Tag: Red Sea

Strife in the Red Sea continues to rattle India Inc

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The conflict in the Red Sea region continues to rattle Indian companies, as nearly 50 companies mentioned disruptions in their latest earnings calls for the financial year 2024.

An analysis of earnings call transcripts available on Bloomberg shows, even though a lower number of companies spoke about the issues in Q4 compared to the preceding quarter, the impact is still evident in many of them as it narrowed their margins due to higher freight costs. However, about 100 companies had discussed the Red Sea crisis in their December quarter analyst calls.

Among the list of companies, pharma major Glenmark Life Sciences saw the highest mention, with the issue flaring up 10 times during the earnings call. The generic API revenue of Glenmark Life Sciences increased 7% year-on-year (YoY) to ₹2,042 crore in FY24. In its earnings call, the company said that segment revenue during the March quarter stood at ₹485 crore and was impacted owing to the Red Sea crisis and the subdued performance of the GPL business.

While the word “Red Sea” appeared eight times in LT Foods’ transcript, and seven times in Welspun Living, Ajanta Pharma and Aeroflex Industries. Other companies like Gravita India, Ramkrishna Forgings and Jindal Stainless also saw the issues being cited six times each in their earnings calls.

Majorly, companies from pharma, textiles, agri and metals featured in the list. While escalations in freight costs were seen due to increased voyage time, the mandatory war risk insurance further upped operating costs. “Red Sea challenges also resulted in an overall increase in ocean freight, which impacted our sales and margins during the quarter,” said Deepak Jain, MD and CEO of Jubilant Ingrevia.

The Red Sea, a vital oceanic channel connecting Asia and Europe, has been witnessing a rise in piracy and military activities in recent times. Indian companies use the Red Sea route through the Suez Canal to trade with Europe, North America, North Africa and parts of West Asia. According to rating agency CRISIL, these regions accounted for 50% of India’s exports and 30% of the country’s imports in FY23.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Red Sea crisis: Maersk could cut Asia-Europe capacity by 20%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Disruption to Red Sea container shipping is rising, Maersk said on Monday, forecasting this will cut the industry’s capacity between Asia and Europe by up to 20% in the second quarter.

Maersk and other shipping companies have diverted vessels around Africa’s Cape of Good Hope since December to avoid attacks by Iran-aligned Houthi militants in the Red Sea, with the longer voyage times pushing freight rates higher.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Red Sea diversions spew carbon emissions equal to nine million cars

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ships seeking to avoid ongoing attacks by Houthi rebels in the Red Sea area are emitting millions of additional tons of carbon, making it tougher for companies using ocean freight to reduce pollution across their supply chains.

Instead of passing through Egypt’s Suez Canal, hundreds of vessels since mid-December are sailing around South Africa’s Cape of Good Hope — a detour that adds at least a week to the journey between South Asia and northern Europe.

The additional fuel burned has led to approximately an extra 13.6 million tons of CO2 emissions over the past four months — equivalent to the pollution of about nine million cars over that same period, according to a report from consultancy INVERTO, a subsidiary of Boston Consulting Group Inc.

“The extra emissions resulting from this crisis will increase companies’ carbon footprints – making it very hard to hit their net zero targets,” said Sushank Agarwal, a managing director at the company. “To meet these targets, companies will either need to reduce emissions elsewhere in their supply chains or invest in more carbon offset initiatives — both can be very costly.”

While significant, the extra emissions are a fraction of what the shipping industry — which carries 80% of world trade — spews into the atmosphere each year. The sector’s global regulator, the International Maritime Organization, is working on the world’s first global carbon levy, though it’s not set to come into force until 2027. Meanwhile, the planet continues to warm.

A separate report from Xeneta, an Oslo-based freight-analytics company, focuses specifically on container shipping and showed carbon emissions sailing from Asia to the Mediterranean rose by 63% last quarter compared with the final three months of 2023.

The Xeneta and Marine Benchmark Carbon Emissions Index, a gauge of carbon emissions per ton of cargo transported along the world’s top 13 trade lanes, reached its highest level in the first quarter in records going back to 2018.

“Ships are also being sailed at higher speeds in an attempt to make up time due to the longer distances, which again results in more carbon being burned,” said Emily Stausbøll, a market analyst at Xeneta.

According to data from Clarkson Research Services Ltd., the average speed of the world’s largest container ships jumped above 16 knots after the Red Sea attacks intensified and mass shipping diversions began in mid-December, compared with speeds under 15 knots earlier that month.

The nine million cars calculation cited by INVERTO is based on a US Environmental Protection Agency estimate for a typical passenger vehicle. Using an International Energy Agency estimate for a year of emissions, the 13.6 million tons of CO2 are equivalent to that of 13.6 million passenger vehicles over four months, the report said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Will crude oil prices reach triple digits? An energy expert weighs in

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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While Brent crude prices are generally expected to hover around $90 per barrel mark, Amrita Sen, Founder and Director-Research, Energy Aspects sees the potential for it to reach triple-digits if geopolitical tensions get out of hand.

“The one that is potentially a threat to supply and probably the biggest threat this year is Ukraine-Russia,” she said.

Global benchmark Brent traded below $88 a barrel after slumping by 3% on April 17, while West Texas Intermediate was near $83. US crude inventories rose by 2.7 million barrels last week, hitting the highest level since last June, while gauges of fuel demand declined.

Sen, however, does not foresee any significant supply disruption for oil and gas from geopolitical tensions.

“But that doesn’t mean that the tensions are going to go away anytime soon and we do believe that the market will remain fairly choppy,” she said.

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She believes, that the US is probably going to draw down 30 million from the strategic reserves to keep prices low but that could be probably at $100 per barrel.

“So we are still $10 per barrel away from that but we do believe that the US is going to turn a blind eye or continue to turn a blind eye towards Iran, maybe they do not reimpose sanctions on Venezuela which will benefit Indian refiners a lot,” she said.

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At the end of the day, the fundamentals are strong enough that oil prices are not going to go down too much, she said.

Indian demand, she believes, continues to remain strong.

“Overall, and most structurally, we remain very constructive on the gasoline side, more people driving, better roads and infrastructure, and with elections coming up, there is going to be a lot of support for demand,” she explained.

Also Read | Oil prices dip as demand concerns outweigh Middle East supply fears

She expects the trade disruptions caused by the Red Sea crisis to continue.

But she also senses a bit of optimism around global demand because of the expectations of a rate cut by the US Federal Reserve.

“Our view also is that the Fed is going to cut rates but I would warn that if oil prices were to spike higher and inflation concerns come back, I think it will be a lot harder for the Fed to cut three times as the market expects,” she stated.

For more, watch the accompanying video

With input from agencies

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Vinati Organics MD expects minimal benefits from anti-dumping duty on butylphenol

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vinati Saraf Mutreja, Managing Director of Vinati Organics says the anti-dumping duty imposed by the government on imports of a key chemical compound is not likely to lead to any significant gains for the company.

The Ministry of Finance imposed an anti-dumping duty on imports of para-tertiary butyl-phenol (PTBP) last month.

“The impact of this duty is not very significant because PTBP product as a whole is not a very large product (less than 10% of overall revenue) in our portfolio,” she said.

The potential benefit of the duty would be around ₹4 crore, she said.

Mutreja said that the fourth quarter of the last financial year has been particularly strong.

The new financial year (FY25) is expected to outpace FY24 by 20-25% as the trend of destocking seems to be nearing its conclusion, she stated.

“We are seeing good recovery for most of the products, customers are sitting on very little or zero inventory and hence the reordering has picked up,” she said.

Most of the demand is coming from the export market and in “Domestic as well, we are seeing demand shaping up quite strongly.”

She believes that because of the Red Sea issue and bridge collapse in Baltimore, freight rates to the US and Europe have doubled from all-time lows.

“But we have seen many highs during COVID, so it has still not gone up to those levels, it is still 30% of that. It is being transferred and most customers are obeying that cost,” she said.

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The company is expanding and adding a new line for 2-Acrylamido 2 Methylpropane Sulfonic Acid (ATBS), which is about ₹300 crore investment and is expected to be completed by December 2024.

On March 11 this year, the company subscribed to an additional ₹499 crore fully paid-up equity shares of its wholly-owned subsidiary, Veeral Organics Private Limited (VOPL).

“We have almost commercialised and started trial production in VOPL, which is our subsidiary where we have new niche products like MEHQ, Guaiacol and a few others,” she explained.

The current market capitalisation of the company is ₹15,674.26 crore.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India brings back 35 Somali pirates as part of operations near Red Sea

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Indian navy handed over 35 Somali pirates to the police in Mumbai on Saturday, after 100 days of anti-piracy operations east of the Red Sea, where piracy has resurfaced for the first time in nearly a decade.

India, the largest national force in the Gulf of Aden and northern Arabian Sea region, captured the pirates from the cargo ship Ruen last week, three months after it was hijacked off the Somali coast.

Taking advantage of Western forces’ focus on protecting shipping from attacks in the Red Sea by Yemen’s Iranian-backed Houthi militants, pirates have made or attempted more than 20 hijackings since November, driving up insurance and security costs and adding to a crisis for global shipping companies.

With the attacks by the Houthis, who claim solidarity with Palestinians in Gaza during Israel’s war against Hamas, and the surge in piracy, commercial traffic through the region has halved since November as ships take the longer route around southern Africa, India’s navy said.

The pirates seized by Indian commandoes face up to life in prison as the first to be prosecuted under India’s 2022 anti-piracy law, which enables the navy to apprehend and arrest pirates on the high seas.

The Somalis were using the Ruen as their ”mother ship” to launch attacks on other vessels, navy Chief Admiral R Hari Kumar told a press conference marking the 100th day of the operations. The commandoes rescued all 17 crew members.

India has responded to 18 incidents, deploying 21 ships and 5,000 personnel in rotation, boarding and investigating over 1,000 vessels, the navy said. Its unprecedented presence has deployed more than a dozen warships some days.

“The task is to ensure that there is safety, security and stability” in the region, Kumar said.

“We are able to live up to the requirement of being a first responder and a preferred security partner… to ensure that the Indian Ocean region is safe, secure and stable.”

During its mission since mid-December, there have been 57 drone or missile attacks or sightings. India’s navy has helped some of the attacked ships, recovering debris from drones launched by the Houthis, whom Kumar said “we really have no quarrel with”.

One recovered plywood drone was capable of travelling 1,600 km (1,000 miles) with a four-stroke engine and ”elementary” electronics, Kumar said.

“It doesn’t require any very complicated tools to develop or manufacture these drones.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Suprajit Engineering eyes double-digit revenue growth in FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Suprajit Engineering is targeting double-digit revenue growth in the next financial year despite challenges.

The company expects an improvement in its controls division within the next couple of quarters, and domestic business grow between 6 and 8% in FY25.

K Ajith Kumar Rai, Founder and Chairman of Suprajit Engineering, said, “Our global business will make the overall group’s growth in double digits,” he added.

Suprajit Engineering is a producer of control cables and halogen bulbs, with a significant market presence in both automotive cable and halogen bulb manufacturing.

As of FY23, global operations contributed to 39% of its revenues and 61% was from the domestic business.

The company’s earnings are diversified across various sectors: two-wheelers account for 34% of revenue, aftermarket sales contribute 26%, non-automotive sectors bring in 23%, and automotive sales make up the remaining 18%.

Rai said the Red Sea crisis continues to hurt business. As the ships got stranded, the company was forced to do air-freights. Container rates have also shot up by 6-8 times in the past four months. Overall, it has led to around 100 basis points (bps) hit on the company’s margins.

However, there has been some stability now and the stranded ships have started to reach their destinations in Europe and US resulting in air-freight costs coming down.

Suprajit Engineering supplies products to major electric vehicle (EV) makers as well as to various original equipment manufacturers (OEMs).

The company is planning to acquire more land parcels for growth requirements.

It had started its electronics division, which has been growing aggressively. “We expect that it will require space. We recently launched our braking division. All these new projects will have to find new places. That is why we will be requiring some of these land parcels,” he explained.

The current market capitalisation of the company is at ₹5,655.66 crore.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Houthi rebel attacks cut three vital underwater data cables in Red Sea

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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An incident in the Red Sea has cut three underwater sea cables, disrupting internet and telecommunications worldwide. The waterway remains a target of Yemen’s Houthi rebels, according to officials on Monday.

A statement by Hong Kong-based HGC Global Communications acknowledged the cuts but did not specify the cause. There has been concern about the cables being targeted in the Houthi campaign, described as an effort to pressure Israel to end its war on Hamas in the Gaza Strip.

The Houthis deny attacking the lines. Global shipping has already been disrupted, and the sabotage of telecommunication lines could escalate the ongoing crisis.

