Thursday, April 28, 2011


I willbe visiting India again most probably next month ,midMay, and hence maybe possible I will not be able to write anything here........for that much of time......It maybe  3 weeks to 1 month.....

Why business loves inflation.........

, On Wednesday 27 April 2011, 10:24 AM

The prices of clothes sold at Future Group's retail stores have gone up for the first time in 15 years. At least some shoppers should have turned away. Instead, Future Group MD and CEO Kishore Biyani says he is "very surprised to see" consumers getting used to inflation-led pricing. Rising prices have not deterred consumption demand.
Future Group speaks predominantly for urban India, but rural and small town demand is also buoyant. For instance, Kochi-based V-Guard Industries reports a growth of over 60 per cent in sales of water heaters in north Karnataka's Hubli town in 2010/11, compared to the previous year. The company recorded an overall topline growth of 50 per cent pushed primarily by demand from rural India. Rising costs are not a worry. Says Managing Director Kochouseph Chittilappilly: "People are ready to pay."
This optimism is reflected in the first-ever survey of business confidence commissioned by Business Today, which will be a quarterly feature. The BT-C fore business confidence index on a scale of 100, conducted in early March just before the shock waves sent by the quake-cumtsunami in Japan, is 74.8. That means respondents expect business to be moderately better in the next six months. They were polled on the present business climate as well as on future expectations. More than 75 per cent of the 500 CEOs/CFOs polled by market research firm C fore said they expect profits to be either substantially or moderately better.
More than half the executives polled expressed confidence that they would be able to increase sales even if prices continue to rise.
Economists and analysts have expressed fears that, as persistently high inflation gets generalised in the economy and spreads from food and fuels to manufactured products through higher input costs, there would be a squeeze on corporate profits and gross domestic product, or GDP, growth would be affected. But companies such as Future Group, V-Guard and many others have been able to pass on the rising costs without losing sales or profits. Input costs inflation is not a profit spoiler yet. Companies in fact hope to leverage inflation to enhance their pricing power.
How so? Unable to absorb rising input costs, companies mark up prices. But when they find consumer appetite intact they can continue to mark up prices even after inflation eases. So, while food prices will correct if the inflation ratedrops, Biyani does not expect prices of other manufactured goods to fall, "thereby ensuring higher profit margins". "When demand is strong, industry loves inflation," says R. Seshasayee, Executive Vice Chairman, Ashok Leyland. "That is the chance to hike prices."
The pricing power that the strong consumption demand has handed to Indian industry seems to have, in turn, made it upbeat about business prospects, as reflected in the survey. Other pessimism-defying findings of the survey are: companies expect export demand to continue to improve, and that hiring is picking up and is also expected to improve. The BT-C fore survey, however, also captures some worries over rising interest rates and possible inflation in raw material costs in the next six months. "The survey adds to the body of evidence that shows strong consumer demand," says DBS Bank economist Ramya Suryanarayanan.
She warns that the biggest worry ahead will be on account of supply-side constraints. T. Sreedhar, Managing Director of TMI Network, a Hyderabad hiring company, points to governments, both Union and state, readying for 2014 elections. "They will need to make massive investments this year... to derive value in terms of votes in 24 to 36 months from now, which is usually when most major projects take to complete," he insists.
The findings come ahead of the announcements of financial results by listed companies for the January-March 2011 quarter. The general expectation from the results is that net profits of companies will see an erosion owing to high input costs, even as most of them post doubledigit growth in aggregate for the sixth consecutive quarter. Prices of base metals such as aluminium, copper, zinc, and lead are up between 22 and 44 per cent compared to a year ago.
Thus some analysts feel the survey findings are "a tad optimistic", as Rajiv Kumar, Director General of the Federation of Indian Chambers of Commerce and Industry, puts it, more so because companies cannot exercise pricing power in competitive markets.
Economists such as DBS Bank's Suryanarayanan also worry that the macro-economic environment continues to remain stressed. "A major difference between the periods 2004 to 2011, and 1998 to 2004 (run by two different governments) is the global challenge of high and rising global food and non-food commodity prices and erratic weather," she says.
The corporate sector's optimism is based on huge unmet demand, especially in new markets beyond the big cities. The demand-supply mismatch allows for comfortable margins. More and more companies are looking outside the metros. "The Rs 3 lakh crore a year the Centre is pumping into developing rural markets and infrastructure is a boost," says V.N. Dhoot, Chairman of Videocon Group.
Companies that are able to squeeze out more from every rupee spent cope better. The BT-C fore survey did not question companies on productivity but there is anecdotal evidence to show this. Himalaya Drug Company, a herbal products maker, has seen prices of ingredients it uses rise.
Turmeric extract, for example, costs 48 per cent more than last year. Similarly, the price of ginger oil has gone up by 46 per cent. But Himalaya is coping well. "We are trying methods like better vendor control, better inventory management, etc., to contain costs," says Ravi Prasad, Chairman, Himalaya.

My Comments:
My arguements in one of my recent post " Inflow in EM" wherein I wrote that price going high doesn't mean end of the day for business.From the above news we can see that people buy cloths even when the prices has gone up and that justifies my view that buying power has increased and that will and should percolate to other white goods gadgets etc.........
Well, the point I am making is one need to pick up the lines between news we read.......well, that is what one should be able to make out from what one is reading.I think many must have read this news but how many were able to interpret it....

Saturday, April 23, 2011

Priya Ltd........cmp Rs 36.45........Value Pick?

Let us see how this unknown stock fares in future......
This is an unknown stock I had brought out from the blue.
Let me write what I feel about it.Check parametres which normally I use to do.Routine things I use to look in finding stocks.
1) Eq very low at 3 cr
2)BV 80...on eq of 3 cr reserve is 25.69 cr
3)Sales 220 cr and Mcap 10! Wow! that is excellent........watering my
4)Paying Div too.......2009 was 20%, 2010 was 5% and recent 2011 declared 10%....excellent going...
5)Promoters hold 75%...excellent
6) Last eps was 3.72 and this year 2011 is almost doubled.....!
7) In computer hardware which is going to be next big things in India.
8) In Chemical business as distributer....

I have been constantly tracking this stock time and again and it is slowly and steadily moving up and up.
Priya looks to me an excellent buy at this rate which can give multibagger return.
Due Diligence is a must before buying it.........

Thursday, April 21, 2011

VIP may sell stake in Windsor Machines ..........

VIP Industries, India’s largest travel-wear maker, is likely to sell its stake in the BSE-listed machine manufacturer Windsor Machines Ltd, to Renaissance Equipment Pvt Ltd, along with other promoters. VIP, one of the promoters, holds 17.49 per cent stake in Windsor Machines.
The promoters are expecting a final decision from the Board for Industrial and Financial Reconstruction (BIFR) soon.
According to BSE data, other promoters — DGP Windsor Ltd and Vibhuti Investments —hold 22.63 per cent and 2.31 per cent, respectively with an aggregate stake-holding of 42.43 per cent in Windsor Machines. The public shareholding stands at 57.57 per cent.
Windsor Machines is a manufacturer of plastic processing machinery with revenue of `206 crore. DGP Windsor is another company owned by Dilip G Piramal, chairman of VIP Industries.
According to sources in the know, the deal could be valued around `125 crore. P C Kundalia, the promoter of Renaissance Equipment, will buy the stake from Windsor Machines’ promoters. Kundalia is currently the director of Windsor Machines and runs the company on behalf of the promoters. Windsor Machines was declared, a sick industrial company on June 29, 2006, by the BIFR. ICICI Bank was appointed its operating agency and asked to prepare a scheme of rehabilitation.
According to experts, an open offer will not be necessary in cases where BIFR is involved.When contacted, management of VIP declined to comment. An email sent to Kundalia did not elicit any response. On Wednesday, shares of Windsor Machines were closed at `80, up by 3.56 per cent, while VIP shares went up by 4.71 per cent to close at `695.2 on the BSE.
Windsor Machines has three manufacturing facilities at Thane in Mumbai, and Chhatral and Vatva in Gujarat. But, the operations of the Thane unit of the company remains closed. Subsequent to the disinvestment of equity by Klockner-Werke, Germany to Dilip G Piramal in 1994, the company was named DGP Windsor India Ltd.

My Comments:
I gave a call on Windsor Machine maybe around 40  and it has been showing excellent runup with results matching the price rise.
The above news says that Windsor should touch 200.
Other stocks that are making news on 52 week highs are 1)Cronimet Alloy which I recomended at 37 and now quoting at 154 after making a new high of 157 today.
2)EPC Ind recomended at 35 is making new 52 week highs at 171 and now at 159.
3)Varun Ind recomended around 160 is going up now at 231.
Well , the point I am trying to emphasize is how many bought these stocks after my recomendation and how many are holding it still?I know one can't buy everything I recomend as I myself is not able to buy everything I write here.
I gave a call on Symphony Comfort at other place /forum at around 22 and now it is 1650.Kwality given at 17 touch 2000 and I don't own both.My own call and I am not there......that is how destiny is....and that is what I call luck.If only one is destined to make huge money only then one gets in such stock and hold it.
The price at which I identified Symphony Comfort and Kwality Dairy were so cheap that there was no reason I can't or anyone can't buy atleast couple of thousand shares and see the return!HUGE!
I always try to find such stocks which gives huge multiple return and we never know which is going to give .All we can do is buy them and hold them.

Sunday, April 17, 2011

Inflow in EM's......

I just read in BS sunday edition that the Inflow in EM has again started and hence I feel that we should make a new HIGH soon.Of course as of now the probability of 16k is gone and I think that will never come as after market making a new high we will have new retracement levels which in that circumstances will be very hard to break 16k after market makes a new high and then correct.
Experts keep on saying about the reason for market going up like
1)Inflow of money from FII's
2) Short Covering
3)Pull back rally
These are the reasons technical analyst keeps on giving ever since market moved up from mere 3k to 21k in Jan 2008.
Doesn't that look surprising that short covering and pull back rally takes the market from 3k to 21k?
I know many readers donot like my arguements and writing against technicals but I am trying to understand what chrats is saying and what technicals analyst are saying.
It was a very clear signal given sometime back by charts while an inverted head and shoulder pattern was formed on charts and that was a bullish pattern and still technical guys wants to say that it is a false signal then these people are either defying charts or trying to cheat people who listen them.
I again write here that whenever one speak about chart and market course , one who speak needs to be responsible for what he speaks because lots of investor follow them and one can't say that this is my opinion and you can have your own.
All the terchnical analyst coming on CNBC always gives contrary view and they are not responsible for anything.
I have always seen that after market goes up for some 3-4 thousand points and then corrects , any upmove is always termed as pullback rally and various levels are given that this level will be the maximum market will go up and then it will come back to break the previous level and then market will TANK to abysmal level.
But when the level given as a high resistanance level , when those level are broken, these analyst comes out with another levels and say now market will not move up from there but no one ask that you went wrong on first call and we lost money following you, what about that?Then they will say, that that was just my view , you need to follow your view..........LOL.....
I haven't seen a single chratist saying that he went wrong.Have anyone seen?
These short covering headlines also I am seeing throughout from 12k in maybe around year 2005 something.....shortcovering pe market itna upper jata hai kya?Does market makes a new high and goes over 3 times from previous HIGH of 6200 of KP's time?
Well, The point I am trying to raise is, technicals and charts are for traders and those who are following the fundamentals has nothing to do with charts.Let chartist say whatever they wants to say, we have nothing to do with them.
One thing is clear and that is those people who are proving time and again wrong about their prediction is looking at the macro economics wrongly.They are not able to see the things unfolding in internatioanl horizon.Like say with Tsunami and earh quake in Japan , lots of damaged is done and hence there will be reconstruction that will come up and hence there will be lots of orders flowing in for MNC and even Indian Cos.
Well, it is not always seen that with commodities prices going up, market goes down.Somewhere the Cos will passon the increase in end products to the consumer and it will keep on doing that.One can't rely upon history that as commodities prices are going up, market will go down.
If we take an example of last 10 yrs the commodity prices has gone up by 4-5 times to 10 times in some cases but still the markets are headed up or are still way above the previous level.
In India everything has become costly but then wages has also gone up and hence that neutralize the hike in inflation, maybe not fully but still it helps a lot.
I remember when 1st Hero Honda was out the price was something around 5k to 7k and now it cost you something like 40k and still Hero Honda working has gone up, the bottomline has gone up and the stock has outperformed the market in big way.TVS which was a laggard has become a multibagger.The reason for giving example of Hero Honda is , here for making one Hero Honda bike, lots of parts are used and lots of raw material is used in which iron, Alu, Copper, Zinc etc ectc are used and these commodities has become dearer in last 20 yrs and still the Co has made hefty profit because people has bought it even with the price escalation as the buying power has also increased.That is the magic of Emerging markets.People get more money to buy at higher level and keeps the train running.And a country like India where export is just peanuts and is more a domestic comsumption story, we can see a temporary setback but we can't be out and get finished.
Gold , Silver are all time high and will go up higher , which I have pointed out in past but still people buy it, countries buy it.
There is always a talk of excess liquidity that will getting in the countries like India and there is always a talk that what will happen when those money will be drained off.But one can't stop investing thinking like that.
There are very rare economies who are doing over 8% GDP and analyst has the habit of crying foul for every .1 % fall in GDP.I heard last week Nomura speaking concerns about inflation and that very day market went up by 400 points.
All these years from 2003 to 2010 the commodities has been at ATH , even in 2008 Jan when market tanked  the reason was not commodities prices that went up and up ,but the reason was subprime crisis.So where is the way for market to tank on commodities price RISE?The market went on making new highs even when Gold went on making newer highs, or copper making new highs all along from 2003 to 2008.There were scores of commodities that made ATH before market tanked in 2008 , much much earlier then the collapse happend.
According to me, there is no way market can go in tail spin or make a new low or go even near to the pervious low of Mar 2009 on commodities prices going up.
As I said in one of the reply to Sukanya, that if Swiss Bank Money is brought back to India which is as big as $1.5 trillion, then not only we can touch sensex 1,00,000 but we can cross that as well.I think one of the Fin Insti has already predicted a target of 1,00,000 sensex and that can happen.
I have written in past and I want to write it again, in stock market , history never repeats because if it is so then market can never touch a new high.I am seeing no reason why Sensex shouldn't touch 1,00,000 because we are at the very nascent stage of higher growth trajectory and even after one can see that $1.5 trillion is sttting idle in Swiss Bank, the greatest of great Investor, Wareen Buffet is saying that India is a NATURAL DESTINATION.
Even after these money, Swiss Bank, has been sucked out from the system,WB is ready to take a call on India.Maybe experts can say that it is WB mistake to start thinking so late, but if WB is not wrong then I will say we are at the BASE LEVEL of market and Indian market has to climbs up many ladders before one can think of selling everything and sitting down with cash on hand.The time has not come yet.We have a long way to go.I can't imagine what can be the effect if those money comes back and is infused into the system.

Friday, April 15, 2011

China's $3 trillion in reserves more a bane than a boon......

China's foreign exchange reserves have topped USD 3-trillion-and-counting, stoking inflation, knocking the economy off kilter and leaving the country's money managers with an impossible assignment.
At first glance, the eye-watering stockpile appears to be a symbol of China's fast-growing wealth. But on deeper inspection, the vast cash holdings are an unflattering testament to much that is wrong in the world's second-largest economy.
They reveal how undervalued the yuan is, how inflation could soar in the future and how much more the government could be investing at home to engender sustainable growth, analysts say.
The People's Bank of China said on Thursday that its foreign exchange holdings, already the world's biggest, increased by USD 197 billion in the first quarter to USD 3.05 trillion. They are now nearly triple Japan's holdings, the world's second-biggest official currency reserves.
"It's clearly too much, it's clearly excess to needs, and more importantly, it's damaging to the economy," said Stephen Green, an economist at Standard Chartered.
In the last decade, China's gaping trade surpluses and its incessant buying of dollars to suppress the yuan's value have led the reserves to balloon 17-fold.
For every dollar that goes into reserves, China prints about 6.5 yuan, adding even more cash to its economy. This is worrying since China is already at pains to drain excess money, with inflation running near its fastest in three years.
"Every new dollar of foreign exchange reserves is every new dollar of base money. And that drives up inflation," Green said.
Too high a cost
To neutralise all the money that has been created, China has conducted what are known as "sterilisation operations". Its primary weapon has been to increase banks' reserve requirements, forcing them to lock up cash that they would otherwise lend.
Required reserves are already at a record 20% of deposits for China's biggest banks, denting their profitability, and analysts believe that the room for further increases is limited.
By most estimates, China only needs about USD 780 billion of reserves. That would be sufficient to pay for three months of imports and to cover all of China's short-term foreign debt -- the standard metrics of how much countries should hold in reserves as a form of insurance in case of a financial crisis.
Yet the stockpile has grown so big because China refuses to let the yuan rise faster for fear of hurting its exports, much to the frustration of its trading partners, especially the United States.
But it is also a problem domestically. It runs directly counter to China's need to boost consumption to cope with tepid growth in its major export markets, said Li Jie, a researcher at the Central University of Finance and Economics.
"It is too high a cost to pay to let the whole domestic economy suffer from high inflation just to protect exporters," he said. "China cannot afford to sacrifice its internal economy as it has a vast domestic market."
China's net exports accounted for just 4% of the country's total output in 2009; consumption and investment were 48% each.

Where to put it?
Then there is the perennial problem of finding a safe place to invest USD 3 trillion. Its monstrous size precludes China from most markets except US Treasuries, leaving Beijing vulnerable to a struggling dollar.
Efforts to boost China's returns on its reserves by spinning off state investment arms misses the point, said Li.
"Any fund manager in the world would find it difficult to look after such a huge pile of reserves," he said.
"The point is not how successful they were in their investments. The real failure is the lack of an exchange rate regime that is fully dictated by market forces."
China's accumulation of foreign exchange reserves also represents an opportunity cost. Given China's high savings rate over the past decade, it was bound to have a high rate of investment.
Had China let its currency rise, that investment could have taken place at home with the building of sorely needed schools and hospitals. Instead, much of that investment ended up parked in assets like U.S. Treasuries.
China is the biggest foreign holder of Treasuries, with USD 1.15 trillion at the end of January.

Not fast enough
Yet China's strident rhetoric about how the yuan is not undervalued and how it needs to rise slowly belies a growing belief at home that the currency is simply not strong enough.
Increasingly, the Chinese realise that a firmer yuan can help them fight imported inflation and give them more bang for buck when they invest abroad.
"The government is moving too slowly towards a more flexible yuan exchange rate. They should definitely quicken the pace o appreciation," said Zhang Bin, an economist at the Chinese Academy of Social Sciences.
Some economists say that concerns about exporters are overdone. They, too, would benefit from cheaper imports of raw materials and other components.
"We know that the foreign exchange reserves accumulate because of the exchange rate regime. It's not because we absolutely need it," said Tao Wang, an analyst at UBS.
"The fundamental thing is to adjust the economic structure so that we don't accumulate so much. We need to consumer more and reduce the savings rate."
In a sign that China might finally be starting to move more aggressively on the yuan -- potentially capping the rise in reserves -- the central bank has steered the currency to a succession of record highs against the dollar in recent days.

Wednesday, April 13, 2011

Kapil Sibal........malign intention..?

I just saw that Kapil Sibal one of the member of the committe for drafting JanLokdal bill said that this bill will not help giving education to poor.
Anna saheb very rightly reacted quickly that if Mr.Sibal is not confident of the outcome of the bill he should not be in the committe.
This is what Mr. Sibal said:

“The scope of the Lokpal Bill is different, people’s problems are  different. If you want to give your children an education, it has no relationship with [the scope of] the Lokpal Bill. If you don’t get water, it has nothing to do with [the scope of] the Lokpal Bill,” Sibal said. He, however, said that he was with Hazare and would bring out an effective bill."

My Comments:
He says if India wants to educate the poor children Lokpal bill will not help because it is not for educating the poor children.
My arguemnet is, Well, if corruption is stopped then there will be lots of money saved due to that and these money  will get diverted for educating the poor children.
But the main purpose why Kapil Sibal is speaking is,he wants  to devide the people of India on this bill.The run has started to tarnish the whole crusade started by Anna Hazare  and make it  good for nothing or get it aborted.
While speaking such sentences he is trying to take out poor people of India that this bill will not let your children get education.Mr.Sibal, may I ask you what the party was doing without Lokpal Bill?Did poor children were getting education in your rule?What your party did for that?
The differences has already started to come up as Anna Saheb asked for video recording for the place where the bill is drafted and Congress has declined.Why there is a denail?Let poeple see which person from which side was going against the draft which is going to be made for the people of India?
This will be a very hard and difficult path for Anna Saheb and I wish each and every Indian remains with him untill the final destination is not reached.I already saw recently on TV that CE of Hindustan Times was asking why Anna Saheb was speaking good about Gujarat?
So the supporters of Congress has been started advocating things against Anna Saheb.They never did anything in their life and when someone is trying to bring some respite to the people of India they have come out to critisize Anna Sahib.
People should show doors to such people and tell them to keep their mouth shut.

Tuesday, April 12, 2011

Essar Oil Q4 net profit up 78% on higher margins, sales...My old call...

Essar Oil’s fourth quarter (January-March) net profit surged 78% year-on-year to Rs 321 crore, driven by strong sales and higher gross refining margins.
Quarterly sales rose 27.4% y-o-y to Rs 13, 564 crore, and gross refining margin was USD 8.15 per barrel compared to USD 5.37 last year.

For the full year, the company clocked a net profit of Rs 654 crore from Rs 29 crore last year, and net sales increased 28.4% to Rs 47,905 crore.
Gross refining margin for the year was USD 6.91 per barrel versus USD 3.70 per barrel last year.
The Ruia-promoted refiner said its GRMs would improve as expansion of its Vadinar refinery in Gujarat will help increase proportion of heavy and ultra-heavy crude.
“Post the expansion to 18 million tons (and then to 20 million tons in 2013-14), Essar Oil’s refinery Nelson Complexity Index will rise to 11.8 (from 6.1) with addition of significant secondary processing capacity — enabling it to capitalise on structurally strong diesel spreads,” brokerage house JP Morgan had said in a recent report.
Margins are also likely to improve due to recent political turmoil in some countries in West Asia and North Africa, apart from the recovery in developed markets and strong growth in developing countries, Essar Oil said in a press release.
"We see the positive trend seen in the last year is likely to continue," Naresh Nayyar, managing director and chief executive officer said in a conference call.
Essar Oil said its refinery at Vadinar processed 14.76 million tonne of crude in 2010-11, its highest yearly throughput ever. In 2009-10, the refinery had processed 13.50 million tonne.
The company said phase-I expansion of the refinery is scheduled to reach mechanical completion in phases between April-September 2011. Most of the additional production from the new unit will start from October-December this year.
However, costs will increase Rs 500 crore, or 6.3% of the original project cost, mainly due to expected delay in commissioning and related interest costs, and pre-operative expenditure, the company said.
The expansion will increase Essar Oil’s production to 375,000 barrels per day from 300,000.
Despite increasing its refining capacity, Essar Oil plans to slowdown expansion of its retail fuel outlets as the government has not yet deregulated diesel prices.
The company currently has 1,381 retail fuel outlets, with a further 254 outlets under construction.
The government had last year announced plans to fully deregulate price of petrol and gradually deregulate diesel price too.
“An increasing oil price has put pressure on the market price of diesel, which in turn has caused the uncertainty regarding government’s plans to deregulate retail prices of diesel. As a result, Essar Oil intends to slow down its plans to increase retail outlets beyond 1,700 until there is a further clarity on diesel deregulation,” the company said in a statement.
Essar Oil shares Monday closed at Rs 135.75 on National Stock Exchange, down 3.8% from previous close.
The stock has risen 14.2% in the last one month.

My Comments:
Essar Oil was my old call and I still stick with it.Buy and hold for 3-4 yrs.It will be a wealth accumalator.......DD is must before buying....

Saturday, April 9, 2011

It's India's people Victory...........

When I am writing this, Anna Saheb will be ending the fast.Government has accepted all talk of Anna Saheb.
Well,that is peoples victory.That is India's victory against corruption.The Janlokpal bill not getting passed for 43 yrs was the testimony that politicians never wanted it to get passed even in the manner they like it.I heard on Timesnow, the chief anchor Mr Arnab Goswami saying that when BJP was ruling they drafted the bill same like it was favouring politicians.
So basically , all parties are same.That is the difference between the western politics and India's politics.There is no hassles for simple layman there and in India for just getting done one thing and that too like taking a signature for passport they take lots of time and above that you have to give 200-300 rupees to make them happy.They never ask for that but it has become a procedure.I gave 300-400 maybe 500 rupees to the police department who gave me clearance certificate that there is no charge on me and I am OK for getting  a passport.Even though I was clean and nothing against me, still I gave those money......
It is a fact that the bribe should be stopped from the top.Untill the people at the helm of affairs don't stop taking bribe we are not going anywhere.If ministers,viz:politicians stop taking bribe, then only they can takeon someone who is taking bribe.So the corruption needs to be stopped from the top level.If the top level is clean then only they can take action on the subordinates.If the boss is corrupt how can he take action on his subs?
If A Raja is noncorrupt then and then only he can see what is happening down under and take action but when A Raja is corrupt then there is no stopping.
It is not possible for someone to stop giving bribe and system gets cleaned.If you do not give someone else give and you can't stop everyone.I don't buy that idea that you stop giving bribe and it will help.No that is not possible.The person who is at the job needs to be clean and easy money is always an attraction for anyone so when the senior is clean the sub can't do anything.

For certain place of posting for IAS or IPS there is special demand of 2-3 -5 cr rupees to have that position of certain region because there are lots of crime and wrongs going there and lots of money to make from there to save those people.That is the position in India.I saw on TV the other day that some local Airlines Pilots certificates were sold for few lacs what if those pilots who are not fits to become a pilot and crash the plane then who is responsible?
These bribe and corruption has been spread in each and every form of life in India.You can do anything in India if you have money.The evidence are stolen of the murder charges, papers are missing for bribery give money and your case becomes weak and you are free......
Bribe has now become a sacred word and no one is surprised by it.Paisa dedo na....kam ho jayega....that is the scenario and we have to eradicate this from the root of the system.
Here also there is a catch even though Anna saheb has end the fast and government has accepted his demands.They have given the notification but the bill will get passed in June session and government knows that once the euphoria subsides they will again twist the matter and do what they want.
I heard Anna Saheb saying that this movement is going to go up further for those farmers who are killing themselves as they can't repay loans.I wish Anna saheb very best and wish all luck as well so that India becomes a better place to live  and people can say proudly that I am Indian and we are non corrupt.
For iradicationg POVERTY, Indian government has to bring those $1456 billion($ 1.5 trillion)  back to India.That is like Rs 67 lacs cr...and that is like as Sukanya said 30 yrs tax free regime.Tax holidays for 30 yrs! Wow! and these money is also 13 times of National Debt.Sometimes when I try to think about this figure, I get fumbled that what these money is going to do to the politicians relatives like son daughter etc.......after more 40 yrs....means 60+40= 100 yrs you are not there and the money is in Swiss Bank, so that money will go ashtray?How much the next generation will be able to use?
As I said earlier Rs 100 cr is enough for 7 generation but not 100 cr, not 1000 cr, not 10,000 cr, not 1,00,000 cr(1 lac cr) but 67 lac cr....that is ....out of world Sukanya rightly pointed that one swiss bank officer said that Indians are poor but India is not a poor country....
We need to bring that money back.
Where will these money will go if the person who dies?Will remain dorment in Swiss Bank?
When Supreme Court is asking about those money, PM like Manmohan Singh says he can't disclose it as it is security matter.......That is is peoples money and how it becomes security matter?
As I am able to recall something more let me write it down here.

It is seen perticularly in USA the main reason for bad credit where the CC holder is not able to pay the amt is , those poeple went overboard to help some family or families and thereby helping them from the CC and they didn't keep on track what the amt is.
So it all depends on your heart.One need to have the urge to help someone.
The business is ruthless in USA.They charge for every little thing but that is business ethics because if you do it in free people keep expecting it coming free everytime.
They know unless you do not ask for the charge no one pays.That is human nature.Everyone wants FREE and when it comes FREE we don't know the meaning of it.
I use to say here in past and to my friends as well that money is money.Whatevere amt it is.Be it Rs 1000 or Rs 5000 or Rs 10,000.Even though we know that Rs 1000 is worth nothing now in India still if you ask any of your friend that you need 5000 rupees or even Rs 1000, he will most probably will give reason why he can't lend it to you.
So saving money is very important.Save it.Money is POWER.Money is STRENGTH.Money is PEACE OF MIND.
People are always ready to say things like I am here for you.If you need anything I am there for you.I am your friend.I care for you.Just ask me for anything and I will be there but when the real time comes they are not there and if someone is there then he/she is your TRUE friend.
The best test is ask for money.Make sure that friend is rich enough to lend you 5k, 10k or 20k rupees.If you feel he/she can give you ask for the help and you will find the ture colors who is what.I don't want to say that friendship needs to be weigh with money, but there are hypocrates who shows they love you and they are only our best friend and hearing them we ignore real good friends who were with us since our childhood.....
The bottonline here is no one lends you money, even 1000 rupees.So 1000 rs was precious 20 yrs back and it is precious even now in 2011 even though 1000 rs value has gone dowm drastically.So each and every penny saved is important.We don't understand what is Rs 1000 but just ask someone who is living in a hut or on footpath.Rs 1000 is very very big for them.

Friday, April 8, 2011

Here he comes....Anna Hazare

Looks like the time has come and someone has taken a lead to fight with the corruption.Someone has to come out for that as corruption was at the pinnacle .
I am constantly viewing TimesNow news channel and I am hearing all debates coming out of it.
One of them who happens to be an editor and a journalist was of the opinion that what if the person who is in the Lokpal committe is corrupt?He was saying that something is wrong with us.
Now hence the question arises is that ,is  whole India  corrupt?How many people are corrupt?Is a simple layman  corrupt?
It is a good idea that the JanLokpal bill should have people in as a member.The problem is the politicians wants it without people who are not politicians and beurocrates and we all know what politicians and beurocrates are.
Somewhere it has to start.The corruption was going bersek and there was no stopping for it.The brakes needs to come and rein in the politicians and corrupt beurocrates.
CBI is made of politicians.They will do what politicians will say.So the idea of Anna Hazare to form a committe wherein people like Supreme Court judge is at helm is an excellent idea.
Since 1968 when late Indira Gandhi was PM since then the Lokpal bill talk is going on and after 43 yrs it is still to be passed.What an irony.All parties speaks to bring it in election and it never get passed.
It is a good thing that Anna Hazare himslef is ready to see how the Janlokpal bill is drafted and he is also ready to be a member of the committe.He do not wants to head it.
How the Janlokpal bill is drafted is important.Debates were going on that this whole revolution should not end in becoming a banana.The crusade that has started with Anna Hazare's fast untill death should not end in a mere tamasha.That is the debate going on.
More and more people are joining Anna Hazare movement.Narayan Murthy, Azim Premji has already joined.If we are corrupt , if all indians are corrupt then why so many people are joining with the Annaji's movement?Out of 130 billion people how many has corrupt mind?
Everyone were fedup with the corruption that was going on and PM.Mr Manmohan Singh wrote to all Ind Inc that government will deal with the corruption then when the time has come to show that government means what it says, why there is delay in implementing it?
2G scam of Rs 70,000 cr, S-Band of Rs.2,00,000 cr ,CWG of Rs 40,000 cr and then the Sugar scam and people who are the creator of such scam heads the committe?Something rediculous....all moral , all conscience everything put aside.Shameless act from all these politicians and they walk like they are the master and nothing can happen to them.
I join from here with Anna Hazare movement.I hail Anna Hazare's movement and wish that untill his demand for Janlokpal bill is not fulfilled more and more people join the movement and make it a big success.
Long live Anna Hazare.We love you......

Tuesday, April 5, 2011

Alfa Laval making new highs.....

Alfa Laval which I recomended on 20 th Oct 2009, means one and a half year back is making new highs as I toady saw that it is at ATH of Rs.1670 and seteling at Rs 1620.
I feel there is still room to go up from hereon.It is in Bio Fuel sector making plants.
Another stock that is making newer highs is EPC Ind which I recomended at around 30 and today I saw that it was making new highs at Rs 135 and closed in upper circuit.
3rd stock which made a new high today is Cronimet Alloy.It made a new high of Rs 119.If one has observed then Cronimet was showing excellent strength in down market.
I remember I recomended Vakrangee Software as well here couple of times at around 50 and that is also making new highs of Rs 367.The reason I am writing about Vakrangee is , it is a case of bad management and still it is showing strength.Many must have given a passon due to management credibility but as I said I do not put much importance on management as when tide turns bad management becomes good and players has a field day accumalating such stocks and then as the bottomlone flourishes they take it to dizzy hieghts.
As is seen in EPC Ind, Alfa Laval, Cronimet recomended at 35,Vakrangee Software etc my calls comes good after one and  a half year .
That much patience readers needs to have for my call.........

Monday, April 4, 2011

Guantam Ghambhir......

I watched the whole final match and also the whole world cup where India matches were there.
I am surprised by the decision of Man Of the Match which was given to Cap.M S Dhoni.
Guantam Ghambhir knock of 97 was par excellence.He came when Shevag got out and then Sachin got out at 33 and Virat Kohli joined Ghambhir.
From 33 to 114 , a partnetship of 81 crucial runs and then Virat got out and Dhoni joined him and they took the total to 233 odd which again is a crucial partenership of over hundred runs.
So Ghambhir made two crucial partnership and his innings was a pillar for the road down to Championship.Ghambhir knock was so important that if he is not there then Dhoni's knock couldn't come.If Ghambhir gets out early then when Dhoni comes in play he may have more pressure on him and in that circumstances he may have not made 91 Not out.
So to me Guatam Ghambhir knock of 97 was very very crucuial to India WIN in final.I don't say that Dhoni's innings was less importantbut when Ghambhir left, India's position was on strong footing.
Atleast the Man Of The Match should have been jointly declared between Guantam Ghambhir and MS Dhoni.......

Savita Oil CMP Rs 502....Excellent Play

Berkshire Hathaway to buy lubrizol for $9 billion

NEW YORK: Billionaire Warren Buffett's Berkshire Hathaway Inc struck a deal to buy lubricants maker Lubrizol Corp for $9 billion, betting on a global economic recovery. The deal is Berkshire's biggest since it bought Burlington Northern Santa Fe for more than $26 billion in late 2009.
It extends the trend of Berkshire expanding in basic industries, which includes Buffett's recent deals for Marmon Holdings and Israel's Iscar Metalworking. Berkshire, which had amassed about $38 billion of cash by the end of last year, will acquire Lubrizol for $135 per share, about a 28% premium to its closing price on Friday. Berkshire will also assume about $700 million of Lubrizol's debt.
Lubrizol's shares soared more than 27% to $133.95 in late-morning trading. Shares of NewMarket , one of the chemical company's closest competitors, were up 12%. Lubrizol makes lubricants for engines, especially large trucks, buses and boats. Demand for the company's products should continue to rise as shipping of goods increases around the world.
In February, the company posted a strong quarterly profit and issued a bullish forecast for 2011, signaling that demand for lubricants was improving along with the economy. About 65% of the company's sales were from outside North America last year. "Lubrizol is exactly the sort of company with which we love to partner ? the global leader in several market applications run by a talented CEO," Buffett said in a statement on Monday.
The company will continue to be led by its current management team under James Hambrick , the companies said. Just two weeks ago, Buffett told Berkshire shareholders that he was searching for new acquisitions. "Our elephant gun has been reloaded, and my trigger finger is itchy," the 80-year-old investor wrote in his annual letter. Thomas Russo , who helps invest more than $3 billion at Gardner Russo & Gardner, said he believes the investment is positioned to take advantage of increasing demand for Lubrizol's products as emerging economies around the world industrialise further.
Some 11% of Gardner Russo & Gardner holdings are invested in Berkshire shares. "It's certainly a full price ? especially if you think back what the opportunity could have been had they bought at the bottom of 2008 or 2009's market sell-off ," Russo said. "But it's all about the forward looking returns and I suspect that the rest of the

My Comments:
WB bought Lubrizol  in Mid March and I think Savita Oil is an excellent pick here looking at its products and bottomline.With 71% held by promoters and 10% by corp bodies .
I am not writing more on Savita Oil and Technologies Ltd as I would like readers to find out more and take own decision.

No investor can ignore India: Mark Mobius

Published on Fri, Apr 01, 2011 at 21:19 | Updated at Sun, Apr 03, 2011 at 18:32 | Source : CNBC-TV18
Here is a verbatim transcript of the exclusive interview with Mark Mobius on CNBC-TV18. Also watch the accompanying videos.
Q: We have got USD 2 billion in the last ten days, what's turned the mood around for India?
A: People have realised that they have got to be in India. India is a growing market. This year we are expecting 8% growth in real terms. There is no way that anyone investing in this world today is going to ignore India. Ofcourse the fact that Warren Buffet has arrived also gives you an idea that the interest is widening throughout the world.
Q: What has changed between the start of the year, when most global investors seem to be in a rush to get money out of this market and now where we seem to be seeing some degree of inflows once again?
A: We must remember that India was outperforming last year and there is always a phenomenon of profit taking. People deciding that they have made some money, want to get some money out and they look for an excuse to do so. In this case, it was these telecom scandals that were very heavily promoted around the world and this is what gave people an incentive and excuse to say look let’s take some profits off the table.
In addition to that fact, ofcourse you have had the Japan earthquake and the Middle East which added some uncertainty. But these were actually not as important because more and more investors are beginning to realise that they have got to diversify away from US dollar and US treasuries. So, a combination of factors coincided with this trend. But I believe now the investors will be back.
Q: That was my next question to you because since the start of the year it was quite distinct this trade, which was going on, which was people getting into developed markets and shunning or going underweight on emerging markets, do you think that trade is beginning to reverse? Has that trade played out fully?
A: Yes, it’s pretty well played out from what I can see. Ofcourse the US market had underperformed for so long. People saw an opportunity, they had some recovery in the US market. But if you look at the long-term trend, emerging markets will outperform developed markets by a wide margin. People are aware that you can’t have a situation where a country growing at 2% is outperforming a country that's growing at less than 8%. And that's a situation you have between emerging and developed countries.
Q: What's leading to the money coming out of developed markets to emerging markets? Is it more of a chasing of growth in emerging markets or realisation that growth will falter as we go deeper into the year into the developed market space?
A: Don’t forget now money is not necessarily coming out from one area and going into another. It’s a matter of degree because the total money supply globally is increasing. So, you are seeing an inflow not only in developed countries, but also in emerging countries. The flows into emerging market funds are increasing, not decreasing. So, now it’s a matter of allocation within these different markets. That’s really what drives the situation. There will be leads and lags between one area and another. But the overall pie is getting bigger because money supply has increased dramatically in all countries around the world.
Q: Do you think some money is beginning to come out of the bond market, the fixed income market as well into equities now?
A: That is one factor. But as I say, we are not seeing a big outflow out of the fixed income area either. Let’s say people have been putting money into the bond markets, they are staying there, but they will go into the equity now because the total amount coming at them is increasing. So, I believe you are going to see growth in equities faster than fixed income perhaps. But that doesn’t mean there will be an abandonment of the fixed income area because people make quite a lot money in the fixed income area.
Q: Any fears of contraction in global liquidity that you see in the second half or the later half of 2011 because of any reason, either of maybe a feeling that there will be no QE3 or because interest rates might start heading up in the West? Do you see any of these events having some kind of a contractionary effect in global liquidity?
A: All those factors will be important and will be part of the mix. I would say a higher interest rate definitely will have the impact because people will sit back and say, “Look, what am I getting in the bank and what is the expected yield on stocks.” If there is a big difference, particularly in real terms then there will be a tendency to hold off on buying more stocks. But there is no guarantee that interest rates will rise to that level where they will outpace returns on stocks. If you look at the average price earnings ratio now, let’s say for some of the frontier markets it’s ten times, that means that you need to have a very high yield in order to get people away from the stocks.
Q: You spoke about a few of the factors, which led to India's underperformance at the start of the year. In your mind, what was the key determinant? Was it the news flow regarding the scams etc? Was it the price of crude, which had short up because of the Middle Eastern conflict or was it just a high interest rate inflation situation, which made people skeptical of this market?
A: I would say there were two factors. Probably the most important in the short-term were the scams, the publicity surrounding scams. But underlying this was the rise in interest rates. Investors were quite concerned that if interest rates kept on going up then stocks would be less attractive. So, those two factors were probably the most important.
Q: Has that scare abated because inflation still remains elevated as does the price of crude?
A: Yes, of course, there is a concern that interest rates will go even higher because the Government of India has been very aggressive in tacking inflation. Over the longer term, however, we expect interest rates will probably come down because in order to grow this country needs a low interest rates.
Q: What about crude, for many global investors India is not the market of preference, when crude goes up beyond USD 115-120 per barrel, is that a big swing factor or a trigger in your eyes at all?
A: Not as biggest people might imagine because the Indian rupee, the currency, has gone stronger. Crude is priced in US dollar, so in rupee terms the price has not gone up as much. That's one factor.
The other factor is that you must remember per capita income has been rising here. So, people can tolerate higher prices to some degree. The lower income segments of the population where food inflation is very important and it can have a very critical impact on their lives, particularly if they are unemployed, in that case, I believe that the programme the government has instituted to have a national identity numbers so that the distribution of subsidies could be more efficient will go long way towards ameliorating that problem.
Q: We have had a 10% rally in the month of March. Post that rally, how does India look relatively, compared to the other emerging markets that you track?
A: I would say it looks quite attractive and we continue to hold shares here and buy more. So we are finding some bargains here.
Q: You think valuations in large caps are still attractive?
A: Yes, certainly the largecap stocks are very interestingly not as expensive as you had imagined. They are quite attractive. As you know, India has a wide swath of small and medium type companies with good earnings, good managements and good growth prospects. So that’s an area that we want to investigate further.
Q: Have you been deploying the money in the Indian broader market, the midcaps and smallcaps which have really underperformed off late, it’s not done really as the largecap names?

A: Yes, we have been putting more money in the smallcap. In fact, we have two new funds - an Asian smallcap and a global smallcap fund. Lot assets from India are going into those funds.( That is the change in stance by Mark Mobious,viz: from Largecap to mid and small cap.)
Q: Any sense you can give us, from which kind of sectors you have been picking those names in the midcaps and small caps?
A: The biggest arena for us is the consumer area. We are finding that the consumer stocks are very attractive. Not only because of the growth prospective, but because they are selling at valuations which are lower than you would find those largecap names in that sector.
Q: Let me just ask you about liquidity. Where is this new money shift coming in from? Is it the Exchange Trade Funds (ETFs), which you are putting in more money now in emerging markets after a higher hiatus or you think global funds are now beginning to reallocate a little bit in favour of emerging markets again?
A: In our actively managed funds, we are still seeing good flows. ETFs of course, have had tremendous growth, but I think people are beginning to wake up to the reality that the ETFs are often not what they are cracked up to be. For example, many people expect ETFs to follow the index perfectly and of course that does not happen, because there is a cost involved with these ETFs. In addition, very often as they get larger, it is more difficult for them to track an index, in the real sense of the world of buying and selling the stocks of the index. So I believe that there will be a leveling off of ETFs going forward. They will still grow, but they won’t be growing at the rate they have in the past.

Q: Is it emerging market
funds per se which are getting more attention in capital flows or are these country dedicated funds where most of the interest in the last couple of weeks has been seen?
A: I would say its global funds, its country funds, US, major countries and emerging markets, its all categories. When you get into more specific smaller countries, smaller sectors, then it gets more problematical, the size of those funds does not get very big.
Q: In the BRICs Universe, what is your order of preference right now given where the price of commodities are and what kind of relative stock price performance you have seen already this year?
A: These commodity prices are sort of a lagging indicator in the sense that companies that are going to benefit from a high commodity prices have already moved up. They move ahead of what’s happening in the market. So I would say that you are going to see a continuation of strong performance growth if commodities moving up, but it won't be spectacular, you would see the kind of moves that we have seen in 2009 when the prices really moved up at a very fast pace.
Q: Any concerns of a correction in that space? Copper has looked a bit wobbly these last few days, any concerns you have that some of these might actually pull down now?
A: We are aware that these commodities are quite volatile. They will slowdown at the drop of a hat, 10% - 15% - 20% is nothing these days in these markets and you can’t really anticipate that and if you try to act upon it, probably too late. So we take the long term view. We know the trend is moving upwards and we want to be in these stocks, of course if there is a big correction, we will take an opportunity to buy more but it will be impossible to time investments in that space so we have to look at it from a long term point of view.
Q: Do you have a view on gold?
A: Yes, the trend is definitely up. I won’t be able to tell you what's going to happen tomorrow or next week but I know that the longer term trend is up, definitely.
Q: How are you reading the Middle Eastern situation? Because that seemed like potentially a big problem, global problem just a few weeks back. Subsequently things seem to have eased out a bit though the price of crude remains quite elevated. How much of an impact could that have on global equities?
A: The general situation in Middle East in my view is quite positive because you are getting reform. You are getting recognition that there is a need for change. Of course it’s precipitated as a result of high unemployment among educated people as well as food inflation and that exacerbates the whole situation. But I would say generally speaking it’s a positive trend that’s moving through Arab countries, there is a sense of fellowship among these Arab countries and I believe that it is generally a positive trend.
Q: You do not belong to the camp which has those alarmist views that crude might shoot up to USD 150 to USD 200 and that might derail global growth?
A: You must remember that there are lots of alternatives now. It’s not like the previous oil crisis. We now have gas, solar and even nuclear even. Although you had this accident in Japan, you are still going to get lots of alternatives coming into play.

Saturday, April 2, 2011


Special mention for our coach Mr. Gary Kirsten without whom this would haven't been possible......Gary is going back and India will have to find a new coach as good as Gary.....
We love you Gary.Before Gary came, India was 5th and 6th in Test and ODI and see where India is now.......

SREI old call......

I have been recomending this stock since 2008.Lateron RJ took stake in Mar 2010 at 65 something like 12,50,000 shares.
I am gald to see RJ taking stake here which vindicates my call on Srei on fundamental side.
I am today putting all the information gathered by me since I started recomending it here, i.e. 2008.One can see how much I go deeper and try to find whatever I can get for a Co which I use to recomend it here for my readers.
I want this type of diggin from my readers.I have no direct access to the Srei Management .What I have gathered is solely from internet.I keep on writing here that try to explore internet.It is a huge ocean and one can always find something which someone else may not be knowing.

Here are my Infos:

1) SREI To Pick Up Stake in Bhaskar Silicon

Thursday, 21 January 2010 06:07 Jarna Gandhi Energy & Utilities

Srei Infrastructure Finance plans to pick up a stake between 15% and 30% in Bhaskar Silicon, a SPV of Singapore-based Environ Energy Corp.

BHaskar Silicon is putting up the world's first integrated Solar Power Plan and India's first polysilicon- Solar Plan in Haldia with a capital outlay of Rs 5000cr. The polysilicon andwafer-processing facility will start operations in 2011. The unit will make 2,500 tonnes of polysilicon per annum capable of generating 250 MW of solar power.

SREI plans to infuse both equity and debt into the company; however the exact details are undisclosed.Earlier, the company had announced that nearly Rs 1,500cr would come as equity while the rest would come as debt.

Earlier, the ¤375 million Centrotherm Photovoltaics,  providers of technology and services for the photovoltaics industry, and Perseus LLC, merchant bank and PE fund had agreed to pick up significant stakes in the company. Perseus manages seven investment funds with capital commitments totalling nearly $2 billion and co-manages a $449mn fund.

In Novemeber 2009, India power corp- a JV between SREI and Bhaskar Silicon had acquired a majority controlling stake of 57.17% in Dishergarh Power Supply Corp (DPSC) at Rs 710 per share in an all cash deal.

2. Srei to pick up 30% in Bhaskar Solar for Rs 5,000 cr

Srei Infrastructure Finance is close to picking up between 15 and 30 per cent

stakes in Bhaskar Silicon, which is putting up the world's first and the largest integrated Solar Power Plant and India's first Polysilicon-Solar Plant in Haldia, West Bengal with a capital outlay of Rs 5000 crore.

Earlier, the ¤375 million Centrotherm Photovoltaics, one of the world’s leading providers of technology and services for the photovoltaics industry, and Perseus LLC, the Washington-headquartered merchant bank and private equity fund management company (which manages seven investment funds with capital commitments totalling nearly $2 billion and co-manages a $449 million fund), had agreed to pick up significant stakes in the company.

Confirming the developments, Srei’s vice-chairman and managing director Hemant Kanoria told Financial Chronicle, “Yes we are close to picking up substantial stakes in Bhaskar Silicon, with power being one of the thrust areas for the group. We may take up to 30 per cent stakes but under no circumstances it will be less than 15 per cent.”

Refusing to divulge the exact value of their equity infusion, Kanoria said, “We will have both equity and debt exposures into the company.”

Earlier, the company had announced that nearly Rs 1,500 crore would come as equity while the rest would come as debt.

It may be mentioned that Srei Infrastructure Finance and Bhaskar Silicon had already participated in a consortium called India Power Corporation (IPCL) to pick up a controlling 57.17 per cent stake in power utility DPSC.

Srei’s power arm already runs two 35mw wind power units in Karnataka and Gujrat and waiting for the “right opportune moment to grow-organically and inorganically”, said Kanoria. “We have sufficient reserves and sufficient line of credit to finance our expansions on the power front. But we are not in a hurry. We will grow cautiously, conservatively and yet aggressively,” added Kanoria.

SREI Infra can bank on Quippo : Feb 17th 2010

EPS Dilution Likely In Short Term, But Both Will Gain From Synergies In Long Run


KOLKATA-BASED SREI Infrastructure Finance, a non-banking finance company (NBFC) that is into financing of infrastructure-related segments, has announced an amalgamation with Quippo Infrastructure.
   The company’s main lines of business are equipment finance, project finance & advisory. This is where the amalgamation part comes into play as Quippo Infrastructure is an equipment bank. For instance, Quippo has a partnership with Tata Teleservices, featuring the largest independent telecom infrastructure in India. Apart from it, Quippo has oil & gas drilling equipment and construction equipment as well.
   Now that Quippo will be a part of SREI, the company will have the advantage of synergies. For instance, if a contractor approaches the company, Srei has the option to rent, lease or sell the equipment, which no other finance company in India is in a position to do. There are bound to be synergies in the long run. However, in the short term, the amalgamation will result in dilution of earnings per share, one reason why the stock took a 25% hammering during the last one month, while the Nifty lost just 8%.
   Infrastructure equipment financing comprises two-thirds of the assets under management, with the remaining one-third under project financing. There are synergies between these lines of business as well. For instance, the contractors to whom Srei provides finance under equipment financing can get business from the project it finances. Therefore, the various business segments of the company such as project finance, advisory and equipment finance are inter-related.
   On the liability side, loans from domestic banks and financial institutions constituted more than 50% of the total funds during the previous fiscal. Close to 13% of its funds were raised from the bond market. On the assets side, the company has a good asset quality, which is evident from its low non-performing assets (NPAs) or bad loans.
   At a consolidated level, NPAs are minuscule. In the equipment financing business, NPAs were less than 1% of net advances at the end of December 2009. The company reported an net interest margin or NIM of 5.1% in the quarter ended December 2009. At the current level, its NIM is one of the highest in the NBFC segment. However, its stock trades at a discount to other players in the NBFC industry. At current levels, it is trading at a price to book value (P/BV) ratio of 1.1, while IDFC, which is also an infrastructure finance company, is trading at a P/BV of 3.2. Clearly, SREI Infrastructure Finance is trading at a huge discount to its fundamentals.

WB govt, SREI Infrastructure Finance ink MoU for LRT

KOLKATA: The West Bengal government and SREI Infrastructure Finance on Wednesday inked a memorandum of understanding (MoU) to set up the country's first light rail transit (LRT) system. A special purpose vehicle, christened Kolkata Mass Rapid Transit Pvt Ltd, has been formed to implement the proposed Rs 6,000 crore project. 

To be executed in two phases, the project will be implemented by a consortium led by SREI Infrastructure and will include technology partner Amex International of Czech Republic and a state government undertaking, West Bengal Transport Infrastructure Development. 
"I have urged those executing the project to prepare a detailed project report (DPR) by this fiscal and begin construction latest by next year. We will take about four-to-five years to complete the project from the day we commence construction," said West Bengal chief minister Buddhadeb Bhattacharjee, addressing mediapersons during the MoU signing ceremony held in Kolkata on Wednesday. 
Incidentally, the project will comprise two corridors -- Joka-Esplanade and Esplanade-Barrackpore links. The air conditioned LRT will connect the northern suburbs with the southern fringes of the city through the central business district and cover some 40 kms in just 90 minutes. 
It will touch 37 stations including Taratala, Khidderpore, AJC Bose Road, Park Street, Esplanade, Sealdah, Shyambazar, Dunlop, Khardha, Titagarh and Barrackpore. 
For starters, the train is projected to carry some 1.2 lakh passengers per month and subsequently, 4.8 lakh passengers per month. 

Emphasising the need for such a system, SREI Infrastructure Finance chairman & managing director Hemant Kanoria said, "Road space in Kolkata has shrunk substantially rendering navigability of vehicles impossible. More so, since the number of vehicles have increased manifold over the years. This coupled with the regular inflow of people from districts is making commuting chaotic." 

Given the anticipated vehicular growth in the future, and increasingly lower availability of road space and time constraints, construction of flyovers and elevated tracks would be the ideal solution, he pointed out. 

"The proposed light rail transit system," Mr Bhattacharjee added, "will meet the East-West Metro at Sealdah to help office goers commuting from one end of the city to the other. Implementation of all three — the light rail transit system, the East-West Metro and the ring road to be built around Kolkata — collectively will solve the city's transport problem in the near future."

1)Stake in DPSC of 57% which SREI took from LIC and DII is a huge positive for SREI.
DPSC is listed on NSE stock exchange whose 52 week high is Rs 3534 and 52 week low is Rs 576 and CMP is Rs.1915.Just imagine the valuation of DPSC?
2)Stake in Bhaskar Solar is another huge positive
3)Merging Quippo is another big positive.
4)WB govt, SREI Infrastructure Finance ink MoU for LRT is another huge huge positive.....
What I am seeing here in SREI is first we saw the merger of Quippo then we will see the demerger of these Co as well as a seperate entity and shares will be given to SREI stake holders.
This is my thinking.I may prove wrong but that is what I am seeing and hence SREI Infra share holders is going gain immensely  from SREI stock as I feel all these demerger entities will be lateron get listed and shareholders will gain from the prices of listing as well and price appreciation lateron.
Srei Infra is the stock of the decade if everything goes well ........Due Diligence is a must before buying anything .......