MONEY MATTERS

Delhiites deposit Rs 6.40 lakh crore in banks in 2010-11

2011-11-03T12:00:00.001-07:00

3 Nov, 2011, 09.12PM IST, PTI

NEW DELHI: A whopping Rs 6.40 lakh crore was deposited in banks in the city by people in 2010-11, which is an increase of 13 per cent compared to 2009-10.

According to latest Delhi Government data, people had deposited Rs 5.67 lakh crore in 2009-10 while the amount was Rs 5.17 lakh crore in 2008-09.

The banks have given loan of Rs 5.58 lakh crore in 2010-11 as against Rs 4.25 lakh crore during 2009-10.

According to the data, Delhiites have a total of 37,783 accounts in all the banks in the city till March 31, 2010 out of which 29,140 are savings accounts.

The per capita income in city at current prices has been estimated at Rs 1.16 lakh in the financial year 2009-10 which is an increase of Rs 13,446 over the per capita income in 2008-09.

The national per capital income for 2009-10 has been estimated at Rs 33,731. Delhi's per capita income is the third highest in the country with Goa having per capita income of Rs 1,32,719 topping the list, closely followed by Chandigarh at Rs 1,20,912.

BSE derivatives volume touches Rs 750 cr

2011-11-03T11:50:00.000-07:00

3 Nov, 2011, 09.10PM IST, PTI
MUMBAI:The country's premier bourse BSE's derivatives trading volume crossed Rs 750-crore mark today.

The volume of derivatives trading touched Rs 759.64 crore with trading in 30 underlying shares, the exchange said in a statement.

The Index futures registered Rs 625.43 crore turnover with 23,940 contracts. Among others Index Option (call) registered a turnover of Rs 68.44 crore, Index Option (Put) Rs 12.73 crore and equity future Rs 53.03 crore, BSE said, adding 128 broker-members participated in the trading.

The exchange launched market-making scheme, known as the liquidity enhancement incentive programmes or LEIPs in September with the expectation that it would improve liquidity and benefit the retail stock market investors.

The scheme aims to generate more investor interest in derivatives, based on its benchmark Sensex and the underlying 30 stocks. The BSE has earmarked a total of Rs 107 crore for the scheme that will be in force for seven months in two phases.

Will the US to return to gold standard after 2012?

2011-09-01T10:05:00.000-07:00

Gold Standard set to return in the US? This may very well be true post 2012 US Presidential elections, says Mr Steve Forbes, publisher of the famous Forbes magazine. For the uninitiated, gold standard bases the value of dollar to gold. Although gold has been used as money for thousands of years, the Gold Standard had been abandoned in the US in 1970s under the Bretton Woods system.

At present the currencies are valued in relation to each other (foreign exchange rates). All over the world, countries use the US dollar as a reserve currency to trade with each other. What this practically implies is that this gives the US Federal Reserve the liberty to print as much money as it wants. It is no brainer that more money in the system results in higher inflation, one of the major problems being faced by countries all over the world. Returning of gold standard would mean that the US would lose this liberty. It will also strengthen the US dollar and curtail the borrowing ability of the government. This is because, there is a limited supply of gold and the government cannot go on printing money recklessly. But will it actually happen?

Government to launch new IIP index tomorrow (i:e 10-June-2011)

2011-06-09T05:16:00.001-07:00

9 Jun, 2011,

Government to launch new IIP index tomorrow

NEW DELHI: The government is set to introduce the new Index of Industrial Production with an updated base of 2004-05 starting from the month of April.

The index would be launched by Ministry of statistics and programme implementation ( Mospi )) with all the data points from 2005 onwards. This step would complete the updating process of the three most widely followed macroeconomic indicators released by the government. The GDP series and WPI series were shifted on to the new base (2004-05) much before.

The new series also has a wider basket of goods with the manufactured items covered in the index going up from 281 to 410. The total number of items under the series has gone up to 695 from 538 earlier.

Researchers had long argued for a more timely launch of the new series as the older series was showing a very high degree of volatility. The new series is expected to capture the industrial production process more accurately, increasing its reliability.

The new series was supposed to have been launched last year but got delayed as due to concerns raised by various ministries regarding how the output growth was depicted. The series was then slightly modified to better reflect the status of the economy.

A new ‘telecom scam’, starring Dayanidhi

2011-06-02T10:06:00.000-07:00

A new ‘telecom scam’, starring Dayanidhi

If you've missed the Tehelka story that got former telecom minister Dayanidhi Maran into trouble, here it is.

What it says, in brief: As minister, he stalled Aircel's efforts to get telecom licences for years. And then after arm-twisting the owners to sell the company to the Malaysian firm Maxis, which his friend owns, he fast-tracked the spectrum approvals. As kickbacks, he got Maxis to invest in two companies run by his family. He benefited to the tune of Rs 700 crore, the magazine alleges. That's a lot, and he must be punished, especially when Kanimozhi, his parliamentarian-cousin accused of pocketing about Rs 200 crore, is already in jail. Dayanidhi is the next on CBI's calling list, Tehelka predicts.

Soon after news broke that Maran, now textiles minister in the Manmohan Singh cabinet, was going to get into a legal battle with Tehelka, stocks of Sun TV Networks fell by 30 per cent and low-cost air carrier SpiceJet by 12 per cent. They recovered a little later in the day. The companies are owned by the Maran family, and run by Dayanidhi's brother Kalanidhi.

Politics is already raging, with Tamil Nadu chief minister J Jayalalithaa demanding Maran's resignation, and the DMK saying a court case isn't grounds enough for him to resign. After keeping mum all of yesterday, the dapper Maran spoke out this morning, saying he owned no shares in the Sun TV Network, in which Maxis had invested. In its rebuttal, Tehelka has dubbed his defence just clever talk because the money went into a company his brother owned.

Prime Minister Manmohan Singh, worried over Baba Ramdev's decision to go on a fast, met his cabinet this morning, and Maran sat in. We don't know how much longer the dapper politician can hold out, now that a big scandal has broken out, but once the quid pro quo is established, he may have no option but to go. Dayanidhi, for those not tuned in to Tamil Nadu politics, is DMK patriarch M Karunanidhi's nephew.

A quick recap: Raja, the DMK leader who succeeded Dayanidhi as telecom minister, also sold spectrum cheap, allegedly causing the nation a loss of about Rs 1.74 lakh crore. He is now in Tihar jail.

By Ramakrishna S R , Yahoo News

Is PFRDA getting into in a turf war with IRDA?

2011-04-22T05:03:00.000-07:00

The Pension Fund Regulatory and Development Authority (PFRDA) now want to regulate of all existing pension schemes from insurance companies after the PFRDA Bill, introduced in Lok Sabha is passed.

PFRDA claims that monitoring all retirement and pension savings products is their mandate. Moreover, the Direct Taxes Code (DTC) too, gives PFRDA the power to approve savings intermediaries eligible for tax sops and prescribe an investment pattern for pension funds.

Life insurers at present own pension schemes in their product portfolio, as they are permitted under Insurance Act, 1938. Moreover, they (pension schemes) contribute a major portion of the insurers' revenue, which also infuses reluctance for the Insurance Regulatory and Development Authority (IRDA) to part with its regulatory powers on pension schemes to PFRDA.

We believe that both PFRDA and IRDA should act in a very responsibly and mature way. Instead of indulging in a regulatory turf war against each other, regulators should mutually settle the matter and come up with solutions which are in the policyholders' interest.

Proving one's mettle over the other and winning more regulatory powers is unhealthy for the industry as a whole. One should overview things at which one is best. So, instead of getting into a tussle, the respective regulators should behave in a mature way which is also in the larger interest of the industry and policyholders.

Fake money from Pakistan flooding India

2011-03-04T11:34:00.000-08:00

5 Mar, 2011, 12.00AM IST,PTI

Fake money from Pakistan flooding India

WASHINGTON: Counterfeit currency is flooding into India from Pakistan and terrorist and criminal networks are using this money to finance their activities in the country, an official US report has said.

Warning that burgeoning black money, remittance systems and porous border were triggering money laundering at an alarming pace, the International Narcotics Control Strategy of the State Department in its 2011 report said because of prevalence of an informal economy, India had become a significant target for money launderers and terrorist groups.

via:E.T

PETROL ADULTERATION

2011-01-20T08:40:00.000-08:00

Recently in Jaggampeta, in East Godavari District, Andhra Pradesh,India, A petrol Bunk owner mixed water to adulterate Petrol. (News from EENADU,District Edition)

It is called height of Innocence or Height of Adulteration?

why our Government is talking about Globalization? de regulating the Petrol prices etc.. etcc.. blahaa , Blahhaaaaa!!

This government does not have the proper mechanism , and proper intention to handle the Petrol Adulteration. The existing mechanism failed in monitoring & controlling the Adulteration.

the government is taking about the global linked pricing system, but quality is village level.

Both should match. or else this government will have to pay a lot in future.

please share your views. G.VENKAT RAO

email: venkatrao.zeevi@gmail.com

» China becomes a lender to the world

2011-01-18T04:58:00.001-08:00

What is the optimum level of forex reserves that a country should have? We believe that the reserves should be able to provide sufficient cushion for paying import bills and also to service external debt comfortably. Many experts believe that China crossed these landmarks long time back. But still, the accumulation of reserves has not slowed down one bit. In fact, if anything, it has only increased. And these reserves, rather than being a source of pride are beginning to look like embarrassment. For should the value of dollar erode substantially, China's reserves too would take a massive hit. Little wonder, the dragon nation has stepped up its efforts to utilise its huge reserves and it has zeroed in on lending to other countries as one such option.

FT reports that China has actually ended up lending more money to other developing countries than the World Bank over the past two years. It is estimated that while the dragon nation loaned out US$ 110 bn in 2009 and 2010, World Bank could manage to lend about US$ 10 bn less during roughly the same period. We believe that while the move is indeed a smart one, all bets would be off should the dollar start losing value rapidly.

» TCS grabs the crown from Infosys

2011-01-18T04:55:00.000-08:00

Infosys, so far, has always set the trend when it came to the performance of the IT sector during any quarter. But it has not been the case this time around. Infosys' performance for 3QFY11 was quite tepid as sales and profits grew by a mere 2.3% QoQ and 2.5% QoQ respectively. Just when one thought that the rest of the IT sector is set to report lukewarm numbers as well, TCS came out with robust set of results. TCS witnessed a healthy 13% QoQ and 14% QoQ growth in sales and profits respectively. This was led by double digit growth in volumes and a growth in demand from all geographies. What is more, based on the discussions with its clients, TCS is upbeat about the demand environment going forward too. On the other hand, the Infosys management has remained more cautious with respect to billing rates and the demand recovery in the US and Europe. Of course, Infosys traditionally has always chosen to maintain a cautious stance as far as the outlook is concerned. And so, its growth should probably pick up in the coming quarters. But for the time being, the 'IT crown' certainly belongs to TCS.

Will US Fed need a bailout?

2011-01-18T04:52:00.001-08:00

Through the global crisis, banks have been going bust left, right and centre. Some have been allowed to fail while some of the luckier ones were bailed out. But the underlying reason for all of them was the same - liabilities were higher than assets.

Imagine if this were to happen to the world's most powerful central bank. Yes. We are talking about the US Fed. The bank's liabilities have been going up thanks to the rounds of quantitative easing that it undertook. But at the same time, asset creation has lagged behind. The central bank has been using most of its money in buying the treasury bonds. If and when inflation starts to kick in, the value of these bonds would start to take a hit. As a result, experts have started to question - will the US Fed need a bailout in times to come?

As per its Chief, Mr. Bernanke, this is impossible. In case such a situation should arise, then the bank would just not put its profits back into the treasury as it normally does. The theoretical way out is to sell bonds and suck up the excess liquidity. But this would impact the country's growth rates. Another way to avoid this from happening is to just open up the money printing press and shower notes from the helicopter. We are all aware that Mr. Bernanke is only too happy to resort to the latter method.

How rich is the Shirdi temple? Very

2011-01-04T11:06:00.000-08:00

Press Trust of India, Updated: January 04, 2011 17:05 IST (Via NDTV)

The famous pilgrim centre of Shri Saibaba temple in Shirdi, one of the richest temples in Maharashtra, has ornaments and jewellery worth over Rs. 32 crore and investments running into Rs. 427 crore, according to official documents.

The administration of Shri Saibaba Sansthan Trust (Shirdi), governed by the Managing Committee which was constituted by the Maharashtra Government way back on August 23, 2004 has Kisan Vikas Patras worth more than Rs. 51.71 crore besides Government of India eight-percent Saving Bonds amounting to Rs. 48.15 crore and Rs. 8 crore in non-redeemable bonds of Maharashtra Jeevan Pradhikaran, and Rs. 3.19 crore in various nationalised banks.

It has Rs. 47.82 crore as Trust Corpus Fund.

The temple trust has ornaments and jewellery including Gold worth Rs. 24,41,10,640 crore, Silver--Rs. 3.26 crore; Silver coins-- Rs. 61.2 lakh; Gold Coins--Rs. 1.28 crore and Gold pendants worth Rs. 1.12 crore, the Trust Auditor Sharad S Gaikwad said in its annuul audit for 2009-10 as the annual report was tabled in the State Legislature during its winter session in December 2010 here.

The total worth of the ornaments and jewellery stands at over Rs. 32.23 crore.

The temple has earned a surplus income of Rs. 94.67 crore in year 2009-10 as against Rs. 87.22 crore in year 2008-09.

The total income during the year 2009-10 was Rs. 164.88 crore by way of rent, interest on savings bank accounts, investments and donations against over Rs. 151.51 crore in previous year. The immovable property and buildings are worth Rs. 7.92 crore including the Statue of Saibaba worth Rs. eight lakh, the annual report stated.

Bankrupting a government

2010-12-08T10:59:00.000-08:00

There have been words, sentences and paragraphs written on the Euro zone crisis . There is an article in every daily highlighting how X government has gone bust. How Y government needs to be bailed out. Most of us wonder how a government can become bankrupt. In this article, we try to understand the fundamental reasons as to why this happens.

First, let us understand that the government like any other entity has income and expenditure. The sources of income are predominantly taxes that are imposed by the government. These are the individual taxes, corporate taxes, value added taxes, customs, excise, etc. This income is spent on various things like education, infrastructure, defense, healthcare, etc. The difference between the income and expenditure is called a fiscal surplus, if the difference is positive, i.e., income is more than the expenditure. And this is called a fiscal deficit if the difference is negative, i.e., income is less than the expenditure.

So how can the government have a fiscal deficit? How can they spend more than what they get. The answer to this is the four letter word DEBT. The government takes on debt to meet this difference. This debt can either be raised internally or taken from other countries. The government issues bonds, which is a promise to pay a certain sum at the end of a certain period at a certain coupon rate (interest rate). These bonds are sold to the citizens of the country, i.e., companies, banks, individuals. These can also be bought by other countries or their companies. Thus, the government raises the extra money that they need to fund the gap between their income and their expenditures.

Why can't the government keep issuing debt whenever they face a deficit? Why didn't the governments of Ireland and Greece just keep issuing more bonds? Why did they need other countries to bail them out?

The answer to this is a wee bit complicated. While a government can issue debt, however, someone has to buy this debt. After a while the bond holders start demanding higher coupon rates if they are to buy additional debt. As a result, bond yields start to rise for the country. Eventually as yields start touching new highs, it becomes more and more difficult for the government to issue additional debt. There are 2 reasons for this. One, it is too costly for the government to issue further debt. And two, no one wants to buy their debt.

This is the point of crisis for the government. Now, they are faced with two choices. One is to increase their income by increasing taxes. This is politically difficult as the citizens revolt at the idea of higher tax rates. However, in recent times, countries like the US have adopted higher tax rates though this has made the government quite unpopular.

The other option then is to cut down on their expenditure. The term for this is to ‘adopt austerity measures'. This is not a welcome option at all times as it conveys a wrong signal to the citizens that the government no longer cares for its citizens. But at dire times this is adopted by countries as was seen in the case of United Kingdom.

If the government is unsuccessful at these attempts, then the other option is to declare themselves as in crisis and request for bailouts from other countries. But even in this option, most of the helping countries give guidelines on the ‘austerity measures' that the country needs to adopt for availing the bailout funds. Either away, the existing government kisses away its chances of reelection.
via: Eqmastr

G-20 to aim at market driven exchange rate system

2010-10-24T10:24:00.000-07:00

GYEONGJU (SOUTH KOREA): The U.S. won G-20 backing on Saturday to tackle groaning trade imbalances as the world's biggest industrial nations vowed to avoid tit-for-tat currency devaluations.
After all-night talks among their senior officials, G-20 finance ministers forged an agreement in South Korea to “refrain from competitive devaluation of currencies” and aim for “more market-determined exchange rate systems.''
South Korean Finance Minister Yoon Jeung-Hyun said the two-day G-20 meeting had laid to rest fears of a “currency war” between struggling debtors such as the U.S. and exporting powers such as China. The outcome will “terminate the controversial currency issue now,” he told a news conference, while conceding that it was “very difficult” for the G-20 to reach agreement.
In a statement, the finance ministers vowed to “pursue the full range of policies conducive to reducing excessive imbalances and maintaining current-account imbalances at sustainable levels.''
The International Monetary Fund won greater power to oversee G-20 commitments. It was tasked with compiling periodic reports that will investigate how a country's economic policies can damage trading partners.
Historic deal
IMF chief Dominique Strauss-Kahn said the G-20 ministers had, in parallel, struck a “very historic” deal to revamp the Washington-based financial watchdog to give China and other emerging powers a greater say.
Under the deal, which has been years in the making, Europe agreed to cede two seats on the IMF board to accommodate developing nations. Brazil, Russia, India and China will all in future rank among the top 10 IMF shareholders.
The G-20 also signed off on a deal for tighter regulation of banks and big finance firms blamed for triggering the global economic crisis, raising the amount of top-quality capital that banks must hold in reserve for a rainy day. — AFP

» Indian IT hit by US visa bill

2010-08-07T10:34:00.002-07:00

Headwinds from US continue to blow southwards for the Indian IT industry. The US Senate has passed a bill to raise the H1B visa fees. The H1B visa (work visa for US) fees have been nearly doubled from US$ 2,000 to US$ 4,500. The Indian IT industry derives nearly 45-50% of its revenues from its onsite work resources. As per NASSCOM, this will increase the annual visa cost for the Indian IT industry by US$ 200-250 m annually. This will reduce the cost arbitrage that India offers to its clients in US. However, Indian IT firms cannot afford to miss the US markets. It is after all worth almost US$ 30 bn. But it will certainly impact their costs. Interestingly, India's working in the US already pay over US$ 1 bn annually in social security for which we do not get any benefits.

» A homegrown competition to Visa, Mastercard

2010-08-07T10:34:00.001-07:00

90% of the time when anyone uses their credit card, they will be using the services of Visa or Mastercard. Whenever 'plastic money' is used at ATMs, malls or for online payments, banks have to pay facilitation fees to these giants for the processing of such transactions.

Well, these two American heavyweights may soon be facing a new competitor. IndiaPay, a new government backed payment processing platform will be launched in the next two years. This new service will help bring down transaction costs significantly. Its development is also being promoted by major Indian and foreign banks in India, as well as the banking regulator. Currently, around 40 m credit and debit cards are in circulation in India. This is only set to boom in the next few years. So, it looks like 'Visa Power' and 'for everything else there is Mastercard' will soon be replaced by a new 'desi' flavor.

» The biggest hurdle to FDI in India

2010-08-07T10:33:00.001-07:00

If India has to grow by 10% plus on a sustainable basis, there has to be considerable development in the country's infrastructure and industry. This also requires substantial long term foreign capital. Thus making foreign direct investments (FDIs) all the more important. But the challenges for this capital to keep pouring in are immense. And one such challenge is land acquisition.

Take the POSCO project in Orissa for example. The state government has been ordered to stop buying land for South Korean steelmaker POSCO's proposed plant. It must be noted that five years ago POSCO signed an initial pact with the Orissa state government to build a plant with a capacity of 12 m tonnes a year at an investment of more than US$ 10 bn. This has now hit a roadblock due to tough forest laws and stiff opposition from the local people. These issues are not new. They have hampered several projects in the past. One needs to look no further than the Tata Nano fiasco in Singur, West Bengal for evidence of this. Thus, the government will have to ensure that problems such as these do not get out of hand lest FDIs begin to slowdown or halt in the future.

Orissa appeals against halt order on POSCO

2010-08-07T10:31:00.000-07:00

Saturday August 7,2010, 02:00 PM
MUMBAI (Reuters) - The chief minister of Orissa has appealed to the prime minister to allow South Korea's POSCO<005490.KS> to continue work on a giant iron ore project after the environment ministry ordered a halt.
Stopping work at this stage on a proposed $12 billion plant would be counterproductive and affect the investment climate in the country, Naveen Patnaik said in a letter to the prime minister, according to a senior state official, who asked not to be named as he is not authorised to speak to the media.
POSCO, the world's third-largest steelmaker, wants to mine iron ore in the Khandadharnear region of Orissa and signed a memorandum of understanding in June 2005 for the plant, which was to be built in three phases by 2016, with production scheduled to begin by the end of 2011 at the completion of the first phase.
But the project, touted as India's biggest foreign direct investment, has been repeatedly delayed due to protests by farmers who fear losing their land and livelihood.
On Friday, Environment Minister Jairam Ramesh said the state had been directed to stop all work on the project, including land acquisition, as a special committee had found it violated the forest rights act that seeks to protect forest land and settlers.
Ramesh, who has scrapped or delayed clearance for some 100 mining projects, wants to protect India's remaining forest land as part of a strategy to fight climate change.
But that could mean giving up mining about a quarter of the country's mineral reserves.
POSCO required 4,000 acres (1,600 hectares) of land in the eastern state, of which 2,900 acres is forested. Final clearances for acquiring the forested land had been given, but there has been little progress in land acquisition because of the protests.
Top steelmaker ArcelorMittal is also battling delays from allocation of mining licences and protests by villagers in eastern India.
POSCO announced in January it planned to invest more than $7 billion in a new plant in southern India.

