SPECIAL MONTHLY REPORT ONSPECIAL MONTHLY REPORT ON

EnergyEnergy(October 2014)

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October 2014

ENERGY PERFORMANCE (29th August 2014 - 30th September 2014) (% change)

ENERGY PERFORMANCE(January 2014 - September 2014) (% change)

Source: Reuters & SMC

-2.69

-4.05

4.46

0.98

-6.00 -4.00 -2.00 0.00 2.00 4.00 6.00

MCX

NYMEX

Natural Gas Crude oil

-7.36

-6.69

-2.72

-2.60

-8.00 -7.00 -6.00 -5.00 -4.00 -3.00 -2.00 -1.00 0.00

MCX

NYMEX

Natural Gas Crude oilSource: Reuters & SMC

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ENERGY COMPLEX

Crude Oil

Overview

In the month of September crude oil prices

continued to tumble lower on global oversupply

concerns and stronger greenback .But some short

covering was witnessed at lower levels during latter

part of the month. On domestic bourses strong local

currency rupee has kept the prices upside capped.

Overall crude oil moved in range of $90.43- 95.91 in

NYMEX and 5526-5865 in MCX. Meanwhile

tensions in Israel, Iraq and Ukraine have supported

the prices. According to Energy Information

Administration “Crude inventories expanded by

3.67 million barrels to 362.3 million last week” U.S.

crude supplies have climbed to the highest level

since 2012 for this time of the year as production

surges amid the shale boom. Output rose by

248,000 barrels a day to 8.838 million during the

week ended Sept. 12, the most since March 1986.

Outlook

Crude oil futures are expected to move sideways

with volatile path. But some short covering can be

seen in the month of October 2014. Economic data

from US, Europe and China along with geopolitical

tensions in Iraq and Ukraine will give further

direction to the crude oil prices. Movement of

stockpiles in Cushing will also give direction to the

prices. The United States and France have both

launched air strikes against Islamic State targets in

Iraq as part of a U.S.-led campaign to "degrade and

destroy" the radical Sunni militant group, which has

seized a third of both Iraq and Syria. According to

National Oil Corp “Production in Libya climbed to

925,000 barrels a day” Meanwhile US refinery

problems or hurricanes can halt the typical autumn

price decline temporarily by reducing gasoline

production. According to data from the Energy

Information Administration” U.S. crude stockpiles

fell unexpectedly as imports dropped to their lowest

October 2014

level in four months” Crude oil can move in range

of 5350-6000 in the month of October.

NYMEX Crude oil biggest quarterly drop

since 2012

Slack demand for oil, a slew of weak macroeconomic

data out of China and the eurozone, a stronger dollar as

well as plentiful supplies that include surging output

from Libya dragged prices lower in third quarter of

2014. The front-month contract skidded more than 13%

over three months, the largest quarterly drop since the

second quarter of 2012.

Weak Asian demand

China and Japan, the two largest oil consumers in Asia,

consumed 1.6% less oil up to July this year, compared to

a year earlier, and with Asian demand so soft, supply will

have to adjust to balance the market.

OPEC output declined in September

Output from the 12-member OPEC rose by 413,000

barrels a day to 30.935 million in September, a

Bloomberg survey of oil companies, producers and

analysts showed. That's the highest level since August

2013.

US production increased

US domestic crude production rose to 8.87 million

barrels a day in the week ended September 19, the most

since March 1986, according EIA estimates.

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Brent WTI Spread

Source: Reuters

Analysis: Brent WTI spread narrowed from nearly 9 in August to 3 last month. Surge in Libya production have

resulted in narrowing of this spread recently. This spread can move in range of 4-1 in October.

Some key points from EIA estimates

Liquid Fuels Consumption

EIA has revised total 2013 U.S. petroleum and other

liquids consumption upwards by 74,000 bbl/d to

18.96 million bbl/d. Upward revisions in motor

gasoline (69,000 bbl/d), special naphthas (66,000

bbl/d), and hydrocarbon gas liquids (HGL) (47,000

bbl/d) were offset by a 113,000 bbl/d reduction in

unfinished oils consumption. Total U.S. petroleum

and other liquids consumption rose by 470,000

bbl/d (2.5%) in 2013, the largest annual increase

since 2004. Motor gasoline consumption rose by

160,000 bbl/d (1.9%). High petrochemical demand

and a very wet corn crop late in the year contributed

to a 100,000 bbl/d (8.5%) increase in propane

consumption last year. Total consumption is expected

to fall slightly, by 0.2%, in 2014. A year-over-year

increase in total consumption of 170,000 bbl/d during

the first quarter is expected to be more than offset by an

average 150,000 bbl/d decline during the second half of

the year. Propane consumption retreats from last year's

growth, falling by an average of 110,000 bbl/d this year.

Distillate fuel consumption is projected to increase by

an average of 160,000 bbl/d (4.2%) in 2014.

Liquid Fuels Supply

The forecast for total U.S. crude oil production increases

from an estimated 7.45 million bbl/d in 2013 to 8.53

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October 2014

million bbl/d in 2014 and 9.53 million bbl/d in 2015.

The 2014 and 2015 forecasts are 0.07 million bbl/d

and 0.25 million bbl/d higher than in last month's

STEO, respectively. The highest previous annual

average U.S. production level was 9.6 million bbl/d

in 1970. Oil production from the Gulf of Mexico is

expected to increase from 1.25 million bbl/d in 2013

to 1.67 million bbl/d in 2015, with 11 projects

starting this year. Six projects began production in

the first half of 2014: Na Kika Phase 3, Mars B,

Dalmatian, Entrada, Atlantis Phase 2, and Tubular

Bells. Additional wells are expected to come online

in the fourth quarter of 2014 from the Cardamom

Deep, South Deimos/West Boreas, Hadrian South,

Jack/St. Malo, and Lucius projects.

Non‐OPEC Supply

EIA estimates that non-OPEC production grew by

1.4 million bbl/d in 2013, averaging 54.1 million

bbl/d for the year. EIA expects non-OPEC

production to grow by 1.8 million bbl/d in 2014 and

1.2 million bbl/d in 2015. The United States is the

leading contributor to forecast non-OPEC supply

growth, increasing by 1.4 million bbl/d in 2014 and

1.2 million bbl/d in 2015. EIA estimates that

Eurasia's production will increase by less than 0.1

million bbl/d in 2014, with increased production

from Russia and Kazakhstan offsetting declines in

other countries, and stay relatively flat in 2015. This

forecast assumes the current economic sanctions on

Russia do not affect Russian oil production in the

short term.

OPEC Supply

EIA estimates that OPEC crude oil production averaged

29.9 million bbl/d in 2013, a decline of 1.0 million bbl/d

from the previous year, primarily reflecting increased

outages in Libya, Nigeria, and Iraq, along with strong

non-OPEC supply growth. EIA expects OPEC crude oil

production to fall by 0.3 million bbl/d in 2014 and by 0.1

million bbl/d in 2015 to accommodate growing

production in non-OPEC countries. Unplanned crude

oil supply disruptions among OPEC producers

averaged 2.4 million bbl/d in August 2014, 0.1 million

bbl/d lower than the previous month mainly because of

decreased outages in Libya. Libya's production

increased to 0.5 million bbl/d in August, 0.3 million

bbl/d higher than the second quarter 2014 average, but

still well below the 1.4 million bbl/d the country

produced before the major blockades started in mid-

2013. Almost all of Libya's export terminals are able to

export crude as protestors agreed to stop the blockades,

and production has restarted in some of Libya's largest

eastern oil fields. However, some of the major issues

that incited the widespread protests over the past year

remain unresolved. As a result, EIA does not expect

Libya's oil production to recover to its preblockade level

over the forecast period.

Crude oil may remain on volatile path but some

short covering can be seen at lower levels in the

month of October. Geopolitical tensions can

give support to the prices while increase in

stockpiles can cap the upside. Global

macroeconomic numbers along with weekly

inventory data in US will also affect the overall

sentiments.

Range

Crude Oil

MCX Rs 5350-6000 per barrel

NYMEX $86-97 per barrel

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Natural Gas

Rise in natural gas output estimatesOverview

Natural gas output from the Marcellus shale Natural gas prices moved on volatile path in

formation in Appalachia may advance 1 percent in September 2014 as low demand and rising

October to 16 billion cubic feet a day from a month stockpiles pressurized the prices while warmer

earlier, the EIA said Sept. 8 in its monthly Drilling temperature increased the demand for air

Productivity Report. Record production from the conditioning. Overall it traded in range of $3.76-

unconventional drilling boom keeps capping the 4.16 in NYMEX and 228.90-257.50 in MCX. Last

market at around $4/mmBtumonth repairs on a Transco pipeline in Louisiana

were also curtailing supplies, with natural-gas flows

were unavailable to several directions for up to 10 EIA Natural gas estimates

days. The repairs, following the shutdown of a

pipeline that feeds Gulf of Mexico production to the U.S. Natural Gas ConsumptionHenry Hub delivery point in Louisiana.

EIA expects total natural gas consumption will

average 72.6 Bcf/d in 2014, an increase of 1.8% from

2013 led by the industrial sector. In 2015, total Outlooknatural gas consumption increases 0.2% as

Natural gas can move on volatile path in range of continued industrial sector growth offsets lower

225-275 in the month of October as weather residential and commercial consumption. Higher

concerns and position of stockpiles will give further natural gas prices this year contribute to a 2.0%

direction to the prices. Warmer temperatures in the decline in natural gas consumption in the power

eastern U.S. could drive demand for air sector to 21.9 Bcf/d in 2014. EIA expects natural

conditioning this week, though cooler temperatures gas consumption in the power sector to increase to

making their appearance in October could hike 22.8 Bcf/d in 2015.

demand for heating. The According to U.S. Energy

Information Administration “Natural gas storage in

the U.S. rose by 90 billion cubic feet during the week U.S. Natural Gas Production and Trade before” Injections of gas into storage have

EIA expects natural gas marketed production to surpassed the five-year average for 22 consecutive

grow by an annual rate of 5.3% in 2014 and 2.1% in weeks, alleviating concerns over tightening

2015. STEO projects that strong increases already supplies.

seen in the Lower 48 states this year will continue,

offsetting declines in the Gulf of Mexico. As of June,

the most recent month for which EIA data are US weather forecastsavailable, marketed production was 4.6 Bcf/d

Warmer temperatures are forecasted in much of the greater than it was in June 2013.

US, though separate predictions added coming back

of some cooler temperatures in much of Western

and North-Central region which is seen keeping the

overall climate normal while hurting demand for

the commodity. As per Bloomberg news, WSI Corp

recently said temperatures would be mostly normal

or higher than usual in the lower 48 states from Oct.

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October 2014

Range

Natural gas

NYMEX $3.50- $4.30 per mmBtu

MCX Rs 225-275 per mmBtu

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October 2014

SMC Global Securities Limited is proposing, subject to receipt of requisite approvals, market conditions and other considerations, a further public issue of its equity shares and has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The DRHP is available on the website of the SEBI at www.sebi.gov.in and the website of the Book Running Lead Managers i.e. Tata Securities Limited at www.tatacapital.com and IL&FS Capital Advisors Limited at www.ilfscapital.com. Investors should note that investment in equity shares involves a high degree of risk. For details please refer to the DRHP and particularly the section titled Risk Factors in the Draft Red Herring Prospectus.

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Pls. Contact

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October 2014

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