Friday, July 31, 2009
Gayatri Projects Ltd has informed BSE that the Board of Directors of the Company at its meeting held on July 31, 2009, inter alia, has approved the following:1. Approved notice for convening Extra-ordinary General Meeting on August 26, 2009 to seek approval of the members for issue and allotment of not exceeding 10,00,0O0 (Ten Lakhs only) Equity Shares to M/s. RELIANCE CAPITAL TRUSTEE Co. LTD- RELIANCE INFRASTRUCTURE FUND a Strategic Investor at a price of Rs 185/- calculated in accordance with the provisions of SEBI (Disclosure and Investor Protection) Guidelines, 2000.2. Extending Corporate Guarantee of Rs 15 Crores to M/s. Gayatri - RNS Joint Venture.
Gayatri was recomended at Rs 166 with all reasons on June 22 .It is now 240 in a month and Ril Cap is taking stake at Rs 185 for 10 lacs shares....as a strategic investor........That vindicates my call .......
Let me put it in lighter vein that maybe Ril Cap Fund Manager (Madhusudan Kela) may have read it here when I gave the call and hence decided to take a stake in Gayatri Project.......Lol.....I gave all informations needs to be given, when I gave a call on Gayatri Pro.....if one can refer it anyone can say that it was a buy at Rs 166 and it is still a buy at Rs 240.....
Wednesday, July 29, 2009
Take time for reading even if cost you that much time but read the whole TEXT......
Full text of Anil Ambani's AGM address DNA Reliance Anil Dhirubhai Ambani Group (R-Adag) chairman Anil Ambani addressed the annual general meeting of Reliance Natural Resources Limited (RNRL) in Mumbai today. RNRL is currently engaged in a bitter court battle with elder brother Mukesh Ambani's Reliance Industries Limited over the use of gas from the Krishna-Godavari basin.
Following is the chairman's speech:
My dear fellow Reliance Natural Resources shareowners,
A warm welcome to each one of you to the 9th Annual General Meeting of our company. It has been a little over three years since we first came together to write a new chapter in our companys growth and evolution. In this time, our shareowner family has grown to over 26 lakh members, adding over 6 lakh new members since the demerger in 2005. We are now the second largest shareholder family in the country, after our group company Reliance Power, which has a shareholder base of 37 lakh members, by far the largest in India.
Performance ReviewThe company's accounts for the year ended March 31, 2009, along with the directors' report, letter to shareowners, and management discussion and analysis have been circulated to you.With your permission, I would like to take them as read.
The gas supply contract with Reliance Industries Ltd (RIL) is our company's primary asset and contributes most of its value, affecting the very basis for its creation. Accordingly, I propose today to comment extensively on recent developments in this matter, covering four main areas:1. RIL's dishonourable conduct in persistently refusing to honour the gas supply contract.2. The exorbitant profits RIL is seeking to make at the cost of the power and fertiliser sectors in the country.3. The apparently biased and partisan role of the petroleum ministry, and4. The reality of the gas demand-supply scenario in India and its implications on long-term pricing.
The Founder's DreamAt the outset, I am happy to note that Reliance Industries Limited (RIL), a company founded by my father, the late Shri Dhirubhai Ambani, with which I was associated for nearly 25 years and which is still very close to my heart, has started the production of natural gas from KG basin recently although seven years after discovery, and with huge time and cost overruns.Nonetheless, my heartiest congratulations to the RIL team for achieving this marvellous feat, and realising one of Dhirubhai's life-long dreams.This significant domestic gas production in India will broadbase our energy basket and contribute to our long-term energy security.
Gas Supply From RILLast year, when we met at the AGM, I shared with you the history behind the creation of RNRL.To recap briefly, our company was created through a demerger of RIL and was to be responsible for the supply and transportation of gas from the various gas fields of RIL to our group companies for power and other projects.This arrangement was approved, by all of you, as shareholders of RIL.To ensure that the benefits of the gas business were rightfully enjoyed by the over two million shareholders of RIL, they were all allotted shares free-of-cost in the new company, Reliance Natural Resources.
Despite the binding commercial agreement that exists between RIL and RNRL for the supply of gas, it is unfortunate that RIL has tried every trick in the book and, apparently, several outside the book to back out of its solemn, legal, and contractual obligations.
Following the failure of our every attempt at talks and conciliation for nearly 18 months, we had no option but to approach the Bombay High Court to ensure that RIL fulfils its gas supply obligations to our company.
I am happy to report that the hon'ble Bombay High Court has delivered three judgments in the past two years on this matter, and in each one of them, our stand has been vindicated, and RIL's claims summarily dismissed.
Most recently, the division bench of Bombay High Court in its judgment of 15 June 2009 has categorically ruled that1. The RNRL application is maintainable, meaning our claims against RIL are totally justified.2. The quantity of gas to be supplied by RIL to RNRL is 28 million cubic metres (plus another 12 in case RIL does not supply gas to NTPC), and shall be binding.3. The sale price of gas shall be US $2.34 per mmbtu.4. The tenure of gas supply shall be for the full 17 years.5. Parties to enter into a bankable gas supply agreement within 30 days.6. The corporate restructuring MoU between the two groups is upheld, benefiting over 15 million shareholders.
I would specially like to mention here that the Bombay High Court gave this verdict AFTER hearing the government of India for over six months on the interpretation of its production-sharing contract (PSC) with RIL.
Clearly, the honble high court's order is a body blow to RIL.
In the last five weeks, there has been a spate of motivated and misleading reports, even official statements from certain quarters, not to mention an unnecessary legal intervention by the petroleum ministry in the honble Supreme Court to sow the seeds of confusion and take away from the clear and comprehensive nature of the Bombay High Court verdict.
Outraged by this vicious and false propaganda, several of you have approached me to urgently clarify these issues at the AGM today and dispel the lies, myths, and untruths being propagated by vested interests.
Let me, therefore, directly deal with your questions, concerns, and doubts on this very critical matter affecting the very foundation of your company.
Question: The petroleum ministry says that the two brothers are fighting over something that doesnt belong to them? That this is a private battle over a sovereign national asset. That the KG basin gas belongs to the government and people of India.
Answer: I am sorry to say that facts are deliberately being twisted to suggest that the corporate agreement between RIL and RNRL amounts to a private division of sovereign national assets.This bogey of sovereign ownership is being raised with the sole purpose of attempting to bail out RIL and help them renege on their contractual commitments. The fact is, we are not claiming any rights to the ownership of the KG basin gas fields. We are claiming gas only from RIL's lawful share or its rightful entitlement of production of gas under the PSC.More importantly, our claim is entirely in line with the government's own stand on the floor of Parliament, not once or twice, but on at least 15 different occasions in the past three years.To quote just one instance, on April 22, 2008, in a specific reference to the RIL-RNRL corporate dispute, the government told Parliament in a written answer, and I quote: "As per the PSC, the contractor that is, RIL is entitled to sell its participating share of gas in cost petroleum and profit petroleum."Simply put, if RIL is entitled to sell its share of gas, as provided for in the PSC and as confirmed by the government in Parliament on so many occasions, where does the question then arise of our corporate agreement carving up national assets or property?Clearly, this bogey is being raised by those seeking to help RIL at any cost, for reasons that no one can fathom...
Q: Why has the petroleum ministry's role suddenly escalated in the RIL-RNRL gas dispute?
A: I am as surprised by this escalation as all of you and most other observers. Even as recently as 2 July 2009, two weeks after the Bombay High Court had delivered its judgment, the government told Parliament in a written answer that the court case between RIL and RNRL is, and I quote: "a commercial matter between two companies".The petroleum ministry has publicly sought to justify its escalated intervention on the ground that it didn't know the terms of the RIL-RNRL gas arrangement till recently when they were revealed during the course of the Bombay High Court hearings. I'm afraid this stand is contrary to facts on record.The petroleum ministry has been in possession of all relevant details of the RIL-RNRL gas supply agreement for at least three years, that is, since 2006, if not earlier. In April 2006, RIL provided all details of the gas supply arrangements to the petroleum ministry. This is a matter of official record.In June 2006, three years before the Bombay High Court delivered its judgment, RNRL submitted full details of its gas supply aqreement with RIL to the petroleum ministry. This again is a matter of official record.The Bombay High Court order of June 2007 outlined all terms of the gas supply agreement, including the initial supply of committed quantities of gas, and the sharing of option gas. Way back in September 2007, when the empowered group of ministers (herein after referred to as cabinet sub-group for convenience) met, it took note of the full details of the gas supply agreement between RIL and RNRL. The Union minister for petroleum was an integral part of the cabinet sub-group and represented the petroleum ministry's point of view. The cabinet sub-group actually went further, and recognising the rights of the parties, categorically recorded that its decisions were "without prejudice to the NTPC vs RIL & RNRL vs RIL cases which are sub-judice".This has been reiterated, reinforced, and restated twice in the cabinet sub-group meetings, in October 2008 and January 2009, as per the minutes filed by the government in the Bombay High Court. In other words, the cabinet sub-group has consistently and rightly stated that its decisions would not affect the rights of RNRL and NTPC against RIL, and the court's decisions would be binding.Through this entire period, the petroleum ministry was a party to, and concurred with, this decision, and did not make any attempt to question the corporate restructuring agreement between RIL and RNRL. It is only now, after the adverse verdict of the Bombay High Court against RIL, that the petroleum ministry has suddenly decided to intervene in this purely corporate dispute.Apparently, the petroleum ministry has used its discretion and not even thought it fit to take the approval, I am informed, of the cabinet. This, remember, is a matter which involves two of India's largest business houses, over 15 million shareholders, global implications for the energy business, and three unambiguous judgments of the Bombay High Court.Yet, the petroleum ministry has unilaterally gone ahead and taken a stand which runs contrary to that of the cabinet sub-group apparently without even consulting it even though that group represented the broader, collective wisdom of several other ministers, including, inter alia, the ministers of finance, law, power, and fertilisers! At least on the face of it, quite unusual and puzzling!There are some other curious aspects of the manner in which this case is apparently being handled. I have been informed that the ministry of law and justice has issued written instructions to all ministries, by a circular dated 3.11.2008, that in all sensitive matters, "written submissions/affidavits should be filed in the Supreme Court only after the same are vetted/approved by the department of legal affairs, ministry of law and justice."Based on all public comments of the petroleum ministry, it clearly considers this to be a sensitive matter. Nonetheless, it has reportedly chosen not to take the requisite approval of the ministry of law and justice. Maybe, technically, it has the powers to go ahead on its own, but given the several inter-ministerial deliberations that had already taken place on the subject and the substantial issues involved, would it not have been more appropriate and transparent to at least consult the law ministry? Quite the contrary, it appears!According to media reports, the petroleum ministry, in an unprecedented step, reportedly wrote to the law ministry earlier this month, and simply informed them that copies of SLPs/affidavits would be made available by the advocates of the petroleum ministry, and the same should be filed in the Supreme Court!Not just that, the petroleum ministry further instructed the law ministry that no counsel should be instructed to appear in the matter without their prior approval, as the matter was "sensitive".Also, according to further media reports today, the senior government law official who represented the petroleum ministry before the Bombay High Court informed it that:- submissions should be confined to the grievances as an aggrieved party arising out of the judgment of the Bombay High Court.- the challenge to the MoU should only be in to the gas sale agreement and not to other matters- the final SLP was not shown to him! Clearly, his advice was not followed!Finally, it has been brought to my attention that one of the senior advocates of the petroleum ministry, who I have no doubt is a most accomplished person with the highest degree of legal expertise, is the same person who sent a formal complaint to Sebi [the Securities and Exchange Board of India] in October 2007 against the Reliance Power IPO and me personally. It's a different matter that Sebi and the hon'ble Supreme Court allowed the IPO to proceed, overruling all complaints.Media reports further suggest that some officials in the petroleum ministry had observed that the services of this learned senior advocate should not be considered "due to inadequate understanding and presentation of cases before the Honble high court...", but this was overruled and he still represents the petroleum ministry!Maybe all just an accident? Or a coincidence?... I leave it to your judgment!It doesn't stop here... it actually gets better... sorry, worse!Frankly, if the petroleum ministry is genuinely aggrieved and if they honestly believe that RIL has violated the terms of the PSC by allegedly trying to divide national property why don't they exercise their powers and terminate the PSC, and take back the ownership of the gas fields from RIL, when the provisions exist for them to do so?Since the corporate agreements between RIL and RNRL have been known to them for three years, what have they been waiting for? Why are they belatedly rushing to the Supreme Court, challenging commercial contracts between two corporate entities?
Q: Why is the petroleum ministry's stance different now than it was in the Bombay High Court?
A: I wish I knew... Before the Bombay High Court verdict, the ministry did not ask for cancellation or annulment of the MoU! In fact, during the high court hearing, the petroleum ministry made certain submissions regarding its views on gas supply, and its interpretation of the PSC, which ran completely contrary to their earlier stated positions on the issue.However, when our counsel requested the court's permission to cross-examine the ministry's officials, the latter quickly withdrew all their affidavits... Again, on the face of it, appears quite unusual... and puzzling!
Q: Could the petroleum ministry then be intervening because the high court judgment affects the government's interests adversely?
A: Not at all. The fact is that the Bombay high court has delivered not one but three judgments on the issue, each one of which, including the most recent one delivered on June 15, fully protects the governments interests and revenues. This is also completely consistent with our own legal position.What is being deliberately distorted is that, as per the PSC, there is a clear distinction between the sale price of gas, which is to be fixed by the contractor (RIL), and the price to be adopted for determining the government's royalty and share of production, normally referred to as valuation, which is approved by the government.This is not our interpretation of some very complex legal clauses this is the view of the government itself, consistently affirmed on the floor of Parliament! On 30 August 2007, the government told Parliament in a written answer and I quote: "As per the PSC signed by the government under the New Exploration Licensing Policy (NELP), the operators have the freedom to market the gas in the domestic market on an arm's length basis. The government does not fix price of gas. The role of the government is to approve the valuation of gas for the purpose of determining government take."Again, the government told Parliament on 27 November 2007 that "[it] does not fix the price of gas". The Bombay High Court, too, has upheld this legal position, and said that as long as the government gets its royalty and share of production on the basis of the government-approved price for valuation, they have no concern with the sale price at which the contractor [RIL] sells the gas.The government's approved gas price is thus not a sale price it is a price the government has fixed for valuing its own share of profit petroleum. To illustrate: the situation is similar to that of stamp duty on property transactions. Just like stamp duty is based on the government's reference rate and has no relationship to the actual sale or purchase price, the government-approved price of gas is a reference rate that is used to calculate the government's share of profit petroleum, but does not become the sale price.It is just like when you buy a flat at a price of Rs10 lakh, the registrar of properties may value the flat at Rs20 lakh and charge stamp duty on Rs20 lakh. But the registrar does not go on to say that you must pay Rs20 lakh to the seller and the registrar certainly does not go and file a case in the Supreme Court to make you pay Rs20 lakh! But this is exactly what the petroleum ministry's stand means!It has contended before the Supreme Court that it will not only value the gas, but also fix the gas sale price that RNRL must pay RIL, even though in Parliament it has repeatedly said that "government does not fix the price of gas!" For the record, I want to emphasize that government does not stand to lose a single rupee, even if RIL sells at a lower than the approved valuation price to any party.And here is the most mystifying part, something very few people are aware of. Going by the petroleum ministry's determined opposition to the Bombay High Court's judgment, it will be fair to assume that this is their way of protecting the financial interests of the government. Appears far from it... very far indeed!As per the terms of the PSC, if RIL gets a higher sale price from us based on the price the petroleum ministry wants to fix for the first few years, 99% of all revenues and profits will go to RIL, and only a measly 1% will accrue to the government! Of the initial revenue of Rs50,000 crore, RIL gets almost all, i.e. Rs49,500 crore vs the government's Rs500 crore. Makes you wonder why the petroleum ministry is pushing so hard for higher gas prices, when 99% gains will go to RIL!The irony is that even RIL's own international partner in the KG D-6, Niko Resources, has written to the government that as per the PSC, the petroleum ministry has no powers to fix the sale price! Other global petroleum industry majors, including BP and Shell, have made a similar formal submission to the government, arguing that any attempt to fix the price would violate the market freedom provided under the PSC. RIL had itself opposed this position earlier, but now, for obvious reasons, is finding great virtue in toeing the petroleum ministry's line!
Q: If all this is true, then why is the petroleum ministry behaving in this partisan manner?
A: What people say is that RIL is apparently firing from the shoulders of the petroleum ministry to renege on its contractual commitments to NTPC and RNRL. It is worth emphasizing that we are not the sole victims of RIL's machinations. There is also government-owned NTPC, India's largest power utility and a navaratna. People say there is a history to the RIL-RNRL dispute the corporate restructuring, and so on. But so far as the RIL-NTPC dispute is concerned, obviously there is no ego, no emotions, no family, and no corporate restructuring it is plain and simple corporate greed.This is a unique case in the history of independent India where the actions of one arm of the government, that is, the ministry of petroleum, is ostensibly harming the interests of another, ministry of power's jewel-in-the-crown NTPC all for the sake of a monopolistic gas producer, RIL.NTPC has been fighting RIL for supply of gas from KG-D6 fields. Initially, RIL had willingly and voluntarily quoted to supply gas to NTPC at US $2.34 per unit, in a global competitive bid, and the dispute was only as regards certain terms and conditions of the agreement.Now, based on the petroleum ministry's revised stand, RIL has told the courts that it cannot supply gas at the earlier contracted price of US $2.34 even to NTPC! Like any other unbiased observer of this unfolding crisis of credibility, I am deeply dismayed by this apparently partisan and biased approach of the petroleum ministry in favour of RIL, which is hurting not just RNRL, but also the government-owned NTPC.NTPC's case against RIL has been going on for nearly three years in the Bombay High Court, and if RIL's current delaying tactics are allowed to persist, it will continue for much longer.
Q: Has the petroleum ministry always behaved like this?
A: Definitely not. It is evident that the apparently biased stance commenced in 2006, coinciding with changes in the ministry. I am not trying to cast any aspersions on the integrity or motives of individuals here I am sure they have good reasons for their stance. I am sure all private companies in India wish that if they made commercial decisions they wished to get out of, they too had a saviour to help bail them out as is the case for RIL!
Q: Will this intervention by the petroleum ministry have any long-term implications for the business environment in India?
A: The petroleum ministry's stance is, in effect, that it will solely decide:- who should sell gas- to whom,- at what price- and in what quantity,- and when- without any heed to commercial considerations or contractual provisions!In complete reversal to the entire direction of economic reforms, being implemented by our respected prime minister, Dr Manmohan Singh, the petroleum ministry is regrettably pursuing a different path, seeking perhaps a return to the command-control elements of the dismantled 'licence-permit raj'!Through its intervention, the ministry is aiming to rewrite the PSC after nearly 10 years, and also seeking to cancel a contract between third-party corporate entities! What, then, is the sanctity of a contract, which is the fundamental cornerstone of any law-abiding, market-driven economy? And will this not set a precedent, allowing any ministry to alter any contracts in future at will?Clearly, the petroleum ministry's unfortunate intervention in a corporate commercial dispute in this manner, if permitted to continue, will erode investor confidence, and thwart the government's efforts to attract investments into India. This will also, naturally, have adverse policy implications for private investments in all natural resources, which are subject to similar considerations.
Q: What about RIL? Why is it not honouring its commitments?
A: I am deeply shocked and saddened by RIL's conduct in this matter, and its blatant refusal to honour a bona fide commercial agreement. Let's remind ourselves that RIL is no ordinary company. It is India's largest private-sector company a proud creation of India's greatest entrepreneur, my late father, Shri Dhirubhai Ambani. What it does, the signals it sends out, have relevance not just for its own business partners but for India at large. And what RIL has been communicating in the last few years is that it has no regard for its own solemn word, no time for values, no respect for the sanctity of contracts. And, most of all, no morality in its headlong pursuit of corporate greed.The most important word for Shri Dhirubhai Ambani was TRUST and that word has, unfortunately, gone missing.RIL has shown no inclination, desire, or urgency to comply with the judgments of the Bombay High Court, even though none of them has been stayed by a higher court. Indeed, the actions of RIL have resulted in existing customers with stranded assets filing a spate of unnecessary petitions in the Supreme Court, even though we have made it clear that there will be no disruption of gas supply to any existing or priority-sector user if gas is supplied to RNRL in the interim as prayed for by us in the Supreme Court.
Q: But why should RIL supply gas to RNRL at a preferential price lower than the price of US $4.20 per mmbtu based on a private family settlement, when others are paying that higher price?
A: There are no preferential or low prices. The price of US $2.34 was not decided by two brothers on the dinner table. Nor is it part of some private family arrangement. The price of US $2.34 was approved by RIL's board of directors nearly five years ago and has been duly recorded in the commercial agreements signed by RIL as a properly constituted legal corporate entity, with all relevant authorisations. All these facts are recorded in the recent order of the Bombay High Court.The proposed gas supply arrangements were also part of the publicly disclosed and widely circulated demerger scheme:- approved by RIL's board,- approved by over 2 million shareholders of RIL,- approved by the Bombay High Court,- after receiving the central government's no-objection certificate.In other words, everybody, including the petroleum ministry, had an opportunity to raise objections against the de-merger scheme, but they didn't do so.Secondly, ours is not some arbitrary price that came from nowhere. This price was discovered in an international competitive bid floated by the government-owned NTPC in 2004, in which RIL voluntarily and unequivocally agreed to supply gas at US $2.34; a price that was authorised by the RIL board.RNRL's gas supply agreement with RIL, finalised at the same time as the RIL-NTPC agreement, was based on this competitive arm's length price, discovered through a full-fledged competitive global bid.Unfortunately, the later price discovery of US $4.20 by RIL (for valuation purposes) is completely flawed. The formula was never approved by the petroleum ministry prior to the orchestrated tender by RIL where participants were invited to bid on a nominated basis. The formula as constructed is not rational, and does not pass on any real benefit to the consumer, even if the crude price was to drop from US $60 or US $30!Moreover, the price has been decided for only five years, and it is unlikely that any new investments in greenfield power projects would materialise on the basis of a five-year contract and, more importantly, on a very high gas price.NTPC, the largest and most experienced power utility in India, with all its financial strengths, has not gone ahead with the construction of the 2600MW Kawas and Gandhar expansion projects as it does not have assured gas supply contract and is finding it unviable to accept gas at a delivered price of nearly US $7 per mmbtu (including transportation costs).Any price for valuation determined for a short-term commitment of five years based on needs of plants sitting idle, and desperate for gas at any price, cannot have any relevance for long-term, fixed price, 17-year gas supply contracts on take-or-pay basis, for setting up greenfield power and fertiliser projects involving investments of tens of thousands of crores.
Q: But isn't US $4.2 the right price for domestic gas, given the scarcity of gas in India?
A: This entire concept of scarcity of gas in India is actually a myth in the long run. The gas production in the country is set to double to over 200 million cubic metres of gas per day in the near future, based on further production from RIL's KG-D6 fields alone. In addition, there will be production from gas reserves already found by various other players like GSPC and ONGC. Besides, RIL has so far explored only 4% of its total fields in KG-D6. The balance 96% area is still to be explored, and given past finds, it is reasonable to expect similar huge discoveries of reserves in the future.In a few years, India will become a gas-surplus nation, provided contractors are subject to an independent process of assessment and verification, which prevents the hoarding, under-reporting or sub-optimal production of gas. A gas price of US $4.2 is exorbitant and can in no way be justified.One must bear in mind that gas prices in the international market have crashed by as much as 80% in the last few months. Yet, that seems to have made no difference to the petroleum ministry's push for even higher prices in India, much to the detriment of power and fertiliser consumers.The situation seems even more bizarre if one looks at other markets in the world. In the Middle East, gas prices are currently ruling at US $1.5, or just under one-fourth of the delivered price in India. India now has among the highest short-term gas prices in the world, nearly 30% higher than even in the UK and the US, where short-term prices are currently hovering around US $3.5.In our view, it would be against public interest to price gas in India for any user above US $1.50. Natural gas should, in fact, be priced substantially lower than US $2 for all power and fertiliser customers.Of course, it is strange that in a democratic country like India, we have to pay for a domestic resource like gas in dollars when the end users of this resource, the millions of power and fertiliser consumers in this country, pay for it in rupees.The simple fact is that RIL has a short-term monopoly, and to perpetuate this monopoly, and earn disproportionate profits at the cost of the people, RIL is spreading misinformation in the public domain to ensure a higher price for its gas.It is a huge scandal that at the price of US $4.20, RIL wants to make super-normal profits of over Rs50,000 crore, which will ultimately be paid for by hundreds of millions of end consumers in the power and fertiliser sector. People wonder if the petroleum ministry realises that its efforts to make this the uniform price for all users will benefit only one monopolistic supplier, RIL, at the expense of the whole country!As per analyst reports, the entire KG basin has been declared commercial, when only 4% of it is actually being exploited, thus profiting RIL for many, many years to come.
Q: What will be the impact of a gas price of US $4.2 for the country?
A: The burden of the higher gas prices will eventually be borne by hundreds of millions of power and fertiliser consumers. The higher gas price demanded by RIL increases the cost of power for consumers by as much as Re1 per unit.The story does not end there. The real price of gas is not US $4.20, but close to US $7 per mmbtu, because the delivered price to bulk consumers would include a huge additional component of transportation costs. At these delivered prices, while some limited stranded power capacities may function, I'm afraid it will not be possible to achieve the prime minister's vision of 'power for all by 2012' and all this, for the sake of enriching one corporate entity, RIL.I may add that there is a strong case to revisit the issue of transportation costs for KG-D6 gas, probably the highest in the world, by the PNGRB, the pipeline regulator. Presently [sic], these are pegged at a prohibitive US $1.25, or 30% of the base gas price! Further, with new tax breaks recently announced, the entire cost of setting up the gas pipeline network has been allowed to be written off in the very first year a special and unique benefit not given to any other capital-intensive sector.For end users in both power and fertilisers, who ultimately pay for the pipeline network, it is only fair that the benefits of these tax breaks be passed on, and gas transportation costs be brought down to near zero. I hope the regulators in gas and power sectors such as PNGRB, CERC, and SERC, will examine this aspect more carefully.Ironically, these transportation costs do not even go to RIL and its millions of shareowners, but to a company called Reliance Gas Transportation and Infrastructure Limited (RGTIL). In 2005, when I was the vice-chairman and managing director of RIL, RGTIL was a 100% subsidiary of RIL. But soon after I resigned, it ceased to be a subsidiary; having been sold to the promoters of RIL for a princely sum of Rs5 lakh and turned into a privately held company.As many of you are shareholders of RIL as well, just like me, we should all note that this company is no longer owned by RIL, but by RIL's promoters.
Q: Won't RIL suffer huge losses at a low gas price of US $2.34?
A: The production cost of KG basin gas is only Rs43, or 89 cents, as submitted by RIL to the petroleum ministry. Therefore, at a price of US $2.34 applicable to NTPC and our company, RIL makes a profit of over 100% on its cost of production, which translates into over Rs30,000 crore just from NTPC and us over the lifetime of our contracts.Accordingly, there is no question of RIL suffering a loss it will still make good profits at US $2.34 as confirmed by RIL's counsel in the Bombay High Court. The problem is it wants to make super-normal profits talk of greed vs need!I would also like to take this opportunity to comment on the capital expenditure claimed to be incurred by RIL on the KG-D6 fields. Based on the way the PSC is structured, all of us who buy gas from RIL are effectively paying for the entire capital expenditure. This is because as per the PSC, RIL is entitled to first recover its entire capital expenditure from the revenues from sale of gas, before even the government gets any meaningful share. The more RIL claims to have spent on capital expenditure:- the more we have to pay for gas,- the less the government gets as its share from the revenues,- and the more delayed is the timing when the government gets its revenues.Clearly, this mechanism embedded in the PSC requires complete transparency and independent validation of the capital expenditure claims of RIL because all of us, a billion Indians, are paying for it!It may be noted that each and every expenditure of Rs150 crore or more made by any arm of the government goes to the cabinet committee of economic affairs for approval. RIL's capital expenditure of nearly Rs45,000 crore, as confirmed in Parliament by the petroleum minister just yesterday, is nearly 33% of India's total defence budget. Yet, such mega expenditure was cleared by a management committee of four, comprising one junior official each from the petroleum ministry and director-general of hydrocarbons, and two representatives of the contractor [RIL].The budgeted expenditure of RIL for peak production of 40 mmscmd in 2004 was only Rs12,000 crore, which should not have exceeded Rs20,000 crore when the production was doubled to 80 mmscmd. However, it is shocking that the capital expenditure has actually gone up by Rs25,000 crore to a staggering Rs45,000 crore when the output became 80 mmscmd.Expert analysis shows that if this was gold-plating of costs, the government could have lost upwards of Rs30,000 crore. When we raised this issue with the ministry, it appointed a so-called independent expert to examine the matter. In his testimony, he said, and I quote: "It has not been possible to study perhaps a few of important documents which now appear relevant to the exercise. The most important is the production-sharing contract between government and the operator."In other words, by his own admission, the expert didn't even read the terms of the PSC before putting his stamp of approval on RIL's capital expenditure. I don't know what would be the right term to describe this elegant audit arrangement co-option, co-operation, collaboration, or just collusion... I hope some of our esteemed public accountability bodies like [the] comptroller and auditor-general (CAG) and Central Vigilance Commission (CVC) will examine all relevant facts and take appropriate action against the guilty persons, if indeed they find that huge losses have been caused to the public exchequer.
Q: What has been the fallout of RIL's conduct on gas-based power in India?
A: RIL's refusal to honour its binding contractual commitments has delayed power projects of national importance of 12000MW by five years. Committed investments to the tune of over Rs50,000 crore have been held to ransom by RIL. As a result, major power cuts, especially in northern India, have become commonplace, causing grave hardship to hundreds of millions of consumers.Contrary to the myths and rumours that are being deliberately spread by RIL, we are not seeking to take away the gas for any ulterior, unidentified, or selfish purpose. We intend to use all the gas for the generation of clean, green, and affordable power, a priority that has been duly accepted and endorsed by the government.If the gas supply contract had been honoured, we would have by now brought on stream up to 8,000MW Dadri project, overcoming the huge deficit of power which has afflicted Delhi and large parts of northern India in the last few years. Let me also add that in January 2009, gas linkage to our Dadri and other power projects was approved by the cabinet. Therefore, RIL is solely responsible for the delays in setting up of these greenfield power projects, including Dadri.
Q: Isn't all this ultimately the fallout of the family dispute?
A: Let me state that the court cases are not a personal fight. There is no ego... only pain, hurt and emotion... a desire for fairness and justice. The court cases were essential to enforce the gas supply agreements and thereby protect and enhance value for over 80 lakh shareholders of our group and crores of power consumers in the country. This is in line with the philosophy of our founder chairman Dhirubhai Ambani, who insisted that we must work for the welfare of our shareholders. Indeed, we would have acted in the same manner if it were any other supplier of gas who was denying us our binding gas supply arrangements.Let me also remind you that RIL's commitment to supply gas for our power projects at Dadri and elsewhere dates back to as early as January 2004 more than five years back, and much before the reorganisation in 2005. This was announced in RIL's own media release issued at the time.In October 2004, a joint board meeting of RIL and Reliance Energy was held, wherein the directors of RIL reiterated their commitment to the supply of gas from KG Basin to the Dadri project. So, this is entirely a corporate dispute and not at all a personal one.
Q: Wouldn't it have been better if the two companies had resolved this dispute out of court?
A: We have repeatedly approached RIL in good faith, to sit down together and amicably arrive at a mutually acceptable solution in the larger public interest of a rapid implementation of our power projects. But RIL is only interested in dragging and delaying issues and does not want a settlement at any cost.To give just one example, I offered to personally meet at a time and place of the Bombay High Court's direction, at an hour's notice, and sit across the table with my respected elder brother to amicably resolve all issues. Unfortunately, RIL informed the court that it was not convenient for him to participate in any such discussions.Last month, we addressed several letters to RIL to meet and arrive at a workable agreement as per the high court judgment. RIL refused to cooperate and instead sent us a letter on July 1, declining to participate in any such discussions.
Current StatusOur company was formed solely for the supply of gas from RIL to our group companies for power and other projects. Hence, the gas supply contracts are critical for the future of RNRL.Unfortunately, RNRL will become a shell company if the gas supply contract is not honoured, as has also been observed by the Bombay High Court in their judgment. Accordingly, we are determined to take all legal steps for the implementation of this agreement.The case against RIL in this matter is now before the hon'ble Supreme Court. We are taking all necessary steps to have the matter finally decided in the most accelerated time frame possible.I have full faith in the judiciary of the country and I am confident that we will, with the support and prayers of our 26 lakh shareowners and the infinite grace of god, succeed in our endeavour to have the gas supply agreements with RIL fully implemented. The truth shall prevail.
Before I conclude, I want to thank, on behalf of our over 26 lakh shareowners, the Bombay High Court for protecting their rights and giving a clear, comprehensive, and categorical verdict on a corporate dispute of great national importance.The corporate restructuring of the Reliance Group, blessed by my respected mother, Kokilaben, was aimed at enhancing value for millions of our shareholders and give [sic] concrete shape to our founder Dhirubhai Ambani's 'well-head to wall-socket' strategy for the Reliance Group. Over the past five years, I have made every possible effort to resolve the outstanding issues with RIL so that we can all focus on realising our founder's dream. But, unfortunately, without any success.On its part, RIL has repeatedly shown that it will, sadly, stop at nothing to deny us and our millions of stakeholders what is legitimately theirs.As you might be aware, I have recently written to prime minister Manmohan Singh, on this subject. Dr Singh is globally respected for his sense of fairness, transparency, and, above all, honesty. I am confident that he will support the cause of truth and justice, and ensure neutrality of the government in a purely commercial dispute between two corporate entities.
Thank you, ladies and gentlemen, for your time, patience, and attention and overwhelming support to the cause of truth and justice.
Take your own call.Many question arises from this speech........
Monday, July 27, 2009
Market corrected for 1500 points after budget and came down to as low as 13200 and from there it has started its upwards journey again.
I remember I was writing here that 12k is going to be the next big support and that is not going to get break easily.Market is remaining over 14500 constantly for more time then remianing below.Actually according to some experts 12700 was the biggest resistance levels and that we have already crossed with ease and no way we are seeing it again since the market made a upper circuit on Election result day.
From that day we have not seen 12700 again and that is almost 3 months.Budget was bad as an expert came at wiremedia to say that Budget is bad and FII sold heavily on that day and few days after that.It means that there are still some FII's left who are still in the Bear Camp and follows the Indian experts instead of trying to understand the budget themselves through experts.Now again FII has started their buying after able to understand the budget in better way.But the question that arises is why they don't wait for the finer prints to come out?Don't they know that in India many things comes outside Budget day?
Either the FIIs who sold are too shortsighted or are following wrong experts and advisor.What is the meaning of selling a month back and coming back to buy next month?
I have seen they have sold in many stocks which have great future and great fundamentals and good management.I have also marked that after selling in last 1 year they have purchased the same stock again and increased the stake ?That makes no sense to me.Anyway that is their decision.......
But market again started its upward journey after the dust setteled down of bad budget and that is important.Any negative that is there in budget was taken as a pinch of salt and it was ignored by the market as they were not big enough to take note of....
I have written about Sesa Goa . Now what one needs to look at is Sesa Goa 52 week high was Rs 3200 and 52 low was Rs 69 and around that price I recomended it.Now if someone feels that Sesa Goa can go down to single digit and then he will buy then he is living in fools paradise.3200 to 69 is just 2.15% of the high.....and even at the currect rate at 230 it is still below 1/10 of the high.
One of the reader has brought to my attention that Sesa Goa price which we are seeing is already 52 week high.I got deceived by the bseindia site wherein I saw that they are showing 3623 as 52 week high....and 1 paidup........I apologize to my readers that without confirming I wrote about Sesa Goa.....
Sesa Goa has recently also bought mines and doing the right things.
Same can be applied for other stocks as well.
Remember one thing always.I just write my views and that's all.After all you are investing your hardearned money and hence level of comfort is very important.If stocks goes down after you buy then it should be you who needs to take the decision whether you still wants to hold or sell in whatever loss and switched over to other good stocks......
I am bound to make mistakes and some of the calls which I gave may not become good this time.The entire scenario has changed.The stocks which ran last time may not run this time and it is also not so that they will SURELY not run this time but there is no guarentee....
But here I will say that if the last year was bad and taken as a BULL Market correction then same sectors and same stocks can become multibagger again and if last year was a Bear Market and this is unfolding of a new Bull Market then ofcourse the sectors and stocks are going to get changed.....Take your call and decide what it what?I have already said that the last year was a Bull market correction as , if we are going to cross the previous high within a year or less then 7 years , which I explained in my last post then Bull market is still intact which started in 2003....
Saturday, July 25, 2009
I have been recomending stocks to buy since long and they includes A gr as well as Cash gr.
I just went through the ET paper on internet and saw some of the stocks are already at 52 weeks high.Some already have made it and I have missed it.But as much as I can recall I am listing down here.
52 week high stocks recomended here are :
1) Alsthom Project
6)Kwality Dairy(whopping figure ..at life time high Rs 327 from Rs 17)
etc ......well, I have my bad calls as well.Like Allied computers......
but I just read in annoucement section at bse that ABC Ind is going for pref allotment at Rs 43.
That is a great news for those holding it on my call and have not sold it.
Kwality Dairy type of stocks can wipe out any losses an investor has made.We donno which is that and hence we needs to buy all we think are suppose to give multibagger return.Buy 200, sell 100 at double and make 100 FREE.Now one can see here that even 100 share can make FORTUNE , if one is holding it.At Rs 327/-....if one have just even 100 shares it can fetch Rs 32700 ...which is great by any standard especially when it has become FREE OF COST.Just if one have bot 1000 shares at rs 17 of Kwality Dairy and sold 500 at Rs 34 and hold on 500 then it is worth Rs 163,000.00.........Rs..One lac sixty three thousand.....and I think a small investor will be able to wipe out all losses......and that too in just one stock........
Just went through a Report of GSPL.......a Buy Call for GSPL..........from Merill Lynch......
Friday, July 24, 2009
Warren Buffett tells CNBC that the economy still isn't showing any signs of life but that doesn't mean investors should stay away from stocks for the long-term.
In a live interview on Squawk Box this morning, Buffett says "business is still flat." But he stresses that doesn't mean he's negative on stocks, predicting the market will revive before the economy does.
"The market is very, very likely to turn up before business. But I don't try and time stocks. I try to price stocks." ( This I have been writing and explaining since long.)
He repeats his advice from his "Buy American" op-ed in The New York Times last fall: don't wait to buy stocks until the economy improves. By then, he says, you will have missed the biggest stock gains. ( Market always rise before the good news comes in.I have been writing here , buy when the chips are down as stock and market both will wait for none.They go up as soon as they smell good news)
Even with the Dow hitting highs for the year around 9000, Buffett repeats his belief that stocks will outperform cash investments, such as Treasury notes, over the long-term. "I would much rather own equities at 9000 on the Dow than have a long investment in government bonds or a continuously rolling investment in short-term money."
As usual, he points out he is not making any predictions about what the stock market will do in the next coming weeks or months.
Buffett repeats his belief there are "real inflationary possibilities" down the road, due to the massive stimulus being applied to the struggling economy. But he also repeats his view the stimulus is necessary despite the after-effects, because helping the economy recover should be the nation's top priority.
Buffett again endorses Ben Bernanke as Federal Reserve chairman, saying "I don't think you could have anybody better than Bernanke in the job. He understands all the issues."
Buffett's bearish comments today on the economy echo what he's been saying in recent weeks. Earlier this month, Buffett told us consumer sales remained "very, very soft" and about a month ago he said in a live interview on CNBC that he was seeing no "green shoots" on the economy.
Buffett declines to comment on Berkshire Hathaway's recent move to sell about 17 percent of its stake in the credit-rating agency Moody's (NYSE:MCO - News).
Buffett's live interview was designed to promote a new online animated series called Secret Millionaire's Club in which he voices a cartoon version of himself who helps teach kids about finance and investing.
Remember one thing.Never play in F&O .......Never ....Never...Never....Leave it to big players.They have scores of sources to have information on world economy and things that are going to pan out.And hence accordingly they play the game.We are very small people to have these type of information.Without information one will always end losing in F&O.It is ST game for a month or two to as short as intraday squaring.
I just read yesterday that China is consuming commodities in big way and hence the metal prices at London stock exchange went up and hence there was a mad rush for Metal stocks like Sterlite, Tisco,Jindal Gr etc.All big players are buying Metal stocks that includes big individual names and MF's.
That is where one will get beaten.They have 24 hrs of news and handy and hence they play accordingly and we keep on thinking how this stock is running so much or how it is going so much down.
Even after looking at the Balance Sheet people has lost money.Even after reading all those things like RNOW,Cash Flow,Sales,Profit margins, Credibility of management still I have seen people making loss.Like say Northgate Ltd.It was having a reserve of over 300 cr and suddenly they showed a loss of 300 cr and the reserve is all gone......The sales are down....now what to say about it?
Stock Market is all about sentiment and LUCK.I have seen very great investor selling Infosys very early and seen people know nothing about stock market and invested in Infosys ,on someone else recomendation and they hold for many years and made millions.
No one know when the valuation has gets saturated and when it is a buy.There is no parametres for that.There is no book for that.They will show all explainations when one should buy and when value is said to be mouthwatering but they are not fullproof methods.I have seen people who are always keeping watch on their portfolio and still making loss or making very less profit and people never looking at stocks and making millons........
Thursday, July 23, 2009
What can be the name of that sector which will give great returns in the next bull run which is going to come?This bull run should go over 21k.Unless it crosses 21k bears will only say that this is a bear market rally.The defination given for a new Bull run is sensex needs to cross 21k!That is a huge task.Because after Harshad Mehta bull run in 1992 when sensex made 4600, it took almost 7 years for the sensex to make a new TOP of 6560 and that was made in 2000 Mar.
After that again a new high was made in 2006-2007.Means again 7 years to make a new high.That was in Ketan Parekh time when it was lead by Technology stocks.
So hence it can be assumed that every 7 years, old high is crossed and market makes new high.
Now if market crosses 21k with 1 year from now then we can assume that this was not a bear market which we saw in 1992 and 2000 after Harshad Mehta took the sensex from 1800 to 4600 and in 1999-2000 Ketan Parekh took it from 2800 to 6560.
These both are known by their mentors name, viz:Harshad Mehta and Ketan Parekh.
For any Bull run , liquidity is very important.Without money bull market can never take place.At that time in 1992 , Harshad Mehta manipulated money from Banks and UTI etc and we saw sensex at 4600.In Ketan Parekh time , he took money from Madhavpura Bank for buying stocks.In both the instances we can see that market maker has to garner money from banks and if a bear knows that they will sell in the market and will make things difficult for bulls as he has borrowed money.
But now in 2009 and since the new bull market has unfolded since market crossed there was big FII inflow and with economy becoming good there is no need for any BULL to try to do things which can make the market go again in bear market.
There are bulls still some are new and some old faces but they now have not to borrow money from Fin institution or banks to manipulate market and trades.They go hand in hand with FII's.Either Bulls or Bears.So that is why even after market has gone up over 3 times from the past high of 6560 we have no SCAM.That is the most important part of this BULL RUN.
So if market crosses 21k before 7 yrs then bears will have to believe this was a bull market correction......
Now coming back to which sector can outperform this bull run I think technology sector is one sector one needs to look at as it has not taken part in last bull run and it was front runner in 2000.So I think technology sector can lead the market to take sensex at new high.......
Wednesday, July 22, 2009
I was going through the bse site and looking results for June qr and I find the results of Kalyani Forge and Tin Plate appealing.The reason I am recomending them here is, Kalyani Forge comes from a very reputed house,Bharat Forge and BF Ultilities gr ,owned by Baba Kalyani who is a very dynamic person.
Looking at the results I saw that promoters have increased the stake in last qr as I saw that the public stake has decreased which is visible in the results.
With Infra sector to boom Forging co will be beniffited in big way and when a co of Kalyani gr is there they are definately going to prosper.Moreover Kalyani Forge is having a very tiny eq of just 3.69 cr ,means 36 lacs shares.Out of it almost 60% is held by the promoters and 22% by private co boides and HNI's.
Tinplate Co Ltd is a Tata Steel co and hence belongs to a very reputed and trustworthy business house.I think I have already recomended here sometimes back in a list and I remember I also recomended way back at mmb.
I think these both stocks are worth a look and if found good then one can buy for superb gains in times to come.
I recall that I gave a call on Sesa Goa in a list of recomendation of A gr stocks along with others like Torrent Power, ABB etc twice and at that time Sesa Goa was at Rs 69 and it is now Rs 232 !What type of returns one wants then, making up more then 3 times? I have always written that I will only look at the stock only if it is going to give me return more then 2 times otherwise I do not look at it and when the valuations has come down so much the returns can be even much bigger then one expect.Within a year, 6 months to 9 months, if someone gets return of over 3 times what needs to think of.That is great by any standard. I do not go for 30-40 % return.
Readers ask me why I do not give A gr stocks and hence I remember I came out with a list of that wherein Sesa Goa was also recomended.I donno those who asked me bought anything from that and earned and made profit from it.I am unaware of that.Sesa Goa has tripled from there...I have written many times here that if world economy is going to come out of shambles then Commodities will have a bull run first.First sign for recovery will be lead by commodities and hence I have written here many times that watch for CRUDE prices.The day crude price starts going up we can infer that global economy is turning around and if someone remember I have become bullish after crude start going up.
Copper, Zinc,Mines, Coals are going to outperform the market so investment in these cos will fetch great returns.
Usually I do not recomend GOLD but it is a precious commodity world over and perticularly in India.According to me GOLD is truely an International CURRENCY.You take GOLD in any country and you get the currencies of that country.One has not to think about the loss of currency exchange.One can buy gold as a defensive investment.Buy GOLD and go to sleep and after 10 yrs it would be atleast 3 times and more.It will never go down more then half in any given bad circumstances and hence the loss which one see in stock can never be seen here.
Lakh na bar hajar nahi thai .In India those parents having daughters use to buy Gold every year on Dhanteras in Diwali or on Guru Pushyamrut day.They buy a very small quantity each year like say 12 g means 1 Tola every year but at the end of 20 years when the daughter is getting ready for marriage the GOLD is already there to give her on that occassion.That is a great thing in our country.So if someone keeps on buying 1 tola Gold(Sonu) everyyear it can become 20-21 tolas and at the time of marriage of daughter ,parents has not to worry about the price of GOLD nor has to dole out big amt for that occassion....
Monday, July 20, 2009
I just saw the price of Torrent Power which I recomended here early around 80-90 and it is now 195.This is just nothing.It will be a star performer.The anamoly is now the analyst has started recomending it.
The stocks to keep a watch are as under:
3)Neuland Labs(though the results are bad)
And I would like to reiterate some in Infra which I have been recomending.
There are others as well which I have written here in past.
I would like to have a special mention on UTv.I remember I was talking with my broker friend and other guys that why people are not buying UTV.That was in last bull run.UTV was then at 192 when I talked about it with them.When Disney is taking stake of almost over 59% then why one should not buy UTV Soft.It then shoot upto over Rs 1100 ! It is almost now a Disney co.
It has again come down to level of Rs 342 after making a low of Rs 182 which is just below the price I talked with some of my friends in last bull run making it a great buy at this level.
Media is going to be a next big sector and UTV still a 10 paidup stock gives value because I think that after it will cross 1k again Ronnie Screvwala ( a parsi guy) will split it to 2 paidup or 1 paid up like Zee TV.I am very bullish on this counter.
One more stock I would like to highlight is Max India.I have seen lagre selling in Max India by FII's.I donno why they are selling but that is a blunder from them.They shouldn't have sold it but as they have sold, the stock has come lower then it was giving a chance to buy for others.
Grasim, a stock par excellence.I remember when I came down here in USA, I was staying at my brother-in-laws house and there I find a guy, who came down there for a visit ,as he was my brother-in-laws friend and he was having a job in one of the financial Institution in USA.I forget the name of the co but we discussed in lenght about Grasim Ltd.He was also following the Indian stocks and was not bullish at that time on Grasim Ltd , but actually sceptic about the co.I gave him all reasons regarding Grasin Ltd that this is a wonderful co. and so one needs to have some exposer in it,especailly MF's . He was not ready to take that call.Grasim Ltd at that time was hovering aound 1500-1600 and after 1 and half year Grasim Ltd is Rs 3200 ! and I don't think any US co can give a return of 100% in a year.
Some of the counters like Kir Ferro,Kir Elec,Jayaswal Neco,SKS Logistic etc may look dorment but when they will start running it can give fabulous return.
I have already written tons of information on Srei Infra and hence no need to repeat that.That is my another favourite counter.
My last pick Lumax Ind is a stock which can give returns like Kwality Dairy.When chips are down it will goup.When everyone will be crying for the loss, when market will be down , it will go up.
I have already talked on Apar Ind.I think I have written a whole post on it but this is a fentestic co very well run. I have discussed Apar Ind in length. It is a Great buy.
Midcap/Small cap is going to outperform the sensex.Don't panic or lose your patience.Some of the stocks which have not taken part in last bullrun will run now.We donno which are they but try to guess yourself which they can be........
The only problem with my picks are, I find them early.I recomend them when no one knows anything about it and hence it takes time to mature but then we get it cheap as well.Another thing is ,I am able to get the hint what is coming up in that stocks.That is , reading between the lines and that has come after so much of experiance.I can say I just have a PASSION LIKE RAKESH JHUNJHUNWALA.Maybe I am exxagarating here .If time permits me I can breath stocks day and night.That is the only reason I am able to keep track on so many stock and that is why some of my friends calls me , The Encyclopidia of Indian Stocks .They say, Rajubhai , we ask you of any stock and you know everything about it.But that is due to my PASSION.I love to go and try to read whatever I can for stock which catches up my eyes.
Let me write here that I am no BIG a man, financially, becuase I have no big money to invest in tons and buy 10k or 20k or 1 lac or 2 lacs shares.
Saturday, July 18, 2009
I have many such examples.eg.I gave a call at mmb of RTS Power at Rs 70 and when market was tanking ,it was making newer highs and I think it touched something above 350.
Flex Foods is another stock which I gave a call below 20 and in all these bear run it has not gone below that level.So no money losing here.
Maestros Mediline is another stock which has not budge down an inch.
Lancor Holding is another stock which is in talk now from analyst which I gave a call on ISG at 156 , 10 paidup and it is 40 ,2 paidup, so it is also 200 means no loss in this counter as well.
There are many such counters where people have not lost a single paise and have been able to save themselves from the loss in bear run.
I have given a call on Ackruti City at around 350.It is already at 500 and it is now recomended by analyst and Tips givers.I also gave a call on TRF here at Rs 325 and it is already 990.
Even Sahyadri Ind is rock solid from where I gave a call before bear run started at Rs 43.
I was cautious about my call on Elpro Int after I saw the selling of Mavi Invt and take the call back,but my reading on stock and fundamental was perfect.
I remember I gave a call on Elpro Int at Rs 272 on 21 Apr 09 and today after 3 months it has exactly doubled.It is now at Rs 550.....
I can go on giving many stocks examples like that.But I don't boast about these things.
Friday, July 17, 2009
I have written about Finance sector that it can outperform in a big way when sensex was at its lowest and when most wellknown analyst were sceptic on Finance Sector .That has come true.I have been writing to have a focus on Oil Exploration cos as well and I have written about some stocks time and again like Dolphin Offshore,Shiv Vani, Alpha Geo,Selan Exploration etc.They are up by big way.
ABB, Seimens, Thermax,Alsthom Pro, L&T have also given great returns in the mean time after I wrote about them.
I will be talking on Auto Anciallary sector this time.If India needs robust Infrastructure then she needs to spend on that and that is what FM has done in Budget.It is very simple to analyse that if Infra sector is going to have big spending then Auto Anciallary co will have good times along with Capital Goods sector which are the backbone of Infra structure sector.Without Capital Goods sector coming in play this sector cannot get completed.
It is obvious that without LCV's and HCV's the work cannot go on.Trucks and Trailers are neccessary ingrediants for Infra and if it takes a front seat then this sector will need LCV's and HCV's and they will have great days in times to come because for moving things they will be needed very badly and when this happens Auto Anciallary co will also prosper.
I am talking of a co named Lumax Ind which CMP is Rs 96 and they did a buyback in last Jan 08 when market was at the peak at Rs 540.They buyback some over 82 lacs shares at Rs 540 and Lumax Ind is now at Rs 96 after making a low of Rs 60.Lumax Ind is an excellent co with great fundamentals.Even though it made loss of Rs 1.8 cr it still went up.I remember in last bulll run I gave a call of Lumax Ind at Rs 152 to one of my friend for a target of over 500 and he missed it at that time and was asking me to give him another same type of call as he has missed the bus.
This is just for information to let know how things happen.
Kwality Dairy is at Rs 270...up from where I gave a call at just Rs 17......couple of years back.It didn't run atall when sensex went on to make new high of 21k but ran when sensex was at 8000 and I think that is the best part that happens because when everyone is losing money your stock is making new high and you are very happy.
Lumax Ind is also same type of call.One need to be patient with it if one buys it now.Lumax Ind is an internatioanl Auto Anciallary co making head lights with Japanese parents.It is a name in itself.What needs one do is buy it and sit on it.It may happen that it may not run with the market but when market is down it will go for upper circuits(UC).....
One should go ahead and have a look at Lumax Ind and if feel comfortable then go ahead and buy in SIP manner.This stock will give great return in times to come.
I have wrote about couple of dark horse here.One was Rungta Irrigation and other was EPC Ind and both below 20's when I gave a call.They both are making newer highs at 46 and 49 respectively and in UC daily.
The bottomline here is one have to wait for the time to come for a perticular stock.The wait can be as big as 2-3 yrs but when they shootup it give multiple returns too.
Coming to market , I think from around Mid Aug 09 the market should start its upwards journey very distinctively and what I am writing here that sensex can touch 21k by Dec 2009 can come true.
These are all my views and I may prove wrong in a big way.I don't want to claim anything here.I may go wrong in big way so please do your homework before acting upon anything I writes.....
Sunday, July 12, 2009
Budget was not as good as expected by the market.Market was expecting some annoucement on disinvestment.That didn't come.Even how the fiscal deficit will taken care of , that also FM spoke nothing about it.
Individual Tax payer, read salaried class, didn't find something to cheer about.The limit was not increased the way middle class was expecting it.
Some annoucement should have come on Infrastructure sector.That ddin't materialize.
These were some of the things that marketman didn't like and bear attacked bulls and came out winner.
Well, in India all the above things can be done out of budget and there is no need to be dissatisfied.Market was ripe for correction and I already wrote that there should be or can be a correction of 2000 points from 14500.Market can't go up in a staright line and it has to correct and consolidate as well.Take chance to buy fundamentally strong stocks in this downtrend.Our economy is bound to outperform the world and hence no need to worry on that front.
Budget gas given impetus on pipeline sector and we have discussed many stocks in this sector,Viz: PSLLtd, Jaihind Project etc etc...
Keep and eye on GSPL.I have mentioned it some time back.While buying GSPL one needs to be LT say like holding for 3-5 yrs and more, but the amt they will produce Gas is very very big which can change the fortune of this company.Just buy it and hold it for 5 yrs.This is a stock like Petro China which Warren Buffet bought and he made something like 5 times in 5 yrs and he sold out after that.According to me GSPL is such type of stock. Those who wants to look at the prices daily should not buy this stock.
Market wanted to give correction and that happened.Don't read too much in it.It will come back again.Warren Buffet said that USA will need another shot of injection in the way of stimulous pacakage as he do not see the recovery soon.The fall has been arrested but to recover from that ground US will need more money to pour in and WB is sure that this will do loads of good to US economy and a new and strong America will be born.
If someone needs any more information read my post of India producing more GAS then OIL and in which one can find how much GSPL can produce gas in a year.Moreover one can always google to find out more facts on GSPL.I would like my readers do that on their own and write me something I do not know.I have not gone deep in this company but I just picked up the clue what this future bluechip is suppose to have from the same post of mine I have reffered in this post.........
Friday, July 10, 2009
I wrote sometime back on being LUCKY.......
and many of my socalled wellwishers who claim to be so,argued that there is nothing like LUCK....you plan it and life goes that way.
I even gave some examples how LUCK plays major part in ones life and again I got argued that those are all tales and nothing more.
I also gave example of Nadan Nelkeni , CEO of Infosys Techonlogy, that once he wrote that one needs to be lucky being in some place.
Well,The co-founder and co-Chairman of Infosys Techno , is leaving Infosys to take another job and I am just pasting his speech ....along with the link so that those who read me can't call it a fake speech......
BANGALORE: At 4 pm on Thursday, computers fell silent at the steel & glass Electronic City campus of Infosys Technologies as 20,000-odd
employees logged out and headed to the convention hall, to hear Nandan Nilekani, their co-founder and co-chairman, who is leaving to lead the national ID project. He logs into his new job next week in New Delhi. Nilekani took the floor at 5 pm to a standing ovation, saying, “I am generally very articulate but this is not the day or place where I can be articulate. I’ve been wrapped up in Infosys for 28 years. My only identity is Infosys. I will be going to lead a programme to give identity to every Indian. But today I am losing my identity.’’ Of his journey, he said, “It’s not the question of being at the right place at the right time. It is also being lucky. You get the right person to guide you in life,’’ referring to Infosys chief mentor N R Narayana Murthy. “He gave me the first job. Then, when he started Infosys, he invited me to join as a co-founder,’’ he added. Recalling the early days of Infosys, he reminisced about carrying his first computer on his lap as a precious possession when travelling from Mumbai and Bangalore. Obviously, Nilekani has no illusions about the world he’s entering. “I am leaving an organized world. Here, standing at the top of an abyss, even if I were to fall, I may find water. But, in my new role, I’m supposed to work with 600 government departments knowing fully well that no two government departments get along with one other.’’ But, public service has been a lifelong calling. His ambition, he said, was “not to be on the board of any company. Also, because my father was a huge public service guy. My uncle was also in this domain. And here I am, heading to it.’’ For 1 lakh Infoscians, he had this to say in the end, “I’ll watch how Infosys is progressing, watch you getting into the next growth orbit from outside.’’ The roar came back, “While you watch us, we will also watch you!’’ The Infosys founding team had interesting anecdotes about Nilekani. Kris Gopalakrishnan, who took over from him as CEO and lives in the same lane as Nilekani, remembered him as a friend and dreamer with the ability to think big and make it happen. “How well he can delegate work. You’ll never find anything in his inbox. If you give him any work, he will delegate it so well that it will go off to the outbox. How he delegates, no one knows.” For HR head and director Mohandas Pai, it was Nilekani’s elephantine memory and his great networking abilities that were amazing. Also, “If Narayana Murthy is to be convinced, only Nandan can do it. How he does it, no one knows,’’ he said.
This is the link and one can open it and see it for any authenticity one needs to have.
I have always said that LUCK is very important in ones LIFE.I have highlighted the sentence with big fonts.I have also heard Bill Gates saying the same thing that he was lucky enough to be so successful.One needs to be destined to do certain things.
Those who wants to believe may believe and those not wants to needs to be with it.No imposition.I never impose anything to anyone.Everyone has right to think whatever one think and believe.
I hope that now that this has become more public that X CEO of Infosys also feels that there is something like LUCK in life which take one life to another Sphere then it is this.Here Nadan Nilkeni attributes his success to the founder Mr Narayan Murthy that he gave him chance to prosper.....and here comes my another belief that one think that he is successfuldue to his planning and hard work, he still is stepping on someone shoulder to do that.Someone did give him a stepping stone to go further.I don't understand how people forgets things so easily and attributes his success as his own!
When a person like Nadan Nilkeni becomes so humble to give credit to Narayan Murthy how people with so little sucess claims to be sucessful on their own?I think everyone knows what Infosys is and how big a giant co it is.....but I must praise Mr Nadan Nilkeni that he is saying that he was LUCKY.......to do whatever he did in LIFE.....very less people can do that.....That is what I call HUMBLENESS....many many thanks Mr .Nilkeni to say it here.......Let the successful arrogant people know that. This says that even you have loads of cleverness you need to be at the proper place at proper time to be successful and that is impossible with everyone.
Monday, July 6, 2009
Daily gas production has already crossed oil production figures
JYOTI MUKUL & AJAY MODI New Delhi, 5 July
India’s hydrocarbon profile is on the cusp of a major change — the country is becoming more of a natural gas producer than a crude oil producer.
Consider this: While India’s current oil production is around 660,000 barrels a day, that of gas has touched 676,000 barrels of oil equivalent a day. Reliance Industries Ltd (RIL), which has started pumping natural gas from its deepwater discovery in the Krishna Godavari (KG) basin, alone accounts for around 35 per cent of this. Before production from the D6 oilfield at the KG basin started on April 2this year, the total gas production was 500,000 barrels of oil equivalent a day, which met only 55 per cent of the country’s demand.
PM S Prasad, RIL’s president, petroleum business, said the company was currently producing around 28 mmscmd, which is approximately 176,000 barrels of oil equivalent a day. “Once gas production from the KG D6 reaches the planned production level of 80 million standard cubic metre a day (mmscmd) — about 528,000 barrels a day of oil equivalent — the total gas production in the country would be about 1.5 times domestic oil production,” Prasad said.
This could still be quite a conservative estimate. Former Director General of Hydrocarbons Avinash Chandra said RIL had made several other discoveries in the same block and as and when they came on stream, the combined output would be much higher than 80 mmscmd.
To be sure, RIL is not alone in contributing to this makeover. The game changer in the energy share composition would be Gujarat State Petroleum Corporation and Oil Natural Gas Corporation’s gas discoveries in the KG basin and ONGC’s Mahanadi discovery. While estimates of the ONGC discovery are not yet known, GSPC in a recent filing to DGH said it would start producing about 38,00057,000 barrels a day of oil equivalent gas by 2012.
Coal bed methane production by Great Eastern Energy, Essar and ONGC-CIL in Asansol – Durgapur region in West Bengal and in Jharia will also bring a significant change.
Compare this with the crude oil scenario. The projected increase would come only from Cairn’s oil find in Rajasthan besides the MA field of RIL. Rakesh Jain, general manager (Energy) at Feedback Ventures, said the increase in crude oil production was not keeping pace with the gas output. This is a direct result of ageing oilfields and new discoveries being more in gas than in crude oil though the two are found together.
Official figures prove that. Director General of Hydrocarbons VK Sibal, who heads the country’s oil and gas exploration and production regulatory body, said in the production sharing contract (PSC) regime, 106 discoveries had been made so far, out of which 43 were oil discovery and 63 gas discoveries. These 106 discoveries did not cover the discoveries made by national oil companies in the nomination blocks.
Going forward, the share of natural gas in the domestic energy basket would continue to rise. “In 2008-09, gas production at 32.481 bcm (214 million barrels of oil equivalent) in the country was marginally less than the oil production at 33.507 million tonne (245 million barrels). However, with gas from deepwaters in the KG basin by RIL, the gas production in the country is expected to exceed the oil production in the current year, Sibal said.
While these are projections, the actual production is a clear signal to the future scenario. The latest figures released by the ministry of petroleum and natural gas show that during the first two months of the current fiscal, domestic crude oil production stood at 40.3 million barrels, with natural gas production only a tad behind at 5.67 billion cubic metre (bcm), translating into around 37.4 million barrels of oil equivalent.
The sharp rise in natural gas production means that the energy consumption scenario is also expected to see a sea-change. The current share of natural gas in India’s total primary energy consumption is currently only 8-9 per cent compared to the global average of 24 per cent. Prasad cited analyst reports to say that RIL’s 80 mmscmd of gas could lead to 3 per cent savings in India’s import bill.
Analysts said with the country importing 70 per cent of its crude oil requirement of about 100 million tonne, increased production of natural gas would obviously see a change in the user pattern, especially among industrial users. A case in point is the switchover seen in the fertiliser sector. Following the availability of gas from D6, fertiliser companies moved from naphtha, a refinery product derived from crude oil, to natural gas.
About 140,000 households in Delhi and 390,000 in Mumbai, which use piped gas instead of LPG for cooking, also witnessed the change. Besides, compressed natural gas has substituted diesel and petrol for use in about 430,000 vehicles in both the cities.
“In India gas consumption had been limited by availability. Coupled with availability and growth in infrastructure, gas would find diversified usage beyond conventional power and fertiliser sectors, in areas like automotive fuels, replacement of LPG cylinders, development of distributed power generation and increased usage as industrial fuel etc. Most of these usages would replace oil and oil products reducing dependence of oil,” Prasad said.
Production and availability of natural gas would also open up the option of cleaner fuel, said Sibal, though he added that a change in the user pattern depended not only on the availability of gas but also on economic viability, long-term commitment and switchover options.
In terms of price, Prasad pointed out that gas was at present priced at around $25 a barrel whereas crude oil is around $70 and this would lead to an energy-led GDP growth. Besides, natural gas does not require much processing and needs to be transported through pipelines as opposed to crude oil that requires to be processed in refineries.
Read the sentence"Daily gas production has already crossed oil production figures".....that is a great sentence......if that happens and that is what is true then we are just waiting for the news.
If we produce more Gas then Oil then future is very bright for India and only Gas production can rake India to different shepre internationally as when cars and LCV's etc starts running on Gas then our dependent on Oil will definately decrease and that will save lots of foreign exchange and the import bills will be trimmed down drastically as our biggest import bill is from one commodity and that is Oil.
As soon as that start happening we will have healthy fiscal deficit and Current account and trade deficit.Rupee will become stronger which will make FII invest more money in India.... and obvioulsy the gas distriburtion co like Gail and Gas kit making co like Minda Ind, Everest Kanto,Comfidence Petro,Aegies Logistic will be beniffited immensely.
There are other cos in this sector as well but I am not able to recall it while writing this so if someone finds it do write here.......
One needs to realise that these was a part of a settlement which Mr.Anil didn't get his full dues at that time.If Mr. Mukesh Ambani do a volte face then Mr.Mukesh Ambani has to compensate it somewhere else by giving Anil the same price for what he is denying now.
All knows that Anil was just given RCom which was having something in it while RNRL was a Khali Khokha , and Anil himself has taken Rcap to the level which we are seeing now.BSES (now RPower was just a power distribution co and nothing more)....
I donno why but Bade Bandhu will have to pay Chote Bandhu somewhere according to the settlement either by Gas or monetarily something else.He has to........
I do not buy the arguement that both brothers are still united.......
What ever tne outcome of the now Suprem Court verdict, Anil Ambani needs to get his value and if Mukesh Ambani is not ready to do that then the whole settlement becomes null and void..and again there will be distribution of parts....
Anil Ambani is entitled to receieve his part which was decided at that time.....
I think Anil Ambani's lawyer , Mr Ram Jethmalani , should make it clear in the Suprem Court that these was the settlement made when the two parted and that selling gas at the rate which was decided then was a part of settlement......So Mukesh Ambani has to fulfill the agreement.......
Sunday, July 5, 2009
HCC works miracle on sea
It has constructed 34 bridges in Iraq, a dam on the Ganges in WB
Prashant Mahesh & Dibyajyoti Chatterjee MUMBAI
THE Bandra-Worli sea link has been among the most awaited projects in Mumbai city and when it was finally completed, the sense of relief was almost audible. The 4.7 km stretch, which not surprisingly is the country’s first sea link, has four lanes for the moment and is expected to cut travel time to 10 minutes from at least 45 minutes now. Hindustan Construction Company (HCC) is the company that made this possible. A LONG WAIT In more than one way, the excitement among the city’s residents comes on the back of an arduous decade long wait before the sea link was finally done. The delay was on account of a host of reasons with a slew of public interest litigations being one of them. While the Maharashtra State Road Development Corporation (MSRDC) awarded the contract in 2000 to HCC, work on the project started full swing only in January 2005 after the go-ahead from the Supreme Court came towards the end of 2004. Demands from various quarters that included environmentalists and fishermen took a toll on the project. There were changes made in the design of the bridge which eventually made it look pretty different from the original design. Most importantly, the cost of the project quadrupled to Rs 1,600 crore from Rs 400 crore, which was the original value of the contract. HCC overcame all this to eventually make sure the project was done and would, in some manner, ease the infrastructure nightmare that confronts Mumbai today. For the 83 year old company, past projects include the construction of 175 road bridges which have a combined length of around 46,000 km. HCC has constructed about 34 bridges in Iraq alone. The famed Farakkah Barrage, a dam on the Ganges in West Bengal, is a project that was executed by HCC. WHAT NOW FOR HCC? For HCC, the Bandra-Worli sea link has had an impact on its balance sheet which the company chairman Ajit Gulabchand admits to. “We lost more than Rs 400 crore on the bridge due to changes in its design and delay,” he says candidly. While pointing out that the project was challenging, Mr.Gulabchand adds that it was not really easy dealing with the numerous delays and litigations. “Over the last few years, HCC has already written down over Rs 400 crore on the project. It has claimed Rs 140 crore from MMRDA as cost escalation following a delay in implementing the project”, says Rohit Gala, Senior Analyst, India Capital markets. Analysts are not hugely concerned by this hit on the company’s balance sheet. They point out that prudent financial management helped HCC write down these losses much before the sea link was completed. HCC’s current debt-equity ratio is 2.2 and the company has Rs 180 crore of cash in the bank. HCC is a core EPC (engineering, procurement and construction) contractor and its order book of about Rs 16,500 crore is spread across three years. This is broken up into 46% coming from hydro and nuclear power related projects, 35% from transportation related projects, 15% from water related projects and the rest coming from BOT( build, operate and transfer) projects. The company is also a key player in the area of construction of nuclear power plants. A report by Angel Broking says HCC has been involved in six out of 17 nuclear power plants constructed. In the hydro power segment, it is a specialist in the construction of vital components, including dams, head and tail race tunnels and power houses. With the government’s focus on infrastructure expected to continue in the time to come, things could look rather interesting for HCC.
51 Funds Make It To Lipper’s World-100 List; Infrastructure-Focused Funds Among Top India Funds
FIFTY-ONE India-focused funds were among the world’s top 100 performing stock funds in the quarter to June as domestic shares leapt by nearly half, recording their biggest surge in 17 years, data from fund tracker Lipper showed. They are led by those investing in shares of infrastructure firms, a favoured theme in Asia’s third-largest economy after the Congress-led coalition won a strong mandate in April-May polls raising hopes for higher spending on roads, ports and bridges. The Lipper’s list of 29,942 world stock funds with a track record of at least a quarter showed India funds recording an average 50.45% jump in their net values in three months to June as compared to just over 18% gain for the fund group. India funds were led by Naya Bharat Property Company fund, domiciled in the Isle of Man, which gave a return of nearly 135%, followed by JM Core 11 Fund, a concentrated 11-stock portfolio, which rose more than 100%. “Stocks in India were spurred on by a steady diet of positive macro data and the strong victory of the incumbent Congress party in national elections mid-May,” said Rajeev Baddepudi, a senior research analyst for ASEAN at Lipper. Indian stock markets surged 49.3% during April-June, the fastest in Asia after Vietnam, on signs of economic recovery and hopes for market-friendly policies by the re-elected Congress-led government. The gain was the biggest rise for the benchmark in any quarter since it soared 124.5% in January-March in 1992 when Manmohan Singh, the then finance minister, kicked off reforms to open up the economy. Hopes are high that Prime Minister Manmohan Singh, currently in his secondterm as PM, would further open up the economy to foreign investment and remove policy bottlenecks. This has led to sharper surge in shares of infrastructure firms, with capital goods stocks rising nearly twice as fast as the benchmark index in June quarter, lifting portfolio gains for funds primarily investing in the sector. For instance, all top five Indian funds part of the Lipper’s top-100 list are infrastructure or property funds. Fund houses JM Financial Asset Management and Sundaram BNP Paribas Mutual Fund have four funds each in the list, while Benchmark, India’s passive fund manager, DBS Cholamandalam, SBI Funds Management and Taurus Mutual Fund had three schemes each.
This news can help and will help more money pouring in India. This news also implies that money invested can and will ripe more return then anywhere over the world and that can lead to more FII monies coming back.This also gives confidence to the international investors.
The key here is one needs to understand the finer lines what one reads.One needs be able to read what can happen when such news one reads.