Solar power gets its day in the sun with national mission support

2010-08-07T10:28:00.000-07:00

Saturday August 7,2010, 03:27 AM
After the recent release of the guidelines to operationalise the Jawaharlal Nehru National Solar Mission, the solar energy industry is shining bright with optimism. As new players scramble to make the first moves, the incumbents are determined to stay ahead. While some industry players are scouting overseas for technology, others are hunting for land back home. Every company seems keen to stake a claim to its share of the limelight. All eyes are on the first grid-connected 5-mw solar thermal plant by Acme Tele Power, expected to come up in Rajasthan by September.
The solar mission envisages setting up of 1,300 mw of solar power, including 1,100 mw of grid-connected solar power, 100 mw small-grid and 200 mw off-grid power generation, by 2013. The overall target is to set up 20,000 mw by 2022 in three phases, up from 12 mw of grid connected interactive solar power as on end-June 2010.
Government support has fuelled a spate of initiatives in this sector. RPG Group's power utility CESC is developing a 200-mw solar power project for Rs 2,000 crore near Bikaner in Rajasthan, for which it has acquired 300 acres. Kalyani Group flagship Bharat Forge (BHARATFOR.NS : 336.1 +1.85 ) is planning to install 100 mw of solar power. 40 mw of solar power is being set up by Adani Power in Gujarat. Yash Birla Group's Birla Power Solutions is targeting 125 mw of solar power in Haryana, Uttarakhand, Andhra Pradesh and Rajasthan. Meanwhile, public sector NTPC has targetted generating 300 mw solar power by March 2014. Referring to the indicative list, Anil Lakhina, chairman and managing director, Forum for the Advancement of Solar Thermal, an industry association, says: "The profile of players is impressive. It's time for serious business now."
Committed to help the industry achieve grid parity by 2022, the mission has named NTPC Vidyut Vyapar Nigam to buy power from private developers. For the first year (2010-2011), the Central Regulatory Electricity Commission has fixed the rate for photo-voltaic at Rs 17.91 per unit and for solar thermal at Rs 15.31 per unit. Besides, the power ministry will contribute "relatively cheaper" 1,000 mw of thermal power for bundling with "relatively expensive" solar power to be sold to distribution utilities in order to reduce its cost for end-consumers.
Rajasthan is a favourite destination for solar power producers. Naresh Pal Gangwar, CMD, Rajasthan Renewable Energy Corporation says: "Rajasthan is scoring not only because of good solar radiation and the number of sunny days, but also because of availability of unutilised land in desert areas at cheap rates." Eleven projects with a total capacity of 66 mw cleared by the Centre are expected to come up in in the state in the next year and a half.
Existing solar players are consolidating and expanding. While Tata BP Solar is planning to increase its photo-voltaic cell manufacturing capacity to 180 mw from 84 mw, Moser Baer (MOSERBAER.NS : 64.55 -2.15 ) is expanding capacity to 190 mw from 100 mw. Rajiv Arya, CEO, solar business, Moser Baer India says: "These are exciting times. The government has done its job. It's now up to us to make the most of it to usher in a solar revolution in the country."
Each company is charting its own course. SunBorne Energy, a solar thermal power developer planning solar power plants of 50 mw each in Andhra Pradesh and Rajasthan to begin with, is focusing on indigenous technology. James Abraham, MD & CEO, SunBorne Energy says: "We are keen to add value and cut costs by using indigenous technology."
It's also time to test radical ideas. Norway's Scatec Solar has just set up a 8.7-kWp photo-voltaic power plant and a mini-grid to provide energy to 70 houses in Rampura, Jhansi in Bundelkhand. While Development Alternatives, an NGO, did the groundwork, Bergen Group of Companies executed the project. Rajinder Kumar, CMD, Bergen says: "We need to look at replicating and scaling up such pilot projects."
It's not only manufacturers and developers who are getting their act together. Services providers too are working overtime to tap into the emerging opportunity. While Germany's TUV Rheinland is setting up its seventh worldwide lab for testing solar modules and systems in Bangalore at an investment of 2 million euros, 3TIER, a renewable energy information provider, has launched its proprietary solar prospecting and assessment tools for developers to assess availability and variability of solar radiation in India.
Solar energy events in the country, too, are witnessing renewed interest from industry players from across the world. The recently concluded three-day Solarcon India 2010 in Hyderabad attracted the who's who of the solar PV industry. Says Priyadarshini Sanjay, MD, Mercom Communications India, a subsidiary of clean energy communication consultancy Mercom Capital Group: "The sentiment has improved a lot since the last event and industry players want the government to set even more ambitious targets."
Observers expect the improved sentiment to light up the second edition of Intersolar India, an international solar industry exhibition to be held in in Mumbai December. Conferences are being supplemented by workshops too. The Confederation of Indian Industry is holding workshops on 'Setting up a Grid Connected Solar PV Power Plant' in Delhi and on 'Enabling Financing of Solar Power Projects' in Mumbai this month.
While older conferences get better global traction, first-timers too are riding the optimistic sentiment to book their slot in the newly expanded space. Belen Gallego, founder and director of UK-based CSP Today, is gung-ho about her 1st Concentrated Solar Thermal Power Summit to be held in September in Delhi. Seeing the kind of draw solar energy is getting, even renewable energy events like the Delhi International Renewable Energy Conference (DIREC-2010) to be held in October in Delhi and the International Congress on Renewable Energy (ICORE-2010) to be held in December in Chandigarh are focusing more on solar energy.
Rajneesh Khattar, vice-president, Exhibitions India Group, which is managing DIREC-2010 says: "Thanks to the National Solar Mission, the response from solar power industry is overwhelming and it bodes well for the economy." Adds Jagat S Jawa, director general, Solar Energy Society of India, which is organising ICORE-2010: "Solar is not just the flavour of the season, but is hopefully going to be a permanent favourite." Now, all eyes are focused on achieving the modest target of the first phase of the National Solar Mission. Its achievement opens the gate to attempting the ambitious overall target.

Source: Indian Express Finance

Gujarat Reclaim (CMP=867)- For Long Term Investors

2010-07-18T19:53:00.000-07:00

19 Jul 2010, E.T

Gujarat Reclaim & Rubber Products (GRRP) is likely to see an increase in demand for its recycled rubber with natural and synthetic rubber prices soaring. Being the industry leader, its expansion plans are likely to offer great growth opportunities as acceptance of recycled material increases. Considering its attractive valuations, stable financials and growth prospects, long-term investors can consider this stock.

Business: Established in 1974, GRRP is into processing and reclaiming rubber from scrap of tyres and its components or other rubber products for different applications in both tyre and non-tyre rubber products. Nearly two-thirds of its sales go to tyre manufacturers. It has plants at Ankleshwar, Panoli and Solapur with a total capacity of 45,000 tonnes with full capacity utilisation.

GRRP supplies to leading tyre manufacturers such as Ceat, MRF, Apollo Tyres, JK Tyre and Bridgestone. More than half of its revenues come from exports. The company has also set up a power plant in Ankleshwar for captive consumption. The reclaimed rubber industry in India is a mix of 125 small and medium-scale manufacturers.
Growth drivers: At a time when natural rubber prices are ruling at their all time high, the demand for reclaimed rubber is on rise. The company is not only expanding capacities, but also plans to raise prices gradually.

In December 2009, the company added 6,000 tonne capacity at its Panoli plant, full benefits of which will be available in FY11. The company also has plans to expand its existing plants apart from setting up new units in strategic locations. The company is currently in the process of tying up Rs 63 crore loan to fund these expansions, which could come up over the next couple of years.

The price of reclaimed rubber stagnated at around Rs 35 per kg in the past two years after steadily rising in the last decade. With sharp rise in natural rubber prices, the demand for reclaimed rubber is likely to increase enabling the producers to increase the prices.

In the past three years, the proportion of reclaimed rubber in tyres has gone up from 3% to 5%, which is expected to increase to 10% within five years.

Financial: The first nine months of FY10 were stagnant for the company, but the fourth quarter registered a sharp 58% jump in net sales with a 54% jump in profits. The lower base effect and additional capacity at Panoli plant were the key reasons behind the spurt. In the past 5 years, the net sales of the company grew at a CAGR of 25.5% while the net profit grew at 26.2%.

The company has a healthy track record of generating cash flows and paying dividends. In the past three years, the company has consistently brought down the debt-equity ratio to below 0.45 as on March 2010. The company’s return on capital employed has averaged at around 40% in the past five years.

Valuations: At the current market price the stock is trading at a P/E of 8.6. The company is expected to generate earnings per share of Rs 125 for FY11, which translates in a one year forward P/E of 6.9. Low liquidity, however, remains a key concern as the scrip had an average daily traded volume of 480 shares in the past one month.

Small units to get more bank funds

2010-07-13T19:52:00.000-07:00

MUMBAI:Micro, Small and Medium Enterprises (MSMEs) will soon have access to adequate funds with the initiative taken by the central government to increase the credit availability to the sector.
Speaking at a seminar organized by the Maharashtra Pradesh Congress Committee (MPCC) here on Tuesday, Union Finance Minister Pranab Mukherjee said the government was trying to remove obstacles in the growth path of the MSMEs.
“The Prime Minister's task force on MSME has submitted its report in January and has recommended an agenda for immediate action to cover all areas including credit, marketing, labour, technology, skill development and taxation. The Prime Minister's Council on MSME will now be regularly monitoring the implementation of the recommendations,'' he said.
It is estimated that in terms of value, the MSME sector accounts for about 45 per cent of the manufacturing output and around 40 per cent of the total exports of the country.
It employs an estimated 60 million people spread over 26 million registered and unregistered enterprises. There are 1.5 million registered units, out of which 95 per cent are micro enterprises and about 4.7 per cent are small enterprises.
However, unlike larger companies, the MSME sector does not have access to alternative avenues of raising capital, “despite its commendable contribution to the gross domestic product (GDP), exports and employment,'' he said.
The Finance Minister pointed out that there were a host of problems relating to registration and credit rating which needed to be sorted out before successful listing. “There has been a general grudge that commercial banks mainly give priority to the corporate sector with better credit rating and provide credit at below prime lending rates.
But with the switch over to lending on the basis of base rate from July 1, their lending would be transparent and hopefully the small scale and medium size enterprises would get more banking funds at favourable rates.''
The Small Industries Development Bank of India (SIDBI) is the principal financial institution for the promotion, financing and development of industry in the small scale sector and to co-ordinate the functions of the institutions engaged in the promotion and financing or developing industry in the small scale sector. NABARD has also undertaken similar initiatives focusing on rural enterprises.
Non-availability of skilled manpower is one of the key hurdles faced by MSME units and Mr. Mukherjee said that to promote skill development, the Prime Minister's Council on National Skill Development laid down the core governing principles for operating strategies for skill development. The Council has a mission of creating 50 crore skilled persons by 2020 and the National Skill Development Corporation which started functioning in October 2009, has targeted creating 15 crore skilled manpower.
“As a political entity, we have a responsibility to create awareness in the small scale sector and MSMEs. They are not aware of the facilities available to them. We should create an awareness campaign as the entire paradigm of development has changed and inclusive growth to participative growth,'' said Mr. Mukherjee.

via:HINDU

BOC India strikes all-time high on delisting plan

2010-06-15T04:31:00.001-07:00

BOC India was locked at 20% upper limit at Rs 287.45 at 12:35 IST on BSE, after the company's overseas parent said it plans to delist equity shares of BOC India from the stock exchanges in India.
The company made this announcement during trading hours today, 15 June 2010.
The stock hit a high of Rs 287.45 so far during the day, which is a record high for the counter. The stock hit a low of Rs 239 so far during the day. The stock had it a 52-week low of Rs 140.05 on 6 July 2009.
The company's equity capital is Rs 85.28 crore. Face value per share is Rs 10.
Linde Holdings Netherlands, a part of the promoter group of BOC India, has proposed to voluntarily delist the equity shares of the BOC India from the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and the Calcutta Stock Exchange (CSE). The total holding of the foreign parent in BOC India is 89.48%.
The delisting will be done in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009. The floor price for the purpose of the delisting offer is Rs 225.29.
BOC India's net profit jumped 372.8% to Rs 23.83 crore on 61.4% rise in net sales to Rs 255.28 crore in Q1 March 2010 over Q1 March 2009.

MMTC jumps 22% on bonus, stock-split plan

2010-06-15T04:30:00.000-07:00

MMTC surged 22.3% to Rs 34,887 at 11:12 IST after the company said its board will consider bonus issue and stock split on 29 June 2010.
The stock hit a high of Rs 37,999 and a low of Rs 34,230.15 so far during the day. The stock had hit a 52-week high of Rs 40,000 on 14 December 2009 and a 52-week low of Rs 25,600 on 13 July 2009.
The large-cap state-run trading company has an equity capital of Rs 50 crore. Face value per share is Rs 10.
The board will also consider audited financial results for the year ended March 2010 on the same day.
MMTC's net profit rose 147.60% to Rs 98.95 crore on 253.50% increase in net sales to Rs 17230.05 crore in Q4 March 2010 over Q4 March 2009.

Godawari Power & Ispat (GPIL) Power & steel to lift numbers

2010-06-15T04:20:00.000-07:00

15 Jun 2010, 0009 hrs IST,Abhineet Singh,ET Bureau

Godawari Power & Ispat (GPIL) is one of the few small-cap steel companies that have run ahead of the Sensex despite the recent correction in metal stocks. In the past one year, its stock price has appreciated by nearly 60% against a 15% rise in the Sensex during the period.

Raipur-based GPIL is an integrated steel manufacturer and has a dominant presence in the long-product segment, especially mild steel wires. Besides, the company produces sponge iron, steel billets and sells surplus power from its heat recovery-based power plant.

The stock is currently on a declining trend in line with the movement in steel stocks. However, the selloff doesn’t seem to be directly related to its financial performance, as the company continues to show a strong revenue and profit growth. In the March ’10 quarter, the company’s revenues were up 37% to Rs 254 crore while net profit jumped two-and-a-half times to Rs 22.6 crore.

Going forward, operating margins are expected to improve, as the company plans backward integration through mining of iron ore and coal.

It is also venturing into value-added steel products and is setting-up an iron ore pelletisation plant to convert ore fines into pellets, which can be used as a raw material for making sponge iron as replacement of sized-iron ore. The company is currently implementing a 0.6-million-tonne iron ore pelletisation plant at its existing unit and plans to set up a similar unit in a joint venture in Orissa.

The company is also focusing on efficiency improvement in its manufacturing operations. The company has achieved about a 75% recovery of waste heat from flue gas of sponge iron kiln and utilisation, which is nearly three times the industry average. This has enabled it to produce more power without incurring additional costs and has helped improve operating margins.

The company plans to set up a 2-mt cement plant at a cost of Rs 628 crore and has acquired 1,235 acres of land in Chhattisgarh. The company may need to raise debt to fund the project, which may stretch its balance sheet in the medium term.

At its current market price,(CMP=210) the stock is trading at a P/E multiple of around 11 and looks attractive. With a low debt on its book, the company can go for further capex without straining its finances. Improving margins in both steel and power segments will add to the earnings in the forthcoming quarters.
Via: E.T

Local content to shine in solar photo-voltaic projects

2010-05-23T20:02:00.001-07:00

The Ministries of New and Renewable Energy (MNRE) and Power plan to make it mandatory for solar power developers to source crystalline silicon-based modules from domestic manufacturers.
However, they can import solar cells for manufacturing these modules for the photovoltaic (PV) projects.
This provision will be in the soon-to-be notified guidelines by the Ministries for implementation of the solar power projects under the Jawaharlal Nehru National Solar Mission (JNNSM).
An official source said, “This is to ensure that the domestic industry gets a boost. The decision has been taken after consultations with all the stakeholders. The intent is to encourage both new technology and the domestic manufacturing sector.” It is desirable that more units are set up in the country to allow competition in the first phase of the Mission (from November 2009-March 2013), the official said. In Phase I, the target is to set up 1,300 MW of solar power, out of which 1,100 MW will be grid-connected and 200 MW off-grid. Industry players such as Tata BP Solar and Moser Baer, that are manufacturers of cells as well as modules, have been expressing concern on allowing import of solar cells.
The players argue that there is enough cell capacity in India at present to cater to the requirement under Phase-I of the Mission.
Tata BP, Moser Baer, Indo Solar, XL Telecom & Energy and Solar Semiconductor have been traditionally manufacturing and exporting solar cells and modules to Europe, Japan and the US. The players are slated to have a total capacity of 750 MW by the year end.
Stating that all cell and modules produced in India are available for sale in India in line with the WTO agreement, the industry officials said, “Domestic manufacturers have no export obligation forcing them to sell abroad. If they have been selling abroad so far, it is because of the non-existence of a proper grid-connected solar market in India. Mandatory domestic content should not be limited only to Phase-I but for the entire JNNSM projects covering Phase II and Phase III as well. This will ensure that the Indian PV manufacturing capacity expands in line with the rising targets of the Mission.”
The Government will notify the guidelines for the next phases after the guidelines for the first phase are announced.

SBI to lend Rs 20,000 cr for 3G funding

2010-05-23T20:01:00.001-07:00

State Bank of India (SBI) will be lending Rs 20,000 crore for telecom companies to pay for licences for the Third Generation (3G) mobile services.
“The rate of interest will be decided in one-to-one talks with the operators to whom we will be lending,” said Mr O.P. Bhatt, Chairman, told newspersons after inaugurating a SBI branch at Rajiv Gandhi International Airport here on Saturday.
The 3G funding would impact the liquidity of the bank in a big way.
“As on March 31, 2010, we have Rs 40,000 crore liquidity. About 50 per cent of this would go for 3G funding,” Mr Bhatt said.
The telecom operators who won the licences for 3G bandwidth would have to pay about Rs 68,000 crore to the Government.
On the business focus, he said the first focus of the bank would be in retail – home loans and auto loans in particular – followed by the corporate sector. “We are expecting a 20 per cent credit growth this year,” he added.

Insurers face Rs 450-crore hit

2010-05-23T19:59:00.000-07:00

BS REPORTER / Mumbai May 23, 2010, 23:39 IST (Business Standard)

Private insurers led by Reliance General are expected to take a hit of around Rs 450 crore from the Air India Express plane crash in Mangalore. The companies had earned a premium of around Rs 110 crore from Air India this year.
This was the first time that private insurance companies had provided a comprehensive cover to the country's national carrier. Earlier, public sector players led by New India Assurance provided the cover.
Apart from Reliance General, HDFC Ergo, Iffco Tokio and Bajaj Allianz were part of the consortium. Like any large risk, the general insurance companies had reinsured the risk, with Sumitomo being the lead reinsurer, a first for the company. ICICI Lombard had also participated as a reinsurer.
Insurance industry sources said that the claim would arise from both hull and liability cover taken by the airline. Insurers and reinsurers are likely to see a claim of $90 million to $100 million (Rs 395 to 450 crore). The crash would lead to a hull loss of $50 million (Rs 225 crore). Though payout towards liability depends on the profile of the passengers, industry sources said it could be of the order of $40 million (Rs 180 crore).
When asked to comment, a company spokesperson said: “The Reliance General-led consortium is the insurer for Air India’s fleet of aircraft. However, as a policy, we do not comment on individual policy details or specific customer claims.”
Apart from the private players, General Insurance Corporation, the designated Indian reinsurer and the world’s fifth largest player in the aviation space, is also likely to face a hit. It had reinsured 14 per cent of the risk of $8.59 billion (around Rs 39,000 crore), while ICICI Lombard’s share was 3 per cent. A senior GIC executive said that the reinsurer's liability from the accident will be around $6 million (around Rs 27 crore).

Four Indian state-run banks will get 15 billion rupees

2010-05-10T10:54:00.000-07:00

dt: 10-may-2010

Four Indian state-run banks will probably get 15 billion rupees ($330 million) as part of their recapitalization, the Press Trust of India reported, citing unidentified people that it didn't identify. The government may give Vijaya Bank 7 billion rupees, while UCO Bank may get 3 billion rupees. Central Bank of India (CBOI IN) and United Bank of India may get 2.5 billion rupees each, the news agency said. No timeframe was given in the report.

