22 Feb 2010, 0331 hrs IST, Amriteshwar Mathur, ET Bureau
Orient Paper & Industries, a part of the GP & CK Birla Group, is a diversified player in products, such as cement (contributed 58% of the total segment sales in the current financial year), coupled with electric fans, paper and paperboard.
The company’s key market for cement includes Andhra Pradesh and Maharashtra, and while it was adversely affected in the third quarter of FY10 by weak realisations, the operating environment for this division has shown signs of improvements over the past few weeks.
For instance, cement prices in Hyderabad have shown an uptick with prices currently at Rs 155 per bag levels, as compared to Rs 130 per bag in November 2009.
In addition, a revival in the residential construction sector should help improve demand for Orient’s products, such as electric fans, going forward. The stock currently trades at discount to other South-based diversified cement conglomerates.
CAPACITIES & EXPANSION PLANS: The company’s cement capacity was 3.4 million tonne at the end of March 2009, a rise of nearly 41.7% from two years earlier.
In addition, the company’s new kiln at Jalgaon, Maharashtra, had started commercial production in the third quarter of FY10, and Orient will also shortly bring on stream an additional 1 MT unit at Devapur, Andhra Pradesh. This would raise the company’s cement capacity to 5 MT.
Its other product segments include electrical consumer durables like electric fans, where it is one of the leading players in the organised sector, with a capacity of 3.5 million units at the end of March 2009, a rise of 35.7% from two years earlier. In addition, its paper and paperboard capacity was 171,000 tonne at the end of March 2009, unchanged for the past two years.
The company had invested nearly Rs 762 crore during March 2007- March 09 period, while its cash flow from operations during this period was Rs 768.8 crore.
FINANCIALS: Orient Paper’s operating profit margin declined 630 basis points y-o-y to 18.8 % in the third quarter of FY10, at a time when its net sales rose 2.6% to Rs 372.2 crore.
Pressure on its operating profit margins was due to its key cement division, where realisations declined nearly 8 % y-o-y to Rs 2,713.8 per tonne, while its despatches grew almost 5% yoy to 0.78 MT in the third quarter. Orient Paper, along with other players operating in the southern region, has been grappling with additional capacities coming on stream in this region over the past few months, coupled with signs of a slowdown in implementation of government-funded projects in Andhra Pradesh in the third quarter of FY10.
However, cement prices have shown signs of bouncing back over the past few weeks, In Orient Paper’s other divisions, such as electrical consumer durables, which include electric fans, the company benefited from a broad revival in demand, especially from the residential sector. As a result, segment profit of this division improved 168 % yoy to Rs 6.6 crore in the December 2009 quarter.
VALUATIONS : Orient Paper & Industries at Rs 47.6 per share, trades at nearly 5.8 times on a trailing four-quarter basis. Other diversified cement players in the South, such as India Cements, trade at 8.3 times, while Madras Cements trades at 6.7 times. Investors could consider investing in Orient Paper in a bid to take advantage of the long-term growth opportunities in the company’s various product segments.
Via:E.T
Sunday, February 21, 2010
Sunday, February 14, 2010
This is more than just a 7%-10% correction
5 Minutes Wrap up, Thursday, 11 February, 2010 4:31 PM
This is more than just a 7%-10% correction
» The empire of Debt is crumbling
'This is more than just a 7%-10% correction', screams a headline on one of the financial portals. The man behind the quote is none other than the famous financial observer and trader Dennis Gartman. In a recent interview, Gartman has opined that it would be a mistake to aggressively buy stocks at the current juncture. He fears that a deep correction in stocks across the globe could happen anytime soon. And he has based his observation on the fact that unlike the previous correction in US equities a few months back, the correction this time around is far more spread out. In other words, it has engulfed practically the whole world and this, as per him is a dangerous sign. He further observes that confidence, which is so key to the functioning of any financial market has gotten badly affected with events like the Greece debt crisis. And this too, does not bode well for capital markets including equities.
If the fundamentals would have pointed to another direction, we would have certainly taken traders like Dennis Gartman with a pinch of salt. However, even in India, the fundamentals seem to be pointing towards a not very rosy picture from a 1-2 year perspective. Even after the recent correction of the order of 10%-12%, it has become difficult to justify investment into a fundamentally sound company, run by a credible management team. It is the price that such stocks are commanding that is worrying us. Thus, while we may not know whether this is more than just a 7%-10% correction, what we know with a far greater degree of confidence is the fact that a significant correction from the current levels would set us up nicely for attractive gains over the next 2-3 years.
via:EQM
This is more than just a 7%-10% correction
» The empire of Debt is crumbling
'This is more than just a 7%-10% correction', screams a headline on one of the financial portals. The man behind the quote is none other than the famous financial observer and trader Dennis Gartman. In a recent interview, Gartman has opined that it would be a mistake to aggressively buy stocks at the current juncture. He fears that a deep correction in stocks across the globe could happen anytime soon. And he has based his observation on the fact that unlike the previous correction in US equities a few months back, the correction this time around is far more spread out. In other words, it has engulfed practically the whole world and this, as per him is a dangerous sign. He further observes that confidence, which is so key to the functioning of any financial market has gotten badly affected with events like the Greece debt crisis. And this too, does not bode well for capital markets including equities.
If the fundamentals would have pointed to another direction, we would have certainly taken traders like Dennis Gartman with a pinch of salt. However, even in India, the fundamentals seem to be pointing towards a not very rosy picture from a 1-2 year perspective. Even after the recent correction of the order of 10%-12%, it has become difficult to justify investment into a fundamentally sound company, run by a credible management team. It is the price that such stocks are commanding that is worrying us. Thus, while we may not know whether this is more than just a 7%-10% correction, what we know with a far greater degree of confidence is the fact that a significant correction from the current levels would set us up nicely for attractive gains over the next 2-3 years.
via:EQM
Saturday, February 6, 2010
Start preparing for oil at $200 a barrel
7 Feb 2010, 0002 hrs IST, Swaminathan S Anklesaria Aiyar, ET Bureau
The Kirit Parikh Committee is the third such committee to suggest decontrolling petroleum product prices. Probably politicians will again refuse to do so, and instead decree a modest increase in petrol and diesel prices.
Yet the key issue is not whether petrol and diesel prices should reflect today’s oil price of $75/barrel. It is that booming Asia will in a decade push oil to $200/barrel and maybe $300/barrel. India must prepare for a world of scarce, expensive oil instead of pretending that astronomical subsidies can ensure price stability.
Today, the “under-recoveries”, implicit subsidy, of oil companies is Rs 60,000 crore. The immediate price increases suggested by the Committee may cut this to Rs 30,000 crore. But if oil goes up to $200/barrel, the subsidy will rise astronomically up to Rs 500,000 crore, eroding funds for all other anti-poverty and development initiatives.
In the 1990s, oil cost $16-17/barrel. When it doubled to $35 by 2004, politicians refused to believe it was permanent, and decreed piecemeal price increases instead of price decontrol. When oil doubled again to $70/barrel by 2006, they cut excise and import duties and provided huge subsidies rather than raise prices proportionally. And when oil shot up to $147/barrel in mid-2008, they just closed their eyes and crossed their thumbs.
Luckily for them, the global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.
The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China and India look like powering ahead at 12% and 9% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development.
Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too. Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward.
China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.
The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Brazil, Mexico and Africa are in deep waters that will take time to exploit.
Indian politicians say it is politically impossible to decontrol oil prices. They fear that freeing oil prices will stoke inflation, because of the impact on transport costs. But in countries with free oil pricing, like the US, inflation excluding food and energy has been less than 1% although oil prices have doubled in the last 12 months.
It is simply untrue that price decontrol leads to inflation. On the contrary it leads to efficiency, conservation and a switch to alternatives. It will also reduce the fiscal deficit, and that will tame interest rates and hence prices.
When I became a journalist in 1965, oil was decontrolled but steel was controlled on the ground that it was politically impossible to free a commodity so vital to the economy. But steel was decontrolled in the 1980s and proved no problem at all.
Why so? Because voters understand that commercial producers need to sell at market prices, but know that governments can subsidise goods indefinitely. As long as oil bears a political price, voters will resist any price increase. But if oil is decontrolled, voters will soon accept the realities of the market, as it already has for steel.
In 1974, when OPEC first flexed its muscle, the government doubled the price of petrol overnight. It was a big blow of course, but the economy adjusted to the reality of expensive energy. India adjusted again in the second oil shock of 1980.
We now face another huge energy crunch, and need to adjust to that reality too. After decontrol, we can replace the kerosene subsidy with solar and LED lanterns for the poor. Farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.
We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.
Via: E.T
The Kirit Parikh Committee is the third such committee to suggest decontrolling petroleum product prices. Probably politicians will again refuse to do so, and instead decree a modest increase in petrol and diesel prices.
Yet the key issue is not whether petrol and diesel prices should reflect today’s oil price of $75/barrel. It is that booming Asia will in a decade push oil to $200/barrel and maybe $300/barrel. India must prepare for a world of scarce, expensive oil instead of pretending that astronomical subsidies can ensure price stability.
Today, the “under-recoveries”, implicit subsidy, of oil companies is Rs 60,000 crore. The immediate price increases suggested by the Committee may cut this to Rs 30,000 crore. But if oil goes up to $200/barrel, the subsidy will rise astronomically up to Rs 500,000 crore, eroding funds for all other anti-poverty and development initiatives.
In the 1990s, oil cost $16-17/barrel. When it doubled to $35 by 2004, politicians refused to believe it was permanent, and decreed piecemeal price increases instead of price decontrol. When oil doubled again to $70/barrel by 2006, they cut excise and import duties and provided huge subsidies rather than raise prices proportionally. And when oil shot up to $147/barrel in mid-2008, they just closed their eyes and crossed their thumbs.
Luckily for them, the global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.
The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China and India look like powering ahead at 12% and 9% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development.
Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too. Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward.
China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.
The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Brazil, Mexico and Africa are in deep waters that will take time to exploit.
Indian politicians say it is politically impossible to decontrol oil prices. They fear that freeing oil prices will stoke inflation, because of the impact on transport costs. But in countries with free oil pricing, like the US, inflation excluding food and energy has been less than 1% although oil prices have doubled in the last 12 months.
It is simply untrue that price decontrol leads to inflation. On the contrary it leads to efficiency, conservation and a switch to alternatives. It will also reduce the fiscal deficit, and that will tame interest rates and hence prices.
When I became a journalist in 1965, oil was decontrolled but steel was controlled on the ground that it was politically impossible to free a commodity so vital to the economy. But steel was decontrolled in the 1980s and proved no problem at all.
Why so? Because voters understand that commercial producers need to sell at market prices, but know that governments can subsidise goods indefinitely. As long as oil bears a political price, voters will resist any price increase. But if oil is decontrolled, voters will soon accept the realities of the market, as it already has for steel.
In 1974, when OPEC first flexed its muscle, the government doubled the price of petrol overnight. It was a big blow of course, but the economy adjusted to the reality of expensive energy. India adjusted again in the second oil shock of 1980.
We now face another huge energy crunch, and need to adjust to that reality too. After decontrol, we can replace the kerosene subsidy with solar and LED lanterns for the poor. Farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.
We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.
Via: E.T
You can do National Electronics Funds Transfer deals till 7 pm
RBI has widened the scope of the National Electronics Funds Transfer (NEFT) for small-ticket online settlements by extending the transaction timings and facilitating speedier settlements.
In a notification posted on its website on Friday, RBI has said customers will now be able to use this facility for extended hours besides increasing the frequency of batches of settlements.
From March, customers will be able to conclude transactions from 9 am to 7 pm from the earlier deadline of 5 pm on week days. While on Saturday, the deadline will be extended by an hour from 12 pm to 1 pm. RBI has also decided to move to an hourly frequency of settlement of batches, and accordingly increased the number of batches of settlements from six to 11 on week days and from three to five on Saturday.
According to RIS Siddhu, general manager of PNB, the move will encourage more remittances through this system and we may see more cheques and drafts settling through this platform. The NEFT platform is offered by RBI essentially for retail customers to make online remittances of up to Rs 1 lakh per transaction.
While the settlement here at present is on a T+1 basis (that is the next day of the transaction.) RBI will now move to B+1 settlement system or an hourly settlement, which means the transaction will be settled in the next batch where each batch will have one hour duration.
What makes NEFT different from RTGS is that the former is more high value real time transactions while NEFT settlements are not instantaneous.
In a notification posted on its website on Friday, RBI has said customers will now be able to use this facility for extended hours besides increasing the frequency of batches of settlements.
From March, customers will be able to conclude transactions from 9 am to 7 pm from the earlier deadline of 5 pm on week days. While on Saturday, the deadline will be extended by an hour from 12 pm to 1 pm. RBI has also decided to move to an hourly frequency of settlement of batches, and accordingly increased the number of batches of settlements from six to 11 on week days and from three to five on Saturday.
According to RIS Siddhu, general manager of PNB, the move will encourage more remittances through this system and we may see more cheques and drafts settling through this platform. The NEFT platform is offered by RBI essentially for retail customers to make online remittances of up to Rs 1 lakh per transaction.
While the settlement here at present is on a T+1 basis (that is the next day of the transaction.) RBI will now move to B+1 settlement system or an hourly settlement, which means the transaction will be settled in the next batch where each batch will have one hour duration.
What makes NEFT different from RTGS is that the former is more high value real time transactions while NEFT settlements are not instantaneous.
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