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Obama threatens fight with banks on new risk rules

noreply@blogger.com (Traders Den) — Sun, 24 Jan 2010 10:08:00 -0800

By Jeff Mason and Kevin Drawbaugh Jeff Mason And Kevin Drawbaugh – Thu Jan 21, 6:07 pm ET
WASHINGTON (Reuters) – U.S. President Barack Obama threatened to fight Wall Street banks on Thursday with a new proposal to limit financial risk taking, sending stocks and the dollar tumbling.
Obama, a Democrat who is struggling to advance his agenda after a key election loss this week, laid out rules to restrict some banks' most lucrative operations, which he blamed for helping to cause the financial crisis.
"If these folks want a fight, it's a fight I'm ready to have," Obama told reporters at the White House, flanked by his top economic advisers and lawmakers.
"We should no longer allow banks to stray too far from their central mission of serving their customers," he said.
Financial sources said Treasury Secretary Timothy Geithner had hesitations about the proposals, concerned that good economic policy was being sacrificed for politics.
But a White House official said the plan had the unanimous backing of Obama's economic team.
"We should no longer allow banks to stray too far from their central mission of serving their customers," Obama said.
After a mixed first year as president, Obama took a tough, populist-tinged stance aimed at revving up his political base by exploiting anger over Wall Street excess.
The proposals, which require congressional approval, would prevent banks or financial institutions that own banks from investing in, owning or sponsoring a hedge fund or private equity fund.
They would also set a new limit on banks' size in relation to the overall financial sector that would take into account deposits -- which are already capped -- as well as liabilities and other non-deposit funding sources.
The proposed rules also would bar institutions from proprietary trading operations, unrelated to serving customers, for their own profit.
Proprietary trading involves firms making bets on financial markets with their own money rather than executing a trade for a client. These expert trading operations, which can bet on stocks and other financial instruments to rise or fall, have been enormously profitable for the banks but can hold huge risks for the financial system if the bets go wrong.
The White House blames the practice for helping to nearly bring down the U.S. financial system in 2008.
The White House said it wants to coordinate with international allies in its implementation of the measures.
POPULIST MOVE HITS SHARES
Big financial institutions criticized Obama's move.
"Trading, proprietary or otherwise, did not lead to the financial crisis," said Rob Nichols, president of the Financial Services Forum, a lobbying group for CEOs of firms such as Goldman Sachs and JPMorgan Chase.
He said the government should be focused on better risk management, corporate governance and other forms of regulatory oversight, "rather than arbitrarily banning certain activities, or setting arbitrary size limits."
Obama's move is the latest in a series to crack down on banks and follows a devastating political loss for his party in Massachusetts on Tuesday, when a Republican captured a U.S. Senate seat formerly held by the late Democratic Senator Edward Kennedy, potentially imperiling his domestic agenda.
Bank shares slid and the dollar fell against other currencies after Obama's announcement.
JPMorgan fell 6.59 percent, helping push the Dow Jones Industrial average down 2 percent.
Citigroup Inc fell 5.49 percent and Bank of America Corp fell 6.19 percent while Goldman dropped 4.12 percent despite posting strong earnings on Thursday.
Ralph Fogel, investment strategist at Fogel Neale Partners in New York, said the move would have a major impact on big-name brokerage firms like Goldman Sachs and JPMorgan.
"If they stop prop trading, it will not only dry up liquidity in the market, but it will change the whole structure of Wall Street, of the whole trading community," he said.
Underscoring the high level of public anger at banks, a majority of 1,006 Americans surveyed in a Thomson Reuters/Ipsos poll said executive pay was too high.
White House economic adviser Austan Goolsbee said the proposals were not designed to be punitive. He said they aimed to end the concept that some banks were "too big to fail" and to show that when such firms "mess up, they die."
Before his announcement, Obama met with Paul Volcker, the former Federal Reserve chairman who heads his economic recovery advisory board and who favors putting curbs on big financial firms to limit their ability to do harm.
The House of Representatives approved a sweeping financial regulation reform bill on December 11 that included a provision that would empower regulators to restrict proprietary trading. The Senate has not yet acted on the matter.
Obama proposes tough limits on largest banks
Washington Post Staff Writer Friday, January 22, 2010
President Obama expanded his new offensive on Wall Street on Thursday, proposing rules that would impede the growth of the largest banks and bar them from making what he called "reckless" investments.
The proposal comes as the administration is shifting from its year-long effort to save financial firms toward a new willingness to confront them with explicit prohibitions on activities that fueled the economic crisis. In essence, Obama is now aiming to force the firms to choose between the federal benefits that come with being a bank and the unbridled pursuit of profits.
After opposing proposals such as hard limits on executive bonuses, the administration is embracing a tougher line -- more evidence that Obama has the industry in his sights as he seeks to show Middle America that he feels its economic pain.
Obama's plan would bar banks from making investments that are not intended to benefit customers, including the creation of proprietary investment funds solely to benefit employees and shareholders. New limits also would make it difficult for the largest banks to become any bigger, effectively stopping domestic expansion at well-known companies such as Bank of America and J.P. Morgan Chase.
While the proposed restrictions are narrower than the now-defunct law that segregated Wall Street trading from commercial banking for much of the 20th century, they share a similar goal: to subsidize banking -- which the administration considers vital to the economy -- without having taxpayers subsidize highly speculative activity.
Flanked by the members of his economic team in the Diplomatic Reception Room of White House, Obama chastised the chief executives of the nation's largest financial firms for sending what he called an "army of industry lobbyists" to fight his efforts to reform the banking sector.
"My message to leaders in the financial industry is to work with us, not against us," the president said. "If these folks want a fight, it's a fight I am ready to have."
Wall Street responds
Wall Street has responded to the administration's increased hostility with its own change in temperature. Bankers howled last week when Obama proposed a fee on big banks to recoup losses from the government's $700 billion program to bail out financial firms. Several executives said Thursday that they regretted their support for -- and campaign donations to -- Obama.
"I wish I could take my vote back," said one executive at a large bank. He spoke on the condition of anonymity because his firm barred public comments on the matter.
As the industry seeks to defeat proposals to rein in banks, companies may now be free to spend more money on political campaigns after a Supreme Court decision Thursday reversed some key restrictions on political advertising by big businesses. Unless Congress acts quickly to reassert these limits, banks and other financial firms will be allowed to support congressional candidates who oppose Obama's bank proposals.
Bank stocks fell Thursday as investors reacted to the president's proposal. Goldman Sachs shares fell 4 percent in trading on the New York Stock Exchange. Citigroup dropped 5.5 percent, Bank of America fell 6 percent, and J.P. Morgan Chase dropped 7 percent.
The proposal is part of the White House's election-year strategy to repair damage done to Obama's image during his first months in office, when he helped bail out the banking industry, senior advisers said. The president's top political aides are hoping to set the stage for a sharp contrast with Republicans, who have historically opposed government prescriptions for private businesses.
"He had to help Wall Street in order to save Main Street," a top Obama adviser said, describing the White House's message for the midterm congressional elections. "Every time we announce an economic policy that Wall Street does not like, the Republicans are standing right there with Wall Street, defending them."
Republicans offered a muted response to the president's proposal, suggesting they recognize the political dangers of siding with big banks when there is a 10 percent unemployment rate, depressed housing prices and increased voter anger.
The White House wants Congress to incorporate the proposals into the sprawling financial reform legislation that passed the House. Rep. Barney Frank (D-Mass.) and Sen. Christopher J. Dodd (D-Conn.), who are overseeing the legislation in their respective chambers, stood with the president as he spoke and then issued statements of support. Frank noted that the House bill gave regulators the discretion to impose similar requirements, but he expressed support for stronger language mandating that regulators take action.
Rebounding banks
White House advisers said the president has become more aggressive in recent weeks as it became clear that the big banks that received large amounts of government aid to stay afloat a year ago had rocketed back to profitability by making the same kind of risky investments that had gotten them in trouble.
Obama's announcement came as Goldman Sachs reported blockbuster earnings of $13.4 billion for 2009, the largest annual profit in the company's history. The firm sharply reduced the share of revenue devoted to bonuses but still pledged to pay an average of $498,000 per employee -- up 37 percent from 2008.
"When I see soaring profits and obscene bonuses . . . it's exactly this kind of irresponsibility that makes clear reform is necessary," Obama said.
Several industry representatives said they were concerned by the president's increasingly stern language, saying that the issues at stake are complicated and deserve to be discussed.
"There is a lot of concern in the banking industry, and by that I mean all banks, about the turn in the tone of the debate," said Edward L. Yingling, president of the American Bankers Association.
Obama officials said they did not discuss the new proposal with the industry before the president's remarks, a break with how the administration has announced its previous financial reform proposals. Treasury Secretary Timothy F. Geithner had dinner Wednesday night with several bank executives, but did not mention the president's plans. The executives learned about the proposal as early news reports about the proposal began appearing via e-mail shortly after the meal.
Staff writers David Cho and Brady Dennis in Washington and Tomoeh Murakami Tse in New York contributed to this report.
Obama seeks tighter limits on banks' reach
‘If these folks want a fight, it's a fight I'm ready to have,’ president says
WASHINGTON - President Barack Obama stepped up his campaign against Wall Street on Thursday with a far-reaching proposal for tougher regulation of the biggest banks.
"We have to get this done," Obama said at the White House. "If these folks want a fight, it's a fight I'm ready to have."
The stock market reacted by dropping more than 200 points by midday as shares in Bank of America, Citigroup Inc. and JPMorgan Chase & Co. each fell by more than 5 percent.
It was a stern, populist lecture from the president to Wall Street for what he perceives as its abandonment of Main Street. Obama said the government should have the power to limit the size and complexity of large financial institutions as well as their ability to make high-risk trades.
He said it wasn't appropriate that banks have been able to run these trading operations with the protections afforded to regular banking services.
"We have to enact commonsense reforms that will protect American taxpayers and the American economy from future crises," Obama said. "For, while the financial system is far stronger today than it was one year ago, it's still operating under the same rules that led to its near-collapse."
Joining Obama for the announcement were former Federal Reserve Chairman Paul Volcker, who heads the president's Economic Recovery Advisory Board, and William Donaldson, chairman of the Securities and Exchange Commission under President George W. Bush. Volcker and Donaldson have advocated stronger restrictions on banks.
Overhauling financial rules is the one issue on Obama's legislative agenda that appears still alive after Democrats' devastating loss Tuesday in the Massachusetts Senate race. The White House is renewing Obama's demand for an independent consumer financial protection agency as part of any overhaul. That's one of the major sticking points in the Senate; the House has passed its version already.
The new proposal from Obama intends to limit speculation by commercial banks and to keep financial institutions from growing so big that they pose a risk to the economic system.
"When you see more and more of the financial sector basically churning transactions and engaging in reckless speculation and obscuring underlying risks in a way that makes a few people obscene amounts of money but doesn't add value to the economy — and in fact puts the entire economy at enormous risk — then something's got to change," Obama said in an interview released Thursday by Time magazine.
'Fat cats' Obama has branded bank executives as "fat cats" and proposed a fee on large banks to cover shortfalls in the government's $700 billion financial rescue fund.
Expanding on earlier measures, Obama endorsed Volcker's proposal to restrict proprietary trading by commercial banks. That would separate commercial banks from investment banks, a line blurred a decade ago by the repeal of the Depression-era Glass-Steagall Act.
This restriction would affect some of the biggest banks,
including Bank of America Corp., Goldman Sachs and Citigroup Inc.
"The better answer is to modernize the regulatory framework and not take the industry and the economy back to the 1930s," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, an industry group that represents large Wall Street institutions.
Goldman Sachs Group Inc. said Thursday it earned $4.79 billion in the fourth quarter as its trading business again outdistanced the rest of the industry. The company rewarded its employees with $16.2 billion in salaries and bonuses for 2009, 47 percent more than the previous year but still lower than many had expected.
There was a new urgency in the Senate to respond to the voter anger at Wall Street and bank bailouts that helped propel Republican Scott Brown to victory in Massachusetts for the seat long held by Democratic Sen. Edward M. Kennedy, who died in August.
Brown's victory gave Republicans 41 votes, enough to mount successful filibusters and prevent Democratic legislation on health care or climate change from getting final votes.
But financial regulations could survive.
Administration officials believe that while Republicans may seek to block other aspects of the president's agenda, Senate GOP leader Mitch McConnell of Kentucky is considering making financial regulations an exception.

