working abroad, as well as foreign aid that is directly received.

Capital Account
An account that tracks the movement of funds for investments and loans into and out of a country. The capital account makes up part of the balance of payments. The net result of public and private international investments flowing in and out of a country. The net results includes foreign direct investment, plus changes in holdings of stocks, bonds, loans, bank accounts, and currencies.

The capital account is where all international capital transfers are recorded. This refers to the acquisition or disposal of non-financial assets (for example, a physical asset such as land) and non-produced assets, which are needed for production but have not been produced, like a mine used for the extraction of diamonds.

The capital account is broken down into the monetary flows branching from debt forgiveness, the transfer of goods, and financial assets by migrants leaving or entering a country, the transfer of ownership on fixed assets (assets such as equipment used in the production process to generate income), the transfer of funds received to the sale or acquisition of fixed assets, gift and inheritance taxes, death levies, and, finally, uninsured damage to fixed assets.

Fiscal Deficit
When a government’s total expenditures exceed the revenue that it generates (excluding money from borrowings). Deficit differs from debt, which is an accumulation of yearly deficits.
A fiscal deficit is often funded by issuing bonds, like treasury bills or consols.

Revenue Deficit
When the net amount received (revenues less expenditures) falls short of the projected net amount to be received. This occurs when the actual amount of revenue received and/or the actual amount of expenditures do not correspond with predicted revenue and expenditure figures.

Trade Deficit
An economic measure of a negative balance of trade in which a country’s imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.