The stocks of Vijaya Bank Ltd. gained 3 percent to 56.25 rupees. Uco climbed 2.2 percent to 71.85 rupees. Central Bank rose 1.1 percent to 149 rupees, while United Bank advanced 1.6 percent to 80.9 rupees. today

Gold adulteration with Iridium & Ruthenium

2010-04-16T09:59:00.000-07:00

Your wedding jewellery may not be as pure or as precious as you think it is. Goldsmiths across India have taken to adulterating the precious metal
with iridium and ruthenium, and are getting away with it, as until recently the metals failed to show up on all purity checks. It's an alchemist's dream, and the practice is becoming increasingly commonplace if you go by the stocks of the 'duplicate' metals at even the smallest of karigar workshops.

Both iridium and ruthenium belong to the platinum family of metals, and when mixed with gold, do not form an alloy but sit tight in the yellow metal. What makes the adulteration even more alarming is that the metals do not replace silver and copper, which are added to the gold during the jewellery-making process to harden the soft, malleable yellow metal. As Saumen Bhaumik, general manager (Retailing) at Tanishq put it, ''The two metals manage to camouflage as gold.''

TOI tested three pieces of jewellery, and all had some amount of either iridium or ruthenium lurking inconspicuously with the gold. A 22-carat gold bangle bought in 2003 from a century-and-a-half-old jeweller—who has since then expanded from Mumbai to other parts of the country—when tested at the Indian Institute of Technology-Bombay, had 3% iridium in it. A gold chain bought from a shop in Bangalore in 2002 when tested at another city-based centre had 2.39% ruthenium, while a pair of earrings from Kerala was found to be adulterated with 4.65% of iridium.

On an average, a piece of jewellery or a bar of gold contains nearly 5-6% of the adulterant, and manufacturers—wholesalers and retailers across India—are aware of how rampant this notorious practice is. Consumers, however, are the biggest losers as they have been kept in the dark. ''Most machine-made jewellery contain these adulterants. Overnight, these manufacturers hit the jackpot,'' said Suresh Hundia, president of The Bombay Bullion Association (BBA).

The situation came to head when several refineries across India noticed that the gold bought from the market, which when melted, contained a high percentage of adulterants. ''Some refineries complained that a blackish substance kept floating in the aqua regia (mixture of hydrochloric acid and nitric acid, which can dissolve gold). Moreover, if they bought 1kg of gold, they were losing 50-60gm after refinement. At the time, they didn't know where the rest of the gold was getting lost,'' said a Bureau of Indian Standards (BIS) official.

The practice was especially rampant between 2004 and 2006, when there were few checks and balances. Traditional jewellers who checked the purity of gold by rubbing it on a touch-stone, said Bhavesh Sonawala from National Refineries Private Limited, ''had no clue about either iridium or ruthenium''. There was also very little awareness on hallmarking. (Hallmark is a purity certification of gold articles in accordance with Indian Standard specifications.) To add to the problem, XRF machines that are used to test the purity of gold were not calibrated to identify iridium and ruthenium. It was only after an alert from the trading community that BIS conducted a survey in markets across the country and found an extensive use of iridium and ruthenium in gold. ''In 2006, we issued a circular to all hallmarking centres to re-calibrate their XRF machines to look for iridium and ruthenium,'' said the BIS official. The results of this survey were never made public. That is when the BBA also started checking for iridium and ruthenium ''So, even hallmarked gold sold between 2001 and 2006 could be of dodgy quality,'' said a member of city-based hallmarking centre.

Several jewellers believe that the damage has already been done. During this period, tonnes of gold had already exchanged hands and consumers were unknowingly investing in 'spurious' jewellery.

By then, the word had spread, and the demand for iridium and ruthenium began to climb. When plotted on a graph, prices of gold, iridium and ruthenium could be seen moving along the same path. For instance, on January 12, 2004, international rate for gold stood at $142.56 for 10gm; the same quantity of iridium was priced at $27.97 and ruthenium at $13.83. In two months, iridium shot up to $73.95 and ruthenium was selling at $21.86—both for 10gm each. All the three metals touched their all time high in February-March 2007; gold was priced at $311.44, iridium was $144.69 and ruthenium was being sold at $273.3.

''This was largely because there was an unprecedented demand for both iridium and ruthenium from all kinds of people dealing in gold across India,'' explained B H Mehta, proprietor of Varsha Bullion and Elemental Analab Hallmarking centre, a Bureau of Indian Standards (BIS)-approved hallmarking centre.

Even now, as per data from the BBA, only 46% of gold sold in India is hallmarked; the percentage is even lower in tier two cities and villages, which make up close to 70% of India's gold consumption. It is paradoxical, but both iridium and ruthenium have now become such high-priced substances that buyers get both these adulterants tested too, just to ensure that the metals are not adulterated with another cheaper substance.

RBI to issue polymer notes of Rs 10

2010-03-22T19:20:00.000-07:00

23 Mar 2010, 0252 hrs IST, ET Bureau

MUMBAI: The Reserve Bank of India will soon issue 100-crore polymer notes of Rs 10 denomination to improve their longevity and to thwart counterfeiters.

These notes will initially be introduced by RBI in five cities. This was disclosed by RBI governor D Subbarao while speaking at the Foundation Stone laying function for the Bank Note Paper Mill at Mysore. Globally, currency authorities in many advanced economies such as Canada and Australia have already tried their hands in polymer currencies.

The governor said polymer notes were more environment friendly. “Considering the relatively long life of polymer notes and their amenability to re-cycling, the ‘carbon footprint’ of polymer notes vis-à-vis paper banknotes is likely to be on the plus side. Regardless, this is one of the issues that we will study during the pilot phase, and will embark on polymer notes on a long-term basis only if the cost-benefit calculus is decidedly positive in all dimensions,” he added.

This year India will print around 17 billion pieces of paper currency. “Producing our own paper is decidedly cheaper, and a check against counterfeiting,” he said. India’s demand for banknote paper — 18000 MT per year — is huge in international terms, and on the supply side there are just 3/4 large producers. “This situation exposes us to vulnerabilities of a suppliers market in terms of price, quantity and timelines, something that we should avoid or minimise,” Mr Subbarao said. He noted that major countries like the US, Japan, China, Brazil, Russia and countries in the euro area and even smaller countries like South Korea, Indonesia, Iran and Pakistan make their own bank note paper.

Giving his analysis of the trend in counterfeiting he said: “By an international metric, the incidence of counterfeit notes in India is not alarming,” adding that counterfeiting per se is a matter of serious concern for the government and RBI.

While Australia detected seven pieces of counterfeit notes per million notes in circulation (2008-09), in Canada it was 76 (2008). In New Zealand, there are 0.71 counterfeits per million notes in circulation (2008-09), whereas in Switzerland it was 10. As for the euro, there was roughly about one counterfeit per 14,600 bank notes in circulation (2008).

In India, fake notes reported as detected by banks and fake notes found in remittances received by RBI in 2008-09 amounted to eight for every one million notes in circulation. The data, however, does not include the counterfeits that are seized by the police, Mr Subbarao clarified.

More Satyams in a new Telengana?

2010-03-09T19:00:00.000-08:00

10 Mar 2010, 0745 hrs IST, Swaminathan S Anklesaria Aiyar, ET Bureau

Carving small states (Jharkhand , Chattisgarh and Uttrakhand ) out of larger ones (Bihar, Madhya Pradesh, Uttar Pradesh ) has so far proved an economic success . Not only have the new states grown faster economically, even Bihar and Uttar Pradesh have experienced much faster growth after the separation, though not Madhya Pradesh. This appears to strengthen the case for creating more small states such as Telengana.

Yet a short visit I made to Andhra Pradesh showed dramatically that a separate Telengana could result in problems that other newly-created states have not experienced. The biggest is a problem of land ownership, and this could conceivably create new Satyams. In Hyderabad, some, though by no means all, businessmen talk with trepidation. The fears are highest among the Andhras, folk from the coastal districts, who fear they will be adversely affected and maybe even forced to flee by the local folk or mulkis.

One such businessman told me, “My driver, a local mulki, said to me, quite gently, that when I left Hyderabad after the separation of Telengana, could I please gift my car to him?” Another businessman trumped this with a better story. “My domestic servants”, he said, “requested me to hand over my house to them as and when I leave!”

Is it really possible that a new Telengana will spark the mass exit of outsiders? No, says economist C H Hanumantha Rao. There is some fear among coastal Andhras, but not among people from other parts of India. Obviously mulkis will get a much larger share of government jobs, but not of business. The real fear of businessmen is not of physically being expelled. Rather, it is about land, in which businessmen have sunk enormous sums, and which they might now lose. Businessmen have a second, and more credible fear. They say that the Maoists who were tamed by Y S Rajashekhara Reddy will make a comeback in the new Telengana, since a small state will not have the resources to tackle the Maoist menace. That could affect business prospects and land values.

The big difference between a separate Telengana and other newly created states like Jharkhand, Chattisgarh and Uttrakhand relates to the state capital. In the three earlier cases, the state capital remained with the original state. But Hyderabad, the capital of Andhra Pradesh, will go to Telengana. This horrifies coastal Andhras who claim to have created 90% of Hyderabad’s wealth.

A compromise could be to make Hyderabad and the surrounding Rangareddy district a Union territory housing the capitals of both Telengana and residual Andhra Pradesh. This solution worked when Haryana was carved out of Punjab. However, politicians leading the movement are dying to lay their hands on the lucrative land of Hyderabad, and will never give up this golden goose from which they hope to get a thousand golden eggs.

Vast amounts of land around Hyderabad have been grabbed in questionable ways. In a new Telengana, many existing landowners — including major industrialists — may lose enormous tracts of land worth thousands of crores. Illegal land grabbing has till now been very lucrative, but may become the kiss of death after Telengana’s creation. All Indians love land, but in Andhra Pradesh it is a veritable passio . Coastal Andhras have engaged in an orgy of land speculation in the last decade. This passion for land ultimately caused the fall of Ramalinga Raju of Satyam: He lost his company because of his forays into real estate, through Maytas and other channels.

Like many other Andhra businessmen, Raju borrowed enormous sums for buying land, and prospered as land prices went through the roof. But then prices collapsed with the onset of the global recession, catching many speculators — including Raju — with their pants down. As India emerged out of the recession, land prices started recovering everywhere. But with the announcement of a separate Telengana, real estate prices have fallen once again in Hyderabad and surrounding areas.

This has hit the state government’s finances. It had hoped to raise Rs 12,000 crore through land sales, a figure that now looks impossible. Far worse hit are thousands of land speculators, including a host of top businessmen. Nobody knows for sure who controls how much land in Hyderabad and Rangareddy districts, since much of the land is occupied illegally or through dubious means. But the risk is clear: land debacles could create new Satyams.

The risk should not be exaggerated. Most businessmen who survived the Great Recession should be able to survive the separation of Telengana too. But some may collapse. Many politician-speculators will suffer too, and so are among the strongest opponents of division. However, division is inevitable : it is only a matter of time.

Many mulkis resent what they see as the obscene prosperity of outsiders, especially coastal Andhras, who dominate not only land and business but also professional jobs and government employment . In many states migration has occurred from poorer to richer areas, but in Andhra Pradesh farmers moved from the prosperous coastal areas into Telengana , a region that used to be part of princely Hyderabad under the Nizam, and was terrible backward in education, agriculture , roads and everything else.

The Andhras brought in improved farm practices, skills and capital. They helped develop Hyderabad and the rest of Telengana, which is no longer backward compared to the state as a whole. Public sector investment, especially in defence industries, brought in many new skills and services. And more recently the IT companies came roaring in, many run by coastal Andhras.

But although the newcomers greatly improved and enrichened Telengana, they also aroused resentment and accusations of quasi-colonialism. Being better educated, they dominated government jobs. Osmania Unversity’s students are at the fore of the Telengana agitation because they hope to dominate government jobs in the new state.

However, there is no reason to think that more land and jobs for mulkis will mean the expulsion of coastal businessmen. The real risk lies elsewhere: in the continuing fall of land prices, leading possibly to new Satyams.

via:E.T

Investors can consider investing in Orient Paper

2010-02-21T18:40:00.000-08:00

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

This is more than just a 7%-10% correction

2010-02-14T12:16:00.000-08:00

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

Start preparing for oil at $200 a barrel

2010-02-06T20:15:00.000-08:00

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

You can do National Electronics Funds Transfer deals till 7 pm

2010-02-06T20:06:00.000-08:00

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.

MARKET AT THE CLOSING. >>Thursday, January 21, 2010

2010-01-21T10:14:00.000-08:00

As expected, the market lost ground today and declined to 17052 sensex level, it is a support zone but as it has lost previous up move by nearly 60% it looks weak. From 21st Dec , market was rising from level 16577 and today at 21st Jan, it is at 17050 level !! Of , 11th Jan was peak 17777. It may reach 16577 and take support or take support from this level too. Keep watching. Stay away from sensex stocks at this point but enter in to other real strong stocks, be stock specific.

L&T Q3 sales disappoint; stock down 5%

2010-01-21T10:13:00.001-08:00

21 Jan 2010, 1424 hrs IST, ET Bureau

MUMBAI: Shares of engineering major Larsen & Toubro were beaten badly after its quarterly sales declined 6 per cent.

L&T's net sales fell to Rs 8139 crore in the December quarter, lower than the corresponding period a year ago. Its net profit grew 15 per cent to Rs 696 crore over the same period a year ago.

At 2:15 p.m., shares of L&T were down 5.2 per cent at Rs 1,550.10 on the NSE.

Kewal Kiran Clothing>>CRISIL assigns Fundamental grade ‘3/5’

2010-01-21T10:11:00.000-08:00

21 Jan 2010, 1620 hrs IST, ET Bureau

MUMBAI: CRISIL (Independent Equity Research) has assigned Fundamental Grade ‘3/5’ to Kewal Kiran Clothing Ltd (KKCL), indicating the company’s fundamentals are ‘Good’. CRISIL Equities has assigned a valuation grade of ‘5/5’, indicating that the stock has a ‘Strong Upside’ to its Fundamental value of Rs 336 from the current market price of Rs 265. The grades are not a recommendation to buy/sell or hold, or a comment on the graded instrument’s future market price.

The assigned fundamental grading reflects the strong prospects of the branded readymade garment (RMG) industry in India and KKCL’s strong positioning in the sector. It also takes into account the company’s strong and experienced management, which has been instrumental in establishing brands such as ‘Killer’, ‘Lawman Pg3’ and ‘Integriti’ in the domestic market. The company also has a robust balance sheet characterised by low gearing and strong liquidity position. As of September 2009, KKCL’s gearing stood at 0.10x, with cash balance of Rs 0.99 billion. Additionally, the company’s ambitious plans in retail would enable it to tap the tremendous potential in the branded RMG market and would also enhance its brand visibility. However, the grading is tempered by high competition in the branded apparel industry, which is likely to impact KKCL’s product pricing. The company also faces the inherent industry risk of accurately predicting fashion trends and correctly timing the launch of new product variants.

From FY06 to FY09, KKCL’s revenues and PAT increased at CAGR of 19.0% and 7.0%, respectively. CRISIL Equities expects the company’s revenues to touch Rs 2.52 billion by FY12, registering a strong 3-year CAGR of 20.2% on the back of increasing volumes and realisations. KKCL’s PAT is expected to grow at a CAGR of 38.2% from FY09 to FY12, driven by revenue growth as well as higher margins due to lower selling expenses and increasing realisations. KKCL’s net margins are expected to improve from 9.8% in FY09 to 17.3% in FY10, before moderating to 15.0% by FY12. Due to rising profitability, CRISIL Equities expects the company’s earnings per share (EPS) to increase from Rs 11.6 in FY09 to Rs 30.7 in FY12. KKCL’s RoE is forecast to increase from 9.4% to 17.0% during the same period.

FIIs pump in Rs 8,100 cr in market in first fortnight of 2010

2010-01-17T11:25:00.001-08:00

17 Jan 2010, 1810 hrs IST, PTI
NEW DELHI: Foreign fund houses infused a net Rs 8,191 crore ($1.7 billion) in the Indian stock markets during the first fortnight of 2010, signaling a good start for the year, in terms of fund inflow.
During the period, foreign institutional investors (FIIs) were the gross purchaser of equities worth Rs 34,663.7 crore, while they sold stocks worth Rs 26472.1 crore, resulting in a net investment of Rs 8,191.70 crore.

According to data available with capital market regulator the Securities and Exchange Board of India (SEBI), FIIs made a net investment of Rs 6,617.40 crore ($1.4 billion) in debt instruments, during the period under review.
Interestingly, during the said period, the Bombay Stock Exchange benchmark Sensex registered a gain of 0.51 per cent, while in the same period past year, the stock market barometer had gained 81 per cent.
In 2009, FIIs were net investors of Rs 83,400 crore in domestic equities, the highest inflow in the country in rupee terms in a single year. It came a year after overseas investors pulled out over Rs 50,000 crore.

Jindal Saw: Maximising capacity usage to drive future nos

2010-01-17T11:24:00.000-08:00

16 Jan 2010, 0431 hrs IST, Santanu Mishra, ET Bureau

FOR Jindal Saw, which manufactures steel pipes, the results for the quarter to December 2009 are probably one of the best in the past several quarters. The net profit of the company during the quarter almost doubled to Rs 170 crore. Such a robust growth in bottomline has come mainly due to reduced raw material cost. The company’s net sales declined by around 11.5%, reckoned on year-on-year basis. The stock performance, however, remained muted along with broader market indices in the past few days.

The company produces three categories of pipes –– welded, ductile and seamless. While the demand in the ductile segment continues to remain strong, the demand for welded pipes, especially overseas demand, has started picking up only now, albeit at a slower pace. Helical pipes accounted for around 60% of sales volume whereas ductile pipes contributed close to 28% during the quarter.

The ductile pipe segment, however, is on par with helical pipe segment when it comes to contribution towards the company’s operating profit. This is because operating profit per tonne of pipe produced is close to $300, compared to $135 in the case of helical pipe segment. Overall, the company had a blended operating profit of $256 per tonne, which is at least 20% higher than what it was last year. The management, however, feels that it may not be possible to increase the current operating margin of 21% further.

There are several factors behind this. First, there is now a greater competition in the domestic market. Second, the local market is becoming more and more important in its overall order book. Unfortunately, the margin in domestic projects like the one by GAIL, is relatively lower. What all these mean is that future growth in bottomline is likely to come mainly from topline growth, especially from volume growth.

The company already has an order book of close to 650 thousand tonne valued at $750 million. The helical pipe and ductile pipe accounts for 61% and 34% of this order book, respectively. The management expects the entire sales volume in the next year to be around one-third higher than the current order book. It means more orders are likely to come in the near term.

The company is utilising most of its existing capacities to meet the current orders. Further, it is readying itself to grab a share of these new orders coming on its way. Its capacity is going to increase by another 250 thousand tonne in the next 12-15 months at a cost of nearly Rs 600 crore. The company now has close to Rs 800 crore of gross debt and almost equal amount of cash, making its net-debt almost zero.

GIC Housing >>is Rar(e)ing Bull Buying???

2010-01-17T11:22:00.000-08:00

Rar(e)ing Bull, loyalists take fancy to GIC Housing

Trade volumes in the GIC Housing Finance stock have shot up over the past few sessions. The counter witnessed a few bulk deals on Thursday and Friday, with Caledonia Investments, the largest institutional investor in the company, offloading nearly 32 lakh shares of the 51 lakh shares it held in its portfolio. Stock exchange websites (BSE and NSE) have no details of the buyers.

Buzz is that the Rar(e)ing Bull and his loyalists have been accumulating the shares. The Bull has publicly said that he’s no fan of real estate companies. But it looks like he doesn’t mind betting on sectors that stand to gain if property developers do well.

Heard On the Street:

Scooters India seen riding the divestment wave>>Beware

2010-01-17T11:19:00.000-08:00

A group of punters appear to have taken control of the Scooters India stock. Shares of the loss-making public sector undertaking (PSU) hit a 52-week high of Rs 45.45, amid a sudden surge in volumes, and ended the day at Rs 44, up 14% over the previous close. Around 13.6 lakh shares changed hands on Wednesday, compared to an average daily volume of around 8,000 shares on most trading sessions in the past three months.

The stock has risen nearly 60% this month alone. Cornering the stock does not need too much capital, considering that the non-promoter holding in the company is barely 20 lakh shares. With divestment being the flavour of the season, PSU shares are suddenly in demand.

It is not too difficult for an operator to whip up volumes in an illiquid stock and then unload the shares to the unsuspecting public by spreading the divestment story. There were more than a dozen bulk deals in the stock on Wednesday, with all of them being squared off before close of trading.

The sudden interest in the stock by arbitrageurs does raise eyebrows, considering the illiquid nature of the stock. Of the 13 players who took up positions at the counter, 8 squared off their positions for a small loss, two barely managed to break even, and four made a small profit. Scooters India made a net loss of Rs 2.27 crore for FY09, and a net loss of Rs 1.2 crore for the half year ended September 2009.

Are you waiting for a correction to invest?

2010-01-17T11:15:00.000-08:00

The 5 Minute Wrapup, On This Day - 16 January 2010
Are you waiting for a correction to invest?
Since the current rally began in March 2009, we have seen the Sensex gaining around 80% till date. What is more, of the eleven months since then (March 2009 included), the index has clocked positive gains in eight. Now after a strong bull market run like this, it is pertinent that investors start fearing a sharp correction in stock prices.

And you might be one of them! After all, that's a normal way of thinking after such bull runs and especially now when concerns still surround the global economic recovery.