Market tumbles as key earnings disappoint

noreply@blogger.com (Traders Den) — Fri, 22 Jan 2010 06:42:00 -0800

Disappointing Q3 results from frontline companies sparked a sell-off on the bourses today, 21 January 2010. The market extended losses for the third straight day. Shares from sectors related to infrastructure were the worst hit. Asian markets were mixed as bullish economic data from China raised concerns Beijing may tighten policy. The BSE 30-share Sensex was provisionally down 423.82 points or 2.43%. The market breadth was extremely weak as small and mid-cap stocks underwent correction after a recent solid surge. L&T led decline in capital goods stocks after the engineering & construction major reported fall in third quarter sales revenue. Power equipment major Bharat Heavy Electricals also declined sharply as its third quarter revenue growth fell short of market expectations. ICICI Bank, too, was under selling pressure as third quarter net profit declined. Power generation stocks dropped as investors shuffled their portfolios ahead of the upcoming mega follow-on-public (FPO) offer of NPTC. Banking shares were reeling under selling pressure ahead of the Reserve Bank of India's monetary policy review meet on 29 January 2010. Shares from metal, realty sectors and PSU stocks were not spared either. The IPO of Jubilant Foodworks ended on Wednesday, 20 January 2010, with an oversubscription of 31.11 times. Foreign institutional investors (FIIs) made a beeline for the IPO. FIIs put in bids for 25.56 crore shares as compared to 71.41 lakh shares reserved for the qualified institutional investors segment as a whole. The strong response from FIIs indicates that global liquidity remains ample. The food price index rose 16.81% in the 12 months to 9 January 2010, while the fuel index was up 6.34%, the government said on Thursday. The rise in food price index was lower than an annual rise of 17.28% in the previous week. The annual wholesale inflation rose to 7.31% in December 2009, compared with 4.78% in November and 6.15% a year ago. Finance minister Pranab Mukherjee said on Wednesday the government was taking steps to contain inflation. The situation is constantly under review, he said. He also promised more measures to check the rise in the prices of essential commodities. Food prices will cool off in 1-2 months and inflation will turn around, finance ministry's chief economic advisor Kaushik Basu said in a newspaper interview published on Wednesday. The Reserve Bank of India will hold its quarterly monetary policy review on 29 January 2010 and is widely expected to increase the cash reserve ratio (CRR) requirements for banks, but economists are divided on when it will raise interest rates. CRR is the level of cash that banks must keep in deposit with the central bank. Food prices rose near 20% in December from a year earlier, their highest in 11 years. Monthly inflation may touch double digits by March 2010, Chief Statistician Pronab Sen told Television media on Tuesday. Union food and agriculture minister Sharad Pawar on Wednesday suggested that the prices of milk and related products were set to rise because of the demand-supply mismatch. Aggregate results of 336 companies showing an 64.70% advance in net profit on 12.5% rise in sales in quarter ended December 2009 over the quarter ended December 2008. Excise, customs and service tax collections are continuing to show a negative growth. Excise duty collections between April to December 2009 are down by 13% at close to Rs 70,000 crore. Revenues by way of customs duty are also down by a whopping 28% at around Rs 59,000 crore while service tax collection is also down over 6% with the government collecting slightly over Rs 36,000 crore. This takes the total collection of indirect taxes in the first nine months to about Rs 1,66,000 crore, down by 18% as compared to last fiscal. The government has set itself a target to collect around Rs 2,70,000 crore by the end of fiscal year ending March 2010. Meanwhile, the government reportedly proposes to ease the norms for foreign direct investment (FDI) approval. Presently projects worth more than Rs 600 crore require the final approval of the Cabinet Committee on Economic Affairs (CCEA). The department of industrial policy and promotion (DIPP) has proposed that this ceiling be raised to anywhere between Rs 1,000 crore and Rs 1,500 crore. The new norms are likely to be notified after the introduction of a consolidated FDI policy framework on 1 April 2010. FDI inflows increased to $27 billion in 2008-09 from $3.2 billion in 2004-05. During the period April-September 2009-10, FDI inflows reached $15 billion. The government has set a target of achieving $50 billion annual FDI by 2012 and $100 billion by 2017. Economic growth will accelerate this year, Commerce and Industry Minister Anand Sharma said on Tuesday as he demanded better access to China's markets to help exports. Sharma's call for greater access for goods comes amid a widening trade gap between the two countries. Trade between the two grew rapidly to $50 billion in 2008, making China India's second-largest trading partner, but fell back to $43 billion in 2009 as global trade declined. Sharma called for more Chinese direct investment in India, especially in infrastructure, while noting that Indian firms are already present in China. European shares rose on Thursday, continuing a choppy week for trading, with miners recouping some sharp losses made in the previous session. Key benchmark indices in Germany, France and UK were up by between 0.27% and 0.42%. Asian markets were trading mixed today. Key benchmark indices in Hong Kong, Singapore, and Taiwan were down by between 1.13% and 1.99%. Japan's Nikkei 225 index rose 1.22% led by technology shares. South Korea's Seoul Composite index was up 0.45%. China's Shanghai Composite added 0.22%. Chinese data released Thursday were largely in line with expectations, showing economic growth powered higher in the fourth quarter, putting the full-year figure above forecasts. But inflation surprised to the upside, suggesting fiscal and monetary policy tightening could be ahead. China's gross domestic product expanded at a rapid rate of 10.7% in the fourth-quarter of 2009 from the year-earlier period, pushing the full-year economic growth rate to a better-than-expected 8.7%, according to official data released Thursday. Developing Asian economies face the risk of asset bubbles or overheating as the region's growth outpaces the rest of the world this year, the World Bank said in a report today. In South Asia, policy makers will be particularly responsive to signs of building inflationary pressures because of a strong aversion to food-price increases, the World Bank said. US markets ended sharply lower on Wednesday, 20 January 2010, as earnings and the dollar's gains clipped the market's momentum. In earnings, Bank of America disappointed investors with a loss of $5.2 billion, which was worse than expected. Among others, Morgan Stanley's earnings fell short of analysts' expectations, but Wells Fargo posted an unexpected profit. The Dow Jones industrial average lost 122.28 points, or 1.1%, to 10,603.15. The S&P 500 index fell 12.19 points, or 1.1%, to 1,138.04, and the Nasdaq Composite Index fell 29.15 points, or 1.3%, to 2,291.25. Trading in US index futures indicated the Dow could fall 11 points at the opening bell on Thursday, 21 January 2010. US stocks futures were firm earlier in the global day. The World Bank raised its forecast for global growth in 2010 but warned that the recovery may lose momentum in the second half of the year as government stimulus programs wind down and unemployment persists. The world economy will expand 2.7% this year after the worst recession since the end of World War II, compared with an estimate in June of a 2% expansion, the Washington- based poverty-reduction agency said today in an annual report. Growth may reach 3.2% in 2011, the bank said. The World Bank report also includes figures on last year's downturn, with an estimate that the global economy declined 2.2%, compared with the 2.9% decrease projected in June. Growth in emerging nations is expected to reach 5.2% this year, compared with a June estimate of 4.4%, the bank said. China will expand 9% this year and India 7.5%, it said. The World Bank also raised its forecast for US growth in 2010 to 2.5% growth, after predicting 1.8% in June. Japan's gross domestic product will expand 1.3% this year, more than the 1% predicted in June. The euro area's economy is forecasted to grow 1%, compared with the earlier estimate of 0.5% expansion. Speaking to a news agency on the anniversary of his first year in office US President Barack Obama urged lawmakers on Wednesday to agree quickly on core elements of healthcare reform, signaling he might support a scaled-back overhaul after his Democrats lost a key Senate seat. Obama acknowledged that voter anger helped carry Republican Scott Brown to a stunning victory in Tuesday's Massachusetts election which has imperiled the president's healthcare effort and the rest of his legislative agenda. The White House said it may retool its strategy for selling Obama's agenda while pressing ahead with his priorities of job creation, climate change and financial regulatory reform as well as healthcare. Meanwhile British Prime Minister Gordon Brown in an article published in Asian Lite magazine marking the 60th anniversary of India becoming a republic said India is a 'modern global success story' that is marching toward prosperity. Brown further said the relationship of one of the world's oldest democracies with one of the largest owes its foundations to our proud historic ties. As per provisional closing, the BSE 30-share Sensex was down 423.82 points or 2.43% to 17,050.67. The Sensex opened unchanged from its previous close at 17,474.49, which was the day's high. Sensex fell 449.23 points at the day's low of 17,025.26 in late trade The S&P CNX Nifty was down 128 points or 2.45% to 5093.70 The market breadth, indicating the overall health of the market was extremely weak. On BSE, 2369 shares declined as compared with 579 that rose. A total of 51 shares remained unchanged. The total turnover on BSE amounted to Rs 6327 crore as compared with Rs 4893 crore by 14:25 IST Bharti Airtel (down 2.93%), Tata Motors (down 2.84%), and HDFC (down 2.94%), edged lower from the Sensex pack. Mahindra & Mahindra was the lone gainer from the 30-member Sensex pack. India's top tractor maker by sales gained 0.34% to Rs 1149.75. The stock staged a pullback from day's low of 1136.50. The company announces its Q3 December 2009 results on 25 January 2010. India's largest car maker by sales Maruti Suzuki India fell 1.25% on profit booking. The company announces its Q3 December 2009 results on 29 January 2010. High beta infrastructure shares were the worst hit in today's sell-off. India's largest engineering & construction firm by sales Larsen & Toubro (L&T) slumped 6.63% to Rs 1527.95 and was the top loser from the Sensex pack. L&T said profit after tax from ordinary activities rose 15% to Rs 696 crore in Q3 December 2009 over Q3 December 2008. Gross sales revenue declined 6% to Rs 8139 crore. The result was announced during trading hours today, 21 January 2010. India's largest power equipment maker by sales Bharat Heavy Electricals (Bhel) fell 4.26%. The company's the net profit rose 35.67% to Rs 1072.59 crore on a 17.28% rise in total income to Rs 7422.51 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours today, 21 January 2010. Power generation stocks declined as investors shuffled their portfolios ahead of the upcoming mega follow-on-public (FPO) offer of NPTC. Tata Power Company (down 4.69%), Reliance Infrastructure (down 2.66%), CESC (down 2.01%), Torrent Power (down 2.77%), Reliance Power (down 2.36%), and NHPC (down 2.30%), declined. India's largest power generation firm by total capacity NTPC was down 1.55%. The company FPO remains open between 3 and 5 February 2010. The pricing has not yet been announced by the company. Japirakash Associates (down 2.48%), Lanco Infratech (down 5.52%), GMR Infrastructure (down 1.84%), Punj Lloyd (down 4.91%), and GVK Power Infrastructure (down 2.29%), declined. Realty shares were not spared either. DLF (down 2.69%), Unitech (down 2.29%), HDIL (down 3.98%), Indiabulls Real Estate (down 3.90%), and Omaxe (down 3.84%), declined. India's largest private sector bank by net profit ICICI Bank lost 3.32%. The bank's net profit declined 13.44% to Rs 1101.06 crore on a 25% fall in total income to Rs 7762.71 crore in Q3 December 2009 over Q3 December 2008. The result was announced during trading hours today, 21 January 2010. India's largest bank by net profit and branch network State Bank of India lost 1.76%. India's second largest private sector bank by net profit HDFC Bank slipped 2.26% after its American depository receipt shed 1.56% on Wednesday. Metal stocks declined after LMEX, a gauge of six metals traded on the London Metal Exchange, fell 2.12% on Wednesday, 20 January 2010. Hindalco Industries (down 1.06%), Tata Steel (down 0.70%), Hindustan Zinc (down 3.09%), Sesa Goa (down 3.96%), and National Aluminum Company (down 4.42%), edged lower. India's largest non-ferrous metal producer by sales Sterlite Industries India lost 3.70% after its American depository receipt or ADR dropped 5.23% to $18.11 on the New York Stock Exchange on Wednesday, 20 January 2010. Index heavyweight Reliance Industries (RIL) shed 1.97% to Rs 1056.25. Reports indicated that RIL is unlikely to raise its offer price to take a controlling stake in LyondellBasell Industries. Lyondell's current restructuring plan values it as high as $15.5 billion. Recently, RIL had reportedly sweetened its initial $12.0 billion offer to about $13.5 billion for acquiring LyondellBasell. RIL will announce its Q3 result on Friday, 22 January 2010. India's largest oil exploration firm by sales Oil & Natural Gas Corporation was down 1.98% to Rs 1140, off day's high of Rs 1180. The company is scheduled to announce its Q3 December 2009 earnings today, 21 January 2010. As per analysts estimates ONGC will fork out Rs 3,497 crore towards auto fuel subsidy in the third quarter of the current fiscal. India's second largest mobile services provider by sales Reliance Communications (RCom) fell 0.99%. As per reports, the company has written to the Department of Telecom (DoT) asking it to reject the report submitted by the Government-appointed auditors. In a 28-page letter to the DoT, the company said that the report was based on uncorroborated facts and contrary to the all norms of audit and professional conduct. Earlier the independent auditor - Parakh & Co - appointed by the DoT to examine the accounts of RCom had concluded that the company has under-reported revenues of Rs 2,799 crore to the Government, resulting in under-payment of Rs 315 crore as license fee and spectrum charges during 2006-08. IT stocks succumbed to selling pressure in late trade after a firm start. The rupee fell to two-week lows against the dollar today, 21 January 2010. India's largest IT exporter by sales Tata Consultancy Services fell 0.85% to Rs 772, off day's high of Rs 790.90. The third quarter earnings unveiled by the company after trading hours on 15 January 2010 surpassed market estimates as demand for outsourcing surged and prices stabilised, fuelling hopes of recovery in the showpiece sector. India's second largest IT exporter by sales Infosys fell 1.39% to Rs 2616, after hitting a day's high of Rs 2663. On 12 January 2010 Infosys raised its full-year revenue and profit outlook after strong Q3 results and on improving trend for outsourcing orders. India's third largest software services exporter Wipro lost 2.21% to Rs 709.40, easing from day's high of Rs 739. The company's consolidated net profit rose 21.26% to Rs 1217.40 crore on 4.17% rise in total income to Rs 7055.80 crore in Q3 December 2009 over Q3 December 2008. The company announced the results before trading hours on 20 January 2010. Chief Financial Officer Suresh Senapaty said in a statement that the key financial services sector had bounced back on the back of strong outsourcing demand. The partially convertible rupee was at 46.01/02 after falling to 46.06 in early deals, which was its lowest since 6 January 2010. It had ended at 45.93/94 per dollar on Wednesday, 20 January 2010. A weak rupee boosts operating profit margin of IT firms as the sector derives a lion's share of revenue from exports.