A suspected Houthi attack also targeted a new ship in the Gulf of Aden. The cut lines include Asia-Africa-Europe 1, the Europe India Gateway, Seacom, and TGN-Gulf, affecting 25% of traffic flowing through the Red Sea.

HGC Global Communications described the Red Sea route as crucial for data moving from Asia to Europe and has begun rerouting traffic. Tim Stronge, a subsea cable expert, clarified that the Seacom-TGN-Gulf line is one cable, not two, at the cut location.

Seacom, responding to questions, stated that the affected segment lies within Yemeni maritime jurisdictions. Tata Communications, behind the Seacom-TGN-Gulf line, initiated immediate remedial actions. Other firms providing data to Africa, Asia, and the Middle East did not immediately respond.

In early February, Yemen’s government alleged Houthi plans to attack cables, and the lines appeared cut on February 24. The Houthis deny targeting the cables, blaming disruptions on British and US military operations.

Houthi-controlled Transportation Ministry alleges that British and US naval military units disrupted submarine cables, jeopardizing international communications.

Despite US-led airstrikes, Houthi rebels continue significant attacks, insisting they will continue until Israel stops its operations in Gaza. Recent days have seen a slowdown in attacks, and Maj.

Pete Nguyen stated that four to eight US and allied warships patrol the Red Sea daily. The UK Maritime Trade Operations center warned of a possible attack in the Gulf of Aden. The cause of the slowdown remains unclear. Seacom suggested the possibility of anchor dragging, given the region’s marine traffic and low seabed.

There are currently 14 cables running through the Red Sea, with another six planned. Over 90% of communications between Europe and Asia traverse submarine cables in the Red Sea, according to Tim Stronge, who highlighted the redundancy built into the system.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India, Oman hold strategic dialogue; discuss trade pact, Red Sea situation

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India and Oman have discussed various aspects of their strategic ties and reviewed the regional developments including the security situation in Gaza and the Red Sea at a high-level dialogue in Muscat. In the ninth India-Oman strategic dialogue, the two sides noted that discussions on signing of a comprehensive economic partnership agreement were progressing and that its early finalisation would benefit both nations.

Deputy National Security Adviser Vikram Misri represented India at the dialogue on Monday, people familiar with the matter said. The strategic dialogue was held in a frank and constructive manner and both sides held discussions on various issues of regional and bilateral concern, they said.

The two sides discussed the regional security situation resulting from the Gaza conflict, including in the Red Sea, the people said. There have been mounting global concerns over Houthi militants attacking various cargo vessels in the Red Sea and other strategic waterways in the region apparently in response to Israel’s military offensive in Gaza.

On the bilateral front, both sides recalled the successful visit to India of Oman’s Sultan Haitham bin Tarik in December last. The Indian side also thanked Oman for their participation and cooperation in making the G20 summit held in New Delhi last year a successful one, the people cited above said.

Misri also called on Gen. Sultan bin Mohammed Al Nomani, the minister of royal office of Sultanate of Oman. Highlighting the historical nature of bilateral ties, both sides in the dialogue noted the positive impact of people-to-people contacts between India and Oman.

India thanked Oman for hosting a large number of Indians, who had contributed positively to the development of the Gulf nation, the people cited above said. It was agreed that the waters between India and Oman acted as a link between the two countries, they said.

The two sides also agreed that all existing bilateral issues on which agreement had been reached would be closely followed up and new areas for cooperation would be identified. In this context, discussions were held on strategic, military and security ties besides cooperation in areas of disaster management, oceanography and artificial intelligence.

Both sides reaffirmed the long-standing ties between India and Oman and reiterated their commitment to taking all possible steps to maintain high levels of cooperation. The two sides also agreed that progress had been achieved on several fronts since the last dialogue held in New Delhi in early 2023 and expressed the hope that the momentum gained could be maintained.

The 10th round of the India-Oman strategic dialogue will be held in New Delhi next year. The ties between India and Oman are on an upswing.

Last month, the two countries inked an agreement that would provide a framework for collaboration in new areas of defence engagement including procurement of military equipment. The Memorandum of Understanding (MoU) was firmed up at a meeting of India-Oman Joint Military Cooperation Committee (JMCC) in Muscat.

Oman is one of India’s closest defence partners in the Gulf region and defence cooperation has emerged as a key pillar of the strategic partnership between the two sides.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Red Sea crisis: TVS Supply Chain Solutions says ongoing uncertainty will keep freight prices up

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow