Friends,
I have pasted my old post on Fibonacci value which is very important in technical analysis as whenever one read charts , they ofetn refer Fibonacci nos......
That is the reason I have again posted this article which I posted here in Dec 2007 .....which I read in BS , supplimentry at that time .......
I have also given my comments as well.........
So Read on and take view what one needs to follow, the fundamentals or technicals......
Fibonacci Numbers......? ............Are they dependable.....!
Friends,This is another bad NEWS for those who are LOVERS of Fibo Numbers!As I have written many times and is again proved that this Technical Analysis is not even 50% good!Actually I put it at just 10%.....good....I read an article at Business Standard in Monday Edition of Smart Investors, year and a half back,in which I read this article regarding Fibonacci Nos.It is worth a look as it will make clear all doubts and will enlighten you all whether to follow this theory or not.
Here it is:"Fibonacci numbersJOHN AUTHERSFibonacci sequences, where each number equals the sum of the two that precede it (for example 1,1,2,3,5,8...) are much beloved by technical market analysts. Such sequences have proved to have many applications since the 12th century Italian mathematician Fibonacci first used them while studying the breeding of rabbits. Beyond the stock and currency markets, they are held to occur frequently in nature, architecture and aesthetics, and even in US baseball results.
The belief that markets move in waves or "retrenchments", which typically factor in some way the Fibonacci "golden ratio" of 0.618, has been around for roughly a century. put simply, when a market hits a peak,it will then "retrench" until it has reached some "resistance level". When it recovers, it might meet a, similar point of resistance on the way up.
Applyjng Fibonacci, "resistance" might come when the market has suffered a fall equal to 0.618 times its previous fall, for example. Nobody has ever explained why this should, be the case, but many people obviously believe it. This column's recent e-mail correspondence from brokerage houses and banks includes references to "Fibonacci support levels," "Fibonacci retracement objectives", "Fibonacci resistance" and "Fibonacci targets".
Sadly, a recent research paper from the City University's Cass Business School in ' London shows that all of this research is a complete waste of time. Looking at the peaks and the troughs in the Dow Jones ,Industrial Average from January 1915 to June 2003, City University's researchers found that the number of times the ratios between those peaks and troughs was anywhere close to a Fibonacci ratio was actually less than would have been predicted if the pattern were random.
The case that Fibonacci sequences do not, after all, have any relevance to the stock market appears to be overwhelming. Rationally, everyone participating in the market should now shelve their attempts to apply such magic numbers. But people are not rational. We all instead look for arbitrary ways in which to anchor our decisions. As the City researchers say: "It is' simply human nature for: traders to take the technical support and resistance levels as starting points for thinking about price targets, regardless of their logic". So maybe, a trading strategy based on exploiting others' mistaken belief in Fibonacci magic numbers could make money.
"My view":
Here we can see how this Fibonacci Numbers is shown of no use.I have never believed in this nos game,be it Fibonacci Numbers, or Elliot nos,or Neo Waves nos, or anything.JOHN AUTHERS has systametically anihilated this Fibo puzzle and made it redundent according to me.As one can see that chartist depends more on this numbers,these whole mathematics has been demistified and is shown that it has no legs...becaused Fibo nos are not dependable then the whole chart theory goes haywire..I ahve never believed in charts...Mine calls will always be on fundamentals.But the Masters of chartist says that first charts makes a pattern and then price follows it..means if the price is going to fall then,surely it will come on Chart and some bad news will come and price will fall...I leave this decision on readers what to believe!Almost all chartist and TA use this FIBO nos and that is a big big blow to them.I do not understand this charts reading...I have seen almost all STOP LOSS are eaten and as soon as the SL is eaten, the stock takes U turn from there just to frustarate you why you put a SL for that perticular stock?There are so many complication....some times I feel , Doctors must also not be having so much complication while doing a biggger operation, while this chartist show us....Like,many legs..eg.first leg then second leg, then 3rd leg,and in that 1 st wave, 2nd wave, then 3rd wave....and that also of Bull wave, bearwave, then comes Support levels,then breakout levels,then come Morning Star, Evening star, morning star for Mandi,evening star for Teji,then comes Doji, then inverted Head and shoulder....Oh....has one to read and learn so much,..seems it is harder then even taking on examination of IIT or IIM...Friends,and the anamoly is that after all these , if we put 4-5 chartist in a different ROOM and ask to make chart on same subject, stock market for last 6 month, they will all have different views...I have written more then enough though can write more on this....I rest my pen here...!