Noida Toll Bridge Company Limited----Results better then expectation;

noreply@blogger.com (Anonymous) — Tue, 5 May 2009 11:36:00 -0700

Noida Toll Bridge Company Limited (NTBCL) declared its Q4FY09 results; which
were better than the market expectations. Led by higher traffic, NTBCL reported
strong 15.4% YoY growth in net sales to Rs 205 mn. EBIDTA growth however
was higher at 21.6% YoY to Rs 145.3 mn. The company has changed its
depreciation policy to units of usage method against straight line method leading
to write back of deprecation thereby resulting in net profit of Rs 105.7 mn as
against Rs 66.5 mn during the corresponding previous period.
Increasing traffic and revised toll rates augur well for the growth prospects of
the company going forward.

Net sales driven by higher traffic
NTBCL winessed 15.4% YoY rise in net sales to Rs 205 mn primarily led by
higher traffic which has increased to nearly 1,00,180 vehicles per day against
91,570 during the corresponding previous quarter.Mayur Vihar Link which became operation in January last year has seen
improvement in traffic to 13,632 against 12,350 vehicles per day last year.
Increased development of NOIDA along with congestion at adjoining bridges has
resulted in company reporting 17.2% CAGR in traffic during the last four years.
With more new dwelling planned in Noida, the traffic is expected to grow further.
We expect traffic to grow over 7% CAGR over the next three years.

Cost control measures resulted in better EBIDTA margins
Led by cost controls initiatives, NTBCL resulted in 21.6% YoY increase in
EBIDTA, though O & M charges have increased owing to addition of Mayur Vihar
Link, other administrative charges have seen a decline resulting in 360 bps
improvement in EBIDTA margins to 73.3%.
Higher Net profit owing to revised depreciation policy
NTBCL has changed its depreciation policy w.r.t. DND flyway to units of usage
method under which company will amortise its toll asset based on number of
vehicles using the project facility based on the traffic study done by M/s Halcrow
Consulting India Pvt. Ltd (Independent consultant).
Based on the independent professional expert’s advice, the estimated useful life
of the Bridge has been revised to 100 years against 62 years earlier. Consequent
to the change in the estimated useful life, the charge for depreciation/
amortization has been reduced by Rs 49.70 million for the year resulting in
increased profit during the current financial year. This has resulted in write back
of depreciation to the tune of Rs 22.9 mn during the quarter. Led by higher
EBIDTA and lower depreciation, net profit during the quarter witnessed 59% YoY
increase to Rs 105.7 mn against Rs 66.5 mn during last year.---- L.kannan

Nse to exclude 50 stocks from F&O after expiry of existing contracts..

noreply@blogger.com (Traders Den) — Tue, 21 Apr 2009 21:48:00 -0700

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Gas Authority of India Ltd. (CMP:Rs.260, FY10E - PE : 11x)

noreply@blogger.com (Anonymous) — Tue, 7 Apr 2009 07:12:00 -0700

Huge expansion ahead, pipeline network to nearly double in next

3-4 years

During the management meet, GAIL has indicated that the company is very bullish on

the growth of natural gas market in India, and to capture the full benefit, GAIL is

continuing the huge capex plan planned earlier. The company is in the process of

expanding the gas pipeline network from 7000 km currently to 12500 km in next 3-4

years at a capex of around Rs 200 bn. As far as financing is concerned, the company

has already tied up for Rs 120 bn and we don’t expect any difficulty in financing the rest

considering comfortable debt/equity ration and huge investments in ONGC and other

listed companies.

Three of the major pipelines are being completed in phase 1, which will be ending in

2010. In addition, GAIL has planned 3 more pipelines in phase 2, which will be completed by

2012.

