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.
Tuesday, June 15, 2010
MMTC jumps 22% on bonus, stock-split plan
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.
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
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
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
Sunday, May 23, 2010
Local content to shine in solar photo-voltaic projects
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.
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
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.
“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
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).
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).
Monday, May 10, 2010
Four Indian state-run banks will get 15 billion rupees
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
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
Friday, April 16, 2010
Gold adulteration with Iridium & Ruthenium
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.
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.
Monday, March 22, 2010
RBI to issue polymer notes of Rs 10
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.
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.
Tuesday, March 9, 2010
More Satyams in a new Telengana?
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
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
Sunday, February 21, 2010
Investors can consider investing in Orient Paper
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
Orient Paper & Industries, a part of the GP & CK Birla Group, is a diversified player in products, such as cement (contributed 58% of the total segment sales in the current financial year), coupled with electric fans, paper and paperboard.
The company’s key market for cement includes Andhra Pradesh and Maharashtra, and while it was adversely affected in the third quarter of FY10 by weak realisations, the operating environment for this division has shown signs of improvements over the past few weeks.
For instance, cement prices in Hyderabad have shown an uptick with prices currently at Rs 155 per bag levels, as compared to Rs 130 per bag in November 2009.
In addition, a revival in the residential construction sector should help improve demand for Orient’s products, such as electric fans, going forward. The stock currently trades at discount to other South-based diversified cement conglomerates.
CAPACITIES & EXPANSION PLANS: The company’s cement capacity was 3.4 million tonne at the end of March 2009, a rise of nearly 41.7% from two years earlier.
In addition, the company’s new kiln at Jalgaon, Maharashtra, had started commercial production in the third quarter of FY10, and Orient will also shortly bring on stream an additional 1 MT unit at Devapur, Andhra Pradesh. This would raise the company’s cement capacity to 5 MT.
Its other product segments include electrical consumer durables like electric fans, where it is one of the leading players in the organised sector, with a capacity of 3.5 million units at the end of March 2009, a rise of 35.7% from two years earlier. In addition, its paper and paperboard capacity was 171,000 tonne at the end of March 2009, unchanged for the past two years.
The company had invested nearly Rs 762 crore during March 2007- March 09 period, while its cash flow from operations during this period was Rs 768.8 crore.
FINANCIALS: Orient Paper’s operating profit margin declined 630 basis points y-o-y to 18.8 % in the third quarter of FY10, at a time when its net sales rose 2.6% to Rs 372.2 crore.
Pressure on its operating profit margins was due to its key cement division, where realisations declined nearly 8 % y-o-y to Rs 2,713.8 per tonne, while its despatches grew almost 5% yoy to 0.78 MT in the third quarter. Orient Paper, along with other players operating in the southern region, has been grappling with additional capacities coming on stream in this region over the past few months, coupled with signs of a slowdown in implementation of government-funded projects in Andhra Pradesh in the third quarter of FY10.
However, cement prices have shown signs of bouncing back over the past few weeks, In Orient Paper’s other divisions, such as electrical consumer durables, which include electric fans, the company benefited from a broad revival in demand, especially from the residential sector. As a result, segment profit of this division improved 168 % yoy to Rs 6.6 crore in the December 2009 quarter.
VALUATIONS : Orient Paper & Industries at Rs 47.6 per share, trades at nearly 5.8 times on a trailing four-quarter basis. Other diversified cement players in the South, such as India Cements, trade at 8.3 times, while Madras Cements trades at 6.7 times. Investors could consider investing in Orient Paper in a bid to take advantage of the long-term growth opportunities in the company’s various product segments.
Via:E.T
Sunday, February 14, 2010
This is more than just a 7%-10% correction
5 Minutes Wrap up, Thursday, 11 February, 2010 4:31 PM
This is more than just a 7%-10% correction
» The empire of Debt is crumbling
'This is more than just a 7%-10% correction', screams a headline on one of the financial portals. The man behind the quote is none other than the famous financial observer and trader Dennis Gartman. In a recent interview, Gartman has opined that it would be a mistake to aggressively buy stocks at the current juncture. He fears that a deep correction in stocks across the globe could happen anytime soon. And he has based his observation on the fact that unlike the previous correction in US equities a few months back, the correction this time around is far more spread out. In other words, it has engulfed practically the whole world and this, as per him is a dangerous sign. He further observes that confidence, which is so key to the functioning of any financial market has gotten badly affected with events like the Greece debt crisis. And this too, does not bode well for capital markets including equities.
If the fundamentals would have pointed to another direction, we would have certainly taken traders like Dennis Gartman with a pinch of salt. However, even in India, the fundamentals seem to be pointing towards a not very rosy picture from a 1-2 year perspective. Even after the recent correction of the order of 10%-12%, it has become difficult to justify investment into a fundamentally sound company, run by a credible management team. It is the price that such stocks are commanding that is worrying us. Thus, while we may not know whether this is more than just a 7%-10% correction, what we know with a far greater degree of confidence is the fact that a significant correction from the current levels would set us up nicely for attractive gains over the next 2-3 years.
via:EQM
This is more than just a 7%-10% correction
» The empire of Debt is crumbling
'This is more than just a 7%-10% correction', screams a headline on one of the financial portals. The man behind the quote is none other than the famous financial observer and trader Dennis Gartman. In a recent interview, Gartman has opined that it would be a mistake to aggressively buy stocks at the current juncture. He fears that a deep correction in stocks across the globe could happen anytime soon. And he has based his observation on the fact that unlike the previous correction in US equities a few months back, the correction this time around is far more spread out. In other words, it has engulfed practically the whole world and this, as per him is a dangerous sign. He further observes that confidence, which is so key to the functioning of any financial market has gotten badly affected with events like the Greece debt crisis. And this too, does not bode well for capital markets including equities.
If the fundamentals would have pointed to another direction, we would have certainly taken traders like Dennis Gartman with a pinch of salt. However, even in India, the fundamentals seem to be pointing towards a not very rosy picture from a 1-2 year perspective. Even after the recent correction of the order of 10%-12%, it has become difficult to justify investment into a fundamentally sound company, run by a credible management team. It is the price that such stocks are commanding that is worrying us. Thus, while we may not know whether this is more than just a 7%-10% correction, what we know with a far greater degree of confidence is the fact that a significant correction from the current levels would set us up nicely for attractive gains over the next 2-3 years.
via:EQM
Saturday, February 6, 2010
Start preparing for oil at $200 a barrel
7 Feb 2010, 0002 hrs IST, Swaminathan S Anklesaria Aiyar, ET Bureau
The Kirit Parikh Committee is the third such committee to suggest decontrolling petroleum product prices. Probably politicians will again refuse to do so, and instead decree a modest increase in petrol and diesel prices.
Yet the key issue is not whether petrol and diesel prices should reflect today’s oil price of $75/barrel. It is that booming Asia will in a decade push oil to $200/barrel and maybe $300/barrel. India must prepare for a world of scarce, expensive oil instead of pretending that astronomical subsidies can ensure price stability.
Today, the “under-recoveries”, implicit subsidy, of oil companies is Rs 60,000 crore. The immediate price increases suggested by the Committee may cut this to Rs 30,000 crore. But if oil goes up to $200/barrel, the subsidy will rise astronomically up to Rs 500,000 crore, eroding funds for all other anti-poverty and development initiatives.
In the 1990s, oil cost $16-17/barrel. When it doubled to $35 by 2004, politicians refused to believe it was permanent, and decreed piecemeal price increases instead of price decontrol. When oil doubled again to $70/barrel by 2006, they cut excise and import duties and provided huge subsidies rather than raise prices proportionally. And when oil shot up to $147/barrel in mid-2008, they just closed their eyes and crossed their thumbs.
Luckily for them, the global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.
The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China and India look like powering ahead at 12% and 9% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development.
Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too. Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward.
China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.
The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Brazil, Mexico and Africa are in deep waters that will take time to exploit.
Indian politicians say it is politically impossible to decontrol oil prices. They fear that freeing oil prices will stoke inflation, because of the impact on transport costs. But in countries with free oil pricing, like the US, inflation excluding food and energy has been less than 1% although oil prices have doubled in the last 12 months.
It is simply untrue that price decontrol leads to inflation. On the contrary it leads to efficiency, conservation and a switch to alternatives. It will also reduce the fiscal deficit, and that will tame interest rates and hence prices.
When I became a journalist in 1965, oil was decontrolled but steel was controlled on the ground that it was politically impossible to free a commodity so vital to the economy. But steel was decontrolled in the 1980s and proved no problem at all.
Why so? Because voters understand that commercial producers need to sell at market prices, but know that governments can subsidise goods indefinitely. As long as oil bears a political price, voters will resist any price increase. But if oil is decontrolled, voters will soon accept the realities of the market, as it already has for steel.
In 1974, when OPEC first flexed its muscle, the government doubled the price of petrol overnight. It was a big blow of course, but the economy adjusted to the reality of expensive energy. India adjusted again in the second oil shock of 1980.
We now face another huge energy crunch, and need to adjust to that reality too. After decontrol, we can replace the kerosene subsidy with solar and LED lanterns for the poor. Farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.
We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.
Via: E.T
The Kirit Parikh Committee is the third such committee to suggest decontrolling petroleum product prices. Probably politicians will again refuse to do so, and instead decree a modest increase in petrol and diesel prices.
Yet the key issue is not whether petrol and diesel prices should reflect today’s oil price of $75/barrel. It is that booming Asia will in a decade push oil to $200/barrel and maybe $300/barrel. India must prepare for a world of scarce, expensive oil instead of pretending that astronomical subsidies can ensure price stability.
Today, the “under-recoveries”, implicit subsidy, of oil companies is Rs 60,000 crore. The immediate price increases suggested by the Committee may cut this to Rs 30,000 crore. But if oil goes up to $200/barrel, the subsidy will rise astronomically up to Rs 500,000 crore, eroding funds for all other anti-poverty and development initiatives.
In the 1990s, oil cost $16-17/barrel. When it doubled to $35 by 2004, politicians refused to believe it was permanent, and decreed piecemeal price increases instead of price decontrol. When oil doubled again to $70/barrel by 2006, they cut excise and import duties and provided huge subsidies rather than raise prices proportionally. And when oil shot up to $147/barrel in mid-2008, they just closed their eyes and crossed their thumbs.
Luckily for them, the global financial crisis and Great Recession then sent oil crashing down to $40/barrel, saving them from facing up immediately to a future of scarce oil. But the global economy is now recovering, so that challenge must be faced.
The global recovery looks weak in Europe and North America, but is gathering steam in Asia. China and India look like powering ahead at 12% and 9% respectively in 2010-11. Other Asian countries are also buoyant. These developing countries are at a very energy-intensive stage of development.
Booming Asia is sucking in commodity imports from Africa and Latin America, fuelling booms there too. Slackness in rich countries has kept a lid on commodity prices, but the long-term trend is unambiguously upward.
China has already overtaken the US as the world biggest consumer of cars and emitter of carbon. India is following in China’s footsteps, one decade removed. So, even if oil consumption is muted in the West, even if rich countries drastically reduce carbon emissions (which is doubtful), oil consumption will rise stridently in developing countries.
The world’s old oilfields are in steep decline, and large new oil discoveries offshore in Brazil, Mexico and Africa are in deep waters that will take time to exploit.
Indian politicians say it is politically impossible to decontrol oil prices. They fear that freeing oil prices will stoke inflation, because of the impact on transport costs. But in countries with free oil pricing, like the US, inflation excluding food and energy has been less than 1% although oil prices have doubled in the last 12 months.
It is simply untrue that price decontrol leads to inflation. On the contrary it leads to efficiency, conservation and a switch to alternatives. It will also reduce the fiscal deficit, and that will tame interest rates and hence prices.
When I became a journalist in 1965, oil was decontrolled but steel was controlled on the ground that it was politically impossible to free a commodity so vital to the economy. But steel was decontrolled in the 1980s and proved no problem at all.
Why so? Because voters understand that commercial producers need to sell at market prices, but know that governments can subsidise goods indefinitely. As long as oil bears a political price, voters will resist any price increase. But if oil is decontrolled, voters will soon accept the realities of the market, as it already has for steel.
In 1974, when OPEC first flexed its muscle, the government doubled the price of petrol overnight. It was a big blow of course, but the economy adjusted to the reality of expensive energy. India adjusted again in the second oil shock of 1980.
We now face another huge energy crunch, and need to adjust to that reality too. After decontrol, we can replace the kerosene subsidy with solar and LED lanterns for the poor. Farmers should switch from diesel pumps to electric ones. Cooking gas cylinders can be replaced by piped gas. Buses can switch to compressed natural gas. The poorest can get cash transfers through smart cards to reduce their fuel bills.
We must stop massive subsidies for a non-renewable and polluting resource. Instead, we must prepare for the coming reality of oil at $200/barrel.
Via: E.T
You can do National Electronics Funds Transfer deals till 7 pm
RBI has widened the scope of the National Electronics Funds Transfer (NEFT) for small-ticket online settlements by extending the transaction timings and facilitating speedier settlements.
In a notification posted on its website on Friday, RBI has said customers will now be able to use this facility for extended hours besides increasing the frequency of batches of settlements.
From March, customers will be able to conclude transactions from 9 am to 7 pm from the earlier deadline of 5 pm on week days. While on Saturday, the deadline will be extended by an hour from 12 pm to 1 pm. RBI has also decided to move to an hourly frequency of settlement of batches, and accordingly increased the number of batches of settlements from six to 11 on week days and from three to five on Saturday.
According to RIS Siddhu, general manager of PNB, the move will encourage more remittances through this system and we may see more cheques and drafts settling through this platform. The NEFT platform is offered by RBI essentially for retail customers to make online remittances of up to Rs 1 lakh per transaction.
While the settlement here at present is on a T+1 basis (that is the next day of the transaction.) RBI will now move to B+1 settlement system or an hourly settlement, which means the transaction will be settled in the next batch where each batch will have one hour duration.
What makes NEFT different from RTGS is that the former is more high value real time transactions while NEFT settlements are not instantaneous.
In a notification posted on its website on Friday, RBI has said customers will now be able to use this facility for extended hours besides increasing the frequency of batches of settlements.
From March, customers will be able to conclude transactions from 9 am to 7 pm from the earlier deadline of 5 pm on week days. While on Saturday, the deadline will be extended by an hour from 12 pm to 1 pm. RBI has also decided to move to an hourly frequency of settlement of batches, and accordingly increased the number of batches of settlements from six to 11 on week days and from three to five on Saturday.
According to RIS Siddhu, general manager of PNB, the move will encourage more remittances through this system and we may see more cheques and drafts settling through this platform. The NEFT platform is offered by RBI essentially for retail customers to make online remittances of up to Rs 1 lakh per transaction.
While the settlement here at present is on a T+1 basis (that is the next day of the transaction.) RBI will now move to B+1 settlement system or an hourly settlement, which means the transaction will be settled in the next batch where each batch will have one hour duration.
What makes NEFT different from RTGS is that the former is more high value real time transactions while NEFT settlements are not instantaneous.
Thursday, January 21, 2010
MARKET AT THE CLOSING. >>Thursday, January 21, 2010
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%
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.
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’
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.
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.
Sunday, January 17, 2010
FIIs pump in Rs 8,100 cr in market in first fortnight of 2010
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.
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
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.
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???
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:
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
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.
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?
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?
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
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.
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
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.
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.
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.
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.
Subscribe to:
Posts (Atom)