Saturday, December 5, 2009
Friday, December 4, 2009
CCAP Ltd.....cmp Rs 41.70......
Friends,
CCAP Ltd is my old call at mmb between 15-20.It is long time back and one of my reader here reminded me about it as well as CCAP was going up.
10-15 days back when I saw the price it was around 30-32 and now I am seeing the price of 41.70 and hence I decided to write it here before it shoots up more.....
The reason I had a look when it was 30-32 was that there was an open offer at Rs 80/share when the price was just 32....means when I read the annoucement the price was 32....and now it is 41.70 because the open offer is now closed......
CCAP - Open Offer :
Announcement: 7th Aug 2009...
Sumedha Fiscal Services Ltd ("Manager to the Offer") on behalf of M/s Ramayana Promoters Pvt Ltd ("Acquirer") has issued this Public Announcement ("PA") to the Equity Shareholders of CCAP Ltd ("Target Company"), pursuant to Regulation 10 & 12 & other applicable provisions as required under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 & Subsequent amendments thereto ("Regulations").The Offer:The Acquirer is now making this open offer to the shareholders of Target Company (other than the parties to the Agreement) to acquire from them 7,14,033 fully paid up equity shares of Rs 10/- each, representing 20.00% of the subscribed equity share capital & 20.07% of the voting share capital at a price of Rs 80/- per fully paid up equity share ("Offer Price") payable in cash ("Offer or "Open Offer") in terms of Regulation 20 of the Regulations. As on the date of this PA, Target Company has 12,500 partly paid up equity shares of the face value of Rs 10/- each & the total amount of allotment money in arrear is Rs 43,000/-. The Offer Price for partly paid up equity shares shall be adjusted to the extent unpaid as per Regulation 20(10) of the Regulations.Schedule of Activities:Specified Date - August 21, 2009Date of Opening of the Offer - September 23, 2009Date of Closing of the Offer - October 12, 2009 ....
My Comments:
Well , the open offer is closed 12th Oct which was the last day.......and the stock hass started moving up because it is still below the open offer price.....so the price should atleast catchup with the open offer price.
Well, it may not always happen like that but it seems to be case here....
Before buying DD is a must.
Herein also , there is one more stock to take note of that....any guess?
Well, the stock in talk is Sumedha Fiscal (I hope readers find this name in this post )and it is a listed entity and it is the Manager of the offer and they will get good money from this type of work.So the point to be noted here is one needs to see who is the manager of the offer and if the name keeps coming with some other offers then we need to understand that the Co is having a very good name for the open offer management as generally the manager use to value the co and put a price for open offer.....
So, friends according to me Sumedha Fiscal is looking good and I have given a call at other forum in last bull run around 10 and it went on to touch something like 28.....
Sumedha Fiscal is a Calcutta base brokerage co ....
Now in very desi language I will say, ki ab Sumedha Fiscal ki janam kundali nikalo along with CCAP..........
Got it.......!
CCAP Ltd is my old call at mmb between 15-20.It is long time back and one of my reader here reminded me about it as well as CCAP was going up.
10-15 days back when I saw the price it was around 30-32 and now I am seeing the price of 41.70 and hence I decided to write it here before it shoots up more.....
The reason I had a look when it was 30-32 was that there was an open offer at Rs 80/share when the price was just 32....means when I read the annoucement the price was 32....and now it is 41.70 because the open offer is now closed......
CCAP - Open Offer :
Announcement: 7th Aug 2009...
Sumedha Fiscal Services Ltd ("Manager to the Offer") on behalf of M/s Ramayana Promoters Pvt Ltd ("Acquirer") has issued this Public Announcement ("PA") to the Equity Shareholders of CCAP Ltd ("Target Company"), pursuant to Regulation 10 & 12 & other applicable provisions as required under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 & Subsequent amendments thereto ("Regulations").The Offer:The Acquirer is now making this open offer to the shareholders of Target Company (other than the parties to the Agreement) to acquire from them 7,14,033 fully paid up equity shares of Rs 10/- each, representing 20.00% of the subscribed equity share capital & 20.07% of the voting share capital at a price of Rs 80/- per fully paid up equity share ("Offer Price") payable in cash ("Offer or "Open Offer") in terms of Regulation 20 of the Regulations. As on the date of this PA, Target Company has 12,500 partly paid up equity shares of the face value of Rs 10/- each & the total amount of allotment money in arrear is Rs 43,000/-. The Offer Price for partly paid up equity shares shall be adjusted to the extent unpaid as per Regulation 20(10) of the Regulations.Schedule of Activities:Specified Date - August 21, 2009Date of Opening of the Offer - September 23, 2009Date of Closing of the Offer - October 12, 2009 ....
My Comments:
Well , the open offer is closed 12th Oct which was the last day.......and the stock hass started moving up because it is still below the open offer price.....so the price should atleast catchup with the open offer price.
Well, it may not always happen like that but it seems to be case here....
Before buying DD is a must.
Herein also , there is one more stock to take note of that....any guess?
Well, the stock in talk is Sumedha Fiscal (I hope readers find this name in this post )and it is a listed entity and it is the Manager of the offer and they will get good money from this type of work.So the point to be noted here is one needs to see who is the manager of the offer and if the name keeps coming with some other offers then we need to understand that the Co is having a very good name for the open offer management as generally the manager use to value the co and put a price for open offer.....
So, friends according to me Sumedha Fiscal is looking good and I have given a call at other forum in last bull run around 10 and it went on to touch something like 28.....
Sumedha Fiscal is a Calcutta base brokerage co ....
Now in very desi language I will say, ki ab Sumedha Fiscal ki janam kundali nikalo along with CCAP..........
Got it.......!
Thursday, December 3, 2009
Expectation is the culprit. Let go! ...........
Taken from ET:
CO S M I C U P LI N K
Expectation is the culprit. Let go!
PARAMAHAMSA NITHYANANDA
YOUcan live either in expectation or in gratitude, never in both. With expectation there is a desire to possess things. You become the owner. With gratitude, you become the enjoyer. When you are the owner you enjoy only the few things that you own. When you are the enjoyer, you enjoy everything in Existence. When you look to own, nothing will seem enough. When you enjoy, everything seems to be overflowing! That is the difference. When we believe that what we need is always only outside of us, we will only continue searching! When we believe that Existence always gives us what we need, we will find everything within us. Working with expectation is like pouring clarified butter into fire to quench it. Can you quench fire by pouring clarified butter into it? Never! In the same way, you can never feel fulfilled if your actions are rooted in expectation.
Try to sit down and make two lists:
one of all the things that you have and one of all the things that you don’t have. The first list should include every single thing that you have, starting from your eyes, ears, hands and legs, because there are people who don’t have some of these. Include all your physical and mental faculties before moving to material things. If you write very sincerely without leaving out anything, you will not be able to complete the first list! That is the truth. If you find you are unable to finish the first list, it means gratitude has started happening in you! The problem is that there is a continuous expectation in us all the time. That is why gratitude doesn’t happen easily. We continuously receive input from our eyes, nose, ears, tongue and touch. Based on this, we continuously expect something or other to happen in a certain way. When we see someone who has a better house/ car, it registers in us. When we hear of some great achievement by someone, it registers in us. Our energy moves only outward, constantly following our five senses, never inwards towards self. Gratitude is when this process reverses and you suddenly awaken to the abundance in you! With gratitude there is no expectation or greed. When you start experiencing deep gratitude, your responses to situations change. You start resonating with Existence. Your body will flow with that resonance, with a cool grace and softness. All your actions will arise out of this grace. There will be no violence, only joy will be flowing. Then anything you do will only make life sweeter. Be Blissful!
CO S M I C U P LI N K
Expectation is the culprit. Let go!