Post the expansion total transmission capacity will increase from 150 mmscmd to 300

mmscmd, which will be sufficient to transport all the available gas which includes RIL

gas as well as gas expected from new LNG capacities. Combined with revenue from

petrochemicals, the company has ambitious plan to increase the topline to Rs 50,000-

Rs 60,000 crore by the end of 11th five year plan from current levels of around Rs

23,000 crore.

Sufficient spare capacity available, expect at least 2/3rd of RIL gas

to flow through GAIL network

Management also clarified the market’s doubts regarding lack of spare capacity in HBJ

pipeline, and clarified that sufficient spare capacity is available and the company expects

at least 2/3rd of KG D6 gas to flow through its network. In addition, the company is also

mapping the progress of laying pipelines with incremental gas supply coming in to

ensure that whenever incremental gas supply comes in, the company is ready with the

gas transmission infrastructure to transport it to end customers. GAIL also indicated

that there is sufficient spare capacity for the first 40 mmscmd coming out from RIL , and stated that HBJ and DVPL pipelines together have 15 mmscmd spare capacity,

which will be enhanced by another 10 mmscmd by end of FY10. With 8 mmscmd

expected to flow through GAIL’s AP pipelines and another 8 mmscmd through DUPL

pipeline in Maharashtra, GAIL aims to transmit at least 30 mmscmd of KG gas once

production ramps up to 40 mmscmd.

Tariff charges for existing pipelines expected to remain at current

levels

GAIL management is confident on the issue of regulatory risk to pipeline tariffs, and

stated that they see no reduction in tariffs of the core HBJ/DVPL network following

introduction of regulation on the ground that these were decided in the past by the

government itself. This is in-line with our estimate of flat transmission tariffs gong forward.

Company focusing on increasing petrochemical capacity

In addition to gas transmission, another segment on which the company is betting big

is petrochemical segment, which contributes nearly 50% to the bottom line. Currently

GAIL has a total petrochemical capacity of 440000 MT in Pata, which will increase to

500000 MT with the commissioning of 6th furnace. The company is looking to double

the

Capacity of Pata plant in next 4-5 years. Also, the company ahs plans to set up one

petrochemical plant outside India, which according to our view will take a long time to

materialize.

CGD and E&P the next growth driver

Going forward, Gail is also focusing on city gas distribution front. The company already

operates CGD networks in several key cities via nine JVs, and plans to

expand this further to more cities. E&P is another area where GAIL is seeking

diversification and is actively bidding for NELP blocks. Currently the company has stake

in 30 blocks, and in future if there is any success in exploration efforts, we expect

significant re-rating of the stock.

No plans to list Gail gas

GAIL has spun off gas marketing business into a new company, which was on the

expected lines as the company was already keeping separate books for both the

businesses. GAIL will focus only on transmission and petrochemical business, and the

new company GAIL Gas (GGL) will run the marketing and city gas distribution

businesses from the next fiscal year. GGL will take over GAIL India’s marketing activities

like the city gas projects. The new entity will also distribute and market CNG for vehicles,

piped natural gas for domestic or industrial use and and auto LPG both in India as well

as abroad. It also plans to set up retail CNG and LNG outlets across the country

We do not see any impact on financials of the company as it is simply an accounting

exercise, and moreover the company has denied any plans to list the company on the

bourses. We see this move as purely a move to meet the policy guidelines as according

to the policy guidelines issued by the Petroleum and Natural Gas Regulatory Board,

GAIL had to split its gas transportation business from the marketing and the trading

business. The policy was drawn to prevent unfair competition that resulted from the

ability of integrated companies like GAIL to cross-subsidise its activities.

Valuations

After the recent run up, the stock is trading at 12.5x and 11x FY09E and FY10E earnings

respectively. Although we are bullish over the long term prospects of the company keeping

in view the huge upside in transmission volumes, over the near term in next 1-2 years,

we expect growth to remain muted mainly on account of poor performance of

petrochemical and LPG business. Petrochemical and LPG business, which currently

contributes around 50% to its profits are still in the downturn, and expected to remain

under pressure till global situation improves. Going forward, from FY08-FY11, we expect

earnings of the company to grow at a muted CAGR of 6.6% in spite of assuming 15.4%

CAGR in gas transmission volumes from 85 mmscmd in FY08 to 130 mmscmd in FY11.

In view of muted growth expected in next 2 years, s. Keeping in mind the decent gains posted by the stock

in the recent market rally. ------L.KANNAN

Dishman Pharmaceuticals & Chemicals Ltd (CMP:Rs.97, FY10E - PE : 4x, )

noreply@blogger.com (Anonymous) — Tue, 7 Apr 2009 07:06:00 -0700

New drug unit to improve CRAMS operations

Dishman Pharmaceuticals & Chemicals Ltd (Dishman), is setting up a Rs.350mn US

FDA and MHRA approvable drug formulation unit at the Bavla plant in Gujarat. In fact,

this facility will be designed to provide complete package of CRAM services, right from

Contract research to Dosage forms, satisfying the entire drug life cycle. The company

plans to finance this investment through internal cash accruals.

Following this arrangement, Dishman is in the process of finalizing a deal with a client

for orders which will account for 30% of the unit’s capacity from its inception. This unit

will however make drugs on a contract basis for its clients. The company has no plans

to enter the generic formulations market.

Multiple expansions to power earnings

Dishman, during FY09 commissioned 4 new plants at its Bavla facility, of which one

has been exclusively apportioned to manufacture Eprosartan API for Solvay that has

increased the Eprosartan capacity from 60tpa to 200tpa. On the similar lines, the

company has assigned one of its other plants to meet the requirements of AstraZeneca’s

14 API supply agreement. Another, two plants have been visited by large MNC pharma

companies like GSK, Pfizer, Novartis and have expressed their interest in entering into

manufacturing contracts going forward.

Alongside, the new Bavla Hi-Potency facility (which is under construction and will

manufacture cancer products for Carbogen-Amcis) is expected to start its operations

from June 2009 ensuring robust earning visibility. Further, additional traction is expected

out of the China facility which is likely to be commissioned from July 2009.

On top of the recent facility expansions (which is the prime indicator growth in CRAMS

business model), the new set up of Rs.350mn drug formulation unit at Bavla indicates

huge potential awaiting in the CRAMs segment for the company. Likewise the recent

agreement with Europe based - Polpharma for co-operative & joint API development

ensures additional contract research & manufacturing business flow for Dishmans’

new facilities.--- L.KANNAN

Kirloskar Oil Engines Ltd

noreply@blogger.com (Anonymous) — Wed, 1 Apr 2009 22:17:00 -0700

(Rs.56, FY10E - P/E 9x)

Demerger of engines and auto component business from the

Company

Kirloskar Oil Engines Ltd (KOEL) has announced the demerger of Engine and Auto

Component business of the Company into Kirloskar Engines India Ltd (KEIL). After

the demerger KOEL would continue to hold investments in its books while KEIL would

represent core engines and auto component business. KOEL after Q3FY09 results

informed that it’s Board of Directors had constituted a Committee of Independent

Directors to examine merits of reorganizing the various businesses and investments

of the company, including by way of restructuring and /or demerger of the Company.

The effective date of demerger has been decided as 1st April 2009.

Existing shareholders to get 3 shares of KEIL for 4 shares in KOEL

KOEL has fixed demerger ratio at 3:4 which means existing shareholders of KOEL to

get 3 shares of KEIL for every 4 shares held in KOEL. The company has not disclosed

the method of valuation for demerger. But we believe it to be mainly based on book

value and potential value of unlisted investments. We believe the valuation has given

due consideration to potential of unlisted companies (Toyota Kirloskar, Toyota Kirloskar

Auto Parts, T G Kirloskar Automotive etc) which is reflected in demerger ratio.

KEIL ‘s equity capital after the demerger would be ~146mn equity shares of Rs.2 each

(~Rs.291mn). KOEL as on 31st March 2008 held book value investments of ~Rs.4.76bn

which includes strategic investments and investments in mutual funds. The current

market value of these investments is ~Rs.1.9bn and including the book value

investments of non-quoted investments and mutual fund investments, the investment

on the books are at Rs.4.93bn.

KOEL’s valuation has not been reflecting the value of investments it holds in the balance

sheet and because of which we believe the company has taken the decision to demerge

core business into separate company, KEIL.

KOEL has emerged as the flagship holding company for all the auto related businesses

of the Kirloskar group. KOEL also holds strategic investment in Kirloskar Brothers,

Kirloskar Ferrous, Swaraj Engines, Toyota Kirloskar Motors and Toyota Kirloskar Auto

Parts. Apart from strategic investments KOEL has invested in certain unquoted group

companies and mutual funds. KOEL’s listed companies and book value of unlisted

valued at Rs.4.93bn.

Further companies like Kirloskar Brothers, Toyota Kirloskar Motors and Toyota Kirloskar

Auto Parts have been registering impressive growth and would command higher

valuation in long term and would be beneficial to KOEL. We believe after the demerger

of engines and auto component business into KEIL, KOEL would reflect true value of

its investments.

