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.

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!

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!

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.

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

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.

Oligopoly is not good for customers

Within a week of the Tamil Nadu government's threat of taking over cement factories in the state if the companies did not cut prices, cement manufacturers have offered to sell 20 lakh bags of blended cement every month in all districts of Tamil Nadu at a subsidised price of Rs 200 per 50 kg bag.Top officials of cement companies like India Cements, Madras Cements, Grasim Industries, Associated Cement Companies, Ultratech Cement, Dalmia Cement and Chettinad Cement met Tamil Nadu Chief Minister M Karunanidhi today, and submitted their joint acceptance letter stating their intention to make available cement at reduced prices.--- BS


Oligopolist always have the tendency to form a cartel and control the market. Whent it comes to cement, it seems as if this is the industry that have been perfectly matched for this tactics.

TN government seems to go against for the prices fixed by the companies in this industry. Most of the pundits are seeing this as a war between Mr.CM and maran family whoz said to have controlling stake in India Cements through various spiders.

I don't know about their feud, but this definitely seems to be a great news for construction industry and ofcourse home buyers. They might possibly get atleast 2%-5% drop in prices. How? If this is a first step, then various raw materials that are related to construction and other related industry would be regulated in a fair manner. Most of the people won't buy my argument. Cement industry always had the tendency to increase the prices despite fair price in raw material for cement. Most of the top biz man went against the controlling that has been done by our commerce minister. Infact Television channels argued against minister and lobbied for cement sector.

If cement companies play a fair game, then there is no need for any intervention. If they tried to capitalize the demand and charge unfair prices, then it would certainly affect the economy. Only few section of the economy really have the buying power and could afford it. Others could only see how these guys are consuming.

"Rich become Richer, Poor become poorer". This would continue despite 9% GDP growth. There is no inclusive growth. Only few people are making money and rest are just seeing it in their Television Channels. Then there won't be fair competition. New comers can't come to industry. There won't be any innovation. There won't be job creation.

“Business is not only about money its also about economy”

Whatz the real value of ADA?

Cluless! This is the exact word I'd put when anyone ask me about his networth. There is really nothing in his business. Most of the people won't agree with me. Its how life goes. If you ask Mr.Anilji, he'd say " When Elephant march forward dog barks"!! What a man and ofcourse what a word!

Here is what DNA says in one of its article about the value of REL.

Reliance Power, a subsidiary of Reliance Energy, will float India’s largest public issue of Rs 11,700 crore, by selling Rs 10 face value shares in the range of Rs 415 to Rs 450, after the Securities and Exchange Board of India cleared the issue.The largest IPO to date in India was floated by real estate giant DLF, which had raised Rs 9,187 crore.

Reliance Power will offer 9.95% stake — or 26 crore shares — to the public.
The issue opens on January 15 and closes on 18. The promoters of Reliance Power — Reliance Energy and AAA Projects, will hold the rest equally, or about 45.025% each.

At the higher end of the price band of Rs 450, this would mean a valuation of about Rs 53,100 crore added to the Reliance Energy shares.

Considering Reliance Energy’s paid-up equity of 23.6 crore shares, the value of its holding in Reliance Power alone works out to roughly Rs 2,250 (Rs 53,100 crore divided by 23.6 crore).
Analysts Shirish Rane and Bhoomika Nair of brokerage house SSKI had, in a report on October 1, estimated the value of Reliance Energy without Reliance Power at Rs 869 per share.

Combining the two takes Reliance Energy’s valuation soaring to over Rs 3,110 per share.
The Reliance Energy share closed around Rs 2,365.50 on Wednesday, up 7.5%.
Retail investors will be asked to pay a lesser amount at bidding, and will have to pay the balance only at allotment, or as per the terms announced.

Reliance Power will be the Anil Ambani group’s primary vehicle for investments in power generation, while Reliance Energy itself is metamorphosing from a transmission & distribution to an infrastructure player.

Reliance Power has lined up projects to generate 24,200 mw through 12 projects.

If you really look into balance sheet, its really tough for you to find any cash reserves that could be helpful for Mr.Anilji to carry forward those mammoth projects which are said to be in pipeline. We need to wait and see how many IPOs he would bring inorder to collect money from Public. It seems as if he is running a political party and making collections from the public. This is what that is happening at Reliance.

There is no doubt that this controversial IPO would make him richest man. Make no mistake his loving brother Mr.Mukeshji would possibly come up with Reliance Retail and ofcourse there is Reliance Life Science, may be physical, geographical, political and whatever sciences are there it would come up in line till his last breath. If someone asks why you're doing this collections he would say " Dog barks while Elephant March"!

Take Mr.Warren Buffett, who is said to have almost similar networth to Ambanis. He is having $45billion in cash through his various investments( Infact there are float, which I'd discuss you later). In contrast Mr.Anilji would go for ECBs and IPOs than buying it through cash. Because he don't have that. All his networth are illusion, because retail investors are living in fantasy world.

I think this single article is not enough! Would continue????

Indian Growth story equals to stock markets

Indian stock markets are seen as economic symbols of success. This is clearly misinformed, lunatic and pathetic show that has been purposely done by intellectuals inorder to attract FDI to our country.