PARAMAHAMSA NITHYANANDA
YOUcan live either in expectation or in gratitude, never in both. With expectation there is a desire to possess things. You become the owner. With gratitude, you become the enjoyer. When you are the owner you enjoy only the few things that you own. When you are the enjoyer, you enjoy everything in Existence. When you look to own, nothing will seem enough. When you enjoy, everything seems to be overflowing! That is the difference. When we believe that what we need is always only outside of us, we will only continue searching! When we believe that Existence always gives us what we need, we will find everything within us. Working with expectation is like pouring clarified butter into fire to quench it. Can you quench fire by pouring clarified butter into it? Never! In the same way, you can never feel fulfilled if your actions are rooted in expectation.
Try to sit down and make two lists:
one of all the things that you have and one of all the things that you don’t have. The first list should include every single thing that you have, starting from your eyes, ears, hands and legs, because there are people who don’t have some of these. Include all your physical and mental faculties before moving to material things. If you write very sincerely without leaving out anything, you will not be able to complete the first list! That is the truth. If you find you are unable to finish the first list, it means gratitude has started happening in you! The problem is that there is a continuous expectation in us all the time. That is why gratitude doesn’t happen easily. We continuously receive input from our eyes, nose, ears, tongue and touch. Based on this, we continuously expect something or other to happen in a certain way. When we see someone who has a better house/ car, it registers in us. When we hear of some great achievement by someone, it registers in us. Our energy moves only outward, constantly following our five senses, never inwards towards self. Gratitude is when this process reverses and you suddenly awaken to the abundance in you! With gratitude there is no expectation or greed. When you start experiencing deep gratitude, your responses to situations change. You start resonating with Existence. Your body will flow with that resonance, with a cool grace and softness. All your actions will arise out of this grace. There will be no violence, only joy will be flowing. Then anything you do will only make life sweeter. Be Blissful!
Tuesday, December 1, 2009
Some Old Picks.........Scan Point Geomatics...now 39.45...
Scan Point Geomatics...........I wrote about this stock as a dark horse and it was something around 17?yes I think that was the rate when I wrote about Scanpoint Geomatics....
Scanpoint Geomatics is making new high and ended at 39.45.....
Well, someone has bought it , I donno whether he has sold or still holding.
I just read that Dr Vikas wrote that he was apprehensive for PAE to go ahead and buy or not but got inspiration from tt comments and now he is confident to buy PAE.
I have been writing time and again that keep the mind open.Don't try to think more if the stock is looking good.Just go ahead and buy it.Buy even a small quantity but buy it.That will keep you tracking that stock and one day when you will find somegthing great of that co you will not repent that I missed a golden opportunity.
One of my friend and a reader of my blog as well, just told me that he was having Kwality Dairy 4000 shares at my recomended price ..i.e. Rs 17 ...but he sold all between 40 and 60...just imagine 4000 shares and Kwality Dairy is Rs 1300.....means 52 lacs rupees.....and the cost of buying is just Rs 68,000 ......Wow!...
People may not believe or do not like my way of seeing things .I know many have apprehesion always that what I am writing is good enough to even have a look or not....because I sometimes comes out with a stock which looks like a JUNK........
I wrote about Scanpoint Geomatics on Aug 6th 2009 means 4 months back and it has runup from 17 to 40 and donno where it will go ........Once stock comes in operators grip then there is no fundamentals and nothing counts.....Can anyoen tell me what is there in Kwality Dairy that it is Rs 1300?
So when I see people giving opinion that certain stock is overvalued and needs to be sold I just laugh at them because they don't know the game of stock market....
Now what will happen is , someone will comeout to ask me whether ScanPoint Geomatics is still a BUY......now that is what I don't want my readers to do....why don't you buy when it is recomended?Why don't you do due diligence and buy it.....buy small quantity but buy it.....
I have already recomended CatVision Product,Frontier Spring, SNL Bearing and many more at very very cheap rate but no one is ready to take a call and go ahead and buy it and then after it runs up by 100% or 200% they comeout to ask me whether they are still buy or not?What is the meaning of that.I actually becomes sad when someone ask me like that.I feel , why didn't you buy it when I recomended it?
I am again writing that if I can pick up multibaggers sitting in USA then anyone can do it from anywhere in the world.
Well, I can understand that not everyone has same pasison and zeal to find such type of stocks.All the things what I do when I go through while finding such stock may not be there for everyone.My mind is just set for it as I have done it for years togather and my hand will go to the mouse to click where I needs to click on bsesite or website of the co.....
But when I have already wrote about a certain stock then one should be able to diggin as much much as he can but that is lacking.
The only thing one can do is either blindly follow me without asking any question, but then there is a problem here, and that is , if the stocks goes down people gets afraid and end up asking me what to do.
And to avoid that one needs to try and find everything one can and then buy it so there is always conviction.I know there are certain things that needs to be read, like taking clue if what is coming that we call it reading between the lines.
I have so much explored different ways that I keeps on analysing them ,like what is the Vol, how much delivary is going ,looking at all the bulk deals daily,looking at the results daily after every qr untill the results stops coming,and many more thing.
One of my friend asked me , he also look at scoreboard of Capital Market whenever it comes and it is always same untill next qr results are declared , so how you find gems from them.....seeing one and one results make no sense and take you nowhere.
But raeding same scoreboard and trying to see the results and Promo holding ,BV,NPM,OPM, etc again and again will get imprint on your mind and when one read something about that Co in Newspaper or somewhere else you will remember the eq, BV etc and your mind will start calculating the statistic immidiately.
This I have been doing for years and I am use to it so ,I have not to make any effort ,what I have to do.I have become accustomed to do ,all that is to be done and that is why I am able to analyse things mush faster then others.But remember all that I have written is not the only thing that needs to be done but start somewhere and you will find your own way to pick multibaggers....ScanPoint has rose 235% in 4 months and so yearly the return comes to 7 times......
But let me write here that be ready to believe in any story.In stock market anything can happen and remember this bottomline forever.......
Losing in stock market is the fees you are paying to learn how to invest in stock market and everyone pays that.I have paid......so no grudges......learn from your mistake....No mistake done ....all lesson learnt....
Take mistakes as pinch of salt , don't go on analysing it..don't get shocked...learn to book loss.....very important...anytime you feel that your decision is wrong sell it.Don't hesitate to sell....and I have written manytimes here but again writing that "DON'T SELL STOCKS WHERE YOU ARE IN PROFIT THAT IS YOUR CORRECT DECISION"Don't try to reverse your good decision to make up with your bad Call.......sell the losers......
AND LAST BUT NOT THE LEAST......
"REMEMBER TO SELL 50% AS SOON AS STOCKS DOUBLES SO THAT YOU CAN BUY OTHER STOCKS ...............AND STILL U HOLD THAT STOCK WHICH CAN TURN A HUGE MULTIBAGGER LIKE KWALITY"
Scanpoint Geomatics is making new high and ended at 39.45.....
Well, someone has bought it , I donno whether he has sold or still holding.
I just read that Dr Vikas wrote that he was apprehensive for PAE to go ahead and buy or not but got inspiration from tt comments and now he is confident to buy PAE.
I have been writing time and again that keep the mind open.Don't try to think more if the stock is looking good.Just go ahead and buy it.Buy even a small quantity but buy it.That will keep you tracking that stock and one day when you will find somegthing great of that co you will not repent that I missed a golden opportunity.
One of my friend and a reader of my blog as well, just told me that he was having Kwality Dairy 4000 shares at my recomended price ..i.e. Rs 17 ...but he sold all between 40 and 60...just imagine 4000 shares and Kwality Dairy is Rs 1300.....means 52 lacs rupees.....and the cost of buying is just Rs 68,000 ......Wow!...
People may not believe or do not like my way of seeing things .I know many have apprehesion always that what I am writing is good enough to even have a look or not....because I sometimes comes out with a stock which looks like a JUNK........
I wrote about Scanpoint Geomatics on Aug 6th 2009 means 4 months back and it has runup from 17 to 40 and donno where it will go ........Once stock comes in operators grip then there is no fundamentals and nothing counts.....Can anyoen tell me what is there in Kwality Dairy that it is Rs 1300?
So when I see people giving opinion that certain stock is overvalued and needs to be sold I just laugh at them because they don't know the game of stock market....
Now what will happen is , someone will comeout to ask me whether ScanPoint Geomatics is still a BUY......now that is what I don't want my readers to do....why don't you buy when it is recomended?Why don't you do due diligence and buy it.....buy small quantity but buy it.....
I have already recomended CatVision Product,Frontier Spring, SNL Bearing and many more at very very cheap rate but no one is ready to take a call and go ahead and buy it and then after it runs up by 100% or 200% they comeout to ask me whether they are still buy or not?What is the meaning of that.I actually becomes sad when someone ask me like that.I feel , why didn't you buy it when I recomended it?
I am again writing that if I can pick up multibaggers sitting in USA then anyone can do it from anywhere in the world.
Well, I can understand that not everyone has same pasison and zeal to find such type of stocks.All the things what I do when I go through while finding such stock may not be there for everyone.My mind is just set for it as I have done it for years togather and my hand will go to the mouse to click where I needs to click on bsesite or website of the co.....
But when I have already wrote about a certain stock then one should be able to diggin as much much as he can but that is lacking.
The only thing one can do is either blindly follow me without asking any question, but then there is a problem here, and that is , if the stocks goes down people gets afraid and end up asking me what to do.
And to avoid that one needs to try and find everything one can and then buy it so there is always conviction.I know there are certain things that needs to be read, like taking clue if what is coming that we call it reading between the lines.
I have so much explored different ways that I keeps on analysing them ,like what is the Vol, how much delivary is going ,looking at all the bulk deals daily,looking at the results daily after every qr untill the results stops coming,and many more thing.
One of my friend asked me , he also look at scoreboard of Capital Market whenever it comes and it is always same untill next qr results are declared , so how you find gems from them.....seeing one and one results make no sense and take you nowhere.
But raeding same scoreboard and trying to see the results and Promo holding ,BV,NPM,OPM, etc again and again will get imprint on your mind and when one read something about that Co in Newspaper or somewhere else you will remember the eq, BV etc and your mind will start calculating the statistic immidiately.
This I have been doing for years and I am use to it so ,I have not to make any effort ,what I have to do.I have become accustomed to do ,all that is to be done and that is why I am able to analyse things mush faster then others.But remember all that I have written is not the only thing that needs to be done but start somewhere and you will find your own way to pick multibaggers....ScanPoint has rose 235% in 4 months and so yearly the return comes to 7 times......
But let me write here that be ready to believe in any story.In stock market anything can happen and remember this bottomline forever.......
Losing in stock market is the fees you are paying to learn how to invest in stock market and everyone pays that.I have paid......so no grudges......learn from your mistake....No mistake done ....all lesson learnt....
Take mistakes as pinch of salt , don't go on analysing it..don't get shocked...learn to book loss.....very important...anytime you feel that your decision is wrong sell it.Don't hesitate to sell....and I have written manytimes here but again writing that "DON'T SELL STOCKS WHERE YOU ARE IN PROFIT THAT IS YOUR CORRECT DECISION"Don't try to reverse your good decision to make up with your bad Call.......sell the losers......
AND LAST BUT NOT THE LEAST......
"REMEMBER TO SELL 50% AS SOON AS STOCKS DOUBLES SO THAT YOU CAN BUY OTHER STOCKS ...............AND STILL U HOLD THAT STOCK WHICH CAN TURN A HUGE MULTIBAGGER LIKE KWALITY"
Monday, November 30, 2009
Timeless and Time-Tested Warren Buffett Watch Predictions.....
Timeless and Time-Tested Warren Buffett Watch Predictions
Published: Monday, 30 Nov 2009 11:48 AM ET
Text Size
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.)
AP
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."
Published: Monday, 30 Nov 2009 11:48 AM ET
Text Size
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.
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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.)
AP
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
Warren Buffet and Rakesh Jhunjhunwala......
Friends,
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......
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......
Anil Naik......CMD of L&T........An inspirational true story...
Friends,
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[1]. 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[2]. 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[3].
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.
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 ........
Read On:
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[1]. 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[2]. 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[3].
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
Poddar Pigments..@36 and SNL Bearing......11.00
Friends,
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
Connecting Rod
Steering Systems
Chasis & Suspension, etc.
Industrial Machinery
SNL Customer Base
Existing Customers4 Wheelers, Denso India Tractors, Maruti, Mahindra & Mahindra, Mico, Sona Steering Ltd., Telco, TAFE.
2 Wheelers
Bajaj Auto Ltd., Kinetic Honda, Kinetic Engineering, LML.
Update:
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 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
Connecting Rod
Steering Systems
Chasis & Suspension, etc.
Industrial Machinery
SNL Customer Base
Existing Customers4 Wheelers, Denso India Tractors, Maruti, Mahindra & Mahindra, Mico, Sona Steering Ltd., Telco, TAFE.
2 Wheelers
Bajaj Auto Ltd., Kinetic Honda, Kinetic Engineering, LML.
Update:
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).....
Discussion........
Friends,
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)
My Commnets:
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......
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)
My Commnets:
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
Rico Auto Ltd .....A case in study.....Updated....
Friends,
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.....
Conclusion:
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.....
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.....
Conclusion:
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.....
Rakesh Jhunjhunwala on how to pick the right stock.....
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.”
My Comments:
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
Rico Auto Ltd....cmp...25.60....fundamentally sound co...
Friends,
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:
1)FCC RICO
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
Exhaust Manifolds
Annual Volumes - 500,000
Turbine Housings
Center Housings
Back Plates
Crank Cases & Covers
Annual Volumes - 1 Million
Cylinder Head Covers
Annual Volumes - 100,000
Oil Pan
Intake Manifold Covers
Annual Volumes - 150,000
Front Cover
Valve Cover
Annual Volumes - 60,000
Side Cover
Annual Volumes - 400,000
Balance Shafts Assembly
Annual Volumes - 120,000
Gear Housing
Annual Volumes - 1,20,000
Main Bearing Caps
Annual Volumes - 1 Million
Water, Air Connections and Pressure Plates
Flywheels
Annual Volumes - 250,000
Timing Cases
Annual Volumes - 400,000
Oil Filter Adaptor
Annual Volumes - 400,000
Engine Brackets
Annual Volumes - 4.2 Million
Cylinder Block (Ferrous)
Cylinder Head (Aluminum)
Clutch Assembly
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
Brake Discs
Annual Volumes - 1.2 Million
Drums
Annual Volumes - 1.2 Million
Steering Knuckles
Annual Volumes - 250,000
Rico Auto has following divisions:
1)Aluminum Casting:
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
Gravity Process
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)
Alloys
Gray Iron (FC) , Ductile Iron (FCD), SiMo, SiMo Cr
Core making
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
My Comments:
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.....
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:
1)FCC RICO
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
Exhaust Manifolds
Annual Volumes - 500,000
Turbine Housings
Center Housings
Back Plates
Crank Cases & Covers
Annual Volumes - 1 Million
Cylinder Head Covers
Annual Volumes - 100,000
Oil Pan
Intake Manifold Covers
Annual Volumes - 150,000
Front Cover
Valve Cover
Annual Volumes - 60,000
Side Cover
Annual Volumes - 400,000
Balance Shafts Assembly
Annual Volumes - 120,000
Gear Housing
Annual Volumes - 1,20,000
Main Bearing Caps
Annual Volumes - 1 Million
Water, Air Connections and Pressure Plates
Flywheels
Annual Volumes - 250,000
Timing Cases
Annual Volumes - 400,000
Oil Filter Adaptor
Annual Volumes - 400,000
Engine Brackets
Annual Volumes - 4.2 Million
Cylinder Block (Ferrous)
Cylinder Head (Aluminum)
Clutch Assembly
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
Brake Discs
Annual Volumes - 1.2 Million
Drums
Annual Volumes - 1.2 Million
Steering Knuckles
Annual Volumes - 250,000
Rico Auto has following divisions:
1)Aluminum Casting:
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
Gravity Process
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)
Alloys
Gray Iron (FC) , Ductile Iron (FCD), SiMo, SiMo Cr
Core making
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
My Comments:
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
Markets.......
"The bear lobby is indeed very much active as their hero of 2008-09 is unable to digest the bull run and was once again propagating about the difficult days ahead from the macro economic point of view. He once again forecast the global markets to correct by 20% and India even more. When the anchor of the CNBC channel enquired if a correction of 25% was likely, this bear operator nodded in agreement. This leads me to doubt about the sagacity of technical experts who continue to be guided by this bear operator and sing his tune."
Friends,
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 ......
Friends,
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 ......
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