Company Background

KOEL incorporated in 1946 is a part of the Pune based Kirloskar group and is headed

by Mr. Atul Kirloskar. KOEL is one of the leaders in manufacturing of Diesel Engines,

Engine Bearings, Engine Valves & Diesel Generating Sets. These engines find

application in agriculture, material handling, mining machinery, construction equipments

and marine and defence applications. KOEL has manufacturing facilities at six locations

- Pune, Ahmednagar, Nasik, Solapur, Kagal and Hospet( with a proposed facility at

Silvassa coming up). During FY08 KOEL earned 93% of its total revenues from engines

(5HP-11000HP), 5% from auto components (Bearings and Valves) and 2% from other

strategic business unit (Fuel Oil Trading). KOEL also exports its engines and auto

components.----L.Kannan

noreply@blogger.com (Anonymous) — Fri, 27 Mar 2009 02:06:00 -0700

Mylan to pay $133 mn for rest of Matrix Labs-
The drugmaker said it plans to acquire the remaining 29% stake in Matrix Laboratories Ltd for about $133 mn
Generic drugmaker Mylan Inc said on Thursday it plans to acquire the remaining 29% stake in Matrix Laboratories Ltd of India for about $133 million in a transaction that would add to its 2009 earnings.
Pittsburgh-based Mylan, which already owns 71.2% of Matrix, said buying the remainder and delisting the company from Indian stock exchanges would give it more flexibility and efficiencies.
Mylan said it plans to acquire all remaining 45 million shares for Rs150 ($2.97) a share, 27% above Matrix’s closing share price on 26 March, the last trading day before the announcement.
The delisting from the Bombay Stock Exchange and the National Stock Exchange of India is expected to take about 12 weeks, subject to obtaining regulatory approvals, Mylan said.
Earlier this month Mylan said Matrix received tentative approval from the US Food and Drug Administration for its generic version of Abbott Laboratories Inc’s Kaletra HIV tablets.--- L.Kannan

Markets on 25th march'09 --- Kannan

noreply@blogger.com (Anonymous) — Wed, 25 Mar 2009 10:30:00 -0700

Capital goods carry the day
Selling pressure saw most of the stocks slip from higher levels, bar realty stocks that held on to their gains and ended firm.
Market recovered most of the day’s losses towards the close of the session, after shedding 41 points in early trades from the day's high of 9706. Tracking weak global
indices, Sensex opened marginally below its previous close. The mood remained bearish and the market slipped on profit booking in index pivotals, public sector units and health care stocks. The market once again witnessed selling pressure and Sensex touched the day's low of 9430 by afternoon amid a choppy session. However, the index recovered, shrugging off weakness on substantial buying in realty and oil stocks towards the close and ended the session at 9668, up 197 points. Nifty gained by 46 points to close at 2984.

The market breadth was positive. Of the 2,586 stocks traded on the BSE, 1,263 stocks advanced, 1,219 stocks declined and 104 stocks ended unchanged. Of the 13 sectoral indices, BSE Realty (index of realty shares) flared up by 6.32% followed by BSE Oil & Gas (up 3.66%), BSE Metal (up 3.31%) and BSE Bankex (up 3%). Other indices were up 0.18-1% each.

Among Sensex stocks, JP Associates was the leading gainer and its stock price soared by 7.51% at Rs84.45. Among other stocks, Tata Power advanced 7.12% at Rs740.20, Sterlite Industries jumped 6.48% at Rs347.35, while DLF, Reliance Infrastructure, Reliance Industries, Tata Steel, Reliance Communications, HDFC Bank and ICICI Bank closed with sharp gains of 3-6%. Among laggards, National Thermal Power Corporation slipped 2.77% at Rs179.95, Bharti Airtel shed 2.05% at Rs591.05, ONGC by 2.02% at Rs763.70, Hindustan Unilever fell by 1.88% at Rs234.70 and Tata Motors lost 1.27% at Rs160.

Over 3.66 crore Unitech shares changed hands on the BSE followed by Cals Refineries (2.62 crore shares), Crompton Greaves (1.27 crore shares), Reliance Natural Resources (1.14 crore shares) and Suzlon Energy (1.12 crore shares). ----- L.Kannan

BIOCON LTD --- Kannan

noreply@blogger.com (Anonymous) — Wed, 25 Mar 2009 00:35:00 -0700

BIOCON LTD.

Contd..

Biocon starts commercial operations under BMS pact

Biocon has commenced a fully dedicated research and development facility for Bristol-

Myers Squibb (BMS), one of the leading global innovator in Biocon Park, Bangalore.

This which was in line with Biocon’s collaborative research pact with BMS during March

2007. In fact, Syngene – the CRO arm of Biocon, entered into an R&D partnership with

Bristol Myers Squibb (BMS) for providing services for discovery and NCE development.

The initiation of the research and development activity will expand the span of the drug

discovery and development process. Syngene would facilitate contract research

services right from the initial stage of lead optimization to early stages of clinical studies

to Phase I and Phase II trials.

The 200,000 square-foot facility at Biocon Park is dedicated to helping advance Bristol-

Myers Squibb’s work in discovery and early drug development, and is currently occupied

by 270 researchers. The facility will house 360 researchers by the end of the year and

could accommodate as many as 450 employees in the future.

This initiative is to add incremental revenues of about Rs

800mn in FY10

With the commissioning of the new research facility and anticipated ramp up in

researchers count to about 360 (since most of the revenues for Biocon are on Full

Time Equivalent (FTE) basis), we estimate Biocon’s BMS pact would add incremental

revenue of Rs 800mn during FY10E. We expect the peak revenue potential from the

pact will be materialised during FY11E with 450 FTEs and revenue worth Rs 1200mn.

Initially the core research activity would earn revenue for Biocon but subsequently the

additional support activities and possible supply opportunities (like supply of sample

batches during the advance development of molecule) would further boost the earning

potential of the BMS pact FY11 onwards.

Certainly going ahead, the commercial commencement of long awaited BMS research

contract would emerge as a money spinner for Biocon, it also projects the research

capabilities of the company in Global pharma industry. Apart from this, Biocon has few

more medium-term revenue triggers that would maintain growth momentum. In fact,

the commencement of Tacrolimus and mycophenolate mofetil (patent expires in May

2009) API supply to US during Q1FY10 and launching of Glargine (a basal insulin

having market potential of Rs 400mn and only cometitor Sanofi-Aventis) in domestic

market Q1FY10 onwards would power the earnings growth of the company. Biocon

has already got the Drug Controller General of India (DGCI) approval for Glargine.

However, looking at the revenue triggers in the pipeline we maintain our positive stance

on Biocon ---- L.Kannan

noreply@blogger.com (Anonymous) — Tue, 24 Mar 2009 13:36:00 -0700

MLL is second largest private sector shipping company in India with a
diversified business model. The company primarily focuses on international
seaborne bulk transportation and tanker shipping operations. However,
strategically in order to reduce dependence on the volatile shipping
segment the company has ventured into dredging, offshore and coal mining.
Considering the eternal fact that volatility in freight rates and
cyclicality is a given for the shipping industry, we believe MLL's strategy
to diversify revenue sources is very positive. For FY10, we expect
company's non-shipping businesses, namely, dredging, offshore operations
and coal mining to contribute 26% to its revenues and over 35% to its
EBITDA. In this manner, MLL is expected to arrest the impact of cyclicality
to a large extent. We initiate coverage on the stock with an 'Accumulate'
rating.

Key Investment Highlights
.. Addition of a Rig to augment revenues: MLL has recently received
delivery of it's maiden jack up rig from Keppel's and the same shall fetch
$92,700 per day for 3 years as per its contract with Great Ship. Since no
operating costs are involved, MLL shall earn about $34m directly at EBITDA
level every year.

.. Baltic Dry Index appears to have bottomed: Since the beginning of the
Chinese New Year, the Chinese EXIM trade has picked up gradually and
helped the Baltic Dry Index (BDI) recover from its lows. Also with the
Chinese Stimulus packages, the commodity shipments are likely to rebound
in coming months and further boost the BDI. This bodes well for the dry
bulk business of MLL as it has 30% exposure to spot markets.

.. Coal mines and Dredging provides the hedge: Gaining from experience MLL
has been able to improve it's charter yields continuously by managing its
cost of operating dredgers. Dredging business and coal mines which formed
7% and 3% of the revenues in Q3FY09 respectively is expected to double
their share in revenues in FY10, given the full year operations of all 4
dredgers and mines. This shall help MLL to hedge revenues against the
cyclicality of pure vanilla shipping business.

Valuations
We would have liked to adopt a sum of parts valuation basis, wherein
ideally the offshore business would earn higher PE multiples, but in
current market scenario we conservatively stick to vanilla valuations.
Assigning target PE of 3x on FY9e EPS, which is about 0.4x its FY09
estimated book, our target price of Rs 32.5 provides an upside of over 27%
from current market price of Rs25.6.

---- L.kannan

Markets on March 24: Hourly averages intact--Kannan

noreply@blogger.com (Anonymous) — Tue, 24 Mar 2009 13:00:00 -0700

After a gap-up opening, Indian markets went down due
to selling at higher end and could not hold the opening
gap. Finally, Sensex closed 47 points up, while Nifty ended
flat. However, mid-cap and small-cap indices posted losses
for the day. On the daily chart, Nifty failed in clearing the
upper boundary of the triangle. Further, on the hourly
charts, after kissing the upper boundary of the rising
channel, Nifty slipped back, in the corner of bears. On
the downside, Nifty has good support of 20- and 40-hourly
moving averages, which are nailed at 2883 and 2843
respectively. The daily KST is still in buy mode, which
points today’s fall as a small dip in the current rally. The
market breadth was in favour of bears with 748 declines
and 470 advances.
The hourly KST gave a negative crossover. Our short-term
bias is up for the target of 3050 with reversal pegged at
2815. However, our mid-term bias is still down for the
target of 2450 with reversal at 3111.
Selling was witnessed across sectors, though some stocks
from banking and realty space found favour. From the 30
stocks of Sensex, HDFC Bank (up 6%), ICICI Bank (up 2%)
and HDFC (up 2%) led the pack of gainers, while Jaiprakash
Associates (down 7%) and Hindalco Industries (down 5%)
led the clutch of losers.