There is a petroleum company that is yet to start its operations. But it is valued in triple digits. There is another company which is saying that its in Oil exploration and et al. Its PE multiples are around 1500. Indian Government is saying that Indian economic story is reflecting in its stock markets.

Tom, Dick and Harry invested Rs.10k in a penny stock said by one of the television channels. They made huge money. Their investment is Rs.10k and their profits are 10k. They tried to enter another stock that has been recommended by the same channel. This time, they’re not able to catch that scrip. It continuously hit upper circuit for months and finally website of that channel proclaim that their recommendation gave their customers (how many brokers & operators are their customers?) more than 1500%. There is another company that is related to term that has been used in stock markets. That company continuously involved in corporate scandal, penny stock scandal and almost all the scandal that are related to stock markets. They went inside regulator room with a briefcase and they’ve been given clean chit.

With all these craps Indian stock markets are reflecting Indian economy.

Indian GDP growth at 9%- Social growth in Question???

India Investment Booms With Third Year of 9% GDP Growth in '08 -Gordon Brown's plane will have barely departed New Delhi's Indira Gandhi International Airport this month before Nicolas Sarkozy's arrives with another contingent of executives seeking opportunities in India's rapidly opening markets. The British prime minister and the French president, separately visiting the week of Jan. 20, are bringing along commercial delegations including retailers Tesco Plc and Carrefour SA, attracted by a burgeoning middle class and loosening curbs on foreign ownership in the nation of 1.1 billion people.
Top Headlines related to India's growth story
Crime rate on decline, but murders up in Delhi
Despite a marginal decline in criminal offences, Delhi continued to be India's crime capital in 2007. A whopping 53,244 criminal cases - including 467 murders, 581 rapes, 1764 dacoity and other heinous crimes - were registered in the city during the year. During the year, the capital also emerged more bloodthirsty compared to 2006 when 462 murders had taken place. The 467 murders in 2007 meant Delhi registered 1.08 percent more killings than the previous year, according to Delhi Police annual crime statistics.
Poverty in India
Poverty line is drawn on the basis of a barest minimum desirable nutritional standards of calorie intake. Nearly half of India's population is estimate to be deprived of this basic minimum standards. People below the poverty line comprise largely those whose consumption is very low and who have little physical resources of production. They are located in the climatically unfavorable regions with extremely low and fluctuating levels of production, income and meagre avenues of gainful employment. The Human Development Report for 2000 has placed India at 128th among 174 poor nations and its population to the extent of 34.6% is poor whereas the 2001 report placed India at 115 among 162 nations and the report for 2002 has now put the country at the 124th place among 173 nations. The 10th Five Year Plan aims to reducing the poverty below 20% in the country by 2007 bringing it down from 26.10% at present.
More to continue on this topic...,

Citi and Indian Capital Markets

Citigroup Inc , the largest U.S. bank, may need to write down $12 billion of debt and boost reserves for bad loans by $1 billion as the global credit crunch deepens, a Sanford C. Bernstein & Co analyst said.

Citi seems to shed billions and billions of dollars in mortgage related instruments. In India Citi seems to compensate all these losses by buying stocks that are keeping on rising despite PE multiples in Triple Digits.

India Bulls Real Estate Rs.767 PE Multiple of 1347.

Hindustan Oil Exploration Rs.154 PE Multiple of 810

Zicom Rs.247 PE Multiple around 40

Karuturi Networks Rs.393 PE multiple around 89

These are few examples. We’d like to see how the prices of Zicom are going to climb after series of bulk deals done by Citi. I accept there might be some turnaround stories or hidden stories. But these PE multiples are really awkward.

We also would like to see the prices of scrips after purchase of Reliance Capital. At this point of time, we don’t want to comment on these purchases. Lets’ make comment after 6 months. We would compare the previous balance sheet and we could find whether the price justifies the market price of particular scrip. Till then, Wait and Watch!!!!

Plight of Largest Employer in India

An Industry That's Fraying Fast -This is an article I read on Businessweek. This article clearly states the plight of Textile Industry that has been affected by rising rupee. I think that Textile manufacturers have forgotten to innovate to counter attack the raising rupee.

Indian Long Term Story is Intact!

Hi Guys,

Indian Long term Story is Intact. There might be lot of stories that could get unnoticed which could possibly cause havoc on economy after decades. This is exactly happening in USA. Most of the guys would think that Ben Bernanke is the prime culprit for US turmoil.

Believe me its Alan Greenspan, who did lot of things (despite several warnings given by his colleagues) that went unnoticed during his tenure as Chairman of Federal Reserve.I just want to focus on Stories that is getting unnoticed or not taken seriously. People might think that I'm bearish on India. My primary aim to highlight issues that could help individuals aware of facts that could possibly stir the decisions that have been taken on utmost good faith?

I sincerely hope this blog would be helpful for me to enhance my knowledge on possible problems that could arise due to various issues that could possibly get unnoticed.
I get my inspiration from Calculated Risk, A blog that has been covering US Mortgage and Real Estate. I sincerely hope that may be from couple of years, I could match CR.