Analysis Of Shivani Oil For Investment

About The Company

Shiv-Vani Oil is India’s largest services provider for onshore exploration and production activities and is currently operating 40 rigs. It is the largest seismic data operator and also the largest operator of land breaks in India.

About The Financials

It has posted a good performance for the second quarter ended 30th September 2009. YoY, net sales rose 58% at Rs.323.52 crore. Contract expenses rose 72% and despite oil prices now ruling lower than last fiscal, its outgo on oil and lubricants rose 68%. But firmer prices on rigs helped it shore the margins. EBIDTA was up 52% at Rs.138.23 crore. Net profit was up 18% at Rs.56.39 crore.

The improvement in the performance has been mainly on the back of deployment of five new onshore rigs. Depreciation of the rupee has also helped as it has posted a currency fluctuation gain of Rs.3.69 crore as against a loss of Rs.3.66 crore in Q1FY10.

The company is sitting on a debt of around Rs1,400 crore , payable in about six years. The huge interest outgo, which in Q2FY10 was at Rs.40.80 crore v/s Rs.17.51 crore in Q2FY09, is the effect of this debt burden. Taking the recourse which many others have taken, the company is looking at the option of raising funds to the tune of Rs.600 crore, either via QIP or private placement to be used to retire debt and fund its future capex.

The current fiscal will remain good for the company, notwithstanding the ONGC fracas. Infact ONGC has stated that it will go ahead with Shiv Vani as it has already made expenditures in facilitating the delivery of rigs by Shiv-Vani and it is difficult for ONGC to scrap the contract at this juncture. ONGC had already imposed on Shiv-Vani a 5% penalty on the Rs 1,610-crore contract value for failure to meet the time schedule. It has also given the company its sixth extension for the completion of the 8th rig.

About The Stock

My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.

Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.

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An Outlook on India Credit Policy

RBI Credit policy has been announced and it has revised the inflation targets upwards from 5% to 6.5% for FY10. RBI has said that it will ‘watch inflation like a hawk’. This clearly means that RBI is concerned about the spiralling prices and this could be the prime issue which would dictate the policy decisions in the coming months.

Apart from that, the RBI Monetary Policy was just another non-event.Interest rates were kept unchanged.Major announcement could be summarized as below:-

1. CRR was unchanged at 5%.

2. Repo rates unchanged at 4.75%.

3. Reverse repo rates unchanged at 3.25%.

4. SLR rate was hiked to 25% from 24% and this, the RBI says would not affect liquidity.

5. FY10 GDP forecast has been kept unchanged at 6% for FY10 with upward bias.

And at the same time, the policy has said that it expects to see a modest decline in agriculture. The RBI does not seem to be overtly worried about the decline in agri growth as it is feels this fall is seasonal and once the monsoons, hopefully, improves in the next year, things would fall back in place. It expects robust growth in industrial sector to more than make up for the decline in agri and that, RBI hopes, would keep the GDP buoyant.

RBI is also equally worried about the present situation of liquidity. And knowing this, it has pointed out that there is enough evidence pointing to excess liquidity feeding into asset prices. FY10 money supply growth projection has also been lowered to 17%.

Loans to real estate companies are to become more expensive as realty provisions have been hiked to 1% from 0.4%. The immediate fallout of this would be that some developers who are already having a huge interest cost would now have to pay more. This would mean, costs for realty companies would go up and in all probability, developers would pass on this cost to the consumers, meaning realty prices would go up.NPA norms for banks have been tightened, which is expected as always.

Collateral borrowings are to now attract CRR. So this is more like a back door entry of the hike in CRR which seems like a surety in Jan 2010, or even before that.

Indian Markets Reaction to the Policy

Markets were down 110 points just few minutes before the RBI Monetary Policy came in. And it continued to remain in the red, with realty companies slipping fast. Though a non-event, the market is now worried about the hawkish stance taken by RBI. It clearly sends out the signal that in the coming months, when the next policy is out in January 2010 or even before that, screws will get tightened.

Calculation Of Inflation Figure in India

Weekly inflation figure is a big joke.

The rate which was given by the Govt and the actual rates which a man on the street had, had no co-relation. Inflation is currently at below one percent but we are paying over Rs.100 for a kilo of toor dal. And though we all in the media and economists have been screaming themselves hoarse, urging the Govt to relook at the way in which it was looking at inflation, unfortunately, which till two days ago, fell on deaf ears. But finally some noise seems to have reached and the Govt has actually changed the way we calculate inflation. Yet, the sad part is that this new change would in no way once again reflect the true picture.

