Metal Stocks Outlook for the week – 25 to 28.08.2014

Metal Stocks Outlook for the week – 25 to 28.08.2014

Stocks of metal companies are expected to trade with a negative bias next week following
a hike in royalty rates for iron ore. The Cabinet on Wednesday approved a hike in the rate
of royalty on iron ore to 15% from 10%, along with a hike in royalty on other minerals.
Steel Authority of India being hit the most due to this hike, as the company has the lowest
profitability among its peers. SAIL would see a hit of about 7-8% on its EBITDA
(earnings before interest, tax, depreciation, and amortisation margin), Tata Steel 2%, and
JSW Steel and Jindal Steel and Power around 1%.

Sesa Sterlite may also be subdued next week due to an ongoing turnover order issued to
the company by a US court. On Thursday, a US court denied the Vedanta group
company's plea for a stay on the turnover order.

According to the terms of the turnover order, Sesa Sterlite cannot repay holders of the
company's $500 mln senior notes unless $82.75 mln is paid to US based copper producer
ASARCO by Oct 30, the maturity date of the notes, and it cannot create a lien on its
assets. The company was asked in 2012 by a US court to pay $82.75 mln to ASARCO

due to breach of a purchase agreement.