Monday, February 8, 2010

Ril Ind on Buying Spree........

RIL submits EoI to buy Canada’s oil sands co
‘Co Ready To Pay Around $2 B For Acquisition; Plans To Expand Global Footprint’
Our Bureau MUMBAI

RELIANCE Industries (RIL), India’s largest private sector company, has submitted an expression of interest (EoI) to acquire Canadian oil sands company Value Creation (VCI), as it looks to expand its global footprint
in the oil exploration business. RIL may be willing to pay as much as $2 billion (Rs 9,250 crore), according to persons familiar with its plans.
The Calgary-headquartered company’s subsidiary Technoeconomics is the owner of a technology, which helps to produce oil from sand and upgrade bitumen — a major feedstock for petroleum — at a relatively lower cost, according to oil industry experts.
RIL’s oil and exploration business head PMS Prasad and group CFO Alok Agarwal are understood to have had initial discussions with VCI’s management, ahead of submitting the EoI, according to a person close to the development. VCI was founded by its CEO and chairman Columba Yeung in 1999 after a long career with Shell Canada and Royal Dutch Shell, where he held various executive positions in technology and project development.
“BA Energy, a subsidiary of VCI, has filed for bankruptcy, which could bring the valuation down,” said an oil industry official close to the transaction. The first commercial application of VCI’s technology was by BA Energy, the bankrupt subsidiary, which is currently constructing an upgrader that processes bitumen, in Strathcona County northeast of Edmonton, Alberta.
An RIL spokesperson said: “The company is reviewing a number of global opportunities for growth in its core business. The difficult operating environment of the past year has made available several interesting opportunities, where an investment by a strategic operator of industrial assets can add substantial value. The review is ongoing and there can be no assurance that any approach will be made with respect to the opportunities under review or that any such approach will result in a transaction.” RIL has raised Rs 9,300 crore so far through sale of treasury stocks, as it builds up a warchest for overseas acquisitions. It is also sitting on a cash balance of $4.65 billion or around Rs 18,000 crore.
India’s largest private sector company, which is looking to expand its global footprint, has targeted loss-making companies. According to media reports, BA energy filed for bankruptcy in early-2009 after it failed to repay a loan its parent, VCI. This default led to creditors recalling loans to VCI.
RIL is also in discussions to take over bankrupt petrochemical major Lyondell-Bassell. “RIL has been trying to expand its footprint across the global, as it has already consolidated its presence in India. The sharp fall in valuation of overseas assets, especially European ones, offers opportunity to the company,” said Deven Choksey, managing director, KR Choksey Securities.
RIL, has raised its bid for LyondellBasel by 13% to $13.5 billion, is facing resistance from the LyondellBasell board, which is controlled by Access Industries. The board has valued the company at about $15 billion. Analysts forecast the asking price to keep rising given the improving prospects for companies, as the developed world emerges out of the recession.
RIL is reviewing a number of global opportunities for growth in its core biz
RIL has raised Rs 9,300 crore so far via sale of treasury stocks, as it builds up a warchest for overseas buyouts
The first commercial application of VCI’s technology was by BA Energy ..

My Comments:
Extracting OIL from Sand? Difficult to understand....isn't it?But still int oil co use to do it and when Ril Ind see opportunity then it should be there and especially when he is ready to pay $2 bn , means Rs 9,800 cr....that is huge amt ......
There are lots of US and Canadian Co which are exploring possibilites for extracting Oils from sands and unless it is lucrative business no one would go for it.
It is said that Alberta , in Canada,is a very rich region of Sands where Oil can be extracted.There are lots of US and Canadian Co which are doing work at Alberta region in Canada......but one thing is very clear and that is if Ril Inf is interested in it then there should be something in this sector......


  1. Hi Rajeev
    I don't know whether I should be asking you this? I met someone from Indiabulls today, He told me that in medium term term market will come to 3000 or sub 3000 levels for Nifty.I told him you have gone mad and are talking nonsense. He recorded my voice and told me that he will make me hear this the day market will get to the levels (he suggested). Your thoughts on this.



  2. Hi amit, I want to answer this one if he is so sure ask him to short market by putting money into market. If he is so sure about that then he will become millionaire . Any one can make sweeping statements in market. But can he show courage by putting money to back hiss statement.I think except god no one can predict markets, by the way did he know that all indiabull companies will crash as they did in last few months. They may be at 52 week lows.

  3. Amit,
    There is nothing wrong in what you write and asking me about it....
    Actually I am surprised to read a view from India Bulls , that nifty will come to sub 3000 level.
    The reason is they use to be bullish for the market.Maybe the guy who talked with you may be telling to on his own...and may not be India Bulls call....
    I do not buy this view.Nifty going sub 3000 level is like we are back at subprime era.Global market has stabilized and economies has started doing well.....I am not seeing anything like should have assked him when this will happen.....see giving such type of targets is easy so ask him in what time 3000 nifty will get achieved.....and you also record his voice....and see what happens ...who gets the first chance to play the voice....because giving targets are easy but when that is going to happen is hard....

  4. Hi Rajeev

    He told me 3000 Nifty before 5300 again. The SMs he sent me read like this "Did u got the chance to exit at Nifty 5266? Levels tough to attain again". After this sms I called him and spoke to him and he recorded my voice.



  5. Amit,
    This is all gimmicks....what if he goes wrong..what you can do to him.It seems he doesn't know you personally nor you know him....Actually bears are hellbent to break the market andd they wants support from retailinvestor and hence such sms are doing rounds so that people short nifty and they get out from their short position....

  6. There is no way market can go down . I am watching some scripts in which FII had major holding are going up. Yes some brokerages companies like India info had increase some margin limit in last 15 days. May be they had shorted it and supply the money to retail investor till budget is over.But one thing is there now they had more trust in market.

  7. Hi Rajeev

    Below written analysis given by that guy in defence for his call.
    Sice the word limit is low i am putting it in parts.
    Our market has turned weak! In all likelihood, a bear market is certainly a possibility. The weakness signs that lead to the onset of a bear market are also visible in major markets like the US as well.

    While a pullback rally to 4860 is entirely possible, the probability of the downtrend resuming soon enough is quite high given the nature of the weakness in weekly charts...............

  8. ............Once we put things in perspective this becomes quite clear as to why we should reassess the situation and shift our stance about the condition of the market. First, till date we have seen three intermediate upswings in this major uptrend that began last year on March 06 from the Nifty level of 2539.45; the first one got terminated at 4693 on June 12: a run of 2154 points in 14 weeks from the low of 2539; second upswing from July 13 till Oct 20 lasted for 14 weeks and had a price swing of 1263 points from 3918 till 5181; and the last one from November 03 last year till January 06 this year was much shorter—a little over just one-third in price terms of the first intermediate upswing mentioned above—it was a swing of 772 points that lasted for nine weeks. The upswings, thus, have become progressively smaller in terms of prices and in time terms first two had been equal and the third one lasted for a much shorter span of nine weeks. This phenomenon of time and price swings getting progressively smaller in intermediate uptrends is definitely a sign of the bull market weakening...........

  9. .........Now, let us look at the corrective downswings in between: first one lasted for 31 calendar days from June 12 till July 13 last year, price swing was of 675 Nifty points; second one is much shorter in time duration—it was a sharp downswing—lasted for only 14 calendar days from October 20 till November 03 last year, and had a price swing of 643 points. The current downswing is already 31 calendar days old the bottom has not been established as yet. Its price amplitude so far has been 618 points. If it were to fall below 4635, by any chance, even on intraday basis it would be the largest downswing in terms of both price and time. This suggests a probable turning of the major trend from up to down.

    However, calling the current market a bear market would be a bit too premature since the 200-day moving averages (MAs) are located at 4650 (both EMA and Simple MA). Since this would be the first test of the 200-day MAs--after they have been crossed from below by the Nifty on Apr 23, 2009--there is every possibility of a rebound after testing it or from a level close to it. Notwithstanding such a possibility, we can say that the Nifty would find it really difficult to cross 4950 levels now: as it is that has established itself as a strong resistance and two, the downward-sloping 89-day EMA is also located close by, which would now act as a strong supply point......

  10. ......This bull market for all practical purposes has been driven by liquidity in domestic economy and FII inflows. Both are on reverse gear at the moment. FIIs are mostly sellers and the RBI has already started tightening. Internationally, Australia and China have also opted for monetary tightening and they did it much earlier than we did. The signs are pretty ominous for the US as well: during the last week of January, FED deputy chief Kohn had already hinted and warned banks in the US to prepare for higher interest rates. The very-important 70% mark has not been breached by the number of stocks in the S&P 500 that are above their 200-day moving averages; however, it is almost there and might just achieve it unless there is a sharp recovery right away.

    Unless the governments and the central banks decide to inject massive quantity of money again to stem the rot in PIIGS (Portugal, Italy, Ireland, Greece and Spain) countries the situation would not become better for world markets. Japan’s debt level is also worrisome at 220% of the GDP. Bond markets are jittery and the commodity markets have also lost their gumption being dependent more on the fuel of liquidity: copper and lead have slid quite a bit again.

    What should be our strategy now?

  11. Amit and others,
    I am holding my position but that is not a call.Every individual hass his own way of dealing things and hence take decision on your own....

  12. Amit,
    Well, I donno the charts.I am a non technical guy.
    So I did read what u wrote but I didn't understand an inch of it...but the general tone that comes from it is, market can go up maximum to 4860.
    Now let us see what pans out in next 2-3 months.
    Whether market breaches 4860 and then where it goes.
    It is good that u wrote this here.Now we will analyse what will happen and whether market behaves like charts or not....
    I would also like to see the end result...
    I am seeing this view by many chartist like Devangshu Datta who writes in BS on every Monday....
    I hope if that guy proves wrong he will come out and accept that he was wrong....that's all I would ask....ofcourse if he goes wrong...

  13. Hi Rajeev,

    I just exited genesys but it is going up circuit by circuit. should i again entered that script.

  14. TT,
    I think it is a good stock to holdon to...Genesys Int has more the doubled from my call around 100...

  15. TT, I always said,don't sell everything.....means sell that we can capitalize for any big return.....
    remember this strategy for ever....

  16. Hi rajeev,
    Yes credit goes to you , it is on your strong words I hold that stock. I remember I do have some Queries about that stock and you cleared all that.

    Thanks I

  17. From Finacial Chroncial
    By MR kumar shankar Roy Feb 08 2010

    Shares of Kanoria family-promoted Srei Infrastructure Finance, the Kolkata-headquartered non-banking financial company, are down 16 per cent since January 28, when the listed firm shared plans to merge unlisted Quippo with itself.
    In the same period, Sensex has fallen by 2.3 per cent, indicating, among other things, that Srei minority shareholders are not happy with the deal, which would see the promoters' holding going up to 46 per cent post-merger against 30 per cent at present. This is because promoters directly hold 58 per cent stake in Quippo.
    Speaking exclusively to Financial Chronicle, Belgium-based Value Square (a minority shareholder in Srei) said there is a suspicion that the Kanoria family is getting a better deal in the merger vis-a-vis minority shareholders. "The company's book value per share is being diluted by an estimated 20 per cent or so in the short term," portfolio manager of Value Square Nic Van Broekhoven said. This is not value creation but dilution, he claimed.
    Broekhoven said his asset management company does not want a fight with (Srei) management and will be meeting them next week in Mumbai to explain Value Square's opinion. "It is unclear if value is being created by the merger between Srei and Quippo. They have given very little financial details for outside shareholders/analysts to base their financial models on. You might have seen that Edelweiss, which is their corporate broker, has put them 'under review' (no buy, hold or sell) rating," said the official from Value Square, which runs a global equity fund.
    On the issue of conflict of interests, Kanoria said: "There is no conflict of interest between Srei and Quippo. The single entity will help create a much larger institution."

    Mr Rajeev any comments on the above news.

  18. nirash,
    I like the situation.If by merging Quippo with Srei if management is able to increase the stake in Srei then I don't feel that is bad.
    After all they own Quippo and while merging it with Srei they are creating more value for SREI and that is a win win situtaion for share holders as well as promoters and mofre importantly SREI promoters are making sure that it doesn't become takeover target but importantly here promoters stake increases and that happens with any merging entity.
    Just imagine what value will it create when Quippo infra arm will be merged and the one which you wrote to me.....
    I am extremly bullish on SREI and my stand has not changed.....