---L. Kannan

IKF Technologies--a report

noreply@blogger.com (Traders Den) — Sat, 28 Feb 2009 21:46:00 -0800

A group of individuals bought a listed company in 2004 and turned it around. The software company they bought, has now expanded into telecom and even into the emerging bio-fuels business.IKF Technologies is today a Rs 180-crore company and growing. In 2004-05, when the company was taken over by Pradeep Dutta and Sunil Kumar Goel, it had a share capital base of Rs 10 crore. Over the last two years, the company has invested in putting together infrastructure and technology, which has paid off. It grew its web development, software and BPO businesses internationally, to Australia and the UK.In 2006, it set up a 31-seat BPO for Tata Teleservices. “The initial couple of years went into restructuring and settling down in the core business,” says Pankaj Garg, director at IKF Technologies, which counts domestic telcos and banks among its clients. Though the promoters realise that they are late entrants in BPO outsourcing, they are looking at new markets.IKF has now set up offices in Germany, Brazil, Dubai and Russia, and is hoping to see growth from these markets over the next two years. The idea of getting into telecom was there since 2006 but “since it was difficult to get a licence at that point in time, it never materialised”, says Garg. But it finally got a Category ‘A’ licence for Internet Service Provider (ISP) by the Department of Telecommunications (DoT) in January. Since then, it has been busy setting up its network. “We have already spent Rs 4-5 crore, and another Rs 8-9 crore will be spent in the future on developing the network,” informs Garg. As an initial foray in telecom, the company decided to get into VoIP services, a segment, which is not too crowded. That’s how IKF Tel came into being. The company is almost on the verge of launching its VoIP services for the retail market, having already launched the same for enterprise customers.IKF has earmarked $2-3 million for its telecom business, of which, says Garg, $1 million has already been spent over the last one year. IKF expects revenues of Rs 100 crore from its telecom business in the next three years, growing both organically and inorganically. Taking its quest for emerging technologies forward, IKF is into bio-fuels too. “The chairman of the company, Dr RP Singh, who is a former scientist at the Indian Agriculture Research Institute, led us into this field,” says Vishal Rawat, president bio-diesel at IKF Green Fuel. IKF Green Fuel is also planning to get into ethanol, solar and wind energy in the near future. For bio-diesel, though, it has signed an MoU with the government of Madhya Pradesh through which it is seeking 200 hectares of wasteland for jatropha cultivation and will also be setting up an oil extraction plant with an investment of Rs 30 crore.It also engages in contract farming on private wasteland. “We have one refinery already at Udaipur, which can produce 3,000 litres a day but at the moment, it is being used for trial runs. We expect commercial production to start by 2010-11,” says Rawat. Commercial bio-diesel production would need a steady flow of jatropha seeds. To this effect, IKF has 10,000 hectares of jatropha under cultivation, both on leased and owned land. “By 2008-end, we hope to reach the 30,000-40,000 hectares mark,” says Rawat. Meanwhile, research is on for better seeds with agricultural universities and other institutions.The company has been granted permission by the government of India for a GDR issue to raise Rs 500 crore. About Rs 200 crore are already been allocated for IKF Green Fuel, indicating the company’s commitment to the growing sector. It is also exploring JVs in Brazil and South Africa for plantation and extraction there. “We want to be the leader in the bio-fuels market by 2015,” says Rawat.IKF Tech plans to grow jatropha in Africa-------IKF Technologies, the country's first corporate jatropha refiner, has formally approached African Governments — Swaziland, Mozambique and South Africa — for permission to cultivate the plant. Armed with detailed project reports, the company has also applied for an area of 50,000 acres of wasteland in each of these countries for organised jatropha farming. Mr Mukesh Kumar Goel, a director of the company, told Business Line that official responses, however, were awaited. According to the company's estimates, the cost of acquiring the land (total 1.5 lakh acres), nursing the plants till the first fruition after 18 months, and setting up crushing facilities would be Rs 3,000 crore. In a phased manner If permissions were obtained, the purchases or acquisition of land through lease and taking up the plantation projects would be done in a phased manner over a long period of time. IKF has sought to own the land in Africa, and prefers not go in for contract farming, Mr Goel explained.In India, it has opted for the contract-farming model in Rajasthan, where its existing refinery is located, in an area of 5,000 hectares. In Meghalaya, however, IKF cultivates on its own land.Its refinery was commissioned in March this year. Currently, it is procuring jatropha seeds from the open market since it began farming the plants in Meghalaya roughly 12 months ago.Though the first flush of seeds takes 18 months, jatropha harvests are available twice a year in the period after maturing. One hectare can accommodate roughly 2,500 plants.The yield per tree in one harvest, according to thumb rule, is around 3.5 kg and from one kg of seeds, a little over 300 ml of bio-diesel can be had.The company has a one-year renewable technology agreement with Indian Oil Technologies Ltd, a subsidiary of Indian Oil Corporation, for perfecting mixing grade bio-diesel.Refinery in Gujarat :It has proposed to set up another refinery in Gujarat with a capacity of 1 lakh tonnes per annum at a cost of Rs 50 crore.It has also sought permission for contract farming of jatropha in Gujarat and Chhattisgarh.In Rajasthan, it has a refinery running with a capacity to produce 3,000 litres a day.As a Market Analyst, I am strictly recommending this stock.CMP: INR 3. It's future prospect is bright. Stock price will definately touch arround INR 200+ in 2012

IVRCLINFRA a Report

noreply@blogger.com (Traders Den) — Sat, 28 Feb 2009 21:45:00 -0800

Company Profile:IVRCL operates in infrastructure sectors namely Water & Environment, Transportation, Buildings and Power. It has a large client base, which includes public sector clients (ONGC, BHEL, IOC etc), private sector clients (Birla Institute of technology, Tata projects, Jindal Steel & Power) and Central and State Govt. clients (Airport Authority, Indian Railways, Ministry of Defence etc). Its operations cut across geographical frontiers of the sub-continent, with headquarters in Hyderabad and administrative offices in Chennai, Cochin, Bangalore, Pune, Kolkata, Jodhpur, Chattisgarh, Ahmedabad and Goa.Construction Sector:Construction is the second largest economic activity after agriculture in India. Construction sector can be classified into three segments: -1. Real Estate: The sector has suffered a meltdown in 2008 due to high interest rates and demand destruction. However we believe it will improve in the coming months due to the decrease in property prices, falling interest rates on home loans and favorable tax treatment.2. Infrastructure: This constitutes roads, water, ports, airports, freight corridor, power, etc. Investment in the infrastructure is robust and is at the center of the various stimuli that the Government is offering.3. Industrial Construction: This constitutes sectors like steel, textiles, fertilizers, and oil and gas refineries. This is where the maximum fall in demand is taking place and worries remain.Construction sector uses raw materials like steel, cement apart from using large working capital. The stock prices of leading companies dropped by an average 84% for the 6-months to early September 2008 due to the credit crises, slump in the housing market, increase in the prices of construction material, increase in rate of interest and increase in the prices of oil. But due to the decrease in interest rate, inflation and cut in the prices of steel, the sector is beginning to gain strength and deserves an upgrade.Financial Position:For the FY’08 the Net sales increased by 54% to Rs 3867 crore from Rs 2506 crore. The company derived Rs 3693 crore of its revenues from Engineering and Construction and about Rs 259 crore from Real Estate in the FY’08. The EBITDA also showed an improvement by 91.5% to Rs 572 crore. The Net profit registered a growth of 74% to Rs 283.4 crore from Rs 163 crore.For the second quarter of FY’09 the net revenue increased by an impressive 65% to Rs 1137 crore, due to faster execution of projects. The EBITDA grew by 69% to Rs 91.28 crore. The net profit showed an excellent improvement by 90% to Rs 67 crore from Rs 35.25 crore. This was due to high revenues and lower tax rate. Interest cost however more than doubled during the quarter due to high borrowings. The order booked during the second quarter FY’09 was worth Rs 2586.6 crore and backlog of orders during the same period was worth Rs 13,800 crore.The total net worth in FY’08 increased to Rs 2480 crore. The company also has stock options worth Rs 1 crore. The secured and unsecured loans, which the company has, were worth Rs 1725 crore. On the asset side a major portion consisted of current assets. The Debt/Equity ratio as on 31st Mar 08 stood at 0.66.During the year, some of the Foreign Currency Convertible Bond (FCCB) holders have exercised their option of converting their bonds into equity shares. Till the date of the Balance Sheet, amounts aggregating to US $ 18.10 million worth of bonds were converted into 3,545,284 equity shares of the face value of Rs.2 each. Rs 7.1 crore has been debited to the Profit and Loss account during the year towards foreign exchange translation difference on Foreign Currency Convertible Bonds and deposits in foreign currency.Subsidiaries:IVRCL’s major subsidiaries are:-IVR prime Urban Developers Ltd: IVR Prime is dedicated to creating luxury-intensive urban infrastructure. Its net profit for the FY’08 increased by a spectacular 750% to Rs 176 crore from Rs 20.6 crore in FY’07.Hindustan Dorr-Oliver Ltd (HDO): Hindustan Dorr Oliver Limited (HDO) is an Indian EPC company having its core business activities in providing Engineered Solutions, technologies and EPC installations in Liquid-Solid Separation applications. The company’s core business focus is on Water Management. Its net profit for the FY’08 increased by 47% to Rs 22.64 crs. Sector wise order booked in FY 2007-08 accounts for 54% in environment, 27% in minerals, 14% in fertilizers and 5% in pulp and paper. IVR Prime and HDO are listed subsidiaries on NSE.Chennai Water Desalination Ltd: Executing the most prestigious contract of Chennai Sea Water Desalination Plant Project at Minjure, Chennai.Alkor Petroo Ltd: is a Hyderabad based subsidiary of IVRCL engaged in Oil & Gas Exploration & Production. It has an association with Gujarat State Petroleum Corporation Ltd (GSPCL).Investment Positives:IVRCL has a very strong order book, making it an attractive investment. The order book remains extremely healthy at Rs 15500 crore. Recently the company bagged a few more orders, latest being from Bangalore Metro Rail Corp, IOC and Karnataka Water Supply Board in the first week of Jan 09. This will inflate the order book to a massive Rs 16000 crore approx. It has the best Order book to Turnover ratio in the industry. Also, NHAI has been going slow on orders in the last two years and it is expected to complete orders for more than 6000 kms in the one or two months- thrice the orders placed in 2007-08. IVRCL is expected to be one of the biggest beneficiaries of this.Steel companies announced a price cut during Sep 2008, which will help reduce the cost of material for construction companies. The price of the cement is also expected to ease in the future. This will shore up margins considerably.Decreasing rates of interest and easing inflation is bound to create a positive impact on the construction companies. With the decrease in rate of interest the cost of borrowing has reduced to a great extent, making the condition favorable for taking more debt to finance the projects.Mid cap stocks such as IVRCL are exposed to infrastructure segment, which is expected to grow in the coming future. India, which is Asia’s 3rd largest economy, is in need of greater infrastructure spending for the next 10 years for economic expansion. India has allocated huge expenditure for the building of airports, highways and for the Commonwealth Games in 2010.Concerns:Any delays in implementation of the projects undertaken by the company may affect its profitability.For more funding requirement the company has to depend on leverage, which will cause increase in the rate of interest to be paid on debt. Increasing interest costs may have a dampening affect on the profits.There is a risk that the government could change certain regulations for the construction sector. The biggest threat relates to availability of 80IA benefit to construction companies. IVRCL has got an award from IYAT in this regard. We believe the government is not likely to enact unfavorable regulations for the sector given the present environment.The table clearly places IVRCL as one of the most attractive bets in the Construction space. The company is growing at a phenomenal pace (change in Net profit of 74%) vis-à-vis its competitors and boasts of some fantastic orders in its kitty.Valuation:IVRCL has shown a good financial performance for the FY’08 and for the second quarter FY’09. The company has a strong order book and currently it is undervalued, making the stock a good investment. In our view it is one of the best plays in the Indian infrastructure.