Amendments made for Calculation of Inflation Figures

Inflation for the week ended October 3, 2009, was 0.92%. And inorder to present a better relfection of the reality, the Cabinet Committee on Economic Affairs approved the proposal to release inflation data on a monthly basis. The base prices for calculation of inflation would be those in 2004 as against the earlier comparison with 1993 prices. The government will now release two sets of inflation data, one is the weekly data which will have primary articles and fuel items and the second one would be more comprehensive on a monthly basis.

Why did this sudden light dawn on the Govt?

Weekly figures were not giving a true picture of the change in prices, especially from the manufacturing sector. But once the Govt goes with a monthly calculation, there would be a much better reflection of the correct picture. One month is a good enough time to take into account price changes over various sectors and that in the real sense, would give a more correct picture of inflation.

The decision to change the base year to 2004 is also a good one as it is considered to be a more stable year, with respect to economic activities like production, trade and their prices. This 2004 base year will ensure more consistency. The monthly data and 2004 as base year is good but what would be a more apt reflection of the true prices would be a change in the weightage of goods on the Wholesale Price Index (WPI). This, the Govt says would also be changed and we will have to wait till November.

India is probably amongst the very few countries in the world which uses the Wholesale Price Index (WPI) to calculate inflation while all the developed countries use the Consumer Price Index (CPI).

WPI METHOD

WPI was used a method of calculation way back in 1902 and we have shrugged off most of the old ways of life, but this continues. In WPI, a total of 435 commodities data on price level is tracked and of this over 100 commodities have no relevance when it comes to giving an indication of price levels. The last time, the WPI was updated to ‘current’ times was in 1993-94. In the computation of WPI, the 3 major variables are Primary articles, fuel, power, light and lubricants and manufactured products. The receipt of input on weekly prices in manufactured products is very low. Services form no part of the WPI at all though its share in the calculation of GDP is over 50%.

Why can’t we shift to CPI like the rest of the world?

CPI tracks the prices of a specified basket of consumer goods and services. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. In India, CPI is calculated on a monthly basis while WPI is on a weekly basis. CPI, as the name suggests indicates price which is a consumer is paying while WPI is about the wholesale prices and there is always a huge variance between the two. So how can wholesale prices be an indication of what the layman on the road is paying?

Conclusion –

we will get a new set of inflation rate but once again it may not be a 100% reflection of the picture on the ground.

Analysis Of Mundra Port For Investments

About The Company

Mundra Port and SEZ, an Adani group company, is currently the only listed non-captive private sector port. It is engaged in developing, operating and maintaining the Port and port based related infrastructure facilities, including multi-product SEZ. The company recently bagged Mormugao Port coal terminal development on a design build, finance, operate and transfer (DBFOT) basis. With this expansion into Western coast ports with good presence in coal and gas terminals, it will vastly improve the potential of the company.

About The Results

The company has done very well for the first quarter ended 30th June 2009. It posted a net sales of Rs.298.04 crore, rising 18% on a YoY. EBIDTA was up 22% at Rs.220.11 crore. Net profit was up by a healthy 76% at Rs.170.75 crore.

This strong performance has been on the back of strong growth in cargo volumes. While major Indian ports have together shown a growth of 1.9%, Mundra Port has shown a rise of 24% in cargo volumes in Q1 June 2009.

In Q1FY10, there was a 23% (YoY) rise in the number of vessles, which called at the port. There was a 24% rise in total cargo handled at the port at 9.89 mmt. Of this 24% came from coal, 20% from crude, 165 from vegetable oil and chemicals, 26% from container, 5% from fertilizer, 5% from steel and 45 from mineral and others.

About The Stock

My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.

Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.

Analysis Of India Cements Limited for Investments

About The Company

India Cements, India’s leading cement manufacturer of South India.Indian Cements 1.10 mt capacity went on stream in April 09’. The company is investing Rs 300 crore for establishing a cement plant with an initial capacity of 1.5 million tonnes per annum (tpa) in Rajasthan and this investment is through Indo Zinc. The total project cost is Rs.600 crore and of this, Rs.300 crore it plans to bring in from debt. This is the second foray of the company into north India, its first project is in Himachal Pradesh, which unfortunately has been embroiled in infra bottlenecks. Its unit in Maharashtra is up and running.

Clearly India Cements is breaking its image of being just a South India based company. These forays into other parts of India will thus help the company get a better-rounded growth. Huge capacities are to go on stream in this fiscal, and it will leave the industry with surplus capacities.

About The Financial Results

The company has presented a good set of results for the first quarter ended 30th June 2009. Net revenues were up 9% at Rs 953.48 crore on a YoY. EBITDA/tonne was at Rs 1188 as against Rs 877 on a QoQ while it was at Rs.1092 on YoY. Net profit rose just marginally by 2% at Rs 144.28 crore.

The pressure is more evident on the profit margins. OPM was down to 30% as against 34% in Q1FY09. The quarter saw a sharp rise in ‘other expenses’; it was up YoY by 74%. These expenses included Rs.13.47 crore on account of dry docking expenses on a ship. Its power, fuel and freight costs remained flat when compared on a sequential basis.

The subdued performance was mainly on account of lower demand from parts of Karnataka and Andhra Pradesh. Andhra Pradesh is the largest consumer of cement in South and in Q1, consumption was flat in that region as most of the infra projects were put on hold due to the elections. But now with elections over and done with, it is expected that cement would see a pick up in this current Q2 quarter.

About The Stock

My personal opinion on this stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have right to email me mentioning the name and date of registration to ask for the same.

Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.

Detail Analysis of Uttam Galva Steel Ltd.

Uttam Galva Steels promoters have signed a co-promotion agreement, with Arcelor Mittal Netherlands (AMN), B.V. Netherlands, which is a 100% indirect subsidiary of Arcelor Mittal, the world’s largest steel manufacturer. Under this, existing promoters will be transferring 5.60% stake to AMN, out of 45.60% held by them.

Though AMN, have not yet acquired 15% or more in the company, but in view of they becoming joint promoters of the company, open offer has been triggered. AMN has made an open offer to acquire 3.52 crore equity shares of the company, at Rs.120 per share, which is opening on Saturday, the 31^st October 2009 and closing on 19^th November 2009. The present paid up equity capital of the company, is at Rs.119.85 crores, which would eventually rise to Rs.136.73 crores, on conversion of series A, US $ 17.50 million FCCB, at Rs.45.12 per share, with fixed rate of exchange on conversion of Rs.43.53 per U.S. Dollar. Though conversion option of these FCCBs, can be exercised upto 31^st July 2010, it is most likely that, this will get exercised in the near future, so as to enable them to participate in the open offer.

Paid up equity of the company, which was at Rs.113.97 crores, got raised to Rs.119.85 crores, on allotment of 58.75 lakh equity shares, on 27^th August 2009, to the promoters of the company, on acquiring power division, of Shree Uttam Steel and Power Ltd. Due to this, promoters stake in the company, rose from 40.71% to 45.60%.

With open offer now being made at Rs.120 per share, and share now ruling at Rs.125, with frozen at the upper circuit, commercial sense says that it will not see any response coming in. So does it likely to get revised upwards, the last date for which is 10^th November 2009. Quite likely, and the revised price call would be taken at that time, which is likely to be close to the prevailing market price, of the company, at that time.

However, if one sees the present shareholding pattern of the company, 4.40 crore shares, which is about 32.20% of the emerging voting capital, is held by just 5 FIIs. In addition to this, 1.69 crore equity shares, being 12.35%, most likely to get acquired by FCCB holders on conversion, puts it at about 44.50% of the expanded equity base. One knows that, due to overseas presence of the new promoter, it will be easy to acquire the stakes held by these OCBs and FIIs. However, existing promoters of the company have also hinted of AMN, increasing their stake in the company, in the near future.

So can one expect a complete buy-out of the company, by AMN, with 75% stake to be held by them, with 25% remaining with the public, to enable the company to remain listed? This 25% stake may in turn, partly remain to be held by these FIIs or OCBs, with very low Indian public float. Probably, smelling this, the share is seeing renewed buying interest, as future AMN company in India.

The present market capitalization of the company works out at close to Rs.1600 crores, adding debt thereto, of close to Rs.1200 crores, enterprise value of the company works out to Rs.2800 crores. This valuation, definitely appears to be quite stretched, which is over 25 times of its average PAT, of last three years, and considering that the company has never rewarded to its shareholders with the dividend as yet. But, as AMN was unsuccessful in creating its presence on the Indian soil, and especially in the steel sector, it seems that they have overlooked the valuations, or consciously moved to pay Rs.500 crores, or so, more. The company presently has a capacity of 6 lakh TPA and raising it to 8 lakh TPA in this fiscal. With AMN assuming complete control of the company, it can get raised to 2 million tonne plus in next couple of years, at very low cost, due to in-house strength and capability lying with AMN, for various value added products.

This acquisition has one more twist. Bhushan Steel and Uttam Galva promoters are related to each other (Miglani’s son married to Singal’s daughter) and even Bhushan Steel Ltd. may be next on the radar of AMN group. Bhushan Steel is also a one million tonne producer of CR coil, GP/GC and Colour Coated coils. In the recent past, promoters of both these companies, seems to be more bullish on power generation and realty space and have been making huge investments in both these sectors. So maybe, realizations of the stake sale, can give them better returns in these two sectors, instead of continuing in their existing companies.

Keep fingers crossed. If this happens, it will be uttam for the country, and for the shareholders of both the companies. Presence of Mittal Group, in India will see many steel stocks getting re-rated.

Analysis of BASF India For Investments

About The Company

BASF India Limited is the flagship company of the BASF Group in India. The company is listed on the National Stock Exchange and the Bombay Stock Exchange. BASF India Limited is headquartered in Mumbai, with manufacturing facilities in Thane, Mangalore and Dadra.

BASF India Limited manufactures and markets expandable polystyrene, tanning agents, leather chemicals and auxiliaries including specialised metal complexdyes, leather dyes, Textile Chemicals, dispersions and speciality chemicals, acrylic polymers in primary forms and crop protection chemicals.BASF India Limited is also involved in the trading of chemicals including dyestuffs and related textile auxiliaries, and renders technical services to various industries.

About The Financial Results

Given the cyclical nature of its business, the first two quarters of the fiscal, Q1 and Q2 are always good, with Q2 being the best in the year and the worst is Q4. BASF India has posted an ‘Ok’ performance for Q1FY10. It reported a rise of 12% in its net profit for Q1FY10 though total income fell marginally to Rs384.15 crore from Rs385.87 crore in Q1FY09.

The company plans to stop production of agrochemicals at its Dadra site under the company’s rationalisation measures. The company has stated that this will not affect the earnings of the company in any way. Further, to rationalise the company’s manpower needs and to build efficiency, the board has also approved the introduction of voluntary retirement scheme for employees. As a part of its rationalization, the company has removed low margin generic products and has also shifted its resources from cotton to soyabeans, fruits and vegetables which would help boost the margins.

The company is planning to set up a 9000 tpa compounding plant at Thane for the engineering plastics business, costing Rs.17.20 crore which is to be funded mainly via internal accruals.

On consolidated basis, BASF Polyurethanes a wholly owned subsidiary is incurring losses, and BASF SE have expressed their intention to acquire this subsidiary, which if happens, would re-rate the company as also would increase its bottomline even on consolidated basis.

In July 08, Promoters of the company raised their stake from 52.69% to 71.18% by acquiring shares under open offer at Rs.300 per share. Open offer at the time did not evoke full response as insurance companies and financial institutions did not tender shares in open offer and continue to hold about 18% in the company.

About The Stock

My personal opinion on the stock with regard to its’ price performance in short to long term on basis of Fundamental analysis , Technical analysis and my exclusive multi bagger reliable news sources are exclusively reserved for the registered member with detailing of the same. Only registered member have rights to email me mentioning the name and date of registration and asking for the same.

Disclosure : I do not feel any need of giving any disclosure over here , my personal portfolio are always shared with the members.

My View On Goa Carbon Ltd for Investments

About The Company

A part of the Dempo group, it is one of the leading manufacturers of calcined petroleum coke (CPC) in India. The company has a capacity to produce 2,40,000 tonnes per annum (tpa) of calcined petroleum coke, which is next only to Rain Commodity’s annual production capacity of around 6,00,000 tpa. The company supplies raw petroleum coke to Indian Oil Corporation, Baruni and Bangaigaon Refinery and Petrochemicals. The plants of the company situated at Goa, Bilaspur and Paradeep. It exports to Australia, Egypt, Dubai, France, Kuwait, Iran, Saudi Arabia, Singapore, Malaysia, Indonesia, Thailand, South Africa, Russia, Wales and England.

About The Financial Results

The company has had a very volatile time, oscillating between losses and profits. The company has been making losses since Q4FY09 and now has run into Q1FY10 also. Being dependent to a large extent on exports and given the overall slowdown, lack/postponement of orders is what has ailed the company.

For Q1FY10, net sales on a QoQ was up 59% at Rs.47.41 crore. It ended with a net loss of Rs.4.82 crore, which is again an improvement over the net loss of Rs.7.05 crore in Q4FY09.

The company was unable to pass on the burden of increased costs to the customers as many has postponed delivery. The costs have gone up due to imported raw materials and exchange rate fluctuations. Realisations were down. The company had a write down of finished goods inventory during the quarter of Rs.28.78 crore to bring to net realisable value. Also due to reduction of viable export & domestic orders, the plants were shut down during the quarter, where Goa plant was shut for 80 days and Paradeep plant was closed for 40 days.

The Board has approved the setting up of a wholly owned subsidiary outside India to invest in a JV in China to manufacture CPC.

About The Stock

My view are reserved only for the registered members and exclusively meant for them.All registered member may email me to have my advice on this stock mentioning there date of registration.

Bharat Nirman

The Govt has announced its second phase of Bharat Nirman which has a deadline of 2014.

This includes providing electricity to 40,000 villages, connect 23,000 villages by roads, raise the number of low cost houses to be constructed from 6 million to 12 million. Given the stress it has laid on promoting agriculture growth, it aims to being 3.5 million hectares of land under irrigation. Bharat Nirman is split into six parts – roads, electricity, low cost housing, drinking water, irrigation and telecom.

This sounds good but no one is really too excited at the moment as it is yet to clear the huge backlog from phase I itself. It proposed to give road connection to 66,802 eligible habitations which was later scaled down the target to 59,536 habitations. The achievement, however, has fallen short of the target – it provided only 49% of the proposed new roads, 55% in upgraded and developed roads and it managed to reach only 49% of the proposed habitations.

Providing electricity has been its biggest failure. Till 31st March 2009, 60 thousand villages remained untouched by electric power. Totally, of the targeted 7.8 crore households, which were to be provided with electricity, it reached only 7% households.

In irrigation, the target till March 2009 was 10 million hectare but it achieved only 5.58 million hectares, which is around 44% short of the target.

In water supply, the target was to provide potable water to 6,03,639 villages but it provided to only 4,79,898 villages till March 2009, which is 20% less than the target.

But in providing low cost housing to the rural population, it has actually exceeded the target. Done under the banner of Indira Awas Yojana, it is routed through the panchayats. As against the target of providing 60 million units, it has managed to provide 61 million houses, which is 102% above the target.

In telephones, the aim was to provide telephone connection to 66,822 number of villages without a telephone and replace presently dysfunctional systems. Of this, till March 2009, it managed to achieve 84% of the target at 56.030 villages.

Bharat Nirman has been an excellent idea, not just for the UPA as it helped them win the elections but also for India. But clearly, it has to work on speeding up when it comes to implementation. Till 31st March 2009, it had spent Rs.1.14 lakh crore on Bharat Nirman which is two-thirds of the target. This means, paucity of funds was the issue. Land litigation, vested political interests, problems with private contractors, corruption and cost overruns too its toll.

New Direct Tax Code

New Direct Tax Code

A new Direct tax code has been introduced , which would replace the Income Tax Act of 1961 within the next 45 days.It will change the way we Indians have been paying tax. And maybe prompt those who have been shirking away paying their taxes as now rates would be lower and it’s so simple.

It was like a mini Budget.The entire Income Tax Act 1961 has actually got replaced with a more progressive norm, more in lines with what the developed countries follow.

The Code is like a law. What is stipulated in the Code is what remains. So this means, the Budget would probably be more about indirect taxes and other budgetary allocations. Once this Direct Tax Code gets implemented, the Budget might then not have this anticipation in terms of changes in Income Tax.The new direct tax code would become a law only by 2011, which is 50 years since Income Tax Act came into being.

The second very important take away from this Code is that all direct tax codes would come under one umbrella.

Third facet is that it has been kept very simple and that is done to ensure better compliance and eliminate scope of litigations. The code also ensures that we will not have any confusion over assessment year and financial year and previous year. It will be about financial year, like how we have for our corporate results.

Negative Points Of New Code

According to the new proposals, all interest on savings will be taxed from 2011 onwards. And that is something which would not really go down too well with people. The markets might not be too happy with the idea of reintroducing long term capital gains on securities trading which means that there is really no incentive for along term investor to stay put.

The Code also suggested that perquisites given to employees should be included in salary income. This would inflate the taxable income of certain categories of salaried persons and this might not be such a welcome move.

Highlights of the Direct Tax Code:

1. No tax on annual income upto Rs.1.60 lakh

2. 10% tax for Rs 10 lakh income; 20% for Rs.25 lakhs and 30% for over Rs.25 lakhs

3. Corporate tax to come down from 30% to 25%

4. Wealth tax on wealth over Rs.50 crore

5. Increase deduction limit for savings upto Rs.3 lakhs

6. Interest on savings to be taxed

7. Security transaction tax (STT) to be abolished

8. To do away with long, short-term capital gains differentiation

9. Base year for calculation of capital gains tax moved to Apr '00

10. Allow indefinite carry forward of business losses

11. No tax deduction on interest payable on any Govt security

12. Rationalization of taxation of all non profit organizations

13. Annual disclosure of profits of non-life insurance business

14. Reintroduction of tax on long term capital gains on securities trading

15. Foreign companies to pay additional tax of 15% as branch profit tax