Friday, August 22, 2008
Inflation peaking.
Inflation touches to 16 year high and its reminding that another CRR wouldn't be a surprise. From next week sugar is also added to the inflation index which could possibly add atleast 5 basis points to inflation figures. Dollar depreciation is the best possible way for the government to tame inflation. But RBI doesn't seems to take any step to depreciate dollar rather its involved in depreciating rupee. Pain comes from inflation plus imports of oil.
Tuesday, August 12, 2008
June Industrial growth 3.5% less than growth of previous year
June industrial growth stands at 5.4% versus 8.9% (YoY) versus 4.1% in May.While infrastructure output number stands at 3.4% versus 5.2% (YoY).May industrial growth has been revised to 4.1% versus 3.8% earlier.Capital goods growth has come out at 5.6% (YoY). Manufacturing growth is at 5.9% versus 9.7% (YoY). Consumer goods growth is at 10%, while mining growth is at 2.9% (YoY). Electricity growth is at 2.6% (YoY).
Slowdown on Cards. There is huge gap of almost 3.5% YOY industrial growth which clearly shows that India is also not alien to global slowdown. If someone says India is decoupling, they're in fools' world.
But how hard is India Inc really affected this quarter? CNBC reports
I'm back
Past 4 months, I've been engaged in various issues which has made me to postpone my work in this blog. Now I've come out with a bang. I'm expecting to come out with articles that would portray the unnoticed problems in Corporate India. Ofcourse, this blog is all about this!
Friday, February 29, 2008
Reliance Power- Real power for Mr.Ambani
Reliance power has come out with Bonus shares. Is it possible to give a bonus shares without having balance sheet. A tough question to answer, but these folks at Reliance power doesn’t mind it. As usual SEBI seems to do its duty- doing its own business of watching small companies and other corporations. Reliance seems to be power house in lobbying for its own cause. Mr.Ambani made a child like comment that market interests are responsible for negative trade of its group shares. When almost all the shares are up on daily basis, he is busy on competing with his brother to become Richest Indian in the earth and possibly richest man in the world.
Indian capital markets suddenly seem to be dangerous place in the world, where most of the IPOs are coming without rating. I don’t know how it’s possible for Mr.Ambani to come out with this comments without realizing that it’s childish. He has his own vested interests in stock markets. He is creating a company and from that he is creating a dozen and from that dozen he is creating another dozen and it has become customary for him to repeat it without any hazard. No one in SEBI seems to mind this problem and its going to continue on daily basis and if it continues Mr.Ambani would become richest man without single dollar in his balance sheet. But magazines would say, he is richest man in the world. Mr. Warren Buffet is having $40 billion cash in his balance sheet. Would you call him as a richest man or would you like to call Mr. Nil oh sorry Mr.Anil as a richest man who is having nothing than paper money. There is no original stuff in his balance sheet.
People should wake up and invest in Real Company than just names. Chak de India!
Indian capital markets suddenly seem to be dangerous place in the world, where most of the IPOs are coming without rating. I don’t know how it’s possible for Mr.Ambani to come out with this comments without realizing that it’s childish. He has his own vested interests in stock markets. He is creating a company and from that he is creating a dozen and from that dozen he is creating another dozen and it has become customary for him to repeat it without any hazard. No one in SEBI seems to mind this problem and its going to continue on daily basis and if it continues Mr.Ambani would become richest man without single dollar in his balance sheet. But magazines would say, he is richest man in the world. Mr. Warren Buffet is having $40 billion cash in his balance sheet. Would you call him as a richest man or would you like to call Mr. Nil oh sorry Mr.Anil as a richest man who is having nothing than paper money. There is no original stuff in his balance sheet.
People should wake up and invest in Real Company than just names. Chak de India!
Saturday, January 19, 2008
Reliance Power IPO subscribed almost 73 times
The initial public offer of Reliance Power, Anil Dhirubhai Ambani Group Company, has received an excellent response since day one despite negative sentiment in markets as well as across the globe. The issue subscribed 73.04 times and received bids worth about Rs 7.5 lakh crore.The reserve portion of QIBs subscribed 83 times and non institutional investors 190 times and retail nearly 15 times.
This is the first time a blockbuster IPO has come out without a balance sheet. This is indeed a shocker for anyone who looks for history of the company. Does Reliance really have expertise? Does reliance have the tenacity to work on this project. Reliance might have done lot of projects. Enron has been voted as an innovative company for eight consecutive years. It wasn't there for 9th time, because it becomes bankrupt. We'll wait and watch whether they could come out with flying colours.
This is the first time a blockbuster IPO has come out without a balance sheet. This is indeed a shocker for anyone who looks for history of the company. Does Reliance really have expertise? Does reliance have the tenacity to work on this project. Reliance might have done lot of projects. Enron has been voted as an innovative company for eight consecutive years. It wasn't there for 9th time, because it becomes bankrupt. We'll wait and watch whether they could come out with flying colours.
Friday, January 11, 2008
SBI might buy scam hit SCHIL
It may have been the Maharashtra government’s persistent questioning and threat to cancel the e-stamping project that did it. Or, a dawning realisation that running Stock Holding Corporation of India Limited (SHCIL), an unlisted entity with disinterested promoters was a recipe for recurring problems. Whatever the reason, we reliably learn that State Bank of India (SBI) has been asked to take over SHCIL. The issue may be taken up for approval at the SBI’s board meeting on 18th January.
Sources also say that SBI may consider turning into a global custodian and that the SBICI (the former BCCI bank acquired in another bailout) is the best vehicle for this business, which can begin operations with a large and ready base of Indian institutional investors.
The acquisition move has come after KPMG’s forensic investigation team, the Serious Frauds Investigation Office (in the Ministry of Corporate Affairs) and the Central Bureau of Investigation (CBI) conducted hush-hush investigations and submitted reports. Effectively however, the scam at SHCIL, documented at length by MoneyLIFE, has been successfully buried. In time-honoured tradition, patented by the Reserve Bank, a problem situation is sought to be resolved by organising a shotgun takeover of SHCIL by a large government undertaking.
The decision was prompted by the fact that several states willing to give e-stamping a try have expressed concerns about the technology, SHCIL’s ownership and the absence of any sovereign assurance about the technology.
This may have forced a realisation that the e-Stamping project can proceed on a pan-India basis only after a demonstrable clean-up and unified ownership of SHCIL. SBI certainly has the credibility and network to ensure this.
The acquisition apparently has the blessings of the Finance Ministry. Institutional shareholders of SHCIL, such as ICICI Bank, IFCI, IDBI and SUUTI have who have a 16.96% stake each, may be asked to relinquish their holding in favour of SBI to give it a controlling stake of 51%.
However, ICICI Bank has apparently been demanding a stiff price for the acquisition. It wants the National Stock Exchange (NSE) shares, held by SHCIL to be valued and also wants a control premium. However, SBI also has the option of acquiring shares from other institutional investors such as Life Insurance Corporation, which holds 15% , or entities such as IRBI and National Insurance of Kolkata, New India Assurance or Oriental Insurance.
With regard to valuation, it is important to remember that every institutional investor, especially those with a board representation, failed in their oversight responsibility leading to the scam. Otherwise, how could a rouge chairman – that too an IDBI employee – manage to steal a subsidiary, debilitate SHCIL, the parent company and dare to set up a 100% subsidiary in Singapore with the sole aim of skimming the fees payable on the e-stamping technology arrangement? It is absurd to think that ICICI could sabotage a takeover by demanding exaggerated value for its shares.
There are other issues as well. The pilot projects for implementation of the e-stamping project had led to new questions about technology. The States that are keen on implementation also want a larger liability cover, since SHCIL’se-stamping service does not have any international certification such as the ISO 9000 or the ISO 27001 (security). Worse, several key officials involved in the e-stamping project have quit the organisation in recent months.
Clearly, finding a single and responsible parent for SHCIL is a good idea and the government must ensure that it is not blocked by unfair valuation demands. Once the company itself is acquired, the government will hopefully have the courage to ensure that the scamsters do not get away with their dubious deeds.
This article has been written by Sucheta Dalal. www.suchetadalal.com
Sources also say that SBI may consider turning into a global custodian and that the SBICI (the former BCCI bank acquired in another bailout) is the best vehicle for this business, which can begin operations with a large and ready base of Indian institutional investors.
The acquisition move has come after KPMG’s forensic investigation team, the Serious Frauds Investigation Office (in the Ministry of Corporate Affairs) and the Central Bureau of Investigation (CBI) conducted hush-hush investigations and submitted reports. Effectively however, the scam at SHCIL, documented at length by MoneyLIFE, has been successfully buried. In time-honoured tradition, patented by the Reserve Bank, a problem situation is sought to be resolved by organising a shotgun takeover of SHCIL by a large government undertaking.
The decision was prompted by the fact that several states willing to give e-stamping a try have expressed concerns about the technology, SHCIL’s ownership and the absence of any sovereign assurance about the technology.
This may have forced a realisation that the e-Stamping project can proceed on a pan-India basis only after a demonstrable clean-up and unified ownership of SHCIL. SBI certainly has the credibility and network to ensure this.
The acquisition apparently has the blessings of the Finance Ministry. Institutional shareholders of SHCIL, such as ICICI Bank, IFCI, IDBI and SUUTI have who have a 16.96% stake each, may be asked to relinquish their holding in favour of SBI to give it a controlling stake of 51%.
However, ICICI Bank has apparently been demanding a stiff price for the acquisition. It wants the National Stock Exchange (NSE) shares, held by SHCIL to be valued and also wants a control premium. However, SBI also has the option of acquiring shares from other institutional investors such as Life Insurance Corporation, which holds 15% , or entities such as IRBI and National Insurance of Kolkata, New India Assurance or Oriental Insurance.
With regard to valuation, it is important to remember that every institutional investor, especially those with a board representation, failed in their oversight responsibility leading to the scam. Otherwise, how could a rouge chairman – that too an IDBI employee – manage to steal a subsidiary, debilitate SHCIL, the parent company and dare to set up a 100% subsidiary in Singapore with the sole aim of skimming the fees payable on the e-stamping technology arrangement? It is absurd to think that ICICI could sabotage a takeover by demanding exaggerated value for its shares.
There are other issues as well. The pilot projects for implementation of the e-stamping project had led to new questions about technology. The States that are keen on implementation also want a larger liability cover, since SHCIL’se-stamping service does not have any international certification such as the ISO 9000 or the ISO 27001 (security). Worse, several key officials involved in the e-stamping project have quit the organisation in recent months.
Clearly, finding a single and responsible parent for SHCIL is a good idea and the government must ensure that it is not blocked by unfair valuation demands. Once the company itself is acquired, the government will hopefully have the courage to ensure that the scamsters do not get away with their dubious deeds.
This article has been written by Sucheta Dalal. www.suchetadalal.com
Thursday, January 10, 2008
Indian Telecom Sector - License Comedy
DoT has cleared the route for five new operators to enter the Indian telecom sector. DoT issued LOIs to new applicants including Unitech, Shipping Stop and Datacom for pan India operations, reports CNBC-TV18. However, Parsvnath, Indiabulls and Cheetah's applications have been rejected by DoT. Spice Tele has got an LOI for operations in four circles. Meanwhile, Bycell, Allianz Infra, HFCL failed to bag LOIs.The LOIs will be converted to pan India licence on payment of Rs 1,650 crore. Priority in spectrum allotment will be determined by conversion of LOIs.
I don't know why DOT is giving License to a real estate company which doesn't have expertise in Telecom operations. It would be helpful for Unitech to increase its valuations. Other than that this is clear strategy to spoil the sentiments of already existing players in Telecom Industry who are there for years and suffered losses during their existense. Already an issue of CDMA & GSM has to be sorted out. Reliance got both the licenses and it clearly states the lack of professionalism of Telecom Industry. This step would definitely kill GSM lobby. This is one of the most worst decisions that has been carried out by DOT in its life time. If Rcom wants to pursure GSM it should sell its CDMA operations and it should seek GSM. But in India, its different. You could do anything provided you have financial muscle, Lobbying and everything thats working for you.
People use to say that Reliance is a marketing machine and et al. But its an overstatement and Reliance doesn't deserve this appreciation. Indian growth story woudn't be intact if government does stupid moves like giving licenses to underserved or unfit companies which are doing it only to appreciate its Market capitalization and Loan power than doing real business.
I'd bet that these companies would start SPV or seperate companies and list it in stock exchange. Later on it would negotiate to sell the company that would gain the price due to spectrum allocation. This is going to happen. This is sheer non-sense and noone would accept.
Indian Growth story is intact, if you could have a lobby in Government circles.
I don't know why DOT is giving License to a real estate company which doesn't have expertise in Telecom operations. It would be helpful for Unitech to increase its valuations. Other than that this is clear strategy to spoil the sentiments of already existing players in Telecom Industry who are there for years and suffered losses during their existense. Already an issue of CDMA & GSM has to be sorted out. Reliance got both the licenses and it clearly states the lack of professionalism of Telecom Industry. This step would definitely kill GSM lobby. This is one of the most worst decisions that has been carried out by DOT in its life time. If Rcom wants to pursure GSM it should sell its CDMA operations and it should seek GSM. But in India, its different. You could do anything provided you have financial muscle, Lobbying and everything thats working for you.
People use to say that Reliance is a marketing machine and et al. But its an overstatement and Reliance doesn't deserve this appreciation. Indian growth story woudn't be intact if government does stupid moves like giving licenses to underserved or unfit companies which are doing it only to appreciate its Market capitalization and Loan power than doing real business.
I'd bet that these companies would start SPV or seperate companies and list it in stock exchange. Later on it would negotiate to sell the company that would gain the price due to spectrum allocation. This is going to happen. This is sheer non-sense and noone would accept.
Indian Growth story is intact, if you could have a lobby in Government circles.
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