We all fear corrections. And we all feel the ardent need to do something when a correction like event strikes, even if we expect it to be just a minor one. Like selling some stocks, fearing the markets might go down even further.

But then, we at Equitymaster believe that after the sharp rise in stock prices we saw in 2009, a correction this year should be expected and not feared. Corrections are just a normal part of stock markets and do not alter the overall bull market trend. And given the way India's economy and companies are evolving; the markets will definitely be in for a good time (notwithstanding the normal hiccups) over the next 5 to 10 years.

One must never try to time a correction. It is nearly impossible. Anyone can give into fears, pessimism, and crowd mentality. But what distinguishes a successful investor is discipline and patience.

Investing systematically and in good quality stocks, without trying to time the market or fearing a correction, is the way to go.

Are you waiting for a correction to invest?

Vardhman Textiles a value buy in long term

2010-01-17T11:14:00.000-08:00

14 Jan 2010, 0350 hrs IST, Devangi Joshi, ET Bureau

Vardhman Textile, one of the oldest and most-diversified integrated textile manufacturers, leads the textile companies whose stocks have outperformed the Sensex in 2009. While the Sensex gained about 75% in 2009, the M-cap of Vardhman textile has more than tripled in the year. Along with a revival in demand and declining interest cost, the stock also seems to be supported by the recent run on cotton yarn prices.

The company produces variety of cotton, polyester and blended yarns, different varieties of popular and specialised fabrics under its textile linked SBUs. Exports accounted for close to 25% of the total revenue in the year ended March 2009. More than one-thirds of its exports came from yarn products, while the rest was accounted for by fabrics. Subsequently, the more than 20% rise in the cotton and yarn prices during the past six months, appears to justify the upswing in its stock price, as investors expect better margins in the quarters to follow.

While the revenues growth in the quarter ended September ’09 was a reasonable 4%, it followed a healthy gain of 10% in the June ‘09 quarter, after the previous two dismal quarters. Moreover, in the latest two quarters, the interest and depreciation cost has stabilised, boosting net profitability. On a trailing year basis as well, the past two quarters experienced a decline in interest costs. For the coming two years, the company is not planning any major capex, and hence, expects the debt cycle to peak out by March 2010.

Of the two major expansion plans, the company has taken up since early 2008, spinning and processing units are expected to function at their full capacities in the coming quarters. Of these, unutilised capacities — 60,000 spindles are anticipated to be functional by March 2010. Over the next few months, the company further plans to consolidate its huge spinning capacities (7.5 lakh spindles) for raising output.

Production through Vardhman’s joint venture with Nisshinbo Textile, Japan that will integrate its fabric business into garments is expected to commence by September 2010. The company plans to hold a 51% stake in this proposed subsidiary. While the operating efficiency and large product portfolio make this company a value buy for long term, currently the stock is trading at a P/E of 13.2, well above the average of 8 for the past four years.

Engineers India soars as Govt plans 10% stake sale ,2:1 Bonus & Stock Split

2010-01-17T07:13:00.000-08:00

15th-Jan-10 (Friday)
Engineers India was locked at upper circuit limit of 20% at Rs 2079.70 at 9:13 IST after the government on Thursday, 14 January 2010, approved sale of a 10% stake in the state-run company.
The stock hit a high of Rs 2079.70, which is an all-time high. It hit a low of Rs 1945 so far during the day. The stock had hit 52-week low of Rs 405 on 19 January 2009.
The mid-cap state-run engineering consultancy active in the oil sector has an equity capital of Rs 56.16 crore. Face value per share is Rs 10.
The current price of Rs 2079.70 discounts the company's Q2 September 2009, annualised EPS of Rs 75.05, by a PE multiple of 27.71.
Engineers India, which is 90.40% owned by the government, is the latest in a list of planned sell-offs aimed at raising funds to cut India's fiscal deficit. After the public offer, the government's stake in the company will come down to 80.4% from the current 90.4%.
The government gave no details of the timeframe for the public offering or how much it wanted to raise. However, reports suggest that the issue is likely to hit the market in April or May this year.
Before the public offering, the company will issue two bonus shares for every share held, split each share of Rs 10 into two shares of Rs 5 each and declare a special dividend of Rs 100 per share
India aims to sell stakes in about 60 firms in the coming years. The government's fiscal deficit is estimated to be at a 16-year high of 6.8% of gross domestic product by the end of March 2010.
Engineers India's net profit rose 59.2% to Rs 105.37 crore on a 36.10% rise in sales to Rs 468.20 crore in Q2 September 2009 over Q2 September 2008.
Engineers India provides engineering and related technical services for petroleum refineries and other industrial projects.

Hanung Toys gets Overseas order worth $100 million.

2010-01-17T07:12:00.000-08:00

15th Jan-10 (Friday)
Hanung Toys & Textiles jumped 3.52% to Rs 128.10 at 9:11 IST on BSE, after the company signed a pact with a US buyer for exporting value added home furnishings aggregating $100 million.
The company announced the overseas order win after market hours on Thursday, 14 January 2010.
Meanwhile, the BSE Sensex was up 18.37 points, or 0.10%, to 17,603.24.
On BSE, 71,351 shares were traded in the counter as against an average daily volume of 87,534 shares in the past one quarter.
The stock hit a high of Rs 128.70 and a low of Rs 124.70 so far during the day. The stock hit a 52-week high of Rs 132.30 on 26 October 2009 and a lifetime low of Rs 24.25 on 23 January 2009.
The company's equity capital is Rs 25.19 crore. Face value per share is Rs 10.
The current price of Rs 128.10 discounts the company's Q2 September 2009 annualized EPS of Rs 29.61, by a PE multiple of 4.33.
The order is to be executed by December 2012. This will bring greater strength and better revenue to the company, Hanung Toys said.
Late last month, the company signed a pact with a US buyer for exporting home furnishings aggregating $60 million. The order is to be executed by December 2012.
Hanung Toys & Textiles' net profit fell 4.1% to Rs 18.65 crore on 12.1% rise in net sales to Rs 182.61 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in the business of manufacturing and exporting of soft toys. It is also into manufacture and exports of home furnishings.

" Transgene Biotek " on pact with Dr Reddy's Lab

2010-01-09T21:14:00.000-08:00

Transgene Biotek was locked at 5% upper limit at Rs 75.70 at 13:34 IST on BSE, after the company signed a pact with Dr Reddy's Lab to manufacture a drug named, Orlistat which is used for treating obesity.
The company made this announcement after market hours on Thursday, 7 January 2010.
The stock hit a high of Rs 75.70 so far during the day, which is a 52-week high for the counter. The stock hit a low of Rs 74 so far during the day. The stock hit a 52-week low of Rs 12 on 12 March 2009.
The company's equity capital is Rs 15.77 crore. Face value per share is Rs 10.
The current price of Rs 75.70 discounts the company's Q2 September 2009 annualized EPS of Rs 0.08, by a PE multiple of 946.25.
Transgene Biotek has entered into a licensing and technology transfer agreement with Dr Reddy's Laboratories for the out-licensing of a technology to manufacture Orlistat, Transgene Biotek said in a filing to the BSE.
Transgene Biotek's net profit fell 66.7% to Rs 0.03 crore on 14.6% decline in net sales to Rs 0.76 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in the research and development and manufacture of various medical reagents, both chemical and immuno-diagnostic reagents for the qualitative and quantitative estimation of bio-chemical parameters and diagnosis of diseases respectively.

McLeod Russel takes a breather after sharp rally

2010-01-09T21:13:00.000-08:00

McLeod Russel India dropped 5.58% to Rs 290.40 at 14:11 IST on profit booking after a recent sharp rally
The stock hit a high of Rs 309 and a low of Rs 288.10 so far during the day. The stock had hit a 52-week high of Rs 311.50 on Thursday, 7 January 2010. The stock hit a 52-week low of Rs 42.05 on 25 February 2009.
The McLeod Russel India scrip has been on a roll recently. It advanced 17.02% in four trading days from Rs 261.65 on 31 December 2009 to Rs 306.20 on Thursday, 7 January 2010. The rally in the counter was triggered by hopes of firm tea prices after a report suggested that global tea shortage may widen this year and extend into 2011 as a rebound in production in Africa, Sri Lanka and India trails demand growth.
The mid-cap tea plantation company has an equity capital of Rs 54.73 crore. Face value per share is Rs 5.
The current price of Rs 290.40 discounts the company's Q2 September 2009, annualised EPS of Rs 70.23, by a PE multiple of 4.13
A recent report on the tea industry showed that the global deficit may reach as much as 130 million kilograms by April 2010, compared with the 110 million kilograms forecast in September 2009, and prices may rise to a record again this year as shortages persist.
Tea prices are likely to rule firm as the dry weather in top tea producing countries viz. Kenya, Sri Lanka and India crimped output. India's output in the 10 months through 31 October 2009 dropped to 830.4 million kilograms from 832.5 million a year ago, according to the state-run Tea Board. Exports declined 12% to 150 million kilograms in the January-October 2009 period.
On the other hand consumption growth is likely in India, the Middle East, Pakistan, Egypt and mature markets like the United Kingdom and Ireland.
On 23 December 2009, McLeod Russel India said it will acquire for the first time tea estates in Africa through its UK-based subsidiary Borelli Tea Holdings (Borelli) UK. The transaction will be completed on 15 January 2010.
McLeod Russel India, said that Borelli has signed a share purchase agreement with James Finlay and James Finlay International Holdings, both of the UK, for acquisition of 100% of the share capital of Rwenzori Tea Investments (Rwenzori), Uganda, for a provisional consideration of $25 million. Rwenzori has six gardens and five factories spread over 3,300 hectares.
With this acquisition, McLeod's total production will rise to 96 million kg , up from 81 million kg. The exports too would rise to 49 million kg from 34 million kg.
McLeod Russel India's net profit rose 57.9% to Rs 192.19 crore on a 23.1% rise in sales to Rs 343.77 crore in Q2 September 2009 over Q2 September 2008.
Mcleod Russel India is the country's largest tea-producing company. It is engaged in cultivation, manufacture and sale of tea.
Promoters have pledged more than 1.19 crore shares representing 10.90% of the equity capital of the company. Total promoters shareholding in the company is 45.36% (as on 30 September 2009).

JK Tyre plans Rs 1,200-cr expansion

2010-01-09T21:12:00.001-08:00

9 Jan 2010, 1956 hrs IST, PTI

NEW DELHI: JK Tyre today said it will invest Rs 1,200 crore in the next three-four years for capacity addition which includes setting up a new plant in Karnataka with an investment of Rs 800 crore.
"JK Tyre has recently completed a Rs 315-crore expansion project to increase truck and bus radial tyre capacity from four lakh to eight lakh tyres per annum and is also planning to invest Rs 1,200 crore in the next three to four years to fulfill the demand for quality tyres," a statement quoting JK Tyre & Industries president Arun Bajoria said today.

As part of company's growth strategy, JK Tyre will invest in Karnataka to manufacture truck, bus and car radials to cater to both domestic and international markets and has earmarked an investment of Rs 800 crore for that, it added.

"We had announced last year to undertake substantial expansion of our tyre operations, therefore our new plant in Karnataka is part of our long-term growth strategy," Bajoria said in the statement.

Budget on Feb 26, GST roll out later - PranabMukherjee

2010-01-09T21:11:00.001-08:00

NEW DELHI (Reuters) - The government will present its annual budget on February 26 and was aiming at enacting legislation in the second half of this year for introducing a new Goods and Services Tax (GST), the finance minister said on Saturday.
Pranab Mukherjee also said he is hopeful growth rate of Asia's third largest economy could touch 8 percent in the fiscal year to March 2010, faster than 6.7 percent in the previous year.
A raft of stimulus through tax cuts and higher spending by the government, coupled with the Reserve Bank of India's aggressive rate cuts and infusion of liquidity in financial markets helped the economy weather the global slump faster than most nations.
With faster growth in output in recent months and rise in inflation, India is widely expected to withdraw some of its fiscal stimulus in the forthcoming budget.
"Budget will be presented on February 26," Mukherjee told reporters at a luncheon meeting but gave no details.
STAKE SALES
Industry bodies have urged the government to extend fiscal stimulus by six months this year, but a 16-year high fiscal deficit of 6.8 percent of gross domestic product estimated for 2009/10, has left little room for extending tax concessions.
Mukherjee said it would take 7-8 months for the government to bring in legislations for introducing GST, which was earlier scheduled on April 2010.
The centre and state government are now still debating the rates of proposed GST, which would replace a multitude of levies such as excise duty, service tax, value-added tax, and ease the burden of industry.
The government expects the proposed tax reform along with higher growth in the economy leading to more revenues and stake sales in state-run firms, could help lower the fiscal deficit in 2010/11 to an estimated at 5.5 percent.
Sunil Mitra, a secretary in the finance ministry looking at disinvestment of state-run firms, said some of the big-ticket share sales including that of Steel Authority (SAIL.NS : 238.85 -2.75 ) of India Ltd and Coal India Ltd would come in the next fiscal year.
An initial public offering of telecoms firm BSNL was also likely in 2010/11, he said.
The government, accelerated the stake sale process and sold shares in NHPC and Oil India that fetched $1.8 billion.
India aims to sell shares of about 60 state-run firms in the coming years, with offers for power utility NTPC, miner NMDC, Rural Electrification Corp and Satluj Jal Vidyut expected by end-March 2010, Mitra said.

US rolls out new online visa form in India

2010-01-06T18:44:00.001-08:00

6 Jan 2010, 2023 hrs IST, IANS
NEW DELHI: With the demand for US visas surging by the day, the US embassy and its consulates in India have introduced a new online non-immigrant visa (NIV) application form to cut out needless delays.
The DS-160 form will be online on the website of the US embassy from Jan 19. For all NIV visa appointments starting Feb 1, applicants will need to fill out the DS-160 form, the US embassy said here Wednesday while announcing the introduction of the new form.

The new form, that leverages new technologies, is expected to cut processing delays as applications could be pre-processed and pre-screened before an applicant's interview.
Applicants will continue to complete visa application forms online, as they did previously with the Electronic Visa Application Form, the embassy said.

The demand for American visas has been escalating in India over the years.

The four US consulates in the country had processed 725,000 visas in 2007 - a 58 percent increase from 2006.

India is among the top 10 countries sending visitors to the US.

Gulf may launch single currency in 2015

2010-01-06T18:42:00.000-08:00

6 Jan 2010, 1810 hrs IST, REUTERS

RIYADH: A single Gulf Arab currency could be launched in 2015 if countries from the Gulf Cooperation Council (GCC) speed up the process, a senior official from the bloc's secretariat said on Wednesday.
Rulers from the world's top oil exporting region endorsed the much-delayed monetary union last month despite the pullout of the United Arab Emirates -the bloc's second-largest economy- and Oman. Policymakers from the other four states -Saudi Arabia, Kuwait, Qatar and Bahrain- are currently expected to set a timetable for the creation of a joint central bank, but launching the single currency is still a distant prospect.

"I personally expect the single currency to be launched in 2015, if we step up the efforts and the work of various committees," Mohamed al-Mazrooei, GCC Assistant Secretary General for Economic Affairs told. Mazrooei's comment is the first from the GCC secretariat that sets a potential new timetable for the single currency's launch after the bloc abandoned an initial 2010 deadline.

"I think it's an optimistic scenario given the slower-than-expected progress that has been achieved up to now," said John Sfakianakis, Calyon's chief economist for the Middle East. "But it's feasible if the political will is there." Striking a power balance in the union remains a challenge as some smaller Gulf states resist the dominance of Saudi Arabia, the world's biggest oil exporter.

"They need to be steadfast to push it forward. They have to complete various technical tasks such as establishing technical committees, synchronizing statistics, facilitating capital and labour movements, deciding on the peg and then the name of the currency," Sfakianakis added. A few days before it hosted a rulers' summit in December, Kuwait said that it may take up to 10 years to adopt the single currency. The UAE opted out of the monetary union in May in protest over a decision to base the Gulf central bank in Saudi Arabia, dealing a serious blow to the project. Oman withdrew in 2006. The GCC bloc -a loose economic entity that seeks to emulate the European Union's economic and monetary integration -abandoned last year an initial deadline for issuing common notes and coins in 2010, saying a joint monetary council would determine a new timetable for its issuance. Oman said earlier this month that it has no plans to review its decision to withdraw now or in the future.

Sunil Hitech Engineers wins order worth Rs 488 crores.

2010-01-06T18:40:00.000-08:00

Sunil Hitech Engineers rose 2.27% to Rs 238.75 at 13:50 IST after the company received an order worth Rs 488 crore from Maharashtra State Power Generation Company.
The announcement was made during trading hours on Wednesday, 6 January 2010.
The stock hit a high of Rs 241, which is also its 52-week high. It hit a low of Rs 234 so far during the day. The stock had hit a 52-week low of Rs 49.25 on 12 March 2009.
The small-cap engineering company has an equity capital of Rs 12.28 crore. Face value per share is Rs 10.
The current price of Rs 238.75 discounts the company's Q2 September 2009, annualised EPS of Rs 41.04, by a PE multiple of 5.81.
The order involves supply of power gears except main equipment for a 250 megawatt project.
Sunil Hitech Engineers' net profit soared 83.4% to Rs 12.60 crore on a 53.2% rise in sales to Rs 200.92 crore in Q2 September 2009 over Q2 September 2008.
Sunil Hitech specializes in fabrication, erection, testing & commissioning of thermal power plants, both in the private as well as the public sector.

Pidilite Industries hits all-time high on bonus issue plan

2010-01-06T18:36:00.000-08:00

Pidilite Industries jumped 13.72% to Rs 222.50 on BSE, after the company said its board will meet on 28 January 2010 to consider issue of bonus shares.

The company announced the board meet during trading hours today, 6 January 2010.

Meanwhile, the BSE Sensex was provisionally up 10.31 points, or 0.06%, to 17,696.55.

The stock hit a high of Rs 229 so far during the day, which is an all-time high for the counter. The stock hit a low of Rs 191.50 so far during the day. The stock hit a 52-week low of Rs 79.50 on 11 February 2009.

The company's equity capital is Rs 25.31 crore. Face value per share is Rs 1.
The current price of Rs 222.50 discounts the company's Q2 September 2009 annualized EPS of Rs 13.52, by a PE multiple of 16.46.
If approved by the board, this will be the third bonus from Pidilite Industries. Earlier, the company had issued a liberal 1:1 bonus, each in October 1996 and June 2000.
Pidilite Industries' net profit surged 158% to Rs 85.54 crore on 6% rise in net sales to Rs 507.20 crore in Q2 September 2009 over Q2 September 2008.

Also, this is PIL’s golden jubilee year & hence one can expect a shareholder friendly corporate action like bonus or special dividend.

HAPPY NEW YEAR>>2010

2010-01-02T04:39:00.000-08:00

HAPPY NEW YEAR

HOPE THIS 2010 GOLDEN YEAR.

Deepak Fertilizers >foreign fund hikes stake

2010-01-02T04:36:00.000-08:00

Deepak Fertilizers & Petrochemicals Corporation jumped 3.65% to Rs 106.40 at 13:58 IST on BSE, after the company said Fidelity Puitan Trust, a foreign fund, has hiked its stake in the firm.
The company made this announcement during trading hours today, 31 December 2009.
The stock hit a high of Rs 108.25 and a low of Rs 102.10 so far during the day. The stock had hit a 52-week high of Rs 111.40 on 2 June 2009 and 52-week low of Rs 48.60 on 6 March 2009.
The company's equity capital is Rs 88.20 crore. Face value per share is Rs 10.
The current price of Rs 106.40 discounts the company's Q2 September 2009 annualized EPS of Rs 16.38, by a PE multiple of 6.50.
Fidelity Puitan Trust has hiked its stake to 4.18% from 4.14% after acquiring 35,000 shares representing 0.04% of the equity capital of the firm through open market purchases on 23 December 2009.
Deepak Fertilizers & Petrochemicals Corporation's net profit fell 13.6% to Rs 36.12 crore on 5.1% decline in net sales to Rs 350.93 crore in Q2 September 2009 over Q2 September 2008.
The company manufactures ammonia, fertiliser, concentrated nitric acid, ammonium nitrate and diluted nitric acid.
The total promoter shareholding in the company is 42.61% (as on 30 September 2009).

Long-term investors should invest in Supreme Petrochem

2009-12-28T09:57:00.000-08:00

28 Dec 2009, 0041 hrs IST, Ramkrishna Kashelkar, ET Bureau

Supreme Petrochemicals is India’s largest producer and exporter of polystyrene (PS) polymer with an installed capacity of 272,000 tonne per annum (TPA). The company acquired Shin Ho Petrochemicals in 2006 with a manufacturing capacity of 6,000 TPA of expandable polystyrene (EPS) at Chennai. The name of the company was later changed to SPL Polymers, before merging it with Supreme Petrochemicals.
In 2006, the company had entered into an MoU with the Maharashtra government to set up a world class styrenics complex and a minor port in the Raigad district at an estimated investment of Rs 1,115 crore. However, the land acquisition for the project is still continuing through MIDC while the company has obtained environmental clearances. The company has implemented a share buyback last year to acquire and extinguish 15.4 lakh shares. The company’s equity capital now stands reduced to Rs 96.8 crore.
GROWTH DRIVERS: The polystyrene industry globally had been suffering from overcapacity and stagnating demand due to competition from polypropylene. However, the scenario has improved with nearly 1.5 million tonne or 10% of the world’s PS capacity closing down in last three years. At the same time, the demand prospects are improving. The lightweight sheets made from extruded PS are increasingly being used for insulation in construction buildings to reduce energy consumption. In fact several developed countries have made this kind of insulation mandatory, and even in India the concept is gaining currency as part of ‘Green Building’ initiatives. In fact the first half of 2009 witnessed the domestic demand for PS spurt 22% against a year ago.