best stock for 2009 according to BUSINESS TODAY

noreply@blogger.com (Traders Den) — Sat, 28 Feb 2009 21:38:00 -0800

Business Today magazine had recently published list of top 20 stocks to buy or watch in 2009. One may treat these as buy stock advice, strictly for long term investment. Mentioned here are good stocks that are strong to survive slowdown in 2009 and emerge as best stocks out of gloom. They are very chep stocks in terms of value investing for long term valuations. The list is in alphebetical order.Business Today had spoken to 11 of the brightest minds on Dalal Street and got them to identify their favourite long-term value picks.
Aventis Pharma
Focus on lifestyle segment keeps it in good healthFor some time now, smart money has been moving into shares of multinational pharmaceuticals companies. After India entered the product patent regime in 2005, the fortunes of MNC pharma companies have changed for the better.They can now introduce new blockbuster drugs of their foreign parents and enjoy the profits. Aventis Pharma is one such well-placed MNC.It is focussing on fast-growing lifestyle segments like cardiovascular and diabetes in the domestic market. Aventis has a few strong products in this segment like Amaryl (anti-diabetes) with a 4 per cent market share and Cardace (cardiovascular segment) with a 28 per cent market share.
Besides, its parent Sanofi-Aventis, France, has a huge pipeline of molecules under development in the lifestyle category.But what has impressed analysts is the aggressive introduction of its parents’ products in the Indian market. Says Rajiv Thakkar, CEO, Parag Parikh Financial Advisory Services (PPFAS): “Aventis’ overseas product introductions in India will expand its domestic business over time.”Another factor, Thakkar says, that will benefit the stock is its debt-free status and a hefty cash balance. Thakkar, however, has not put a target price on the stock and cautions that the uncertain market may play spoilsport in the short-term. But in the long term, he says, “the stock has the makings of a multi-bagger.”—Clifford AlvaresAxis BankStrong business model to offset succession worriesThe stock market often reacts sharply to news from the banking sector. Axis Bank’s stock dipped sharply—slipping nearly 18 per cent to Rs 394.50 on January 27, 2009, down from Rs 485 on January 9, 2009. The market, already edgy over slowdown fears, was more worried over the retirement of Axis Bank’s long-time chairman P.J. Nayak, and the issue of a successor. Axis Bank’s advances continue to grow at a decent clip of over 50 per cent at a time when credit expansion has slumped.The bank is facing a squeeze on margins as lending rates are falling while borrowing costs have yet to come down. Another hitch is possible stake sale of 21.5 per cent in Axis Bank held by administrator of the special undertaking of UTI. Says Vaibhav Agarwal, analyst, Angel Broking: “Axis Bank has been focussing on retail liabilities business before increasing its loan assets. Its fee income too is doing well.”—Clifford Alvares
Bharat Electronics
Armed for growthJust when large manufacturers are curtailing their activities to save on costs, Bharat Electronics is opening a support centre at Kochi, Kerala, to serve its growing clientele. A Navratna public sector undertaking which gets 80-85 per cent of sales from the armed forces, BEL’s turnover and profit after tax have been rising consistently for four decades now. It is talking to global players like Lockheed Martin, Boeing and EADS to make the most of the government’s “offset” clause, which requires any foreign company bagging an order worth over Rs 300 crore from India’s defence sector to share 30 per cent of it with Indian firms.It also gains from its links with the Defence Research & Development Organisation. Says V.V.R. Sastry, BEL’s Chairman & Managing Director: “We are interacting with DRDO for developing new products.” Over the last one year, the BEL scrip has slid some 59 per cent, but broking houses still bet big on it. Says Dolat Capital’s Sameer Panke: “In the last five years, while the defence budget has grown at 12 per cent, defence capital expenditure grew at 23 per cent. BEL is a big beneficiary of this increase. The company has strong cash flows and no debts at all.’’—K.R. Balasubramanyam
Bharti Airtel
More subscribers, more towers, and now more spectrumBharti Airtel typifies the success story of Indian mobile telephony. Its outstanding execution skills have made it the market leader. Over FY2006-08, Bharti cornered 26.5 per cent of the all-India incremental mobile subscriber additions. In the third quarter (fiscal 2009), it reported an increase of 41.5 per cent in gross revenues on a year-on-year basis, and 9 per cent on a sequential basis. During the same period, its mobile subscriber base grew by 55.3 per cent y-o-y and 10.5 per cent q-o-q to 85.7 million. Says Sunil Mittal, CMD, Bharti Airtel: “Bharti’s strategy of extensive roll-out ahead of competition, especially in new villages, has yielded rich dividends.”The company is also well placed with its telecom infrastructure business, given the need for rapid network expansion by current and new operators. Bharti, with the largest tower portfolio in India through Infratel, is likely to be a key beneficiary. Then there are other reasons why the stock is a good bet. The spectrum allocation imbroglio seems to have been resolved. Says Hitesh Agrawal, Head of Research, Angel Broking: “The spectrum issue was critical for the sustained growth of the telecom sector. Now the medium-term growth requirement of Bharti has been taken care of.”Checkout: Bharti Airtel - Investing In Stock From Telecom Sector—Rishi Joshi
BHEL
Everybody wants light in dark times—and BHEL has the spark.Bharat heavy electricals, the largest manufacturer of power plant equipment, is one company that is unlikely to be hit by the economic gloom. It knows the government will spend freely to improve the power sector. And the government does not cancel orders. So, BHEL, which has 64 per cent of the power plant market, has been ramping up capacity.By December 2007, it had increased capacity from 6,000 MW a year to 10,000 MW, and is now taking it to 20,000 MW by 2011-12. Says Pulkit Bakliwal, analyst at Sharekhan: “The 11th Five-Year Plan has envisaged capacity addition of 78,000 MW.BHEL has been the major beneficiary of the spending.” Government projects account for around 85 per cent of BHEL’s order book of Rs 1,04,000 crore, giving it high revenue stability. “Even in the present scenario, orders placed by government institutions are unlikely to get cancelled,” says Bakliwal, pointing out that the cash-strapped private players may have to do so. “This gives BHEL a huge comfort level,” Bakliwal adds.But there are bumps on the road ahead. BHEL could face project delays and a lag before new orders start coming in. The stock, at slightly above Rs 1,320, is trading at a premium. Says Bakliwal: “A strong balance sheet and huge cash pile of about Rs 8,400 crore would help BHEL sail smoothly through the challenging business environment. We recommend a buy with a price target of Rs 1,546 over the next 12 months.”—Manu Kaushik
CRISIL
Ratings become vital during downturnsThe global credit crisis has hit the capital-raising plans of Indian companies.The only window open these days is through domestic debt issues or bank borrowings.Here’s where a debt rating from CRISIL, India’s largest rating agency, helps. Another growth avenue has been created by the Basel-II norms to rate corporate loans given by banks.Says Jigar Valia of Parag Parikh Financial Advisory Services (PPFAS): “It’s a small component now, but it’s going to be a phenomenally fast-growing business. It’s a perpetual and stable income.” CRISIL’s work for its parent Standard & Poor’s is a cash cow.Adds Valia: “Even in years of de-growth, this company was trading at a PE multiple of 20 times; but thanks to the financial crisis, the stock is cheap.”—Clifford Alvares
Engineers India
No fear of input cost hikesOne of Asia’s leading design and engineering companies, Engineers India builds petroleum refineries, industrial projects, offshore structures, metallurgy and power projects. India’s substantial investments in infrastructure have given it an order book of Rs 8,000 crore, to be executed over 3-4 years. It has begun protecting its margins by signing open-book orders—input cost hikes are passed through.Says Ajay Parmar of Emkay Global Financial Services: “The stock looks quite attractive… there are no worries about the management since the government holds a 91 per cent stake… it has zero debt and high dividend payout. It’s a very safe bet in the current market scenario.”—Rishi Joshi
GMDC
Sitting on a mine of wealthThe share price of Gujarat Mineral Development Corporation was one of the worst affected when Gujarat government asked state-run companies to fork out 30 per cent of their profit before tax for social work. Despite this, the stock is still seen as a good value pick—the bad news has been discounted. Profitability is expected to get a boost from the recent lignite price hike. “Full impact will be seen in the next financial year,” says Sameer Ranade, analyst at PINC Research.The government may reverse the 30 per cent rule, since minority shareholders at some other companies have mutinied. GMDC’s moves into the power sector will add to valuation.—Virendra Verma
HCl Technologies
Seeking a global footprintAs India’s fifth-largest IT services exporter, straddling a diverse portfolio of services that ranges from R&D to enterprise, BPO and infrastructure management, HCL Technologies has a de-risked model as it is essentially in high-growth, high-end, low competition areas. It is looking at inorganic growth.The acquisition of UK-based Axon last year is expected to help it become a major player in SAP implementation, an area from which it expects to get a quarter of its revenues, against 11 per cent now. Says Vineet Nayar, CEO, HCL Technologies, “We have successfully integrated Axon to dominate the SAP space globally.”Anagram’s V.K. Sharma says: “We feel the worsening global macroeconomic situation and slowdown in IT spending is factored in at this price. The stock trades at almost 8 per cent dividend yield, limiting its downside from these levels.”—Rishi Joshi
HDFC
Pioneer grows biz in slowdownAt a time when the home loans business is in the dumps, a lower third-quarter profit at India’s largest housingfinance company did not ring any alarm bells. Housing Development Finance Corporation actually boosted net interest income by 18 per cent to Rs 785 crore but was hit by higher running expenses. Analysts did not waver from their “buy” rating.HDFC’s asset quality has improved further, it has valuable subsidiaries in insurance and asset management and it has been consolidating its business. HDFC’s asset quality has improved in December 2008. Says Gaurav Dua of Sharekhan: “Throughout its history, HDFC has shown a healthy growth.”

Iceland stock exchange crashes 76%

noreply@blogger.com (Traders Den) — Tue, 14 Oct 2008 10:05:00 -0700

Iceland’s stock exchange nose-dived 76% on opening this morning after trading was suspended for three days.
The Icelandic government took the decision to cease trading on Thursday after the country’s financial sector collapsed.
Local authorities say the index actually rose when financial stocks were removed as their continued suspension was causing a statistical anomaly.
The country has been on the verge of bankruptcy after the government was forced to take over its three largest banks, which held debts many times the island’s GDP.
Today, Iceland sought a €4bn loan from Russia, and may become the first Western country to seek support from the IMF in more than 30 years.
The country is also facing a legal challenge from the UK government, which has been forced to guarantee lost savings deposits in the British subsidiaries of Icelandic banks.

Switching to Cash May Feel Safe, but Risks Remain

noreply@blogger.com (Traders Den) — Mon, 13 Oct 2008 08:00:00 -0700

By RON LIEBER Published: October 8, 2008
It’s a question we’ve all asked in our darker moments of late: Why not just put all of our investments in cash, 100 percent, just for a little while, until things calm down?

Some indexes around the world have fallen by a third or more.
Some people already seem to be acting on that instinct. In the first six days of October (through Monday), investors pulled $19 billion out of mutual funds that invest in United States stocks, matching the outflows for the entire month of September, according to TrimTabs Investment Research. “What clients are looking for is safety,” said John Bunch, president of retail distribution at TD Ameritrade. “They are seeking solutions that are backed by the federal government. Specifically, F.D.I.C-insured money funds and certificates of deposit. All of it is under the umbrella of, ‘Am I safe and insured?’ ”By fleeing for the comfort of safe and insured, however, investors with a time horizon beyond a few years may be doing real damage to their long-term finances. If you’re tempted to make a big move to cash right now, you’re doing something called market timing. It’s an implied statement that you’ve figured out the right moment to get out of stocks — and will also know the right time to get back in.So let’s dispense with the first part straightaway. The right time to move out of stocks was a year or so ago, before various stock indexes the world over fell by one- third or more. If you missed that opportunity, you’re hardly alone. But if you sell now, you’ll be locking in your losses. And once you’re in cash, there isn’t much upside. In fact, with interest rates low, you’re likely to lose money in cash, because inflation will probably eat up the after-tax returns you earn from a savings or money-market account. A guarantee of a small loss may sound good right now. But if you’re not bailing out of stocks once and for all, how will you know when it’s time to get back in? The fact is, any peace of mind you gain by being on the sidelines now will turn into a migraine once you see how much you can harm your portfolio over time by missing just a bit of any rebound.

H. Nejat Seyhun, a professor of finance at the Ross School of Business at the University of Michigan, put together a study in 2005 for Towneley Capital Management, where he tested the long-term damage that investors could do to their portfolios if they missed out on the small percentage of days when the stock market experienced big gains. From 1963 to 2004, the index of American stocks he tested gained 10.84 percent annually in a geometric average, which avoided overstating the true performance. For people who missed the 90 biggest-gaining days in that period, however, the annual return fell to just 3.2 percent. Less than 1 percent of the trading days accounted for 96 percent of the market gains. This fall, Javier Estrada, a professor of finance at IESE Business School in Barcelona, published a similar study in The Journal of Investing that looked at equity markets in 15 nations, including the United States. A portfolio belonging to an investor who missed the 10 best days over several decades across all of those markets would end up, on average, with about half the balance of someone who sat tight throughout. So moving to cash right now is just fine as long as you know precisely when to get back into stocks (even though you didn’t know when to get out of them). At some point, stocks will indeed fall enough that investors will remove the money from their mattresses and put it to work, causing prices to rise significantly. But, as Bonnie A. Hughes, a certified financial planner with the Enrichment Group in Miami, put it to me, there won’t be an e-mail message or news release that goes out when this is about to happen. It will be evident only afterward, on the few days when the market surges. And it gets worse for those who think they won’t have any trouble investing in stocks again later. Medium- or long-term investors who are considering a big move into cash right now are probably making an emotional decision, at least in part. For those who follow through, the same instincts will probably hurt when trying to figure out when to reinvest in stocks. “The emotional forces that drove them out of the market aren’t likely to let them back in ‘until things are better,’ ” Dan Danford of the Family Investment Center in St. Joseph, Mo., said in an e-mail message. “And for most people, things won’t feel better again until the market has already moved back up.” In fact, he added, plenty of people may not allow themselves to get back in until the market has already risen significantly. That situation is worth considering if you think your mood, or returns, can’t get any worse. “People feel worse missing out on the bounce-back that will inevitably come than they do hanging in there through the down period,” said Elaine D. Scoggins, a certified financial planner with Merriman Berkman Next in Seattle. The truly downbeat do not see the bounce as inevitable. This outlook is essentially a bet that our current predicament is so different that the equity markets won’t bounce back at all, even though they survived 1929, the Great Depression, 1987 and a major terrorist attack. I do not believe that the markets are in some kind of permanent decline, and I haven’t found an expert who does.That said, some retirees, or those close to leaving the work force, may be well-off enough to leave stocks behind for now. If the tumult in the economy and the decline in the markets have altered your risk tolerance, then it may make sense to move to a portfolio of Treasury bills, certificates of deposit and money market funds. Michael G. Coli, 56, of Crystal Lake, Ill., decided to take his 401(k) money out of the market in February. As an investor in his sons’ pizza restaurants, he noticed that an increasing number of customers were relying on credit cards. And as the owner of a winter home in Naples, Fla., he witnessed the housing market dive. Taken together, he decided to pull his retirement money, which he would need in five years, from the Vanguard Balanced Index Fund and move it all into certificates of deposit.“I had the feeling the economy was not on real firm ground,” Mr. Coli said. “I decided to get out and put it all in C.D.’s, and that is where I’ve been ever since.”If you can’t afford to live off the proceeds of cash investments (or dividends from your investment in your kids’ pizza joints), you may have no choice but to hold on to whatever stocks you have left. Then, you can hope for a rebound that will allow you to live out your later years more comfortably. Selling now and moving to cash could mean guaranteeing a lower standard of living for the rest of your life, because you’d be locking in your losses. But if you’re a bit younger, try to think of your investment portfolio in the same way you consider the value of your home, if you own one. After all, if you’re not moving anytime soon, your home is a long-term investment, too. “Today’s price is not your price. Your price is 10 or 20 years from now,” said Thomas A. Orecchio, of Greenbaum & Orecchio, a wealth management firm in Old Tappan, N.J. “Unfortunately, stock market investors don’t always see things that way.”

Those With a Sense of History May Find It’s Time to Invest

noreply@blogger.com (Traders Den) — Mon, 13 Oct 2008 07:56:00 -0700

By ALEX BERENSON Published: October 11, 2008
The four most dangerous words for investors are: This time is different.
Ruby Washington/The New York Times

Five Weeks of Financial Turmoil In 1999, technology companies with no earnings or sales were valued at billions of dollars. But this time was different, investors told themselves. The Internet could not be missed at any price.They were wrong. In 2000 and 2001 technology stocks plunged, erasing trillions of dollars in wealth. Now investors have again convinced themselves that this time is different, that the credit crisis will push economies worldwide into the deepest recession since the Depression. Fear runs even deeper today than greed did a decade ago. But in their panic, investors are ignoring 60 years of history. Since the Depression, governments have become far more aggressive about intervening when credit markets seize up or economies struggle. And those interventions have generally succeeded. The recessions since World War II, while hardly easy, have been far less painful than the Depression.Now some veteran investors, including G. Kenneth Heebner, a mutual fund manager who has one of the best long-term track records on Wall Street, say that the sell-off has gone much too far and stocks are poised to rally powerfully if the downturn is less severe than investors fear.“The fact is, there are a lot of tremendous bargains out there,” said Mr. Heebner, who manages about $10 billion in several mutual funds. Indeed, by many measures stocks are as cheap as they have been in the last 25 years.He pointed to Chesapeake Energy, a natural gas producer that he owns in his CGM Focus mutual fund. In July, Chesapeake traded for $63 a share. On Friday, it fell as low as $11.99.He says that investors with a stomach for risk and a long time horizon should consider following Warren E. Buffett, who in the last three weeks has invested $8 billion in Goldman Sachs and General Electric.Mr. Heebner expects world economies to contract over the next year. But he said the market plunge in the last week was no longer being driven by rational analysis. Stocks are probably falling because of a combination of panic and forced selling by hedge funds that must meet margin calls from their lenders, he said.Mr. Heebner’s funds have not avoided the carnage this year. The CGM Focus fund is down about 42 percent so far in 2008. But his long-term track record is impressive. In the decade that ended Dec. 31, 2007, CGM Focus rose 26 percent a year, including reinvested dividends, making it among the best-performing mutual funds.Mr. Heebner is not alone in his optimism. “I think in years to come — I wouldn’t say months to come — we will perceive this as being a great value-buying opportunity,” said David P. Stowell, a finance professor at Northwestern and a former managing director at JPMorgan Chase. “Two and three years from now, it will seem very smart.”Even before their jaw-dropping plunge of the last month, stocks were not expensive by historical standards, based on fundamentals like earnings and cash flow. Now, after falling 30 percent or more since early September, stocks in stalwart, profitable corporations like Nokia, Exxon Mobil and Boeing are trading at nine times their annual profits per share or less. Many smaller companies are even cheaper. Some of those stocks are trading at five times earnings or less. Those ratios are historically low. Over all, the Standard & Poor’s 500-stock index is trading at about 13 times its expected profits for 2009, its lowest level in decades. In contrast, at the height of the technology bubble in early 2000, the stocks in the S.& P. traded at about 30 times earnings, the highest level ever. At the same time, the 10-year Treasury bond paid about 6 percent interest, compared with less than 4 percent today. Investors have fled stocks in favor of government bonds, insured bank deposits and other low-risk investments because they are deeply afraid of the worldwide economic crisis, said Stephen Haber, an economic historian and senior fellow at the Hoover Institution. But he said he believed that fear might have gone too far. “If there is good and wise policy, and government moves effectively, this need not play itself out in ways like the Great Depression, which is the image that is playing itself out in people’s mind,” Mr. