Monday, November 30, 2009
Published: Monday, 30 Nov 2009 11:48 AM ET
By: Alex CrippenExecutive Producer
Gerald Herbert / AP
As a new year approaches, it is customary for journalists to make predictions about the future.
In keeping with Buffett's long-term way of looking at things, Warren Buffett Watch offers eight predictions that are intentionally on the 'timeless' side of the prognostication spectrum.
In keeping with what's becoming a holiday tradition, they are the same set of predictions we've offered for the past two years. We still stand by them.
Warren Buffett became one of the wealthiest people in the world by making predictions and putting money behind those predictions. Every time he buys a stock or a business or some other investment, he's forecasting the future.
Judging by the incredible returns of his holding company Berkshire Hathaway, Buffett and his colleagues are very good at making those predictions.
Of course, it helps when you can give your predictions plenty of time to come true. That's one reason Buffett's favorite holding period for investments in "outstanding businesses with outstanding managements" is "forever." After all, "We don't get paid for activity, just for being right. As to how long we'll wait, we'll wait indefinitely."
With that in mind, here are Warren Buffett Watch's 'timeless' predictions.
1. Recessions can't be avoided forever. As 2007 was coming to a close, Buffett told our Becky Quick that if unemployment picks up significantly, the "dominoes" will fall and the U.S. economy will fall into recession in 2008. He was right, but not alarmed. "It is the nature of capitalism to periodically have recessions. People overshoot." (He told Becky she's young enough to expect to see 6 or 7 or them.)
The economic downturn took its toll at the almost-empty Bayshore Town Center Mall in Milwaukee, Wisconsin. (2008 File photo)
2. We'll survive current and future recessions just as we've survived past problems. As Buffett told us in August, 2007, (and repeated throughout 2008 and 2009): "We've got a wonderful economy... There's never been anything like that in the history of the world. We live seven times better than the people did a century ago on average... We've had problems all along. If you look at the last century, we had that Great Depression and World War Two, we had the Cold War, we had the atomic bomb, but the country does well."
3. Recessions will create opportunities. "I made by far the best buys I've ever made in my lifetime in 1974. And that was a time of great pessimism and the oil shock and stagflation and all those sort of things. But stocks were cheap."
4. All stocks won't be cheap. Like Ted Williams waiting for the right pitch, a successful investor waits for the right stock at the right price, and it doesn't happen every day. "What’s nice about investing is you don’t have to swing at pitches. You can watch pitches come in one inch above or one inch below your navel, and you don’t have to swing. No umpire is going to call you out." You get in trouble, Buffett says, when you listen to the crowd chanting "Swing, batter, swing!"
5. The crowd will make mistakes. Buffett cites this piece of advice from his mentor Benjamin Graham: "You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."
6. Investors will mistakenly think falling stock prices are bad. "If they reduce the price of hamburgers at McDonald's today I feel terrific. Now I don't go back and think, gee, I paid a little more yesterday. I think I'm going to be buying them cheaper today. Anything you're going to be buying in the future, you want to have get cheaper."
Walt Disney (1950)
Cinderella rushes for the exit as midnight approaches
7. Good times will prompt bad decisions. In his 2000 Letter to Berkshire shareholders, Buffett compared the crowd that buys big when prices are high to Cinderella at the ball. "They know that overstaying the festivities - that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future - will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands."
8. There will be more dancing at another wild party followed by another painful hangover. Looking back at the Internet bubble, Buffett is quoted as saying, "The world went mad. What we learn from history is that people don’t learn from history."
Sunday, November 29, 2009
This question keeps on arising to my mind that, when WB is bullish on US economy, when RJ is bullish on Indian economy why others are not.
It is a known fact that WB is the richest and not one of the richest person in world.So is RJ , richest person in stock market terms atleast on paper as his wealth is as good as rs 5000 cr something around as of now......
We see Marc Faber, Jim Rogers speaking on US dollar and then also see some other expert saying the same thing that dollar is going to get junk and will depreciate and hence there is no future for US economy as a whole.While WB keeps on saying that overtime US economy will do good and he is so sure about that , that he actually bot Burlington Norflok for $32 bn which is no less and amt to consider as a peanuts.....why WB is buying Burlington at a premium?that question arises to my mind if the future of US economy is not good because the sector in which he has taken stake is related to the core sector for bulidup of any economy as it is a Railway Co.....then why he is risking $32 bn?
So then the question come is whether we need to follow what Marc Faber and Jim Rogers says or we should follow WB?and after some due diligence I came to the conclusion that I atleast need to follow WB and no one else.
Same case is with our Indian Stock Market where RJ keeps on saying he is bullish and other expert keeps on saying they are not citing all reasons.
Hence here again , my mind says we need to follow RJ and not someone else as they have proved wrong time and again.What RJ is able to see , others are not able to understand.
I have seen , that many are very bearish for our stock market in 2010.They have their reasons to believe but my mind says that we will see a new high next year .......as Mark Mobious said , the earnings will keeps on getting rerated and stock will become cheaper ......
I am also seeing lots of discussion going on Chinese economy.That Chinese stock market is a bubble in making and it will collapse very soon.Well, I am not of that view.China will keep on growing and will keep on surprising market pundits.
I donno know whether those who are discussing US economy and Chinese economy and Indian economy , whether they are BUYING anything or just SELLING their holding.......
If someone has seen the parade of Chinese day, they showed their power with war heads.China is a trying to show to the world that they are the next economic power as well as financial power and can anyone think that the governmment there, a communist government will letgo such an opportunity easily?No way.......they will not let it go due to some miscalculation......
I have pasted an interview of Shree Anilbhai Naik , CMD of L&T which was taken by Sucheta Dalal in Moneylife Magazine in Sep 2008....
Anilbhai Naik story is very inspirational as he was very very poor in speaking English but still he came out winner....... His drawbacks, not an IITian, nor IIMian,poor in English....and still he become CMD of L&T........ read how he did that ........
A. M. Naik is the Chairman and Managing Director of Larsen & Toubro, one of the most popular Indian companies. He was awarded the Padma Bhushan,India's 3rd highest civilian award,on January 26, 2009. Mr. Naik was also the recipient of the prestigious 'Economic Times Awards-Business Leader of the Year' award, for the year 2008. Anil M. Naik joined L&T in 1965 as a junior engineer and shortly became the youngest manager in Larsen & Toubro's history.
After joining L&T as Junior Engineer in 1965, he rose rapidly through its ranks; he became General Manager in 1985, and Vice President (Operations) and Member of the Board in 1989 (in charge of the erstwhile Group II, now bifurcated into E&C and Heavy Engineering). In 1995, he was appointed President (Operations) and in April 1999, he took over as Chief Executive Officer and Managing Director. On December 30, 2003, he was appointed as the Chairman & Managing Director. Naik is also extensively involved in social work and is currently developing the educational institution set up by his father in a region called Kharel, Gujarat.proud to be anaval Mr.Naik has been announced as an awardee of the Padma Bhushan in India on 26 Jan 2009.
AM Naik - A rare interview to MoneyLIFE
September 15, 2008
By 2010, we will hopefully come to the take-off point to becoming a true Indian multinational in our sector
He came from a family of teachers, but was essentially a kid from a village in south Gujarat who, by his own admission, was poor in English because he used to think in Gujarati and then translate his thoughts. But language was no barrier to Anil Manibhai Naik, 65, in rising to the top slot in Larsen & Toubro, an engineering and construction giant, or putting it on the path to being a multinational entity and creating enormous value for shareholders. He achieved this through sheer hard work and through what he calls “devotion beyond dedication”. He is the first professional to head the blue-chip company set up by two Danish engineers, Henning Holck-Larsen and Soren Kristian Toubro with financial help from the father of NM Desai (another former L&T chairman). As the executive chairman of Larsen & Toubro, Naik has steered the company through some of its most turbulent times. Under him, L&T has recorded probably the most robust performance and the scrip has had the fastest rise in its history. His prime concern now is attracting and retaining talent for L&T, his biggest pride is in being “partners in nation building” and his big regret is that he has been such a workaholic that he did not spend enough time with his family
ML: Would you start by telling us something about your background?
