Tag Archives: Europe

Tata Steel and thyssenkrupp JV will be second-largest European flat steel producer

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Singapore/Mumbai: Tata Steel Limited’s (TSL) memorandum of understanding with thyssenkrupp AG to create a 50:50 JV in Europe paves the way for TSL to reduce exposure to a structurally weaker business, says Fitch Ratings.

However, according to Fitch, TSL’s Long-Term Issuer Default Rating (IDR) of ‘BB’ remains on Rating Watch Evolving until further clarity on the proposed JV emerges with the signing of definitive agreements, which is expected by March 2018. In addition, Fitch will look out for details on TSL’s plans to significantly expand capacity in India and evaluate its impact on TSL’s financial metrics and credit profile.

TSL’s operations in Europe face weak regional demand, high conversion costs and lack of captive raw-material sources. Fitch believes the reduction in direct exposure to this industry and the increase in the significance of its more-profitable Indian operations will not only reduce earnings volatility, but also improve TSL’s overall business profile.

TSL’s India operations are highly profitable; they generated EBITDA per tonne of around USD160 in the financial year ended March 2017 (FY17). TSL benefits from significant vertical integration in India as captive mines provided all of its iron ore and 36% of its coal requirements in FY17. The company has been steadily ramping up output from its Kalinganagar plant, which has capacity of 3 million tonnes a year, since its commissioning in May 2016. While recent steel demand growth in India has been muted at around 4% yoy in April-August 2017, the outlook is supported by accelerating public-sector spending and a preferential policy for locally processed steel in government procurement. In addition, long-term anti-dumping duties provide protection from the threat of imports should international steel prices weaken.

The proposed JV, which TSL announced on 20 September 2017, will be called thyssenkrupp Tata Steel. It will be formed on a non-cash basis, with both shareholders contributing assets and liabilities in order to achieve fair valuation. The JV will be the second-largest European flat steel producer with annual shipments of about 21 million tonnes. TSL intends to transfer its European flat steel assets and around EUR2.5 billion of term debt to the JV, while thyssenkrupp (BB+/Rating Watch Positive) would transfer pension liabilities of EUR3.6 billion and its European flat steel assets and steel mill services. The companies expect to sign definitive agreements after due diligence and shareholder approval by March 2018 and close the deal after anti-trust and other regulatory approvals in late 2018.

The proposed JV’s intended capital structure has been designed by the two partners to be self-sustaining, with the ratio of term debt to EBITDA in the last 12 months below 2x and expected cost synergies of EUR400 million-600 million annually. TSL expects to service offshore net debt of around INR170 billion with the help of dividends from the JV. Given the lack of recourse by the JV to TSL and cash-flow exposure limited to dividends, Fitch will use the equity accounting method for this new entity, rather than proportionally consolidate the JV’s financials when assessing TSL. Fitch will also place an emphasis on the significance of the Indian business when assessing the business profile of the group.

TSL has stated that it intends to double its capacity in India from 13 million tonnes in the next five years to enhance its market position. Apart from organic growth at its Kalinganagar and Jamshedpur sites, the company may acquire distressed assets in India. Indian steelmakers Essar Steel, Bhushan Steel and Electrosteel Steels are in bankruptcy proceedings. Fitch believes further details on TSL’s plans are likely to emerge over the next six to nine months. While the company has indicated a financially prudent approach to capacity growth, substantial investments over the next two to three years could hinder sustainable deleveraging. (Fitch Ratings)

TSL’s FFO adjusted net leverage improved to around 5x at FYE17, from 13x at FYE16. We estimate TSL’s leverage to decline further to 4x by FY19, driven by robust EBITDA in India and reduced capex. TSL’s capex averaged around INR120 billion each year over FY14-17 as it set up its Kalinganagar plant, and we assume roughly half of that level will be spent annually over the next three years resulting in positive FCF. However, higher-than-expected spending to pursue capacity growth is a key risk to our estimates.

Reputed scholar and historian compares today’s Kashmir with Syria

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Inside Syria

Chandigarh: Pointing to Kashmir and its fabled sufi culture that has not been visible for thirty years now, historian Rajiv Lochan draws an analogy with the present situation in Syria by underscoring that Syria was a secular country before the outside terrorists stepped in to create havoc in that country.

To draw home his point, Rajiv cites extensively from the interview of Flemish Father Daniël Maes (78), who has witnessed the civil war and lives in the sixth-century-old Mar Yakub monastery in the city of Qara, 90 kilometers north of the capital Damascus. The interview was published under the title ‘The Media Coverage on Syria is the Biggest Media Lie of our Time’ by Ron Paul Institute for Peace and Prosperity.

Excerpts from Father Daniël’s interview:

“The idea that a popular uprising took place against President Assad is completely false. I’ve been in Qara since 2010 and I have seen with my own eyes how agitators from outside Syria organized protests against the government and recruited young people. That was filmed and aired by Al Jazeera to give the impression that a rebellion was taking place. Murders were committed by foreign terrorists, against the Sunni and Christian communities, in an effort to sow religious and ethnic discord among the Syrian people. While in my experience, the Syrian people were actually very united.

Before the war, this was a harmonious country: a secular state in which different religious communities lived side by side peacefully. There was hardly any poverty, education was free, and health care was good. It was only not possible to freely express your political views. But most people did not care about that.”

“When thousands of terrorists settled in Qara, we became afraid for our lives. They came from the Gulf States, Saudi Arabia, Europe, Turkey, Libya, there were many Chechens. They formed a foreign occupation force, all allied to al-Qaeda and other terrorists. Armed to the teeth by the West and their allies with the intention to act against us, they literally said: “This country belongs to us now.” Often, they were drugged, they fought each other, in the evening they fired randomly. We had to hide in the crypts of the monastery for a long time. When the Syrian army chased them away, everybody was happy: the Syrian citizens because they hate the foreign rebels, and we because peace had returned.”

Malaysia Airlines does a U-turn, lifts baggage ban on Europe flights

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malaysia airlinesKuala Lumpur: Malaysia Airlines has announced that it has lifted a ban on check-in baggage on flights to Paris and Amsterdam, after their earlier move to ban angered many passengers who slammed the airline on social media. Taking a quick damage control step, the airline made a pronto detour on its decision. The U-turn came less than 24 hours after the airline announced that passengers would not be allowed check-in baggage for Tuesday and Wednesday flights to the two European cities, the reason being, ‘unseasonably strong headwinds’ on a longer flight path that it has to manoveur about.

The airline elaborated that recently, it had to operate a longer route to Europe, via Egyptian airspace, for safety reasons. As strong headwinds over the past four days were in excess of 200 knots, the natural environmental load caused a fuel burn of high quantum, which could therefore, add up to 15 percent of extra fuel consumption on its Boeing 777 aircraft. The statement spoke thus — Based on its current risk assessment, done on a daily basis, the airline is now able to take a shorter route on European flights. Malaysia Airlines maintains that safety is of utmost priority in its operations and will not hesitate to adjust its flight path based on its daily risk assessment.

Staying shy of giving detail route plan, the Airline did not elaborate on change in route, and airline officials refrained from any comment on it right now. Many passengers left angry comments on the airline’s Facebook page, slamming it for being the only airline to impose such a ban. Varied opinions filled the page, wherein some opined that the airline should have limited the number of passengers and rejected freight instead. Few other passengers preferred a refund of their tickets, and spelt it out on the FB page.

Malaysia Airline has been facing rough weather on the ground too, and, to take cognizance of the situation, last year, the airline appointed its first foreign CEO, Christoph Mueller, the former head of Ireland’s Aer Lingus, to oversee a major restructuring. Mueller has said the airline could break even by 2018 after cutting 6,000 staff, selling surplus aircraft and refurbishing its international fleet. Mueller took to his seat with a baggage of unpleasant history of flights of Malaysia Airlines, as losses of two flights in 2014 had already hit the finances of a struggling Malaysia Airlines. One flight heading to Beijing disappeared and was believed to have crashed in the Indian Ocean. That tragedy was followed months later by the Ukraine disaster.

UNHCR reveals, over one million migrants reached Europe by sea

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migrant crisisNew Delhi : The number of migrants moving across borders has reached to a total head count of over one million, which includes both refugees and migrants in totality. The data provided by he United Nations refugee agency (UNHCR) revealed that more than one million refugees and migrants have reached Europe by sea since the start of 2015.

The breakup of the consolidated data reveals that more than 80% of the 1,000,573 people concentrated in the regions of Greece, and, a majority of them landing on Lesbos island. The migratory refugees who moved in from Turkey to Greece pointed that about 844,000 travelled to Greece from nearby Turkey. Additionally, the others – over 150,000 – crossed the Mediterranean from Libya to Italy.

The migrant crisis of recent calendar years is supposed to be Europe’s worst such migratory swarm of people – men, women and children – since World War Two. The number of sea arrivals, people crossing water bodies to penetrate into safe haven, has increased vastly since 2014, when it was recorded at slightly more than 216,000. The UNHCR stated on its website — Increasing numbers of refugees and migrants take their chances aboard un-seaworthy boats and dinghies in a desperate bid to reach Europe. The vast majority of those attempting this dangerous crossing are in need of international protection, fleeing war, violence and persecution in their country of origin.

The report added that about 49% of those crossing the Mediterranean Sea originated from Syria, and around 21% come from Afghanistan. The number of those dead or missing at sea now totals to 3,735.