Supreme Petrochemicals is also shifting its focus from commodity polymer to value added varieties such as coloured, compounded, specialty, expandable, extruded and cup grade polystyrene. It has lined up investments of over Rs 200 crore to expand its capacities in all these value added products within next 18 months. The company has also entered in a tie-up with Italy’s Ultrabatch to manufacture and market high-end additive masterbatches, which are concentrated mixture of pigments and additives. Similarly, it has joined hands with the US based Nova Chemicals to set up 20,400 TPA cup-grade EPS plant in India, which has recently commenced operations.

FINANCIALS: The company has been stagnating over last 5 years - both in case of topline as well as bottom line - due to difficult situations in the global polystyrene markets. During these five years, the company improved its debt-equity ratio gradually to 0.7 as on June 30, ’09 as against 1.48 five years ago. For the year ended in June ’09, the company recorded a net profit of Rs 19.2 crore despite a net loss of Rs 46.7 crore in the December ’08 quarter due to inventory losses. A strong rebound in demand in the first half of 2009 enabled the company to wipe out these losses and end the year in profit.

VALUATIONS: At the current market price of Rs 26 the company is valued at eight times its profits for the trailing 12 months. The current price is just 1.3 times the book value of the company’s stock price. Going forward, we expect the company to report net profit after tax of Rs 55 crore during the year ending June 2010, which translates in a forward P/E of 4.6. The dividend yield of 3.8% can add to the margin of safety for an investor. Considering the growth prospects as a result of the industry turnaround Supreme Petrochemicals appears attractively priced.

VIA: E.T

RIL successfully tests its peak output capacity of K-G fields

2009-12-28T09:56:00.000-08:00

28 Dec 2009, 2108 hrs IST, PTI

NEW DELHI: Mukesh Ambani-run Reliance Industries today said it has successfully tested the design capacity of its massive eastern offshore Krishna-Godavari basin D6 field production facilities.

"A flow rate of 80 million standard cubic meters (the peak production envisaged from KG-D6 fields) was achieved through the KG-D6 facilities and delivered" to the pipeline, a company statement said here.

RIL, which is currently producing about 60 mmscmd gas from two of the 18 gas discoveries in the KG-D6 block, has put deep-sea production facilities to produce 80 mmscmd. These facilities were successfully tested last week.

"Within a month of emerging as the largest producer of natural gas in the country, RIL announces that it has successfully carried out an assessment of the design capacity of the KG-D6 deepwater gas production facilities on December 23," the statement said.

80 million units of gas was delivered to the Reliance Gas Transportation Infrastructure Ltd -- the firm that owns the East-West pipeline that transports the KG-D6 gas from Kakinada on the Andhra coast to Baruch in Gujarat.

"At present, RIL is producing about 60 mmscmd of gas which is being supplied to several priority sectors identified by the Government under its Gas Utilization Policy," it said.

Reliance Power's Rosa plant starts generation

2009-12-28T09:55:00.000-08:00

28 Dec 2009, 1747 hrs IST, IANS

ROSA: One of the four 300 MW-capacity units of a thermal power plant developed by Reliance Power here was commissioned here Monday morning.

The second 300 MW-unit will be commissioned by the end of January, and will be followed by the other two 300 MW-units by March 2012. The 1,200-MW plant at Roja, is located about 175 km from Uttar Pradesh capital Lucknow.

"In fact, March 2012 would mark the beginning of a new era in the history of Reliance Power as we hope to simultaneously commission two other power projects -- a 600-MW plant in Nagpur and a 1,300-MW plant at Sasan in Madhya Pradesh," said Reliance Power chief executive officer J.P. Chalasani.

Significantly, the Rs.6,000-crore Rosa project has not only been touted as the largest single investment by any private player in this state, but it is also the first Reliance Power plant to start generation.

"It is a matter of pride for us to have moved well ahead of our schedule and instead of April 2010, we have succeeded in taking off today, the 77th birth anniversary of our founder Dhirubhai Ambani," Chalasani said.

"After taking over the project in 2007, we put it on the fast track, expeditiously acquired land, signed the PPA (power purchase agreement), obtained all statutory and regulatory clearances and approvals, and signed coal supply and transportation agreements."

According to him, "once the entire plant is commissioned, it will enable us to make an annual contribution of 9,000 million units to Uttar Pradesh, light up as many as four million homes, besides helping in bringing down load-shedding by at least 25 percent".

The project is expected to provide permanent direct employment to 300 people.

"However, it has tremendous potential to generate a lot of indirect employment for which preference would be given to local people," said Chalasani.

Natural gas prices have more than doubled from its six-year low

2009-12-28T09:54:00.000-08:00

28 Dec 2009
Amidst the talks of economic recovery and improvement in global demand, the prices of most of the industrial commodities have more than doubled during March-November 2009. The gains also intensified due to a weaker dollar and the liquidity in the financial markets. Natural gas prices, however, seem to be driven more by its demand- supply equation rather than extraneous factor such as liquidity flows that seem to play key role in the prices of other commodities.

Unlike the major commodities, natural gas price experienced a continuous decline since the beginning of 2009, and reached a six-year low in August, only to show a rebound from early September. This behaviour has sustained in last one month from the time when natural gas’s energy counterpart, crude oil remained range bound, while the former has moved closer to its 2009 highs (chart-1).

To understand this price performance one needs to understand the characteristics and uses of natural gas. Natural gas, one of the common energy resources, is an odourless, highly flammable hydrocarbon gas, which has a wide range of industrial and household usage. It is widely used as a fuel for base load and combined cycle power plants. Liquefied Natural Gas (LNG) is a popular piped fuel, which is used for cooking and heating in most households in the developed world. Its industrial use as a fuel varies from that in boilers, baking ovens, air conditioning and in manufacture of fertilizers and petrochemicals. In recent years, compressed natural gas (CNG) is gaining in popularity as a relatively cleaner and cheaper alternative to auto fuels like diesel.

Globally, the natural gas usage accounts for about one-fifth of total energy consumption. US, Russia and Canada followed by Europe are the biggest producers as well as consumers of the commodity. The reason behind a sustained fall in prices in early 2009 was a continuous rise in storage inventories in the US, world’s biggest consumer of natural gas. Natural gas accounts for nearly a quarter of the US energy consumption. For this reason, the New York Mercantile Exchange future price derived from the spot deliveries taking place at the Henry Hub in Louisiana is considered the North American benchmark for the natural gas prices. US natural gas storage surged to a new all time high of 3,837 Billion Cubic Feet (Bcf), which was well after the prices started showing a turn around.

The turnaround was caused by the plunge in prices to a six-year low of $2.80 per Million British Thermal Units (mmbtu) in August ’09 even as the traditional demand season was approaching. However, rising inventory was more than offset by rising demand for heating due to colder than expected winter in northern hemisphere this year. So, in last few weeks, the price rise has been supported by the beginning of a strong heating season in the US and parts of Europe where temperatures dropped significantly in the first half of December. In most part of the US, temperatures were about 20% lower than normal. The early and strong cold weather thus reduced concerns regarding the abundance of natural gas in storage.

As can be seen from the second chart, the 2009 storage reached record high in the end of November and is way above its 5-year range and 5-year average.

Nonetheless, due to the expectations of continued extreme cold in consuming regions the latest reported stock withdrawal (of 207 Bcf) also exceeded the 5-year (2004-2008) average withdrawal by 63% and the last year’s withdrawal by 78%. In the coming weeks while the extent of chill in the consuming regions could help prices, the speculative interest could also lend a support. Traditionally, a rebalancing of commodity indices takes place in the start of a calendar year, wherein the commodities with dismal price performance during the year gain a higher weight in an index depending on its performance. Accordingly, funds adjust their exposures in the futures market which can give a push to prices.

However, once the winter season is over, the prices may experience a corrective pressure given the flattening of the forward curve. The direction of natural gas prices then would be a function of the end of the season stocks and the status of industrial demand.

VIA: E.T

Kemrock Industries>> Dilution effect

2009-12-28T09:52:00.000-08:00

The Vadodara-based manufacturer of composite plastics and products, Kemrock Industries, recently announced its board approval for Rs 400 crore of preferential issue of equity shares and issued 16 lakh equity warrants to a strategic investor. The warrants were issued at Rs 90 each at 25% of the issue price of the equity shares. The rest 75% will become payable over the next 18 months on conversion of the warrants.

Earlier in May ‘08, the company allotted 4.6 lakh shares and 3.93 lakh warrants to the same strategic investor, RPM International, at Rs 650 each on a preferential basis. RPM International, a US-based manufacturer of paints and sealants, currently holds 15.85 lakh equity shares or 14.4% of the equity of the company. Assuming a full conversion of the recently issued 16 lakh warrants, RPM will become the second largest shareholder in the company after the promoter and managing director Mr. Kalpesh Patel. However, crossing the 15% holding limit will trigger an automatic open offer for the company, which can make it the largest shareholder of the company.

Kemrock’s performance on the bourses has been spectacular in ‘09 so far despite a forgettable ‘08. In ‘08, the company suffered from weak earnings performance that impacted its valuations. The company, which was trading at over 45 times its profits at the start of ‘08, was being valued at just 5 times the profits by the year end.

During ‘09, Kemrock’s valuation improved swiftly despite a continuing stagnancy in its profit growth. Currently, the company’s market capitalisation is twoand-a-half times that at the start of the year. However, this is mainly due to doubling of the P/E multiple of 11, as its per share earnings grew merely 10%.

The company has also diluted its equity periodically, which has impacted the per share earnings. Between December ‘07 and December ‘09 the equity has expanded nearly 46% from Rs 7.55 crore to Rs 11.01 crore. This is just the paid-up equity without considering outstanding warrants that can be converted into equity shares at the option of the holder.

Considering the company’s successive equity dilutions, retail shareholders are unlikely to benefit from any future earnings growth by the company.
via: E.T

Chettinad Cement to expand capacity

2009-12-17T19:34:00.002-08:00

Total capacity to reach 13.2 million tonnes
Funding through internal accruals and loans
CHENNAI: Chettinad Cement has drawn up plans to expand the capacity to 13.2 million tonnes from 7.5 million tonnes. The company has plants in Puliyur, Karikkali and Ariyalur (all in Tamil Nadu). Addressing presspersons here on Thursday, after unveiling the company’s new corporate identity, M A M R Muthiah, Managing Director, said the Puliyur and Karikkali plants would together see a capacity enhancement of 2.7 million tonnes by December next year through a combination of process improvements and brownfield expansion involving an additional line in Karikkali.
Greenfield unit
Mr. Muthiah said the company was planning to set up a greenfield plant with a capacity of three million tonnes annually at Gulbarga (Karnataka) where huge limestone reserves were available. “This location is slated for further expansion in similar sized modules in future up to 2015”, he said.
The Gulbarga unit including a 45 MW power plant would involve an outlay of Rs. 700 crore, Mr. Muthiah said. This would also be funded with internal accruals and borrowings, Mr. Muthiah said.
According to C. Sudhakar, President (Operations and Projects), the company has invested significantly in captive power generation.
The current installations and expansion under completion in Tamil Nadu, totalling 105 MW, would meet 80 per cent of power requirements.

Change in market timing to be effective from Jan 4

2009-12-17T19:34:00.001-08:00

The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) jointly decided on Thursday to implement the change in market timings from nine in the morning with effect from January 4, 2010.
Earlier, on Wednesday, both the exchanges separately announced that they would start trading from nine in the morning from December 18.
“Based on the market feedback, it has been jointly decided by the BSE and the NSE that the revision of market open timing to 9 a.m. shall be effective from Monday, January 4, 2010

NSE, BSE extend trading time

2009-12-16T18:45:00.000-08:00

16th Dec'09
The National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have decided to extend the timing of trading from 9 a.m. with effect from Friday.
On NSE, normal market, retails debt market and limited physical market will open at 9 a.m.
The block trade session shall be available from 9 am to 9.35 am. On the futures & options segment, normal market / exercise market open at 9 a.m. and the normal market close time would remain unchanged at 3.30 p.m.
The Bombay Stock Exchange on Tuesday stated that it would change the trading time with effect from Friday and trading would commence from 9.45 a.m. to 3.30 p.m. instead of 9.55 a.m. to 3.30 p.m. in the equity and equity derivatives segments on all business days.
However, BSE stated that there will not be any change in timings of any other session in both the segments and the block deal window timings in the equity segment of the exchange will remain the same.
But on Wednesday BSE came out with a statement that it has been decided that the block deal window in the equity segment would be available from 9.45 a.m. to 10.20 a.m., with effect from Friday. However late on Wednesday evening — after the announcement of NSE — BSE officials confirmed that it too would start trading from 9 a.m.

BSE announces change in trade timings

2009-12-15T09:56:00.000-08:00

BSE announces change in trade timings
15 Dec 2009, 1552 hrs IST, ET Bureau

MUMBAI: The Bombay Stock Exchange has announced change in trading timings for its equity and equity derivatives segments. With effect from Friday, December 18, 2009, trading will commence from 9.45 a.m. onwards, instead of the present timing of 9.55 am.

The continuous trading session in both segments will be from 9.45 a.m. to 3.30 pm on all business days. There will be no change in timings of any other session in both the segments.

Abu Dhabi provides $10 b to Dubai World

2009-12-14T20:04:00.000-08:00

DUBAI: Oil rich Abu Dhabi has provided Dubai World, the state-owned holding company $10 billion to meet some of its most pressing obligations.
Out of the total package which will be channelled to the Dubai Financial Support Fund, $4.1 billion will be used to cover real estate giant Nakheel’s payments for an Islamic bond that matured on Monday.
Dubai World will utilise the balance amount to cover interest expenses and working capital requirements till April 30, 2010, provided the company manages to successfully negotiate a ‘standstill arrangement’ with its creditors, a Dubai government statement said. “The statement shows that despite its commitment to Dubai, Abu Dhabi will not provide unconditional support. It will fund those companies in Dubai that are prepared to follow sound and sustainable financial principles,” an Abu Dhabi based investment banker, who did not wish to be named, told The Hindu.
The statement added that the funds that have been released will also be used to meet the obligations of Dubai World’s domestic creditors and contractors, based in Dubai. Besides, the central bank has expressed its readiness to step in to support local banks in the United Arab Emirates (UAE), should they face a liquidity crisis. Analysts say that the Abu Dhabi’s intervention has not come as a surprise for two reasons. First, the failure of the Dubai World to meet its financial obligations would have affected the national image of the UAE, having long term negative political and economic implications. Second, the cost of borrowing to fund Abu Dhabis own mega-projects would have surged, because the UAE is part of emerging markets, which would have been hit had Dubai World defaulted on its payments.
The government of Dubai is also set to announce a “comprehensive reorganisation law, a framework that is based upon internationally accepted standards for transparency and creditor protection,” the statement added. “This law will be available should Dubai World and its subsidiaries be unable to achieve an acceptable restructuring of its remaining obligations.”
According to the statement, Dubai’s ‘best days are yet to come’ and the city will “continue to be, a strong and vibrant global financial centre.”
Consul calls for Indian businessmen support
The Consul General of India in Dubai, Venu Rajamony, has called upon Indian businessmen to help infuse confidence in the Dubai economy, which was boosted on Monday by an infusion of $10 billion from the government of Abu Dhabi.The Consul General urged the Indian community, especially the Indian businessmen, to do everything possible to support measures being taken by the UAE and Dubai governments to stabilise the economy. He said that for India, the UAE was a valuable economic partner, and ties between the two countries were intensifying in all fields.

Anil Ambani-led companies slide on regulatory action

2009-12-14T19:18:00.001-08:00

14th Dec'09
Three Anil Ambani-led companies declined 0.71% to 1.17% at 15:11 IST on BSE after the finance ministry and Reserve Bank of India reportedly barred them from borrowing abroad for violating guidelines.
Meanwhile, the BSE Sensex was down 3.37 points, or 0.02%, to 17,115.66
Reliance Communications (RCom) lost 1.17% to Rs 181.45 in volatile trade. The stock swung between a high of Rs 186.50 and low of Rs 180.60 so far during the day. Reports of RCom looking to sell an undersea fiber optic network FLAG and a related US business, hoping to raise around $3 billion in cash, led the rally in the stock earlier in the day. However, the reports were denied by the company's spokesman in a clarification to a news agency, which triggered the fall.
Reliance Power (down 0.71%), and Reliance Natural Resources (down 1.14%), edged lower.
As per reports, three Anil Ambani group companies - RCom, Reliance Power, and Reliance Natural Resources (RNRL) were barred from borrowing abroad under the so-called automatic approvals route after they were found to have violated the external commercial borrowing (ECB) guidelines for loans to the tune of $2 billion.
As a result, any application from Anil Ambani group companies for ECBs or foreign currency convertible bonds (FCCBs) will be considered only under the approval route.
Under the automatic route, a company can raise funds directly from the overseas market, whereas it will require prior Reserve Bank of India (RBI) approval for raising funds under the non-automatic route.
Of the $5.3 billion that the Anil Dhirubhai Ambani Group (ADAG) has raised so far in 16 applications, more than 80%, or $4.25 billion, has come through the automatic route in 12 applications. The remaining 20%, or $1.05 billion, was raised in 4 applications under the approval route. RCom has led the chart with 9, of a total of 12, via the automatic route.
The difference between the rate at which these funds can be raised overseas and at which they can raised locally, can be as high as 400 basis points
Separately, Reliance Communications' share price estimate was cut to Rs 160 from Rs 210 at a foreign broking house which cited the effect of increased competition on earnings. The brokerage kept a sell rating on the stock

Western India Shipyard jumps 17% in four days

2009-12-14T19:17:00.001-08:00

Western India Shipyard rose 4.94% to Rs 12.32 at 13:01 IST on BSE, extending gains for the fourth consecutive day, after the company bagged an order worth Rs 5 crore for the repair of a deep water oil rig named JUR Noble Ed Holt.
The company announced the new order win during trading hours on Thursday, 10 December 2009, when the stock had jumped 4.97% to Rs 11.19.
Meanwhile, the BSE Sensex was up 131.57 points, or 0.76%, to 17,250.60.
On BSE, 2.14 lakh shares were traded in the counter as against an average daily volume of 1.69 lakh shares in the past one quarter.
The stock hit a high of Rs 12.32 and a low of Rs 12.10 so far during the day. The stock had hit a 52-week high of Rs 13.99 on 25 August 2009 and a 52-week low of Rs 3.10 on 9 March 2009.
The stock has risen 17% in just four trading sessions from a recent low of Rs 10.53 on 8 December 2009.
The company's equity capital is Rs 23.42 crore. Face value per share is Rs 2.
The rig berthed on 7 December 2009 and the repair works have commenced, the company said in a filing with BSE.
Western India Shipyard reported a net loss of Rs 4.47 crore in Q2 September 2009, lower than net loss of Rs 7.33 crore in Q2 September 2008. Net sales declined 15.4% to Rs 17.24 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in building and repairing ships. It operates as a composite ship repair facility in India. It offers ship services, including routine maintenance and damage repairs.

PSL advances on fund raising buzz

2009-12-14T19:15:00.001-08:00

14th Dec'09
PSL surged 3.02% to Rs 163.65 at 10:33 IST on BSE on reports the company has raised $50 million through external commercial borrowings to fund expansion.
The stock hit a high of Rs 164.70 and a low of Rs 160.70 so far during the day. The stock had hit a 52-week high of Rs 188 on 18 September 2009 and a 52-week low of Rs 59.50 on 9 March 2009.
The small-cap steel pipe maker has an equity capital of Rs 53.46 crore. Face value per share is Rs 10.
The current price of Rs 163.65 discounts the company's Q2 September 2009 annualised EPS of Rs 16.48, by a PE multiple of 9.93
As per reports, the funds were raised at nearly 500 basis points over Libor (London Interbank Offered Rate) from the state-owned banks through their overseas branches. External commercial borrowings (ECB) refers to overseas borrowings in foreign currencies by Indian companies. PSL plans to use the funds raised from the ECB to expand its capacity in terms of its capital expenditure and for modernization programme.
PSL is the largest producer of helical submerged arc welded (HSAW) pipes in India. The company's net profit fell 0.10% to Rs 21.58 crore on a 7.80% decline in net sales to Rs 593.64 crore in Q2 September 2009 over Q2 September 2008.

Jaihind Projects builds on new order win

2009-12-14T19:13:00.000-08:00

Jaihind Projects rose 1.01% to Rs 139.60 at 10:39 IST on BSE, after the company bagged an order worth Rs 24.53 crore from Bhagyanagar Gas for laying and construction of U/G steel P/L network & associated works for CNG & city gas projects.
The company announced the new order win during trading hours today, 14 December 2009.
Meanwhile, the BSE Sensex was up 54.91 points, or 0.32%, to 17,173.94.
On BSE, 764 shares were traded in the counter as against an average daily volume of 3,574 shares in the past one quarter.
The stock hit a high of Rs 140 and a low of Rs 137.25 so far during the day. The stock had hit a 52-week high of Rs 170 on 16 October 2009 and a 52-week low of Rs 32 on 12 March 2009.
The company's equity capital is Rs 7.26 crore. Face value per share is Rs 10.
In November 2009, Jaihind Projects had secured an order worth Rs 14.05 crore from Bharat Petroleum Corporation for laying cross-country pipeline and associated works from Kochi Refinery to Cochin aviation fuelling station (AFS) at Ndedumbassery in Cochin district of Kerala.
Jaihind Projects' net profit surged 50.62% to Rs 6.07 crore on 64.91% rise in net sales to Rs 64.71 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in engineering and construction services.
Promoters have pledged more than 31.83 lakh shares representing 43.86% of the equity capital of the company. Total Promoter shareholding in the company is 47.74% (as on 30 September 2009).

Talbros Automotive accelerates on Japanese tie-up

2009-12-14T19:12:00.001-08:00

14th Dec'09 (Monday)
Talbros Automotive Components gained 2.86% to Rs 45 at 10:19 IST on BSE, after the company signed a pact with Sanwa Packaging Industry Company, Japan for obtaining technical know-how for making heat shields for automotives.
The company made this announcement after trading hours on Friday, 11 December 2009.
Meanwhile, the BSE Sensex was up 90.65 points, or 0.53%, to 17,209.68.
On BSE, 1,102 shares were traded in the counter as against an average daily volume of 3,574 shares in the past one quarter.
The stock hit a high of Rs 46.40 and a low of Rs 45 so far during the day. The stock had hit a 52-week high of Rs 48.25 on 21 October 2009 and a 52-week low of Rs 15 on 12 March 2009.
The company's equity capital is Rs 12.35 crore. Face value per share is Rs 10.
The current price of Rs 45 discounts the company's Q2 September 2009 annualized EPS of Rs 2.49, by a PE multiple of 18.07.
The agreement is for a period of five years and it will help the company to expand its product bandwidth among its customers, Talbros said in a filing with BSE.

One More Sovereign Downgrade, This Time Around Its Spain!

2009-12-09T10:46:00.000-08:00

Standard & Poor's Ratings Services lowered its outlook on Spain to negative, saying the country will likely see "significantly lower" gross-domestic-product growth.

The ratings agency said a downgrade could come in the next two years if authorities don't take action to tackle fiscal and external imbalances. "If the government announces concrete fiscal measures that we believe could credibly achieve annual primary surpluses of 2% or higher by the end of the forecast period in 2012, downward pressure on the ratings may abate," said analyst Trevor Cullinan.
(Source:- http://online.wsj.com/article/BT-CO-20091209-707060.html)

Comment-
In just one month we have witnessed 3 major downgrades by global credit rating agencies, first it was Dubai, then Greece and now Spain. These are not so small economies that it won't hurt the sentiment, slowly it is becoming like a house of cards, one falls and the whole house collapses.
Last year it was ICE LAND

Micro Inks to delist shares from BSE, NSE

2009-12-09T10:45:00.000-08:00

Wednesday December 9, 06:30 PM

MUMBAI (Reuters) - Micro Inks Ltd said on Wednesday it plans to delist its shares from the Bombay Stock Exhcnage and National Stock Exchange (^NSEI : 5112 -35.95 ) as founder and majority shareholder MHM Holding GmBH would acquire its shares held by the public.
MHM Holding is recommending a price of 550 rupees a share for the public shareholders of Micro Inks an an attractive exit oppourtunity, the Indian firm said in a statement to the BSE (^BSESN : 17125.22 -102.46 ).
Micro Inks shares closed up 7.6 percent at 524.65 rupees in a weak Mumbai market.

NRIs are pouring money into real estate

2009-12-09T10:43:00.002-08:00

This is one of the biggest ironies we have come across so far. The economic downturn in the US, Europe and the Dubai debacle - all had only one factor to blame. A bubble in real estate prices and mortgage loans! But it seems the trend is that of greed feeds greed. With NRIs from the West and the Gulf wanting to relocate to their home-country, the real estate market in India is seeing a never-before rally. The dollar-earning NRIs are willing to pay higher than market prices. Banks and mortgage lenders are all too willing to help their high ticket purchases with attractive interest rates. These funds are therefore feeding an asset bubble in Indian real estate, which was relatively less impacted by the global meltdown. A business daily reports that an estimated 25 m NRIs living in 130 countries have remitted US$ 52 bn to India so far this year. Most of it has directly come to real estate. Further, the current tight liquidity situation across US has enticed NRIs to mortgage loans in India. We do not see this as a very healthy sign as Indian real estate players and bankers have to be very careful about whether the high prices and risky loans are sustainable.

FM wants to do away with oil bonds

2009-12-09T10:43:00.001-08:00

Two wrongs do not make a right. From the Oil Ministry's point of view, price controls on petroleum products is wrong. After all, the finances of state owned oil marketing companies are completely messed up because of the subsidized prices. These companies receive oil bonds from the Finance Ministry. From the Finance Ministry's point of view, oil bonds are wrong. They worsen the fiscal deficit situation. In fact, the Finance Ministry has not given any oil bonds to the Oil Ministry so far for the current fiscal. It might wait up to the next budget. The problem is how does a government increase prices of petroleum products without affecting the economy and its popularity? Especially, if it gets elected on the aam admi plank. In our view, no amount of accounting and procedural jugglery can solve the fundamental problem.

Signet Overseas hits the roof after setting record date for bonus issue

2009-12-06T04:48:00.000-08:00

Friday 4th Dec-09
Signet Overseas was locked at 5% upper limit at Rs 44.25 at 12:06 IST on BSE, after the company fixed 14 December 2009 as the record date for a 2:1 bonus issue.
The company announced the record date after market hours on Thursday, 3 December 2009. This is a maiden bonus from Signet Overseas.
Meanwhile, the BSE Sensex was up 84.63 points, or 0.49%, to 17,262.17.
On BSE, ten shares were traded in the counter as against an average daily volume of one share in the past one quarter.
The stock opened with an upward gap, surging by the maximum 5% daily circuit and remained locked at the 5% level so far in the day. The stock had hit a 52-week high of Rs 50 on 29 January 2009 and an all time low of Rs 2.15 on 29 January 2009.
The company's equity capital is Rs 1.62 crore. Face value per share is Rs 10.
The current price of Rs 44.25 discounts the company's year ended March 2009 annualized EPS of Rs 12.59, by a PE multiple of 3.51.
Signet Overseas' net profit galloped 1076.5% to Rs 6 crore on 25.3% rise in net sales to Rs 80.42 crore in Q2 September 2009 over Q2 September 2008.
The company provides various kinds of sacks such as liner bags, valved bags, gussetted bags, hemmed bags, inside coated, box bags, bale wraps, mail bag, envelop bags, rubble sacks sand bags, zig zag mouthed, resin bags, paper-PE sandwich bags.

Atul gains as promoter revokes pledged shares

2009-12-06T04:12:00.000-08:00

Friday 4th Dec-09
Atul rose 2.13% to Rs 84 at 12:55 IST on BSE, after one of the promoter group companies revoked a portion of shares which it had pledged earlier.
The company made this announcement after market hours on Thursday, 3 December 2009.
The stock hit a high of Rs 85 and a low of Rs 82 so far during the day. The stock had hit a 52-week high of Rs 90.50 on 1 October 2009 and a 52-week low of Rs 34 on 9 March 2009.
The company's equity capital is Rs 29.67 crore. Face value per share is Rs 10.
The current price of Rs 84 discounts the company's Q2 September 2009 annualized EPS of Rs 28, by a PE multiple of 3.
Aeon Investments, a promoter group company, has revoked 2.99 lakh shares representing 1.01% of the equity capital of the company out of 10.68 lakh shares representing 3.60% stake which it had pledged earlier.
Aeon Investments holds 6.62% of the equity capital of the company, whereas total promoter shareholding in the company is 40.26% (as on 30 September 2009).
Atul's net profit rose 16.7% to Rs 21 crore on 20.6% fall in net sales to Rs 274 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in the business of manufacturing dyes and dye intermediates, agro-chemicals, aromatic like para-Anisaldehyde, epoxy resins and pharma intermediates.

Unichem Lab strikes 52-week high

2009-12-06T04:11:00.001-08:00

Unichem Laboratories surged 4.53% to Rs 278.10 at 13:46 IST on BSE, after the company's wholly owned unit Niche Generics received marketing authorization for Anastrozloe tablets for a number of markets within the European Union.
The company made this announcement during trading hours today, Friday 4 December 2009.
Meanwhile, the BSE Sensex was down 36.93 points, or 0.22%, to 17,148.75.
On BSE, 75,778 shares were traded in the counter as against an average daily volume of 17,571 shares in the past one quarter.
The stock hit a high of Rs 288 so far during the day, which is a 52-week high for the counter. The stock hit a low of Rs 261.40 so far during the day. The stock had hit a 52-week low of Rs 132.15 on 6 March 2009.
The company's equity capital is Rs 18.02 crore. Face value per share is Rs 5.
The current price of Rs 278.10 discounts the company's Q2 September 2009 annualized EPS of Rs 37.68, by a PE multiple of 7.38.
Anastrozole tablet is used for treating breast cancer.
In early November 2009, Unichem Laboratories received approval from the US Food and Drug Administration (US FDA) for its bulk drug facilities at Pithampur, Madhya Pradesh, and Roha, Maharashtra. US Food and Drug Administration has already approved the company's formulation facilities in Goa and Ghaziabad
Unichem Laboratories had in August 2009 received approval from US FDA for Clonidine Hydrochloride tablets in multiple strengths. The drug is used for treating hypertension. The drug is the generic version of Boehringer Ingelheim's Catapres tablets.
Unichem Laboratories' net profit declined 3.1% to Rs 33.97 crore on 0.8% fall in net sales to Rs 173.28 crore in Q2 September 2009 over Q2 September 2008.
Unichem Laboratories is engaged in manufacturing and marketing pharmaceutical formulations, bulk drugs and drug intermediates.

China wants to buy 10,000 tons of gold!

2009-12-01T10:57:00.000-08:00

China Should Boost Gold Reserve Holdings, Youth Daily Reports
Nov. 30 (Bloomberg) -- China should increase the amount of gold it holds in
reserves to reduce potential losses from a depreciating dollar, the China
Youth Daily said
today, citing Ji
Xiaonan,
head of the supervisory committee at the state-owned Assets Supervision and
Administration Commission.
“We recommend China increase its gold reserves to 6,000 metric tons within
three-to-five years and possibly to 10,000 tons in eight to 10 years,” the
paper quoted Ji as saying. China increased its gold reserves by 76 percent
to 1,054 tons since 2003, the official Xinhua News Agency reported in April.
China is likely to become the world’s largest producer and consumer of gold
this year, Rozanna
Wozniak,
investment research manager at the World Gold Council, said yesterday. The
dollar has fallen about 20 percent against the euro since Feb. 18. Dubai
World’s possible default may give China an opportunity to invest its foreign
currency reserves in the metal and oil, Ji said in a separate report by the
Economic Information Daily.
“Given the size of their reserves compared with the size of the gold market,
there’s a limit on how much they can add,” David
Barclay,
commodity strategist with Standard Chartered Bank in Hong Kong, said today.
“But it certainly seems that there’s scope for further addition.”
Ji said that the recommendation to buy gold was made by an unidentified
group of experts who had convened since last year to discuss the issue, the
Youth Daily reported.
Record Prices
The nation increased its reserves to 1,054 tons through domestic purchases
and refining scrap metal, Hu
Xiaolian,
head of the State Administration of Foreign Exchange, said in an interview
with the Xinhua News Agency in April.
China may break records for both demand and output this year as jewelry
consumption soars and miners expand production after prices reached all-time
highs, Zhang Yongtao, deputy secretary-general of the China Gold
Association,
said at a conference in Kunming yesterday.
Bullion touched a record $1,195.13 an ounce Nov. 26 as a weaker dollar drove
demand for precious metals as an alternative asset. Gold declined 0.4
percent to $1,172.43 an ounce at 2:23 p.m. in Shanghai.
Some of China’s foreign exchange reserves should be swapped into gold, which
would lessen losses from a depreciating U.S. dollar, the China Youth Daily
said, citing Ji. China is underweight on holdings and will increase buying
as the economy expands, said Jeffrey
Rhodes,
chief executive officer of INTL Commodities DMCC, Oct. 23.
China’s 1,054 tons of gold represent less than two percent of its reserves,
Dubai-based Rhodes said then. That compares with the international average
of 10.2 percent held by central banks worldwide which have under 30,000 tons
of the metal, equivalent to about $960 billion.
The country may not find it “very necessary” to purchase bullion for its
reserves after the price rose above $1,000 an ounce, Zhang Yuyan, an
economist at the Chinese Academy of Social Sciences, said Nov. 5.

from another forum

Robust GDP, global recovery to drive Mkts further up: Analysts

2009-11-30T10:35:00.000-08:00

30 Nov 2009, 1751 hrs IST, PTI

MUMBAI: The stock markets today shrugged off the Dubai hiccups and ended the days almost two per cent higher, and analysts believe the momentum is likely to continue as the street will take positive cues from the robust economic growth, as well as global rally.

The economy grew by a robust 7.9 per cent in the September quarter, propelled by increased government spending and surge in the manufacturing sector.

"The GDP figures are higher compared to market expectations. If the third quarter figures

continue to hold above seven per cent, then overseas investors may increase their asset allocation in stocks here," Taurus Mutual Fund managing director RK Gupta said.

Analysts feel buoyed by good growth across all vital sectors, domestic markets sustained momentum throughout the day despite weak European cues. The European stocks were down by one per cent in early trade.

"The domestic trigger is strong enough to hold the market steady against weak European cues. Going ahead, investors should watch the movement in the US markets for a direction," Unicon Financial chief executive Gajendra Nagpal said.

The benchmark Sensex today closed up 294.21 points or 1.77 per cent at 16,926.22. During the intra-day trade the index had scaled up to 17,027, a rise of 395 points.

"A positive development in the US markets today could catapult our markets further. However, a negative trend might not bring in much of a fall," Nagpal said.

During the September quarter the manufacturing output grew by 9.2 per cent as consumers increased purchases of cars and other goods.

"The manufacturing sector growth is likely to increase in the December quarter. If the farm output increases in the same tune, then the country can clock a decent growth. Fresh money can come into the stock markets around February," Gupta added.

Further, agriculture output was up by 0.9 per cent during the quarter, while the services sector grew by 12.7 per cent during the reporting quarter.

For the first half, the economy grew by seven per cent against 7.8 per cent a year ago, prompting the finance minister to say that the economy would log in over 7 per cent growth this fiscal.

"The GDP figures reinforces the fact that the stimulus provided by the government both on the monetary front and the fiscal stimulus are bearing results. We can expect an upgradation in the overall GDP growth numbers for FY10," Angel Broking VP for research Sarabjit Kour Nangra said.

Echoing similar views Nagpal noted that close to seven per cent growth in FY10 would be a good figure for the market.

vIA:E.T

Stimulus pushes Q2 GDP up 7.9% Y-O-Y

2009-11-30T10:34:00.000-08:00

30 Nov 2009, 1116 hrs IST, REUTERS

NEW DELHI: India's economy grew an annual 7.9 percent in the September quarter, much faster than expected on government stimulus spending and a surge in manufacturing, adding pressure on the central bank to lift interest rates as inflation rises.

The annual growth for India's fiscal second quarter was far above a median forecast of 6.3 percent in a Reuters poll as agricultural output performed better than expected, sending the yield on the benchmark 10-year bond up by 2 basis points as investors bet on higher interest rates. The growth was the strongest for Asia's third-largest economy in 18 months.

"This data could be a green light for the Reserve Bank of India to hike rates, and there are greater chances of this by end of the calendar year. The exit from the fiscal stimulus by the government may also be earlier post the GDP data," said Robert Prior-Wandesforde, senior Asia economist at HSBC in Singapore.

In the June quarter, India's economy grew 6.1 percent from a year earlier, and Prior-Wandesforde said that by his calculation the September's period's growth was the sharpest on a quarter-by-quarter basis since quarterly data began in 1996.

Manufacturing output expanded 9.2 percent in the September quarter as consumers stepped up purchases of cars and other goods. Farm output was up 0.9 percent, beating expectations for a decline, although economists warned that the impact of the poor monsoon was likely to be seen in the current quarter.

"The December quarter will show agriculture declining, because that's when the harvest shortfall will get captured," said Rajeev Malik, economist at Macquarie in Singapore, who stuck with his view that the central bank would deploy liquidity management steps rather than rate hikes in December and January.

"I don't think they (RBI) are going to be swung by what agriculture has done on a technical basis," he said. Last week, India's finance minister expressed worry about rising food prices -- the result of a bad summer monsoon and floods that have crimped farm output.

On Monday, however, a top government advisor said there were no serious inflation concerns for now and said he expected no change in government stimulus policy for the current fiscal year. "It is difficult to project what will happen in the rest of the year. But this performance does suggest that there may well have to be an upward revision in the GDP growth of 6.5 percent which has been projected so far," Montek Singh Ahluwalia, deputy chairman of India's Planning Commission.

India's roaring September quarter performance still lagged the 8.9 percent growth recorded by China during the same quarter. Consumers' share of spending in the Indian economy totalled 53.5 percent in July-September, roughly in line with 53.4 percent a year earlier, while the government's share rose to 10.6 percent from 8.7 percent on the back of stimulus spending, Monday's data showed.

The economy accelerated from its 5.8 percent rate in the December and March quarters to 6.1 percent in June on pick-ups in the mining, manufacturing, and electricity and services sectors from the previous quarter. In the 2008/09 fiscal year , India's economy grew 6.7 percent, its weakest in six years and well below rates of 9 percent or more in the previous three years.

The Reserve Bank of India has warned the poor monsoon was more likely to drive inflation than to curb growth. The index of food prices jumped 15.6 percent in the year to mid-November, although supply-side inflation is largely beyond the purview of monetary policy.

The central bank cut its key lending rate by 425 basis points between October 2008 and April, while the government slashed duty rates and stepped up spending to pump-prime the economy and prevent massive job losses. The central bank forecast growth during 2009/10 would come in at 6 percent with an upward bias.

The finance minister said last week growth could be 6-7 percent in 2009/10 and rebound to 8 percent next year. The Reserve Bank of India late last month began its exit from its extremely loose monetary policy by removing some of the liquidity support measures implemented to help India weather the global downturn. Economists in a Reuters poll at the time were divided over when the RBI would begin to raise interest rates, but were unanimous that rates would increase by the end of April. The central bank will hold monetary policy review meetings in January and April, but can adjust rates at any time.

FACTBOX - What assets Dubai could be forced to sell

2009-11-29T11:53:00.000-08:00

DUBAI (Reuters) - Dubai will attempt to reassure markets and investors on Monday on how it plans to restructure its beleaguered conglomerate Dubai World after it requested a shock standstill from bondholders for a $3.5 billion bond maturing on Dec 14.
The lack of clarity and the prospect of bondholders rejecting the delay in repayments could lead to a fire sale of prize assets and even push the emirate to divest speculative investments made during the six-year boom that are unlikely to generate long-term revenue.
Following are details of key assets and high-profile holdings possibly up for sale.
DUBAI WORLD ASSETS
DP WORLD
One of the world's largest port operators is arguably the crown jewel in its trophy cabinet. Its 2007 IPO, the region's largest to date, raised almost $5 billion, but its share price has fallen by more than two thirds of its original value. The firm went to reassure investors on Nov. 26 it was not part of Dubai World's restructuring. Dubai World was in talks with a private equity firm to sell a stake in the port operator.
STANDARD CHARTERED
Istithmar bought a 2.7 percent stake worth about $1 billion in October, 2006. The bank signalled on Friday its exposure to Dubai World would not be material.
MGM MIRAGE
In 2007, Dubai World invested about $5 billion in casino operator MGM Mirage by buying shares and half of an $8.5 billion Las Vegas project. Dubai World last year sued MGM Mirage as credit dried up and CityCenter flirted with bankruptcy. The project has been plagued by construction problems.
BARNEYS
Istithmar World bought U.S. luxury retail chain Barneys for $942 million in 2007. Barneys hired restructuring advisory firm Perella Weinberg in August to help it mull options that would shore up its financial position.
PERELLA WEINBERG
Istithmar also invested about $100 million into the boutique investment bank in 2006.
CIRQUE DU SOLEIL
Property developer Nakheel and Istithmar bought a 20 percent stake in Montreal-based international circus touring company in June 2008 and had planned to build a theater with the group on its main palm-shaped island.
TURNBERRY GOLF COURSE
Leisurecorp, Dubai World's leisure and sports investment unit, bought the Turnberry Golf course, home to golf's oldest competition, from Starwood Hotels & Resorts in Nov 2008 for about $100 million.
QUEEN ELIZABETH 2 LINER
Originally bought in 2007 for $100 million to be converted into a luxury hotel and moored off Dubai's Palm, the ship's future has been under scrutiny since it docked at Port Rashid in Dubai last year for refurbishment. In July, Nakheel said it was mulling moving the liner to another location, or Africa.
ATLANTIS DUBAI
The resort, which opened in November to a $50 million firework display, is a joint venture with South Africa tycoon Sol Kerzner.
DUBAI PRIZE ASSETS
EMIRATES
The airline, whose chairman also chairs Dubai's supreme fiscal committee, has $55 billion of orders of planes from Boeing and Airbus. It has been at the forefront of turning Dubai into an international hub and had been nearing a potential share sale before the financial crisis hit. Emirates has repeatedly fought back speculation it would merge with Abu Dhabi's carrier Etihad Airways.
DUBAI ALUMINIUM
Established in 1979, the aluminium producer has become one of the world's largest producers and exporters of the metal and in 2006 entered into a joint venture with Mubadala Development Co, a wholly-owned investment vehicle of the Abu Dhabi government to build one of the largest single aluminium plants in the world.
LONDON STOCK EXCHANGE
Borse Dubai, which took a 21 percent stake in the bourse operator in November 2007, said in June it saw its LSE investment as long-term and had no plans to sell its stake. LSE shares were among the biggest fallers on the FTSE 100 after Dubai's debt news.
HSBC
The investment arm of Dubai's ruler Dubai International Capital (DIC) in 2007 bought an undisclosed stake in HSBC making it one of the largest investors in Europe's biggest banks. DIC in 2006 set up a fund aimed at buying into some of world's largest listed equities. The group earlier this year went under restructuring and its chief executive left the company.
DEUTSCHE BANK
DIFC Investments, a unit of the Dubai international Financial Centre, bought a 2.2 percent stake in the German lender in 2007 in a deal worth about $1.83 billion. The DIFC's governor was last week replaced as part of a shake-up Dubai's hierarchy.
SONY CORP
Dubai International Capital through its Global Strategic Equities Fund (GSEF) bought a stake in the Japanese electronics and entertainment firm in 2007 in what it described at the time as a substantial investment. Anyone who buys more than 5 percent of a listed company on Tokyo is required to report the stake to regulators within five business days.
EUROPEAN AERONAUTIC DEFENCE & SPACE COMPANY (EADS)
The GSEF also bought into Airbus' parent company taking a 3.12 percent stake, making it one of the largest institutional investors in the aerospace group.
ALLIANCE MEDICAL
DIC also in 2007 bought Alliance Medical for $1.25 billion with plans to expand one of Europe's largest MRI and CT scan services provider into the Middle East and Asia.
EMAAR PROPERTIES
The Arab world's largest property developer by market value is in the midst of a merger with three other state-linked developers after a failed acquisition in the United States and Dubai's real estate market crashing left it vulnerable. Still, its portfolio includes the world's tallest tower Burj Dubai, set to open in January, and one of the world's biggest malls already open.
(Compiled by John Irish; Editing by Mike Nesbit)

FACTBOX - Gulf Arab policy steps to address financial crisis

2009-11-29T11:49:00.000-08:00

REUTERS - Gulf Arab oil exporters have adopted an array of policy measures to ease tight liquidity and prop up sagging investor confidence during a global recession.
Dubai's government took the latest step on Sunday, and said it would provide additional financing for commercial banks and it stood behind the Gulf Arab country's banking system and branches of foreign banks.
Below are details of government and central bank actions.
KUWAIT
Aug 10 - Kuwait central bank said it would issue $348 million of one-year treasury bonds on Aug. 12.
Aug 4 - Central bank said it would issue $348.8 million of one-year treasury bonds on Aug. 5 at a coupon of 1.5 percent.
July 1 - Central bank cut its three repurchase rates by 25 basis points each, but left its benchmark discount rate on hold.
May 13 - Kuwait central bank decides to cut benchmark discount rate by 50 bps to 3 pct from May 14. This is the fifth cut since October, taking total reduction to 275 basis points.
April 2 - Kuwait's cabinet approved a bylaw to implement a $5.11 billion economic support package, including a guarantee of 50 percent of new loans extended to local firms.
Nov. 19 - The central bank introduced new short-term repurchase agreements to give banks more access to funding.
Dec. 4 - Sovereign wealth fund said it would invest 1.5 billion dinars in local equities, adding later the funds aimed to stabilise the bourse and would invest for the long term.
Oct. 29 - Kuwait passed law guaranteeing all bank deposits after the central bank was forced to save Gulf Bank, which suffered steep derivatives trading losses.
Oct. 9 - The Kuwait Investment Authority pumped cash into the bourse to help stabilise markets.
SAUDI ARABIA
June 16 - Saudi Arabian Monetary Agency (SAMA) halved the interest rate it pays to commercial banks for deposits, but kept its benchmark repurchase rate unchanged.
June 4 - Saudi Arabia's central bank freezes some bank accounts related to industrial group Ahmad Hamad Al Gosaibi Group & Brothers (AHAB), bankers said.
June 1 - Central bank orders domestic lenders to freeze bank accounts of businessman Maan al-Sanea, one of the country's wealthiest businessmen, chairman and founder of the Saad group, and big shareholder in HSBC.
May 17 - Central bank governor said Saudi was drawing on some foreign reserves but not selling foreign assets to finance a growing budget designed to stimulate the economy.
April 14 - Saudi Arabian Monetary Agency (SAMA) cut its reverse repurchase rate by 25 basis points to 0.5 percent. It had reduced the rate in January and December by a total of 125 basis points.
Jan. 19 - SAMA cuts benchmark repurchase rate by 50 basis points to 2 percent, having lowered it by 50 basis points in December. In five moves since October, the repo has been lowered by a total of 350 basis points.
Nov. 23 - SAMA lowered bank reserve requirements to 7 percent from 10 percent. Since October, it has reduced the reserve ratio from 13 percent.
Oct. 21 - SAMA poured $3 billion in long-term bank deposits, its first direct injection of U.S. dollars in a decade.
Oct. 17 - Saudi Arabia's top economic body, the Supreme Economic Council, promised to guarantee bank deposits.
UNITED ARAB EMIRATES
Nov. 29 - The central bank set up a new additional facility for commercial banks. The facility is at the rate of 50 basis points above the 3 months EIBOR. It also said it stood behind UAE banks and branches of foreign banks.
Nov. 25- Duabi government raised a further $5 billion as part of a $20 billion bond programme launched in 2009.
Aug. 31 - Central bank said would cut interest rate on its liquidity support facilities to banks to 1.5 percent from 2.5 percent in a bid to boost economic growth and spur lending. The cut would take effect starting Sept. 1.
Aug. 26 - Central bank official said new UAE EIBOR panel to consist of 11 banks.
Aug. 19 - Central bank will introduce an official interbank offered benchmark rate mechanism in the first half of September.
Aug. 5 - Country's interbank rates dropped after announcement of central bank benchmark plan.
Aug. 4 - Central bank said it planned to set up an Emirates Interbank Offered Rate (EIBOR) that would create an official benchmark for the dirham's offered rate, and ensure a better view of "prevailing market conditions."
July 16 - Central bank met commercial banks to assess potential problems due to lending to troubled Saudi family conglomerates.
Feb. 25 - Dubai said it is working on a stimulus package to support small- and medium-sized companies.
Feb. 22 - Dubai launched a $20 billion bond programme and sold the first $10 billion tranche to the UAE central bank, easing worries state-linked companies could default on debts.
Feb. 4 - Abu Dhabi government said it plans to inject $4.4 billion to recapitalise five of its banks.
Jan. 19 - UAE lowered overnight repurchase rate by 50 basis points to 1 percent.
Nov - The government set up a committee to come up with policy responses to the crisis, including the economy minister, central bank governor and minister of state for finance.
Oct. 21 - The finance ministry poured $6.8 billion into bank deposits, the first tranche of a $19.1-billion rescue facility. It deposited another $6.8 billion into banks in November.
Oct. 13 - The UAE guaranteed bank deposits.
Oct. 8 - UAE cut repo by 50 basis points to 1.5 percent, and lowered borrowing rate on its $13.6 billion facility.
Sep. 25 - The central bank set up a $13.6 billion emergency bank lending facility.
QATAR
March 24 - Qatar central bank says it has not cut interest rates since the autumn because liquidity is fine and it is tackling inflation.
March 20 - Qatar said it bought $1.79 billion worth of listed banks' investment portfolios.
Jan. 19 - The government ordered two local real estate companies to merge as consolidation rises to face global turmoil.
Oct. 13 - Qatar's sovereign wealth fund, the Qatar Investment Authority, said it would buy 10 percent to 20 percent of listed banks' capital to boost confidence.
OMAN
Jan. 27 - Oman said it would start a $390 million market-maker fund on Feb. 1.
Jan. 1 - The central bank reduced bank reserve requirements to 5 percent from 8 percent and raised the lending ratio.
Dec. 4 - The central bank said it amended bank reserve requirement rules to release 270 million riyals ($700 million) into the banking system.
Dec. 31 - Oman raised its repurchase rate by 47 basis points to 2 percent, having lowered the rate by more than 200 basis points between November and mid-December.
Nov. 3 - The central bank allocated about $2 billion to local banks to provide dollar liquidity.
BAHRAIN
Sept 15 - Bahrain's central bank cut its one-week deposit facility by 25 basis points to 0.50 percent from 0.75 percent and kept its overnight deposit facility at 0.25 percent. Repo and lending rates were cut to 2.25 percent from 2.75 percent.
Aug 9 - Bahrain names administrators for Saudi groups' two banks.
July 30 - Bahrain's central bank seized two banks belonging to debt-laden Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi and Brothers.
June 23 - Central bank launched probe at The International Banking Corporation (TIBC) after its owner, Saudi-based Algosaibi group (AHAB), said it had discovered substantial irregularities in its financial services arm.
Mar. 3 - Central bank cuts bank reserve requirements to 5 percent from 7 percent, citing easing inflation.
Dec. 18 - The central bank slashed all key interest rates by 75 basis points in response to a Federal Reserve cut, taking its lending rates to 2.75 percent, its one-week deposit rate to 0.75 percent and its overnight deposit rate to 0.25 percent.
Oct. 30 and Oct. 9, Bahrain cut overnight secured rate and repurchase rate by a combined 175 basis points to 3.5 percent. It cut the one-week deposit rate by 50 basis points to 1.5 percent and the overnight deposit to 1 percent.
Oct. 30 - Central bank expanded acceptable collateral for overnight funds to include ijara sukuk, a type of Islamic bond.

Dubai debt worries to hit stock markets

2009-11-26T19:18:00.000-08:00

World stocks fell as news of Dubai asking for a creditor standstill at Dubai World and Vietnam's currency devaluation, increased investors' aversion to risk.
Dubai's financial health has come under scrutiny after a major, government-owned investment company asked for a six-month delay on repaying its debts. Dubai World, which has total debts of $59bn (Â£35bn), is asking creditors if it can postpone its forthcoming payments until May next year. Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring. The company has been hit hard by the global credit crunch and recession. It was due to repay $3.5bn of its debts next month.
The request for a delay in repayments led to major credit ratings agencies downgrading a number of state-backed companies. Following six years of rapid growth, the Dubai economy has slumped since the second half of 2008. The Dubai government said in a statement that the request to delay debt repayments also applied to property developer Nakheel, a Dubai World subsidiary.
The announcement raised concern about the once-booming Gulf region's financial health and added to general nervousness in financial markets about the real state of the world economy at a time when investors are also seeking to lock in 2009 profits
Meanwhile, Vietnam's stock market tumbled after the nation's central bank devalued the currency by around 5% against the US dollar and raised interest rates by a percentage point to 8% from 1 December 2009..

Gold surges to Rs 17,500 per 10 gm

2009-11-20T10:45:00.001-08:00

20 Nov 2009, 1721 hrs IST, PTI

NEW DELHI: Continuing its record setting spree, gold today surged by Rs 100 and touched a new high of Rs 17,500 per 10 gram in the bullion market here on heavy buying by jewellery makers amid firming global trend.

Silver coins also rose to an all-time high of Rs 34,200 for buying and Rs 34,300 for selling of 100 pieces, recording a significant rise of Rs 200.

Analysts said that gold prices might touch Rs 18,000-level here once physical buying starts in the overseas market ahead of the Christmas season.

Gold, which moves in tandem with the international trend, got support from firming global cues rather than physical buying for the current marriage season, said Mahesh Verma of OM Sons jewellers.

The yellow metal in the overseas markets rose to 1,154 dollar an ounce.

Some of the investor funds were seen shifting from volatile equities to bullion, boosting gold prices.

The precious metal commenced its upward journey ever since the Reserve Bank of India bought 200 tons of gold from the International Monetary Fund, raising fears that some more central banks may follow suit.

The major transaction took place at a time when the market was passing through a hectic time of marriage season buying. Besides, a firming global trend due to dollar's weakeness overseas boosted demand for the metal as an alternate investment.

Gold, which had gained Rs 400 in last four sessions, rose further by Rs 100 to Rs 17,500 per 10 gram, a level never seen before.

Standard gold and ornaments shot up further by Rs 100 each to set a new peak of Rs 17,500 and Rs 17,350 per 10 gram respectively, while sovereign rose to a new peak of Rs 13,550 by gaining Rs 50 per piece of eight gram.

Silver ready rose by Rs 80 to Rs 28,680 per kg and weekly-based delivery by Rs 200 to Rs 28,400 per kg.

GAIL to benefit from Gas Highways Authority of India

2009-11-17T19:45:00.000-08:00

GAIL Cmp Rs.383 Solid Long term Buy
PSU Stocks has been active in recent days after Government said it wants to raise money to bridge fiscal deficit.

India has just 10500km of pipelines and even a small neighboring country Pakistan has 56400km of pipeline which is nearly 6 times that of India’s (2007 stats). India needs a bigger pipeline Infrastructure and the government has already started action on this need- the government is likely to put in place an apex planning body for laying major gas pipeline projects - Gas Highways Authority of India (GHAI) on the lines of the National Highways Authority of India (NHAI) - by March 2010 and GAIL, being vastly experienced, will be one Company which can benefit from pipeline highway.

GAIL’s pipeline is around 7,000 km long now and would go up to 14,000 km by FY-2013, Transmission capacity would increase to 300 mmscmd from 150 mmscmd. GAIL current capacity utilisation to be 55-60% is expected higher with capacity utilisation at 70-75% by 2012-13. New tariff regime – likely to be announced by December2009, average blended tariff to increase by 5-10% say’s management in analyst meet.

Negative: Subsidy sharing for Oil losses has been drag on the stock, GAIL management reportedly asked the Petroleum Ministry to exempt it from sharing the subsidy burden as it did not benefit from any uptick in crude oil prices.

Many fears of rising Global asset bubble due to low interest rates in my view can come true, so my selection of stocks are mostly on strength of promoters and GAIL being a PSU can with stand a Double recession if it were to happen.

World Bank president: some risks to global growth in 2010, asset bubbles could undermine confidence in East Asia economies, there is some pressure on China to strengthen yuan

by A.K.PRABHAKAR

Pakistan has more nuclear weapons than India: Report

2009-11-17T19:31:00.001-08:00

17 Nov 2009, 2216 hrs IST, PTI

WASHINGTON: Pakistan is estimated to have more nuclear warheads than India and the two Asian neighbours along with China are increasing their arsenals and deploying weapons at more sites, two eminent American nuclear experts have said.

While Pakistan is estimated to possess 70-90 nuclear weapons, India is believed to have 60-80, claims Robert S Norris and Hans M Kristensen in their latest article 'Nuclear Notebook: Worldwide deployments of nuclear weapons, 2009'.

The article published in the latest issue of 'Bulletin of the Atomic Science' claimed that Beijing, Islamabad, and New Delhi are quantitatively and qualitatively increasing their arsenals and deploying weapons at more sites, yet the locations are difficult to pinpoint.

For example, no reliable public information exists on where Pakistan or India produces its nuclear weapons, it said.

"Whereas many of the Chinese bases are known, this is not the case in Pakistan and India, where we have found no credible information that identifies permanent nuclear weapons storage locations," they said.

"Pakistan's nuclear weapons are not believed to be fully operational under normal circumstances, India is thought to store its nuclear warheads and bombs in central storage locations rather than on bases with operational forces. But, since all three countries are expanding their arsenals, new bases and storage sites probably are under construction," the two nuclear experts said.

Bank profits to be under pressure in next 6 months

2009-11-05T19:22:00.000-08:00

6 Nov 2009, 0104 hrs IST, Karan Sehgal & Pallavi Mulay, ET Bureau

The profitability of Indian banks is expected to be under pressure over the next two quarters. The possibility of lower treasury gains and muted growth in net interest income (NII) is expected to curtail the growth of banking sector.

The top 10 Indian banks made more than Rs 6,000 crore collectively from treasury operations in the first half of FY10 (Apr-Mar) against only Rs 220 crore in the corresponding period of the previous fiscal. This was possible because bond yields were declining and bond prices were moving up. However, a further softening of yields is unlikely.

“RBI’s latest quarterly review of monetary policy indicates that we are at the bottom of a soft interest-rate regime. Thus, high treasury income earned in the first-half from government Securities’ (G-sec) portfolio may not recur in coming quarters,” said Ravi Mehta, research analyst, Indsec Securities & Finance. The central bank restored the statutory liquidity ratio (SLR) to 25% from 24%, in a bid to reduce the liquidity in the banking system and send out a signal that a further softening of rates is ruled out.

Interestingly, banks have piled up investments in G-secs. The aggregate G-sec investment of Indian banks increased by 42% as on October 2009 from the year-ago level. If interest rates were to rise, banks would have to incur mark-to-market losses. “Public sector banks have high exposure to low-yield high-duration G-secs. They are more exposed to market risk than their private sector counterparts,” said Vaibhav Agrawal, AV-P, banking, Angel Broking.

While treasury income is expected to decline, banks can derive solace from a likelihood of better growth in non-food credit growth in the second-half of the current fiscal. Non-food credit offtake of the banking sector grew by a mere 11% year-on-year in the first week of October, the lowest growth observed in almost a decade. However, experts feel that the worst is over.

“If the GDP is forecast to grow at 6-6.2% during FY10, a 15-16% growth in non-food credit cannot be ruled out,” says Indranil Pan, chief economist with Kotak Mahindra Bank. According to Mr Pan, since real activity is gaining momentum, metal and infrastructure companies will be major borrowers of bank funds.

Siddhartha Sanyal, chief economist of Edelweiss Securities, echoes similar views. Many factors influencing demand for and supply of credit have turned positive now, he maintains. The demand for funds is likely to go up as working capital investment increases on account of a pick-up in industrial production and rising commodity prices. However, there is a catch here too.

Banks had mobilised high-cost deposits in the second-half of the previous fiscal, leading to a contraction of their net interest margin (NIM), the difference between interest earned and paid. Bankers say going forward NIMs will improve on a retirement of high-cost funds and mobilisation of low-cost deposits. However, that improvement will only be on quarter-on-quarter basis.

On a y-o-y basis, spreads in December 2009 quarter will still be less than the corresponding period of the previous fiscal. Therefore, despite a pick- up in credit offtake, banks will find it difficult to grow NII as high-cost deposits will still have a lag effect. This will lead to muted NII growth, which, coupled with low treasury gains, hints that banks will see a dip in their net profit in the second half of the fiscal.

VIA:E.T

Sudha Murthy sells 20 L Infy shares for Rs 445 cr

2009-11-05T19:21:00.000-08:00

6 Nov 2009, 0318 hrs IST, ET Bureau

BANGALORE: Sudha Murthy, the better half of the first couple of India’s IT industry, has made her second big venture capital investment. When husband N R Narayana Murthy was setting up Infosys in 1981 on a wing and a prayer, she gave him Rs 10,000 from her savings. Look what has happened to that money.

On Thursday, an Infosys announcement made clear that not much had changed between the couple in 28 years. This time, Mr Murthy’s big idea is called Catamaran — a venture capital fund — and his wife is helping him with a small matter of some Rs 430 crore.

The social worker and author sold 20 lakh Infosys shares owned by her, boosting the corpus of Catamaran to Rs 605 crore. Mr Murthy announced two weeks ago that he had sold eight lakh shares in the company he founded to establish a venture capital fund which will assist young entrepreneurs, mainly from India.

The couple don’t have any immediate plans to raise any more capital for Catamaran.

“Sudha Murthy selling shares is a good thing and it is nice to see somebody step away and help others become successful,” observed Sourabh Srivatsava, president of the India Venture Capital Association.

“We are beginning to see individuals and families getting active in this space,” he added, referring to similar ventures by the Future Group, Azim Premji’s PremjiInvest and the Religare Group.

Infosys’ shareholding pattern at the end of September showed Mr Murthy and his family owning a 4.97% stake in the company. His wife owned 1.62%, daughter Akshata 1.41% and son Rohan 1.39%.

Close observers of the venture capital industry believe that Mr Murthy will likely model Catamaran on the lines of Nadathur Holdings, a venture fund set up by former colleague and Infosys co-founder N S Raghavan. A family-administered fund, Nadathur Holdings was set up around nine years ago and backs scientific or business innovation driven startups.

Mr Murthy has said that his fund will help entrepreneurs across sectors such as healthcare, retail, technology with early stage investments. “I have always believed that entrepreneurship is an instrument of creating jobs and is the best way to solve poverty of a country like India.”

Catamaran is likely to be launched during the early part of 2010 and look at funding entrepreneurs as
well as making private equity investments in established businesses. Most of the investment activity is likely to centred around India but it may include some overseas ventures.

“We will not be in a hurry to finish the fund; there’s no limit for spending,” Mr Murthy said two weeks ago.
Infosys also told the stock exchanges on Thursday that its MD & CEO S Gopalakrishnan has acquired four lakh shares in the company through open market purchases, taking his total holding 66.56 lakh shares.

via:E.T

RBI buys 200 mt gold from IMF to pump up reserves' value

2009-11-03T19:40:00.001-08:00

4 Nov 2009, 0137 hrs IST, ET Bureau

MUMBAI: The purchase of 200 tonnes of gold from the International Monetary Fund (IMF) by the Reserve Bank of India will not just diversify the country’s foreign exchange reserves but also boost of the value of the reserves.

On Tuesday, RBI announced that it had concluded the purchase of 200 metric tonne of gold from the International Monetary Fund (IMF), under the Fund’s limited gold sales programme. The central bank said that it was an official sector off-market transaction and was executed over a two-week period during October 19-30, 2009 at market-based prices.

Gold prices have been moving up faster than the major global currencies — which is expected to boost the value of the country’s foreign exchange reserves.

This is the first time that the Reserve Bank has bought such a large amount of gold globally. Interestingly, the market import of gold has dipped sharply this year on account of high international prices and low demand. Years ago, confiscated smuggled gold used to be assigned to RBI vaults.

However, with the opening up of the economy, gold smuggling has virtually stopped. For many year’s the central bank gold holdings remained constant at about 11.5 million troy ounce accounting for 4% its reserves worth $285 billion now.
The recent purchase of close to 6.5 million troy ounce would raise the share of gold in India’s foreign exchange reserves to about 6%. The gold is valued at the month end closing price on the London bullion exchange.

With international gold prices touching a new high every day, this part of the reserves has seen a sharp appreciation. In the month of September, reserves rose $485 million only on account of the rise in valuation of gold in reserves.

In its official release, IMF has said that the total sales proceeds are equivalent to US$ 6.7 billion or SDR 4.2 billion. MD Dominique Strauss-Kahn indicated that the proceeds from the gold sale will help the Fund, step up much-needed concessional lending to the poorest countries.

As for the central bank, there is no official communication either being the intent of such a move or its plans for the purchased gold. But experts say the move could help the central bank diversify its reserves and would not have a significant impact on the overall foreign exchange reserves position, said a former top RBI official.

This is because these purchases are reckoned to be carried out from the $4.8 billion worth SDR allocation that the RBI had obtained from the Fund earlier this year. The IMF had allocated $4.8 billion by way of general allocation of special drawing rights (SDR) — the reserve currency with the IMF — in August this year as part of its SDR 161.2 billion package allocated to member countries.

The value of SDR is a weighted average of a basket of currencies which includes the US dollar, the Sterling pound, the yen and the euro. The weightage to each currency
which is revised at regular intervals depends on their prevailing relative importance in the global markets.
via:E.T

SFIO set to probe into Sesa Goa

2009-11-02T07:57:00.000-08:00

The government has ordered the SFIO to probe into mismanagement and financial irregularities in Vedanta Group-owned Sesa Goa and its subsidiary Sesa Industries (SIL), the company said on Thursday.
“The scope of (SFIO) investigation include looking into the state of affairs of the company and its subsidiary Sesa Industries Ltd, in respect of mismanagement, malpractices, financial and other irregularities,” Sesa Goa said in a filing to the Bombay Stock Exchange.
The Serious Fraud Investigation Office (SFIO) enquiry, to be completed in six months, follows a probe by Registrar of Companies which was looking into Sesa Goa’s case since 2003. “The company... has received request from the RoC for information for the period from 2001 to 2009,” the statement said, adding it also received an intimation for the SFIO probe from the ministry of corporate affairs on Wednesday.
Clarifying its position, Sesa Goa said, “the company believes that the investigation originates from the complaints filed by one of the shareholders of SIL against SIL, the company and the directors in 2003, prior to the acquisition of the company by Vedanta in April 2007.”
The company added it will fully cooperate with the investigation and expressed its commitment to follow the highest norms for corporate governance and transparency. Following the announcement, Sesa Goa shares fell as much as 6% in morning trade on the BSE. It was trading down 1.6% in the afternoon session.
Allegations against the company, official sources said, also include diversion of funds. The RoC had submitted its report on Sesa Goa early last week. On Wednesday, corporate affairs minister Salman Khurshid had termed the inspection as a “normal procedure” and said, “These (inspections) are procedures that have to be followed before taking a final decision.”
Another case pertaining to merger of Sesa Goa, the country’s leading iron ore producer, with its subsidiary Sesa Industries is pending before the Supreme Court. The London-based Vedanta Resources in 2007 had acquired a 51% controlling stake in Sesa Goa from Mitsui & Co, for $981 million. AGENCIES

DCM Shriram Consolidated Robust Q2 result

2009-10-25T11:05:00.000-07:00

DCM Shriram Consolidated rose 2.24% to Rs 63.90 on BSE,on -Oct-09, after net profit surged 95.6% to Rs 13.93 crore in Q2 September 2009 over Q2 September 2008.

The stock hit a high of Rs 66 and a low of Rs 63.55 so far during the day. The stock had hit a 52-week high of Rs 71 on 13 August 2009 and a 52-week low of Rs 20.80 on 4 March 2009.

The company's equity capital is Rs 33.18 crore. Face value per share is Rs 2.
The current price of Rs 63.95 discounts the company's Q2 September 2009 annualized EPS of Rs 3.34, by a PE multiple of 19.15.
DCM Shriram Consolidated's total income declined 13.5% to Rs 839.07 crore in Q2 September 2009 over Q2 September 2008. The company announced the results after market hours on Thursday, 22 October 2009.
The company's net profit advanced on the back of 81.03% spurt in other income to Rs 8.40 crore in Q2 September 2009 over Q2 September 2008.
The company is engaged in manufacturing fertilisers, plastics, chemicals, agri inputs trading, sugar and cement.

Ponni Sugars moves north after robust quarterly earnings

2009-10-25T11:02:00.000-07:00

Ponni Sugars (Erode) jumped 7.49% to Rs 107.65 on BSE, after net profit galloped 235.48% to Rs 10.40 crore in Q2 September 2009 over Q2 September 2008.

The stock hit a high of Rs 108 so far during the day, which is 52-week high for the counter. The stock hit a low of Rs 101.15 so far during the day. The stock had hit a 52-week low of Rs 19.75 on 28 November 2008.

The company's equity capital is Rs 8.60 crore. Face value per share is Rs 10.
The current price of Rs 107.65 discounts the company's Q1 June 2009 annualized EPS of Rs 20.74, by a PE multiple of 5.19.
Ponni Sugars (Erode)'s total income surged 44.36% to Rs 48.52 crore in Q2 September 2009 over Q2 September 2008. The company declared its results during trading hours today, 23 October 2009.
The company manufactures cane sugar, cane molasses and bagasse. The company operates in a single segment of sugar and its by products.

NRB Bearings on a roll after solid Q2 results

2009-10-25T11:01:00.000-07:00

NRB Bearings spurted 6% to Rs 61.45 at 15:12 IST after net profit surged 325.8% to Rs 3.79 crore on a 4.5% decline in sales to Rs 78.93 crore in Q2 September 2009 over Q2 September 2008.
The results were announced during trading hours today, 23 October 2009.

The small-cap ball bearing maker has an equity capital of Rs 9.69 crore. Face value per share is Rs 2.
The current price of Rs 61.45 discounts the company's Q1 June 2009 annualised EPS of Rs 3.89, by a PE multiple of 15.79.

NRB Bearings manufactures a wide range of needle rollers, needle bushes, needle cages, needle bearings and tapered roller bearings.

3M India Ltd. (3MI) (CMP: Rs. 1735.5)

2009-10-25T10:58:00.000-07:00

3M India Ltd. (3MI) (CMP: Rs. 1735.5)on 21-oct-09
(Long Term Buy - Accumulate in the Rs. 1600-1850 band)

3M India Ltd. (3MI), a 76% subsidiary of Minnesota Mining and Manufacturing Company (USA), is a diversified technology company. The company started its operations in India as ‘Birla 3M' in 1988. Later, in 2002, it was rechristened '3M India Ltd'.

We think that long-term investors could accumulate the stock in the price band of Rs. 1600-1850. While we have made an attempt to forecast the earnings for the company, a better than expected topline / bottomline achievement and / or greater visibility on earnings or corporate development could result in a rise in its share price. We feel that the stock has the potential to trade at atleast 2829xCY10E EPS, which gives a price target of Rs. 2094-2169 in the next two to three quarters.
HDsec

Monthly inflation report:

2009-10-25T10:56:00.001-07:00

Currently, inflation is reported every week based on the Wholesale Price Index (WPI). The base year (reference) of the current WPI numbers is 1993-94 .

The integrity of inflation data and its coverage has been in question since the last few quarters. The government has recently cleared a proposal to shift to a monthly WPI series with a much wider coverage than the current WPI index.

The base year of the new WPI index will be 2004-05 and it will cover over 1,200 commodities . It is expected to deliver inflation numbers closer to ground reality.

Investors trust cos where promoters sell stakes

2009-10-25T10:53:00.000-07:00

Investors in Indian equity markets have remained bullish on companies where promoters reduced their stake, a trend totally different from the global scenario.

Companies which witnessed sizable selling of promoters’ stake are Unitech, Sobha Developers, Housing Development & Infrastructure and Bombay Rayon Fashions. In Unitech, promoters’ holding came down to 44% in the quarter ending September 2009 from 67% at the end of December quarter 2008. Similarly, in Sobha Developers
, promoters’ holding fell to 65% from 87%. Housing Development & Infrastructure also saw its promoters’ holding coming down to 48% from 62% during the same period.

On the other hand, major buying by promoters took place in companies such as Pfizer, Indo Tech Transformers, Dish TV India and Sesa Goa. In Pfizer, promoters’ holding went up from 41% to 71% between quarter ending December 2008 and September 2009. Promoters of Indo Tech Transformers increased their holdings from 54% to 74%, whereas in Sesa Goa, it increased from 51% to 57% during the same period.

5 mid-cap stocks: middle path to prosperity-DEEWALI GIFT

2009-10-15T20:07:00.000-07:00

16 Oct 2009, 0425 hrs IST
ET Bureau It’s that time of the year again when many investors rejig their portfolio and take position on their favourite stocks. With most of the blue chips having turned expensive, the only option for most investors is the mid-cap sector.

We at ET Intelligence Group bring you a list of 5 mid-cap stocks that could make your next Diwali brighter. But, as always, make sure you’ve done the due diligence before placing your bets on these.

Tata Teleservices (Maharashtra) Ltd (CMP=32.6)
TTML, which has recently joined hands with Japan’s NTT Docomo, is the Rs 2,000-crore Tata Group company that provides telecom services in the circles of Mumbai and Maharashtra, including Goa. TTML has reported net loss in each of the past six years. However, the picture is likely to change soon.

The company is aggressively adding new subscribers and has topped the 10-million mark, following its innovative pricing methods. Higher users would improve network efficiency, thereby reducing cost per user. The company has undertaken necessary capex in the last few years.

TTML has reduced the level of net loss in the last three quarters. It is likely to post quarterly profit by the March 2010 quarter.

Indian Hotels Company Ltd (CMP=80)
Indian Hotels (IHCL), which has underperformed the markets, is currently trading below its book value. This appears pretty cheap as it has always traded between 1.4 and 5 times the book value in the last five years. The last few bad quarters indicate that the scrip is trading 28 times its past 12 months earnings.

The hospitality industry is now going through a tough phase. However, being the industry leader, IHCL could well be the first one to move up once the tide turns. The Commonwealth Games being held in Delhi next year can be one major trigger for the industry, apart from the global economic revival.

Supreme Industries Ltd (CMP=362)
Supreme Industries, India’s leading plastic goods manufacturers, has always enjoyed a healthy history of profit growth, cashflows and dividends. Its decision to exit unprofitable businesses, coupled with rising domestic demand for plastics and a likely glut situation in polymers, are likely to keep its profit growth strong in the coming quarters.

At the same time, the company has constructed a commercial complex at Andheri with 2.5-lakh square feet of saleable area at a cost of Rs 115 crore. The sale proceeds from this property will boost the company’s bottomline for the next few quarters. The scrip at Rs 363 values the company just 8.6 times its earnings for trailing 12 months, much cheaper compared to its peers.

IndusInd Bank Ltd (CMP=124)
IndusInd Bank has made a huge turnaround in the past one year, reporting a dramatic improvement on key parameters such as non-performing assets (NPAs), net interest margin (NIM) and business per employee. Its gross NPAs or bad loans as a percentage to gross advances have halved in the quarter ended September 2009 against the year-ago period, with NIM rising to 2.86% from 1.68%.

The bank has cleaned up its balance sheet and has more than doubled its profit in the September quarter. The next growth driver will be expansion of its loan book beating the industry growth and continued improvement in its NIM, which can transform it into one of the fastest growing banks.

Dalmia Cement (Bharat) Ltd. (CMP=170)
Dalmia Cement (Bharat) (DCBL) is aggressively expanding its cement capacity and is shortly bringing on stream 38% additional cement capacity, taking its total capacity to 9 million tonnes. It is also well positioned in the booming sugar business with a combined capacity of 22,500 TCD (tonnes of cane per day) at three locations in UP. These two businesses should help the company grow its net sales aggressively in the next two years.

In the past four years, the company has quadrupled its revenues and is expected to maintain its growth trajectory in the next few years. Dalmia Cements recently announced plans to raise nearly Rs 3,000 crore to fund its expansion plans. The company plans to add a further 10 million tonnes capacity across the country in a phased manner over the next three years. At Rs 169.3, Dalmia Cement (Bharat) trades at a P/E of 8.2 and looks cheap.
Via:E.T

EID Parry scrip seen playing catch-up

2009-10-13T19:50:00.000-07:00

14 Oct 2009, 0124 hrs IST, Shikha Sharma, ET Bureau

Eid Parry (India), part of the $3.14-bn Murugappa Group, saw its stock price move up close to 4% to end at Rs 318 on Monday after hitting an intra-day high of Rs 329.
Although the diversified company generates a significantly large chunk of consolidated revenues from its fertiliser subsidiary, Coromandel Fertiliser, the latest uptick on the scrip is attributed to the acquisition of 76% equity stake in privately-held Sadashiva Sugar (SSL) for a consideration of Rs 50 crore.

With the acquisition of Bangalore-based SSL, its sugar production capacity is expected to grow 15% to around 21,500 tonnes crushed per day (TCD). Assuming the current capacity utilisation at 75% with increased capacity and the ruling price of sugar at Rs 30/kg, EID Parry is likely to grow standalone revenues in the coming quarters. At the consolidated level, however, the business is dominated by its fertiliser subsidiary, which accounted for 92% of the company’s revenues and its entire profits in FY09.

Its standalone turnover for the year ended March 2009 stood at Rs 755 crore compared with Rs 616 crore last year. For the first quarter ended June 2009, it posted 0.8% growth in standalone revenues to Rs 205 crore and net profit was Rs 26 crore compared with Rs 3 crore during the same quarter last year, due to improved realisation in sugar prices. Sugar is the main business of the company besides co-generation power and distillery.

EID Parry’s operating margin for the June quarter ended 2009 at 29.71% is comparable to its peers in the sugar industry and has improved significantly compared with 11.78% in the corresponding quarter last year. As the industry estimates supply deficit of close to 5 million tonnes of sugar during the sugar season 2009-10, prices may continue to see an upward trend. But availability of sugarcane poses challenge for sugar producers.

Despite the recent run-up in its stock price, the company looks cheaper than its peers. At its current stock price of Rs 318, the stock is trading at a trailing price-earning multiple of close 20x (on a standalone basis) and looks pricey, considering that sugar companies are currently trading at a P/E of around 10x.

However, the market value of EID Parry investment is equivalent to around 70% of its total market capitalisation, which means that either its sugar division is not getting fair valuation, or its investments in fertilisers are being undervalued by the market.

In the current rally, the EID Parry scrip has underperformed its peers. The stock has risen 115% between April 1 and September 30 against 147% rise in the ET Sugar index during the period. So the current move could be seen as the stock playing catch-up.

via:E.T

KG basin gas row

2009-10-11T11:30:00.000-07:00

KG basin gas row

What is the Krishna-Godavari (KG) basin?

As the name implies, this refers to the area broadly enclosed by the deltaic basins of the two major rivers in Andhra Pradesh Krishna and Godavari. It includes part of the Bay of Bengal into which these rivers drain.

The area has been identified as one of India's biggest oil and gas fields, several times the size of Bombay High.

Onland, the KG basin has an area of about 28,000 sq km, while the offshore area is estimated at 21,000 sq km till a depth of 200m and another 18,000 sq km between 200m and 3000m.

KG basin controversies

How is Reliance Industries involved in the KG basin?

Under the government's New Exploration and Licensing Policy (NELP), various blocks in identified oil and gas fields were offered to private operators on lease for exploration and production. RIL won the bids for 12 such blocks in the KG basin in 2000.

Under the NELP, private operators sign a production sharing contract (PSC) with the government, which sets out the terms and conditions under which they operate their lease, including the share of revenues that would accrue to the government.

The PSC for block D6, which is at the heart of the current controversy, was signed between RIL, the government and Niko, which is partnering RIL, in April 2000.

Ambani group broke up in 2005

How is the Anil Ambani group involved?

When the Reliance group was still a unified entity with both brothers sharing management responsibilities, RIL had announced in 2003 that group company Reliance Energy Ltd (REL) would be setting up a gas-based power plant at Dadri in western Uttar Pradesh for which gas would supplied from RIL's KG basin production.

In 2005, however, the group broke up with each brother acquiring control of different business areas. While the oil and gas business went to elder brother Mukesh, Anil had control of the power business.

As part of the division of the group, RIL was demerged and Reliance Natural Resources LTD (RNRL) was formed to act as a conduit for the gas from the KG basin to REL.

All RIL shareholders were made RNRL shareholders, except that Mukesh's holding in the parent company was substituted by Anil in the new firm. Thus, RNRL was part of the Anil Dhirubhai Ambani group (ADAG).

MoU singed between RNRL-RIL in 2005

What is the MoU often referred to?

In 2005, RNRL and RIL signed a memorandum of understanding (MoU) on the terms under which gas would be supplied for the Dadri project . This MoU specified that the price at which the gas would be supplied would be the same as the price at which RIL would supply gas to an NTPC project. NTPC had invited global bids for supply of gas in 2003 and RIL finally won the bid and was issued a letter of intent by NTPC in June 2004.

The price quoted by RIL in its bid was $2.34 per mmbtu (million metric British thermal units). So what’s the dispute about? RIL argues that the $2.34 per unit price is not applicable to its deal with RNRL for various reasons. First, gas prices had since the 2005 MOU risen sharply.

Second, it has not concluded a deal with NTPC on that price, since it had some issues pertaining to damages it would have to pay in case of failure to supply the agreed quantity of gas. Hence, it says, there is no NTPC price to be followed as per the MOU with RNRL. Third, it says under the PSC signed with the government, the government has the final say on the price at which it can sell gas to third parties and in fact can even dictate to whom the gas should be sold.

RNRL contests each of these claims. It argues that international gas prices have historically been much higher than Indian prices and so that can't be a benchmark . Further, the bid price for the NTPC project must be followed under the MOU irrespective of whether or not RIL and NTPC have finalized their deal. Finally, it maintains that the government only has the right under the PSC to fix the price at which gas will be valued for the purpose of determining the government's share of revenues from the project. RIL, it insists , is free to sell its share of the gas at whatever price it decides.

RNRL-RIL gas row

Where did the price of $4.2 per unit come from?

In May 2007, RIL invited bids from various gas users like power and fertilizer companies and on that basis arrived at a price of $4.2 per, which was then approved by the petroleum ministry as a market-determined price.

RNRL alleges that this was an eyewash and an orchestrated auction between small time users and that the ministry has been partisan towards RIL in the whole issue.

Governments involvement in RIL-RNRL gas row!

How did the government get involved?

When, after sustained pressure from RNRL, RIL sought approval of the government for the price of $2.34 per unit, the government refused. It said the price was not marketdetermined and in any case gas was a national asset and its allocation could not be decided by some private agreement between two brothers.

ADAG points out that the ministry's stance in the matter which suits RIL's current position — has been a feature since Murli Deora became the petroleum minister in 2006.

How are courts involved? Following RIL's refusal to supply gas at the terms specified in the MOU with RNRL, the Anil group company went to the Bombay HC seeking an order to RIL to follow the terms of the MOU.

The Bombay HC finally in June this year passed an order that RIL must renegotiate a deal with RNRL that would make suitable arrangements for supply of gas. It also added that the basis for such an arrangement must be the scheme of demerger agreed between the brothers in 2005.

RNRL has now gone to the Supreme Court seeking a direction from the apex court that the HC order on renegotiation should be set aside and RIL should be asked to supply gas under the terms of the MoU.

via: E.T