Naik: My upbringing has a lot to do with who I am today. Our family was called the ‘teacher’s family’ - ‘Master Kutumb’ in Gujarati -- as my grandfather was the headmaster of the Gurukul school. My father, a MSc and MEd in those days, came to Mumbai in 1944 and was a senior teacher at Hansraj Morarjee Public School at Andheri, one of the best schools in those days. He had participated in the Quit India Movement in 1942. But, in 1952, he left Mumbai to go back to our village to serve the community. He became the Principal of a new high school that was being started there. By then, my sister had finished her SSC exams. My father strongly believed that girls should study and, in spite of great opposition, he got my sister to be the first doctor and MD in our community. Anyway, after spending my early childhood in Mumbai, in 1952, I suddenly found myself in a small village school, sitting on the floor after having come from a city where schools had benches. To cut a long story short, I went to Vallabh Vidyanagar from where I graduated as an engineer and came back to Mumbai in 1963. I was an engineer but my English was poor. When I came to Mumbai, my father gave me a note introducing me to Viren Shah of Mukand. I went to see him at his Kurla office. I gave him my father’s letter and he sent me to his personnel manager who gave me a form to fill up. Being poor in English, I had made seven-eight mistakes in filling the form. I would have got a job at Mukand because of Mr Shah, but I decied to wait a while and joined a small company called Nestor Boilers. Those days, Larsen & Toubro (L&T) only hired from the IITs and that too only the top 10 people got the job. So I knew I could not get into L&T. I did very well at Nestor and moved up fast. In contrast to college, where I hardly attended any lectures, at work, I never took a day off in the first 21 years of my working life.
ML: What brought about the change?
Naik: I became serious. I thought to myself that my student life is over; let me build my career. I had joined the company at Rs350 a month, although I could have got Rs400 at Mukand. But here, I got Rs500 on confirmation and then I became a workshop in-charge by the time I turned 22. After that, I decided to apply for other jobs, including L&T, which was my dream company. After several months, I got a call from L&T. I went for an interview and met one Mr Baker. Mr Baker asked me a few questions on design and, after some discussions, offered me Rs760 for the job of an assistant engineer, a supervisory, grade-B post. I agreed because I wanted to get into L&T. He then took me to meet the boss, Mr Hanson at the corporate office at Powai. As I mentioned earlier, my English was weak -- I used to think in Gujarati and translate it into English. Sometimes, this led to misunderstanding. Mr Hanson was stern, serious and never laughed. He asked me the organisational structure of Nestor and the number of people who reported to me. When I said 350, he remarked - “Oh that is a lot. You will not get that kind of responsibility in L&T for a long time”. I did my translation and said: “Who knows, time will tell”. When we left the office, Mr Baker had a long face. He took me to his cabin and kept mumbling all the way. Finally, he sat me down and said, “Sorry boy, the old man thinks you are overconfident, so I am afraid I can only offer you the job of junior engineer, starting at Rs670 which is a grade lower than assistant engineer which is supervisory B. I told Mr Baker not to worry. It was my dream to join L&T and I will take it.
As I was getting up he said, “If you do a good job, I will give you what I promised on your confirmation.” I joined L&T on March 15, 1965, got the promotion I was promised in six months and, in April 1966, I was promoted a grade higher to the supervisory level. Suddenly, in 1966, I got the entire workshop as my responsibility and I became the workshop incharge within 18 months after joining. Some 800 people reported to me and I was not yet 25. In 1968, I became covenanted which was very prestigious. I used to come to work every morning before the shift started and work all through. I did not take any leave except once when my leg got jammed in a battery-operated vehicle. For three days, I did not come to work but, on the fourth day, I came to office on crutches. My office was shifted from the first floor to the ground because I could not climb up. Since phones were not readily available, I used to tell my wife while leaving for work that if I am not back by midnight, I would be back the next morning.
Worker discipline was an issue in L&T. The workers would go catch fish from the Powai Lake to fry and eat. I was told not to go to Powai after seven in the evening. Six months before I joined, a foreman was knifed by a worker. I used to go to the factory at 8 pm, 9 pm and even at midnight. I used to stand at the attendance punching machine to watch when people leave. Until I did that, they used to leave at 11 pm. when the shift was due to end at 11.55. I would switch off the engine of my car when it entered the gate to avoid making my presence felt. Initially, the workers opposed my disciplinary actions, but soon they realised that I knew each worker personally -- their family, their difficulties, where they came from and everything about them. I was firm but I built a relationship with them. I also got a lot of sympathy because they could see that I worked from 7.30 in the morning until late into the night.
ML: Did you think that you would rise so fast?
Naik: When I graduated, our expectations used to be very low. If asked what do you think you would be paid at the end of your career, I would say I would get a four-figure salary. And if somebody had asked me in 1968 how far I would go in L&T, I would have said I would become a general manager because that was my benchmark. I became the youngest production manager, and the youngest deputy general manager. Then, a new story began -- on 1st April 1974.There was a change in L&T’s management. The Europeans went away and senior Indian managers became directors. All of a sudden, seniority and not merit became the criteria. I then spent the longest ever stint in the history of L&T in one grade -- six years as a deputy general manager. In November 1979, I became a joint general manager and remained there for seven years. So, until 1974, I had the fastest rise ever in L&T and, from 1974-1986, I was the slowest ever to be promoted.
ML: In these 12 years, were you not tempted to leave?
Naik: I was frustrated but I was too devoted to the organisation.
ML: But why at L&T?
Naik: It may sound strange but, at L&T, I got the best opportunity to exploit my skills as an engineer and also work for what is good for the country. I don’t think there was any other company which could provide me that kind of a platform. I had an opportunity to leave, but I didn’t even go for the interview.
ML: Didn’t you want to join the public sector? Those days, public sector companies were called the temples of modern India and were into nation building.
Naik: L&T was providing that. In 1965, we were chosen as partners for building nuclear reactors. In 1971, we delivered India’s first nuclear reactor and set up nuclear steel generators. BHEL (Bharat Heavy Electricals Limited) was the only other company selected. In 1972, India launched its space programme. Once again, L&T was invited to participate and we did. I was the one responsible for taking the programme further. I was already in-charge of the whole manufacturing and then from SLV (space launch vehicles) to advanced SLV to PSLV (Polar Satellite Launch Vehicle) to GSLV (Geosynchronous Satellite Launch Vehicle) and now to advanced GSLV. Most of L&T’s expertise has been built from scratch. Therefore, it is easy for me to relate to any situation. If someone tells me today about nuclear reactors, I know exactly what he is talking about. If these challenges and freedom of work, action and empowerment were not there in L&T, would I have stayed? Possibly not. L&T provides tremendous freedom. We do make mistakes but we learn from them. This company gives you the feeling of ownership over what you do. I never felt that this company did not belong to me, although our salary got frozen during the socialistic regime for years together and when it was finally removed, our children started earning more than us, especially in the IT industry. In 1989, I became a director on the board and, in 1999, I became the CEO. But if I look back at what made me stick on, it was great excitement, feeling of owning the company, empowerment and environment. Of course, it was a hard decision.
ML: What happened during the time the Ambanis came into L&T? How did you feel about that?
Naik: Frankly, it was a matter of concern to all. But what discussion chairman NM Desai had with the Ambanis none of us knew. They came in as protectors against the Chhabrias who had acquired 4%, but I was away from the inner circle at that time to really know what was going on.
ML: But weren’t you worried that it would no longer be a professionally run company?
Naik: I never understood what was going on in the inner group of five-six people. I was one step away from it, till I entered the board in 1989. In 1988, I was the one who took Dhirubhai and Mukesh on a shop-floor tour of our Powai works. They never interfered. They understood that I am my own man and I always had an arms’ length relationship but, at the same time, they respected me as a professional. They used to take my advice on petrochemical plants, particularly reactors, even before they came in. In 1986, Mukesh requested me to look into the leakage in the Patalganga plant, which L&T had built.
After the 1990s, the management was always very united and all the employees stood by it to keep the professionally managed character intact. We never realised that we were not owners, till we were taken over. This was uppermost in my mind when, in 1999, I decided to bring in employee ownership. After all, Mr Larsen and Mr Toubro were basically employees; they were not businessmen. They came to India for installing the ACC plant and running it for three years. Then, the Second World War broke out; they got stranded in India and started Larsen & Toubro to do ship repairs. They didn’t have the money; they borrowed it from Mr Desai’s father and that’s how NM Desai became one of the co-founders and a director at 32. Interestingly, L&T had no chairman since 1991 till December 2003 when I became the chairman.
ML: What do you rate as your most significant contribution as the CEO?
Naik: I had made an action programme of 90 days when I took over on April 20, 1999 and put forth my vision for the next five years. The first thing I did was to bring back the merit-based system. I said our biggest task was to attract the younger generation, knowing that it is going to be a very serious problem for this company to attract even one engineer, unless we change our way of rewarding them. Even today, I say L&T is a vehicle which is run by four wheels -- the front two wheels are training and HR and the rear two wheels are technology and IT and the spare wheel, is sheer devotion. This is what takes L&T forward -- driven by values, culture and tradition. The first two years of transformation were very painful, because the economy was in a horrible shape. I wanted our strategic plans to be accepted by all the employees, so I started a large-scale interactive process.
I also had P Subramanyam, then chairman of UTI (Unit Trust of India), the CEO of Morgan Stanley and stockbroker Anand Rathi to give a frank opinion about L&T -- what people in the stock market feel. Until then, if you talked about the stock price or shareholder value, it was considered not in the interest of the employees. They would speak about the beautiful bridges that we have built, temples that we have built… shareholder value was not a great word. That is why, for 10-15 years prior to 1999, L&T’s share price had remained stagnant except during Harshad Mehta’s time. When I took over, it was Rs160 and Kumar Mangalam Birla actually made an open offer in February 2002 at Rs190, including the cement division. I started saying we have to create shareholder value. Everybody said, L&T is a great company technically but what is your market cap? Even today, I ask, do you want to remain independent or do you want to be taken over and the reply is we want to remain independent. I ask: can we have a low market value and still be independent, when someone can sign a four to five hundred million dollar cheque to take us over? This has gone deep into every manager’s mind. If you want an independent professional company, you have got to make it valuable; you have to make it so expensive that people stay away from you. We got a trust formed and we took over the Birla stake in that and then a stock option scheme was launched in the first 90 days, which has created a lot of value for the top management. Otherwise, I would have lost all my senior managers. Stock options are the reason we have a fairly stable top management for the last seven years.
This changed the whole company’s attitude. Today, my junior manager looks up L&T’s share price on the Internet since he has 500 shares. This is how shareholder value begins to get created in the minds of people. But the most important thing is that I touched their soft spot -- you want to be independent or one day be a part of somebody? Make the market cap Rs75,000 crore and very few people can sign billions of dollars needed to take you over.
ML: What about the period when Kumar Mangalam Birla acquired a stake? Did his move take you by surprise?
Naik: Yes. I was in America and I got a call first from one of my colleagues saying that Ambanis are looking for me to tell me that they have sold their shares. Later, Mr Birla called me saying that we have a long history together - “you knew my grandfather and my father had high praise for you. So, let’s work together…” and all that.
ML: What was your reaction?
Naik: I was very innocent still. I knew the Birla group and its three generations but when the open offer was made, I slowly got the feeling that possibly there is more than what meets the eye… I don’t want to get into all that because they are all my excellent customers. We have just signed a contract to build a 30 million tonnes refinery for Reliance -- the largest again. So, as far as I am concerned, L&T exists because of its customers and well-wishers. In any case, L&T is so unique that nobody has fully understood what it is doing. Some people think it is a construction company. Until it was in cement, people knew L&T as only manufacturing cement but the fact is that we are now building nuclear reactors. We are now participating in fast-breeder reactors. Another major transformation was from being foreign-technology dependent. For this, you need to have pride in yourself. Of course, we still have a long way to go because technology advancement continues every day. But the fact is we are able to stand up with our own products in switchgear and we are still No. 1 in India. We have a 42% market share and we are competing against the No. 1 company - Siemens -- which has been in India for 30 years, No. 2 in the world -- ABB, and No. 3 in the world -- GE. All these are $50-60 billion companies. GE is a $200 billion company and we are one tiny little L&T in the global arena, fighting them all with our own products and winning awards at international exhibitions.
ML: What is the biggest change you have seen from the time you started your career?
Naik: Opportunities are abundant today. There are so many choices. Secondly, all over the world, the younger generation has begun to grow faster and more independently than us. We accepted and valued what our parents told us but today’s generation thinks that it has grown up and can decide what it wants. Thirdly, there was tremendous amount of energy bottled up in India. Earlier, if you wanted to go outside India, you had to get an invitation letter. There were no head-hunters, no electronic media. Till 2000, there was no analyst community; the press was not that inquisitive. In India, L&T was people’s dream company for engineering. Now, GE is offering a starting salary of $75,000 a year. A head-hunter from Hong Kong or London will call up and ask you to come over in any of the 11 flights a day to London. You use a credit card to buy the ticket; you are there the whole day and, in the evening, you collect your appointment letter, return the next day to office by 11.45, and nobody knows where you were yesterday.
ML: Has that really been happening?
Naik: These are the possibilities and opportunities of today. Young people come and ask me to increase their salary after comparing it with other companies. I have increased salaries by two and a half times in four years but, beyond a point, I will lose business because I have to compete with the Chinese. Manufacturing has to compete with the Chinese; construction has to compete with many large-size companies. If I have to go to the Gulf, I have the whole world to compete with. In switchgears, I have to compete with products of multinationals made in China. Remember software companies do not have all these problems, because China is not breathing down their necks. They are deeply engaged in building a powerful China. Don’t think they don’t have IT professionals. They have millions of them but the only problem is that they don’t speak English.
The president of China is not worried about not having software exports. He says automate the government departments first and then the provincial government. Some 30% of IT spend in America is on government automation. How much is it in India? Please tell me how much capacity of the Indian IT industry is being spent to automate India’s medical science, health ministry, hospitals, government, etc. We sell our bodies. Infosys and Wipro do not lose engineers to the Gulf. I lose them to the Gulf; I lose them to IT; I lose them to multinational engineering companies; I lose them to Australia, Canada, New Zealand, FMCG, investment banks… everywhere. Simultaneously, I should fill in the void.
People ask why I don’t pay more, but my margin is 5%. All my competitors around the world pay less than 5% which is the industry margin. Construction business all over the world works on 2%. The IT Industry earns 30% margins. India is only adding 4% of value in the product cycle. Every year, foreign companies come here for designing and I know, within three months, I will lose 20 more guys because they can pay two to three times more. Foreigners get their design done here. We add 4% of the value. China adds 45%-50% value by manufacturing it too.
ML: What about the future of L&T? What are the challenges?
Naik: In Hazira, which is the pride of India, we are doubling our capacity. We have entered shipbuilding. A lot has been done in taking L&T to the next level in infrastructure building with the help of engineering, project management and other skills that we are building up, even in the middle of all this turmoil of talent loss. L&T would have grown faster if we had no turmoil on talent; that’s our only limitation, not the market place. I am not taking orders or quoting for new jobs because I don’t know how to deliver in the middle of all these people going away for lucrative jobs all over the world. Some 70% of the best Indian talent goes out of India. Out of the balance 30%, 25% goes to non-infrastructure, non-manufacturing-oriented job opportunities. So, only 5% of the talent is available to us. L&T grabs the best ones and then, after a year or two, with a golden stamp of L&T, seven out of the 10 leave. So, within three years, we are back to square one. All I have to do is training and more training.
I am sure that not many people knew that we were sitting on Rs2,500 crore in value of project development. Below that, we are now creating a property development company. L&T transportation infrastructure is all bridges, roads, metros, airports, seaports and, now, we are going to start L&T power development where we will have hydropower and in future nuclear power development. The board has just approved of L&T project finance company, which will participate in a consortium with banks to finance our infrastructure projects. Be it in financial services or taking manufacturing to the next level, becoming more sustainable in engineering and technology and going outside India to China and the Gulf and all over the world, we have a long way to go. Therefore, I always say we are 50% to 60% into our transformation journey. By 2010, hopefully, we will really be at the take-off point to become a true Indian multinational in our sector. I am sure we have hard work to do. My single biggest challenge is I don’t know how to connect with the younger generation and make them feel for L&T as we feel for the company.
This excerpts is taken from Business Standard:Jan 2009...
Anil Manibhai Naik, chairman and managing director of Larsen & Toubro, sees himself as a dynamic workaholic. Ever since he took over as CEO and managing director in 1999 and thereafter assumed the chairmanship in 2003, he’s seen his role as “more than half a public servant”.
The latter assumption stems from the fact that his company is involved in almost every large project of note — from the modernisation of the Delhi airport, the Delhi metro, and a host of highway projects, to name just a few.
As one of the front-runners to buy Satyam, L&T’s close association with many key infrastructure projects India so critically needs will no doubt be a part of the hard sell that Naik will make to the troubled software company’s government-nominated board.
Satyam may appear an odd choice for a company that’s strongly focused on engineering and construction. The company has unofficially said the interest is strategic because of its 4 per cent stake in the company — some of it acquired after Raju’s confessions.
A closer look suggests that the bid isn’t so out of synch with Naik’s vision for the company. He’s long seen IT and human resources as core to the company’s growth. Besides, there are synergies with L&T Infotech, the engineering conglomerate’s wholly-owned subsidiary.
L&T Infotech, in fact, is a fairly large outfit. It was set up in 1997 and now has 10,000 employees and a turnover of $425 million (Rs 2,000-odd crore) with clients such as Hitachi, Lafarge and Chevron. Like Satyam, it has expertise in enterprise resource planning (ERP) solutions which could prove a useful springboard for growth.
Still, given that no one has a fix on the depth of the accounting fraud to which Satyam’s promoter Ramalinga Raju confessed January 7, L&T’s interest can certainly be called bold. Even assuming a buyer will not acquire Satyam’s liabilities (once a forensic audit figures out what they are), regaining global client confidence will be just one of many challenges they’ll be up against.
But then, no one would accuse Naik of lack of confidence in his own abilities. Indeed, as he admitted in an interview to Business Standard last year, it was one of the reasons that nearly did not get him his first job in L&T in 1964 as assistant engineer. The Danish general manager who interviewed him found him “over-smart” but luckily for Naik, his immediate Scots boss decided to take a chance on him.
Educated in a village school in his native Kharel, Gujarat and later in Vallabh Vidyanagar, near Anand, Naik did not possess many of the attributes considered indispensable to a job in corporate India in those days. He was academically brilliant, he says, but his English was poor. So poor that he didn’t get past an exam to join steel company Mukand. It says something that he gamely learnt from that setback to acquire language videos and practice delivery in front of a mirror.
Naik’s command of the English language may be still be idiosyncratic, but that never impaired his rise up the ranks at L&T or the rapidity with which the corporation has grown under him. He took charge as managing director of a company with a turnover of just under Rs 7,000 crore and grew it to almost Rs 25,000 crore by 2007-08, making it a model of the virtues of professional management. In many ways, it’s now pretty much on auto pilot. Reviving Satyam, therefore, may well be the new challenge he’ll relish.
Tuesday, November 24, 2009
I have two stocks to write upon today.
Seems that worst is over for Textile sector and seems good times coming ahead.
Poddar Pigment is in Dyes and Pigments which are used in Textile,Eng,moulding machine, etc.
They claim to the first in India for creating Masterbatches for dope dyeing for Poly propylene,Nylon & polyyester multifilament yarn/fibres.
Well, I am no textile guy and hence do not understand anything here what can be the growth trigger for this.
But the bottomline is showing some great signs . Management is buying back from the market at this price and hence I can say that future looks bright for Poddar Pigments otherwise there is no need to buy at current rate if they are not going to do good in future.
Since last 2 qr they have an eps of 2 and hence Poddar Pigments can end the year at around 7-8 eps which makes it a value buy at 5 p/e...
Another is SNL Bearing...CMP 11.00
It is still in very nascent stage but what I like is , it is owned by NRB Bearing.SNL Bearing was previously Shriram Needles Bearing Ltd and NRB Bearing (MNC) took over in 2000.With such a great management SNL Bearing is bound to do good in future.....
At Rs 11.00 , SNL is looking damn cheap....one can take a small exposer atleast to give a salute for a co owned by NRB Bearing ltd......I think Rs 11 is not a big price to buy a co which have a MNC management..
Here are some excerpts which I have taken from their website:
Shriram Needle Bearing Industries Limited ( SNL), promoted by the leading Indian business house, Shriram Group, was established in 1983 in Ranchi, India. SNL was promoted as a joint venture between Shriram Group and INA Germany and is India’s major needle bearing manufacturer. SNL is equipped with state of the art technology, along with expertise in product design and process technology gained from the world leader INA Germany in a technical collaboration from 1983 till 1997.
SNL Bearings Ltd. ( formerly Shriram Needle Bearing Industries Limited) was acquired by NRB on 1st June, 2000. SNL has successfully developed and introduced cage guided drawn cup needle bearings, connecting rod needle cages for piston pin and crank pin along with other types and ranges of needle bearings.
SNL enjoys a large market share of Original Equipment Manufacturers ( OEMs), producing motorcycles, scooters, cars and trucks in India, and has made successful in-roads into the motorcycles, chainsaws, handtools and other industrial markets worldwide with established customers in USA, Italy, UK, Portugal, France, Indonesia, Malaysia, Taiwan, Singapore, Thailand, Vietnam, Phillipines, Kenya and U.A.E.
SNL is respected in the domestic and international markets for its product quality and design values.
SNL Ranchi is a certified ISO 9002 Company going across international frontiers, satisfying demanding customers in its journey into the 21st Century.
SNL ProfilePlant Locations : Ranchi
Employees : 200
Product range : Over 200 sizes in needle roller bearings
Products : Needle Rollers, Needle Cages, Needle Bushes, Thrust Cages,
Applications : Gear Boxes & Propellor Shafts
Chasis & Suspension, etc.
SNL Customer Base
Existing Customers4 Wheelers, Denso India Tractors, Maruti, Mahindra & Mahindra, Mico, Sona Steering Ltd., Telco, TAFE.
Bajaj Auto Ltd., Kinetic Honda, Kinetic Engineering, LML.
Lumax Ind,Frontier Spring , GSPL, Thermax, Sesa Goa,Catvision Product ,Sabero Organic, Sahyadri Ind,Max India( am seeing brokerage calls for this counter)etc has started making new highs.....
Watchout for Ennore Coke and PAE Ltd(going in Solar sector).....
I have been discussing everything that has come to my way.Rama wrote me that he didn't want to hurt anyone while questioning here.I personally am not hurt at all and I think no one has taken the other way too.
Some may have written something , like blindly following me or takes my writing as nothing to doubt at.But that is also not a good situation.Never blindly follow what I write.I can and have gone wrong many times in past and hence there is no reason why I can't go wrong now.
The only thing I would like to write here, is picking stock is looking at the FUTURE and not at the present or past.
I compared Motherson Sumi with Rico Auto when I wrote about Rico Auto.Has anyone cared to go and look what is the earning of Motherson Sumi?Has anyone cared to look what is the eq of Motherson Sumi and compared it with Rico Auto?Has anyone tried to see what P/E Motherson Sumi is attracting?
I didn't see anyone writing on Motherson Sumi....and trying to compare it or whatever they observed between Rico Auto and Motherson Sumi.
Isn't that a sad part I am seeing from my readers?
I know there are many who use to look at all angle and try to analyse to the core then why there is none who came out with such comparision between Motherson Sumi and Rico Auto.Both are 1 paidup......both are in same sector, Auto Anciallary...then?
Anyway, I am today talking on some masters who use to come on CNBC and many follows them as well.
What I am going to write is just discussion and not trying to belittle anyone personally as I am very very small in front of them, acadamically as well in other parametres as well.I am no match in front of them but there are certain things which one is not able to understand and hence am trying to write it here.
If anyone to whom I am writing feels like giving any reply is always welcome to write here instead of trying to do something else.....We use to have a very open discussion without any pride and prejudice for anyone hence no one needs to feel the otherway.
Well, what I have observed recently is that after Ramesh Damani who use to first chat online ,live, at rediff.com and now at moneycontrol site, other too have started online chat where anyone can join and ask question to them.
Offlate,Mr Shankar Sharma of First Global and Ridham Desai ,MD,of Morgan Stanley has started this online chat.
Those who wants to read their transcript can go to monetcontrol site and read it and also take part askign question to them as well....
Pasting some of SS transcript here:
Q.ananda.sreeniva : u HAD DESCRIBED URSELF AS FEARFULL BULL EARLIER THIS YEAR, lOOKING AT YOUR PRESENT STATEMENT IT LOOKS LIKE U HAVE CHANGED THAT STANCE, WHAT IS IT NOW? fEARLESS BEAR OR A FEARFUL BEAR? In the recent fall we noticed a strong support coming @ 4550 levels, could tell us what would trigger Sensex so low as u have stated today? what time frame are you looking at for this sensex atrget?
A.Shankar Sharma : Bearish now. very clearly bearish.( He is bearish...giving no. 1)
Q.bse17000 : You just said sensex will go to 12500.When there is so much liquidity around and so many people who missed the rally ready to jump in even on a small correction.......doesnt a 20% correction sound bizarre and out of synch
A.Shankar Sharma : sure. doesnt look likely, right?it was the same in March 09...and look what happened...these kinds of consensus things have a strange way of coming apart.(bearish , giving no.2)
Q.alneshsomji : sir, just today u spoke of market not surpassing 16,700 and it turned out to be true as it drifted down ... would it b safe to assume we have entered the phase where it would be safe to short ?
A.Shankar Sharma : yes...quite safe now...market will probably rally about 200-400 points more but that should be it.(bearish..giving no.3)
Q.aahansaloni : Sir,You are simply great in your views.Iwould like to know your views on market for 1 to 2 tears prospective and any share you like for that time horizion.
A.Shankar Sharma : We will see, I dont like taking that far out a view. right now, th eview is negative.(bearish, giving no.4)
Q.srikanth820 : Sir,How do you look at the Infrastructure sector in near term?
A.Shankar Sharma : negative in infra for now.
Q.ckkhanna : WILL NIFTY BE ABLE TO HOLD 4500 BY END 2009
A.Shankar Sharma : that should hold, but over th enext 6 months we ll get lower.(bearish,giving no.5)
Q.sandeeparora9 : Dear Sharma you mentioned 12500 levels when do you think we will reach there?
A.Shankar Sharma : next 6 months approx.(bearish..giving no.6)
Q.thwisha : Dear Sir, whenever you state your bearish stance, the market bounces back with vengence and makes a new high. your comments on it please
A.Shankar Sharma : thats a coincidence!.( now who is going to tell Mr SS that this coincidence is happening since 2003! and when coincidence happen frequently then that is not called coincidence but getting wrong on judgement....but who will tell him that?)
Q.sadhawin : Hi, do you suggest to the retail investors like me to exit the market immediately? Or will it withstand for some more time?
A.Shankar Sharma : exit 70% of positions.(bearish..giving no.7)
Q.sonali9876 : what do u make of they HIGH VOLATILITY IN NIFTY over last week,,,r we in d middle of bounce
A.Shankar Sharma : we have bounced after the sharp fall...thats all there is to it.(bearish ,giving no.8)
Q.nextbullleader : Hi sir...Could u plz explain me why there is a feeling of doubt emerging regarding dollar could strengthen in short term even when rate of interest in US is near zero..because i believe in zero rate scenario supply of dollar would not come down??
A.Shankar Sharma : not everything inmarkets follows logic always!( that is what Mr SS needs to understand, that his logic of whatever reason he gives for market going down doesn't work and that he has seen from 2003.....who will tell him that...)
Q.shivdb : sir, i am thinking that mkt will not make high upto oct, 2010 but it can make low around 3200-3300 (nifty). and we should by there. what do say abut that.
A.Shankar Sharma : possible.(bearish..giving no.9)
Q.happy_doon : hi shankar, you feel markets will go beyond 5200 before they start their corretive mode. rgds
A.Shankar Sharma : probably not.(bearish..giving no.10)
I have written some comments in bracket as welll in blue letter.
Mr Shankar Sharma ,of First Global, is very very bearish as whenever he was asked about market he says, sell 70%, market will go down, maximum we can see 5200 etc etc, I have written how many times he said he is bearish....10 times and even more in his chat......reading his chat transcript and listening him on CNBC , readers and investors needs to take clue what needs to be done......
Wednesday, November 18, 2009
One reader asked me how Rico Auto is fundamentally sound and how I recomended it as a next multibagger.
According to him there are many negatives.
1).Sales growth rate is very less in the last couple of years.
2)Even the operating profit is coming down.
3)Debt is high when compared to equity.
4)Book value is at 21 because of new equity in 2006, otherwise it would have been very low.
5)Operating profit margin is coming down at an alarming rate.
6)Even interest coverage is less than 1 in 2009.Current ratio is less than 1, debt equity ratio is more than 1.
7)Earnings per share is coming down from 2005 onwards
These are the negatives he has find out from the Co.
I know many readers are more good then me.Like Natraj, rama,Barat,Mtiz,Vasanth, Vikas and many more.They are in real sense have more knowledge then me and I accept that.I have always said I am not an analyst or an economic or commerce student.
See, when I recomended Rico Auto I was not knowing about all these because I don't know how to see it.
Now what I would like to ask here to my readers is, why still I say that Rico Auto is a buy .......Let all give reason why I would still say it is a buy......
What I am going to discusss is perhaps discuss in IIM or MBA in Harvard University , USA or something like that.Maybe it may not at all discuss this whole subject the way we are going to discuss......
So I would like all readers to participate in this discussion and write what they think about negatives which "rama" wrote and after reading that why I am still sticking that it is multibagger in making.....
As MVS Raju rightly pointed out
"If all the fundamental variables of the company are good at this point of time would you be getting this stock at the current price?"
That is the question one needs to ask to themsleves.
Well,these question needs not be asked with stocks which have poor management or with less sales.See, there are certain things that ones needs to judge very well.
If we try to ask such question for cos which are still growing then its makes no sense.But here the sales is already there, the client list is excellent,the production capacity is excellent,the products are excellent, they are OEM,the gr is excellent,the collobaration is excellent...what just needed is tightening of belts by management and that can come any time.
So as Raju rightly pointed out if the variables are good as one needs to see, then can stock be available so cheap?
Market always sees the future.
and then Uno wrote:
"none of the competition has this variety in portfolio and cover all sectors. or do they?"
that is replacement theory.If one needs to create a capacity of Rico Auto plant how much money will be neededand how much time it will take?How many compititors have such type of varity of products.....and adding to that they have many subsidiaries with them which I have already pointed out.
I have pointed out the production capacity as well.
I have tried to point out almost all pros and cons for Rico Auto.Now it is on individual to take a call.
See,this type of discussion is not possible for each and every stock by me.Hence I always write the stock name and some insight then readers has to take the decision.....
If you’re a proponent of value investing, which involves buying stocks that offer value when they’re cheap and holding on to them till they achieve their potential — Warren Buffet style — here are tips from India’s own Buffet, Rakesh Jhunjhunwala, that you may use.
— Jhunjhunwala’s advice to investors is not to look for companies that would give profits but understand factors that help in creating profits. “Don’t emphasise too much on analysis of profits,” he says. “Profits are created due to various stages of circumstances. I always look at how large is the opportunity for that business in the sector.”
He recalls how he bought Praj Industries, a bio-ethanol company that gave him large returns. “When I bought Praj, we thought there would be a humongous demand for ethanol. The opportunity was huge but it was not recognized.”
IT bellwether Infosys, he said, benefited because of the internet revolution. “Nobody knew about Infosys in 1993 but Infosys could become Infosys because the opportunity for the internet went through the roof.”
“When opportunities come, they can come through technology, marketing, brands, value protections, capital, etc. You need to be able to spot those.”
— “Then I look at scalability of a particular company that I choose in a sector,” Jhunjhunwala says. “A friend of mine asked me: should I invest in a small cap or largecap? I said we must invest in the smallcaps, which will be the largecaps. The biggest challenge of investing is that you should recognise whether organization has the ability to scale.”
Jhunjhunwala says he makes an investing decision by understanding how a company’s profits may grow in the next four-five years, and by that account, its price-to-earnings and valuation. “If I succeed in making the right call, then after four-five years, I do a proper re-examination of the business model and accordingly reallocate capital because the business model can undergo change. Intense competition could emerge in that sector,” he says. “This is when I examine the earlier opinion I had made when I first bought, whether those assumptions still were valid.”
— How should you spot a good company?
“You can have an idea by looking at companies’ capital raising. Are they distributing profits, are they using the surpluses in the right manner,” he says. “For me, quarters don’t matter. There can be always be an aberration in one quarter when the company has less profits. You should examine the reason for it and whether it can revert back on its growth.”
— Choices of asset classes is important too, says Jhunjhunwala. “If you bought gold in 1970 and sold it in 1980. you bought the Nikkei Index in 1980 and sold it in 1989 and then bought the Nasdaq [till before the dotcom bust], you would have made 33% compounded returns in three decades,” he says. “Warren Buffet rode the entire wave of those different asset classes.”
— “Value investing is relevant in all circumstances. But thought processes and principles are dynamic and not static. Be open to change,” he says.
— Don’t get carried away short term market trends, he says. “In 1999, people used to buy Himachal Futuristic, Global Tele, Pentasoft, I used to buy Shipping Corporation and Bharat Electronics because I saw long-term value,” he adds. “Never get carried away by aberrations, recognize and respect them but do remember that the market corrects its aberration though it takes time.”
This is a nice latest interview from RJ where he says what needs to be looked at while selecting stocks.The bottomline here is how much one can visulize the growth and if someone gets correct in seeing that then he is with a MULTIBAGGER.
But the reality here is untill the growth comes , we have to remain cool.As he rightly answered to his friends question about where one needs to invest, Smallcap or Largecap? and he aptly answer that in smallcap because there is where the growth is.....and that is I have done here and through out my tenure in stock market.
Find the GEMS while finding the growth.It may happen that not all stories get successful and maybe 50% gets aborted but the rest can give multiple returns.Be ready to make mistake but mistake needs to be affordable.One should not get throwened out from the market with one mistake and shouldn't end in a position that one will tell himself that I will never play in stock market again......Stockmarket is the only market where one can make above average profit and if played with discipline then one is bound to succeed.
Monday, November 16, 2009
I usually do not look at Cos which are already splitted but I am going to write on Rico Auto this time even though it is a splitted stock.
Rico Auto is fundamentally very sound Co with Japanese collobaration and have clientele names like Hero Honda, Honda Car,Suzuki, Bajaj,Maruti Suzuki,Ford, GM,Volvo,Jaguar, Tata,Landrover,Nissan.
In commercial vehical segment it has a very great customer list like CaterPillar,Cummins,Tata , Detriot Deisel,Perkins,Komatsu etc and as system supplier they have clients like Honeywell,QP Pump,Magna etc.....
These client list says that they have great products.
Rico Auto is having 4 joints ventures which are as under:
F.C.C. RICO is a joint venture company of F.C.C. Co. Ltd Japan and Rico Auto Industries Ltd. India established in February 1997 with 50:50 share equity.
The company is exclusively into manufacturing & supplying of automobile clutch assemblies to O.E.M's of Two Wheelers and Four Wheeler. The co. is also in to manufacturing of Clutch Friction Disc with Cellulose (Paper) and Cork base.
With F.C.C. RICO coming into existence, it has joined the group of overseas companies of F.C.C. having operations spread all over the world.
Now F.C.C. RICO can avail any kind of Technical & Operational Support from its overseas base companies, it will have an additional advantage of exposure to the latest development taking place Worldwide of different bases & same can be incorporated to improve upon local operations facility & efficiencies in India.
2)CONTINENTAL RICOProducts :
Hydraulic Brake Products and Services for Vehicles of all Classes for OEMs in IndiaSub Products
Brake Calipers for Front and Rear Axles : 2 Million Units
Drum Brakes : 1.5 Million Units
Master Cylinders : 1 Million Units
Actuation Units & Brake Boosters : 1 Million Units
LSPV Load Sensing Proportioning Valves : 0.5 Million UnitsLaunch Plan : Gurgaon Start of Production 4th Quarter 2008
3)RICO JINFEIProducts :
Aluminum Alloy Wheels for Two WheelersLaunch Plan
Start of Production: Early 2008
Planned Capacity: 1 Million (First Phase)JINFEI Introduction
Established in 1959, started production of Two Wheeler Aluminum Alloy Wheels in 1995
Among top three motorcycle Al Alloy Wheel Manufacturer in China
Main customers: Honda, Yamaha, Suzuki, Piaggio
Sales US $ 280 million (2006), Exports $ 43 million (US, Japan, Europe, Middle East)
4)MAGNA Powertrain RICO -JV HighlightsShareholding :
Magna Powertrain-Rico 50-50Products : Oil & Water Pump (with Aluminum Housings) for Automotive Engines – India & EuropeLaunch Plan : Gurgaon Start of Production 2009
They have 33 products which are as under:
Oil Pump Assembly
Annual Volumes - 500,000
Fuel System Parts
Annual Volumes - Annual Volumes - 400,000
Lube Oil Filters Heads
Annual Volumes - 200,000
Annual Volumes - 500,000
Crank Cases & Covers
Annual Volumes - 1 Million
Cylinder Head Covers
Annual Volumes - 100,000
Intake Manifold Covers
Annual Volumes - 150,000
Annual Volumes - 60,000
Annual Volumes - 400,000
Balance Shafts Assembly
Annual Volumes - 120,000
Annual Volumes - 1,20,000
Main Bearing Caps
Annual Volumes - 1 Million
Water, Air Connections and Pressure Plates
Annual Volumes - 250,000
Annual Volumes - 400,000
Oil Filter Adaptor
Annual Volumes - 400,000
Annual Volumes - 4.2 Million
Cylinder Block (Ferrous)
Cylinder Head (Aluminum)
Annual Volumes - 3.5 Million
Automatic Transmission Bracket Assembly
Annual Volumes - 1 Million
Differential Case Housings
Annual Volumes - 600,000
Gear Shifts Forks
Wheel Hubs Assembly
Annual Volumes - 7 Million Sets
Brake Panel Assembly
Annual Volumes - 7 Million Sets
Annual Volumes - 1.2 Million
Annual Volumes - 1.2 Million
Annual Volumes - 250,000
Rico Auto has following divisions:
Rico has over 76 HPDC (High Pressure Die Casting Machines) from 135 tns to 1800 tns locking force.
Rico would be the largest high pressure die casting capacity in India.
Rico is currently producing 45 million high pressure die cast components per annum.
Current HPDC machines are from Buhler, Toshiba, UBE etc.
Alloys produced today : ADC 12,14, LM24, A 380, A 383 and ENAC46500Future Plans
Low Pressure Process
Aluminum Cylinder Block
Aluminum Cylinder Head
2)Ferrous Casting :
4 Automatic Moulding Lines
(2 Disamatic size 650 * 535)
(2 Horizontal size 610 * 510)
Gray Iron (FC) , Ductile Iron (FCD), SiMo, SiMo Cr
Rico has in house core making facility with over 17 machines(Cold box and Shell process)
Continuous Shot Blasting and Real time X Ray
3)Machining & Assembly :
Rico has over 1000 machines (CNCs & SPMs).
Rico is one of the largest machining facility in India.
Rico has implemented a mix of state of art CNCs (Mazak, Kitamuras, Daewoos, Emags, Fanucs, Pitlers, Stama, Chiron etc) & low cost automation to meet its customer requirements.
Rico currently manages over 40 sub suppliers covering a vast range of parts e.g. Sintered, Rubber & Seals, Sheet metal, Friction Material, Precision Machined Components, Bearings, Springs and Fabricated Parts.
4)Engineering and R & DEngineering :
CAD CAM CAERico has over 60 seats and all the required engineering CAD CAM CAE software's.CAD & CAM : Unigraphics, Pro Engineer, Catia, C3P, Ideas, Vericut, Solidedge, AutoCAD, AnsysCAE : Magma soft, FEA, CFD, Ansys, FCX, GT Suite, MSC Fatigue R & D Capabilities
Design & analysis: Structural, Thermal, Fatigue, NVH (noise, vibration, harshness)
Material research & development
Testing & validation
5)Dies, Patterns and Tooling :
Rico has in house dies and pattern design and manufacturing.
Rico manufacture over 200 dies and patterns and 600 die inserts annually.Facilities and EquipmentsCNC Machining CenterMikron HSM 700, Mikron VCP 710, Deckel FP 50 CCP, Makino S33L, Haas VF6, Haas VF2CNC - EDMCDM Rovella BF 600, CDM Rovella BF800, CHMER 50 NCNC Wire cut (EDM)Electronica Euro cut Mark 2, Fanuc Rob cut a - 1ICCNC - CMMDIE SPOTTING PRESS TUS 130
There was labour unrest at Rico Auto factory but it is now amicably setteled and that was the reason the price was not going up.
Rico Auto is fundamentally very sound co with Japanese collobartion.They have almost all type of companies as clients.
If I compare Motherson Sumi's price which is Rs 138 and 1 paidup means 1380 on 10 paid up then Rico Auto Ltd is going very cheap at 25 with 1 paid up FV means, Rs 250 on 10 paid up.
This is my view and DD is a must for everyone.One can accumalate it for multibagger return in long run......but I think Rico Auto offers value and hence I have recomended it here.....
Sunday, November 15, 2009
This is what I read in one of weekly for stock market from a very wellknown analyst.
This guy is refering Shankar Sharma and one reader asked me what I think about SS view that we can see 12500 !
I wrote him in reply that one needs to read Marc Mobious view which I have posted here.
I am quoting it here what I want to read at from Marc Mibious interview at cnbc :
"A: I think a deeper cut will come as we go up. It is expected since many people will get frightened looking at the valuations. A number of analysts have not been too optimistic about what the earnings will be for next year. So these analysts will say, “We are at the peak and it is about time that we get out of the expensive stocks”. They will realize that the next year and the year after that it will be much better than expected and then the market will rebound."
This was his one of the reply ....and what one needs to read here I have put it in RED WORDS.....
That is what one needs to read....understanding is important and able to read what needs to be read is more important.
My answer comes with this reply from MM.He says that analyst will feel that valuations has gone up and one need to sell it and next year the results will be much better and there will be upward revision for earning and one will repent booking profit in good stock.....
See, I am not in the sector and hence nor do I have any exposer in Int market.I read and take clues from what someone is saying........
So the bottomline here is SS fear is unwarrented ......
Friday, November 13, 2009
I have come out with this wonderful Pharma Co named Venus Remedies.
Venus Remedies has a very low eq base of just 8.47 cr.Growing qr to qr with NP increasing simulstaneously.
All chances are there for this upcoming pharma co to give an EPS of 48 this year and the stock is available at just Rs 221 means at 5 p/e....try to find any good Pharma co quoting at this p/e.....Venus Remedies has the turn over of 265 cr and hence has very big scope for growth.That is where the scalability comes.That is where one needs to analyse.Scalabiltiy...how much the sales can go up......I am seeing huge scalability here.....
According to me this a big multibagger in making in years to come.
Read on:( taken from site)
Venus Remedies India is a research and development driven, pharmaceutical manufacturing company. Among the top 50 Indian Pharma companies of India, the company has out paced most Indian pharmaceutical companies in its growth and value creation over the past few years.
Driven by a top class team of mangers and motivators this organization is counted as one of the most professional companies of India and a preferred place for top innovators and mangers to join the bandwagon of the globally significant Indian Pharma industry.
Our research team has proved itself to be a power house of innovation by filing many international patents for sophisticated formulations of anti-biotics and oncological therapeutics. We are constantly working to broaden the pipeline of products and to make a impact in the international markets.
We have two manufacturing locations in India and one in Germany. Venus is top class manufacturer of Oncological and Cefelosporine Injectable products following EU-GMP norms for all is activities.
We reach out to all the significant markets across South Asia and our sales force is a highly dynamic team working to deliver the ideas and products to the market at great speed. Our contract manufacturing of these product provides great value to major marketing companies of the world working in India and the Europe.
From MD's Desk:
To indicate where we are headed, it would be necessary to appreciate where we have come from.
The year 2008-09 marked the end of an important phase in our journey; the end of a five-year period in which we invested Rs.200 crore in growing capacities and capabilities.
In doing so, we enhanced our manufacturing capacities from 16 million units to 78.50 million units; we created a globally benchmarked 100,000 sq. ft R&D centre with multiple testing facilities, pilot labs and sophisticated equipment; we added a clinical trial wing to our research capability.
Consequently, all our globally certified facilities now operate in line with internationally-respected standard operating practices. So while our facilities may be in India (we have one in Germany), the standards they champion belong clearly to some of the best manufacturing facilities from the regulated markets.
This positioning was showcased in a pride-enhancing achievement: we received product patents from a regulated market like South Africa, transforming our image from just another Indian pharmaceutical player into a globally-respected pharmaceutical innovator.
Review It is with this background that one needs to appraise our performance of 2008-09. We reported a favourable performance during the year under review:
Revenue grew 23.83%
EBIDTA improved 14.41%
Profit after tax increased 18.21%
EBIDTA margin stood at 22.15%
ROCE was 35%
This improvement was achieved in the face of India�s currency devaluation that made our products expensive and prompted some international customers to postpone purchases. Besides, product offtake from Indian institutional clients (we have marketing tie-ups with about 20 large pharmaceutical companies) slackened marginally. However, I am pleased to state that our growth direction remained largely intact owing to our deliberate strategy and significantly derisked business model.
Building a stronger companyDuring 2008-09, we continued to build a stronger company through a number of initiatives whose impact will be progressively reflected.
We established a Rs. 1.30-crore global scale animal house which received approval from the Committee for the Purpose of Control and Supervision on Experiments on Animals (CPCSEA).
We created an internationally-benchmarked warehousing facility with sophisticated temperature control systems for the storage of our injectables.
We established an engineering wing with electrical and mechanical workshops for proactive repair and maintenance to maximise the uptime of our manufacturing facilities.
We invested in the automation of our manufacturing sections leading to product value-addition.
External initiativesOur domestic and international businesses grew 22.19% and 28.42% over the previous year for the following reasons:
We established our offices in three more international locations, strengthened our marketing team from 450 members (March 31, 2008) to 650 members (March 31, 2009) as a result of which there is a Venus representative in each of India�s 543 districts
We introduced 21 new products in India.
We filed more than 225 dossiers in 2008-09 to enhance our presence in semi-regulated markets; a number of these dossiers were approved and we extended our footprint from 19 nations (March 31, 2008) to 60 nations (March 31, 2009).
We filed three CTDs in 2008-09 in Europe that will help us establish a presence in those regulated markets
We filed 341 patents in 50 nations.
We received the GMP certification from Iran (key player in the US$12 billion Middle East pharmaceutical market); we filed registrations for our oncology products and will address emerging demand from our German facility.
We received GMP approval from Kenya; we filed 28 dossiers in the antibiotics and oncology segments (sixteen approved); we entered into a tie-up with a leading pharmaceutical distributor.
We launched four innovative products in 2008-09.
We opened offices in Vietnam, Syria and Kenya to cater to the Middle East, African and Southeast Asian markets.
Our growth drivers in 2009-10
Contract manufacturing opportunities with leading global brands are likely to yield attractive results
Registrations approved in 19 semi-regulated markets in 2008-09 are expected to drive prospects and profitability
Launch of innovative products in India is expected to strengthen revenues
Launch of innovative products in international geographies (through marketing alliances) is likely to enhance revenues
Entry in new global geographies through regulatory approvals (namely Thailand, Malaysia, the Philippines and Syria) is expected to grow our international busines
In-lincensing initiatives are likely to reinforce our performance.
At Venus, we never lose sight of reality, that we are in business to relieve people from pain through innovative products and processes.
One of our high priority areas is cancer. This is so because we fear that the world�s medical resources are inadequate for containing the spread and scale of the disease. For instance, cancer has emerged among the 10 leading death causes. An estimated 1.5 � 2 million cancer cases are present at any given point in time; an estimated 15 lakh patients require facilities for diagnosis, treatment and follow up. Some 10.9 million people across the world are diagnosed with cancer annually; this is expected to increase 50% to 15 million new cases by 2020 (source: World Cancer Report).
Our international infrastructure capabilities were endorsed in the successful in-licensing of the solid tumour detection technology from the University of Illinois. Our product (injectable) received DCGI permission to undertake Phase I clinical trials, a prestigious achievement.
The next step
We made responsible investments to prepare ourselves for the therapeutic challenges at hand. We invested significantly � Rs. 35 crore in 2008-09 � in our intellectual capital. On patent receipt, we will file detailed registration documents in three years to commercialise our products. We filed about 341 patents and received four approvals, which will accelerate. Our strong pipeline is reflected in more than 10 products being at various stages of approval with the Indian regulatory authorities. Following their approval, we need to take them across the globe through our patent applications and registration documents. More importantly, our anytime R&D pipeline of about 25 products will drive prospective growth.
Besides, we will strengthen our intellectual capital in response to the following developments:
We filed two CTDs in Europe in two high-end products in the antibiotics therapeutic segment. We expect to emerge as the first generic in that geography to capitalise on an estimated Euro 300 million market; even a 2% market share can potentially drive the Company�s growth
We in-licensed a novel Aminoglycoside (new antibiotic) with a patent right from a Chinese innovator and obtained approval for Phase III clinical trials. We filed the documents for the bulk drug and the formulation approval with the DCGI.Following approval, we will be the only company in India with this novel product, catering to a Rs. 600 crore market growing at about 8% annually.
Message to our shareholders
We are that point in our journey where we are attractively positioned to capitalise on our capability to ideate (conceptualise a road less travelled), innovate (create high-end novel products) and invest (in man, machine and markets). The result is that we expect to report a 25% year-on-year growth in our topline over three years and grow shareholder value correspondingly.Wishing all the Shareholders the very best,
Thanks & Regards,
Sd/- (PAWAN CHAUDHARY)
September 8, 2009
First Indian Product Patent Granted to Venus Remedies for Potentox
Indian Patent Office (IPO), Govt of India has granted the first ever injectable FDC Product Patent of POTENTOX to one of the research products of the company. This unique combination of a Cephalosporin with Aminoglycoside is a super specialty product indicated for the
treatment of Hospital acquired pneumonia, Community acquired pneumonia and Febrile Neutropenia. This is the second patent of POTENTOX within 3 months of grant in South Korea.
A recent joint UNICEF-WHO report has drawn attention to the scourge of pneumonia. India recorded a total of 7.8 lakh pneumonia cases in 2005 and 3,513 deaths. As in many countries, Pneumonia is an under-recognized problem in India, despite the fact that pneumonia kills more than 400,000 children here each year. According to UNICEF and WHO, the country accounts for nearly 40% of global pneumonia child pneumonia cases. Pneumonia kills millions every year,
children in particular. 15 countries account for 75% of childhood pneumonia cases world wide; the number of cases in India is the highest. Though PCV vaccine is available now but it costs Rs 4,500 per dose and needs to be given to infants when they are aged 6, 10, and 14 weeks followed by a booster dose. This makes Vaccine therapy very costly and unaffordable affair for common man. POTENTOX provides a cost effective solution to all such kind of deadly diseases.
Prompt treatment of pneumonia with a full course of appropriate antibiotics was a challenge in the developing world. Venus Medicine Research Centre (VMRC) took up this challenge and studied thoroughly the bacteria responsible for pneumonia, the resistance pattern with existing therapies, reason of failures in order to find this innovative drug combination POTENTOX which shall help in
providing instant remedy for Hospital/ Community Acquired Pneumonia. The product was launched in Indian market after completion all preclinical and multicentric Phase III clinical trials on more than 300 patients after DCGI approval. Later after the launch Post Marketing Phase IV studies were also conducted to re-establish the safety of drug. The product has potential to reduce
the toxicity caused by aminoglycosides and disease condition.
Pneumonia affects nearly 4 million adults each year. Out of which About 1.2 million people are hospitalized each year for pneumonia, which is the third most frequent reason for hospitalizations.
Pneumonia carries an associated mortality of 30% to 70% (direct 27% and 50%) of total patients. HAP requires the hospital stay of 15 to 21 days and is associated with a high cost of medical care. POTENTOX shall not only provide relief to the patients in terms of early cure by reduction in treatment time and cost, but also helps in reduction in drug and disease induced toxicities, thereby
reducing side effects.
Venus had already launched POTENTOX in Indian market 2 years back. The product has already been used by more than 20,000 patients across India and has proved to be a big boon for ailing humanity. Company is in the process of out licensing and further registration of POTENTOX in different markets world wide.
September 23, 2009
VENUS OUTLICENSED “SULBACTOMAX “ TO SOUTH KOREA
SULBACTOMAX , a research product of Venus Remedies has been successfully out
licensed to one of the top 10 pharma companies in South Korea. Korean party has
been given Exclusive Marketing Rights for the whole life of patent. As per the agreementterms the product will be supplied from Venus Baddi unit, which is accredited with multipleinternational GMPs. The company has already initiated product registration process throughtheir collaborators. Commercial supplies are expected to begin early 2011.
Sulbactomax, the innovative product developed to overcome the challenge of antibioticresistance, is indicated mainly for LRTI and pre-post surgical infections caused by widerange of ESBL producing cephalosporin resistant strains. LRTI is a common condition posing a heavy economic burden to the health care system, especially when hospitalization
Post-operative Surgical Site Infections are the most common health care-associated infection, occurring in up to five per cent of surgical patients. Treatment of the infections caused by ESBL-producing organisms is difficult, not only because of the resistance to the extended-spectrum cephalosporins themselves, but also because they are often associated with resistance to other antimicrobial agents coded either by the same or different plasmids.
Sulbactomax provides solution to chronic problem of ESBL producing resistant strains by widening the antibacterial spectrum and reducing treatment time. It additionally helps in better tissue penetration and reduces drug and disease induced side effects, thereby giving better patient compliance.
South Korea’s US$14.75 billion pharmaceutical market growing at compound annual growth rate (CAGR) of 8.56%, is one of the most promising in the world. Sulbactomax will have a significant market share out of the present cephalosporin market size of US$585 million in South Korea, growing at 10% per annum.
This is first successful out licensing by Venus Medicine Research Centre. Earlier Venus Remedies has received patent of Sulbactomax from South African Patent office. Venus is searching for suitable partner in South African market also. This out licensing will open doors for other potential collaborators. With this deal Venus Remedies Limited will have a strong presence in South Korean Pharmaceutical market and the company is looking for such more deals in near future.
Thursday, November 12, 2009
Pradeep Thakur, TNN 12 November 2009, 02:45am IST
NEW DELHI: This seems to be the biggest slip by an Indian financial institution which is supposed to maintain heightened vigilance on suspicious and high-value cash transactions. At least Rs 640 crore was deposited in cash by one of the alleged front companies of former Jharkhand CM Madhu Koda in a state-owned bank in Mumbai. The bank failed to trigger an alert to countless intelligence agencies tasked to keep a tabIncome Tax officials investigating the case have found documentary evidence of how the huge cash transactions took place in Mumbai between 2006 and 2008 when Koda was at the helm of affairs in Jharkhand. Koda's alleged frontman Manoj Punamia deposited Rs 640 crore in cash in Union Bank of India at its Zaveri Bazar branch between November 2006 and December 2008. The cash transactions were carried out by a Balaji group company -- Balaji Universal Trade. The same group operated by Punamia was earlier found to be behind hawala and legal money transfers to the tune of $110 million to other front companies of the cartel based in Dubai. Sources said Enforcement Directorate (ED) had also found details of the cartel's land investment in Bangkok worth Rs 100 crore. The agency is examining an accused Vikas Sinha at their Delhi office while Punamia is being questioned jointly by I-T and ED officials in Mumbai. Strange details have emerged during the cross-examination of accused and verification of documents seized during raids. Balaji Universal Trade, that had made huge cash deposits, is believed to have made Rs 991 crore of transactions with Union Bank alone. Sleuths are yet to open many sealed almirahs and lockers that are likely to throw more surprises. Suspicious transactions going unnoticed have unnerved the government which, for the first time, has realised that the anti-money laundering mechanism it had set up in the wake of global pressure post-9/11 has failed to give results. As part of 'know your customer' guidelines issued by RBI, it is mandatory for all banks and financial institutions to monitor transactions of high-risk individuals and their intermediaries on a day-to-day basis and report all suspicious transactions to the Financial Intelligence Unit (FIU), under Union finance ministry, within seven days of getting such information or be liable for punitive action. It's surprising that the Mumbai bank failed to generate an alert when such huge transactions were being carried out by a relatively unknown firm, especially when the bank is believed to have appointed a principal officer located at its head office who is responsible for monitoring and reporting all suspicious transactions to FIU, apart from maintaining close liaison with enforcement agencies. All high-risk accounts have to be subjected to intensified monitoring with periodical review of their risk categorisation in the fight against money laundering and combating financing of terrorism. As per the RBI directive, banks should verify the identify of the person and seek information about the sources of funds before accepting a suspicious customer or a concern. The decision to open an account of such entity should be taken at a senior level and such accounts should be subjected to enhanced monitoring on an ongoing basis.
Rs 640 cr deposited in CASH ?That is huge huge amt by any standard.How Madhu Koda was able to gather this much in Cash?How much bribe he has taken to sell the Mines in Jharkhand?And when we see Rs 640 cr as bribe as there can be no other source to get Rs 640 in 2 years,he do not owe any business where he can say that he got that much profit nor any business will fetch this much big Net Profit in 2 years, Rs 640 cr.....that is just unbelievable...... Now if we just try to analyse and think that if Madhu Koda has taken this Rs 640 cr or Rs.991 cr as bribe for allocating the Mines in Jharkhand or any project given to Co then what will be the profit from all those allocation he made to entity or person?Can anyone imagine?If the bribe portion is Rs 991 cr and much much more , as he is also having Mines in Liberia and Land in Bangkok worth Rs 100 cr.....! I have just to imagine what other MP's would be having how much money of BRIBE.... If a normal person would put a Cash of just even over Rs 25,000 then all questions are asked forget 1 lac in Cash....What is the meaning of all those rules like "Know the Customer"! India main sab chalta hai....these money needs to be used for Educaation and Health instead it has gone to some individual.The anamoly is that he is a single individual...only one name...Madhu Koda.....how much a person will need in his whole LIFE?Include his whole family? How much one need?If someone is earning ,like say Big Industrial House ,like Tata, Ril, Birla, they give something to the country and society, by the way of employment , Taxes...but an individual trying to gather this much amount is just seems like there is NO END FOR GREED.....God Save India....I can't imagine how much money must have sucked from the system by how many MP's and MLA's in 60 years of independence...how India can make a progress?I think even with all these coming we are doing reasonably good on economc front then how much India can prosper if all these bribery etc is stopped........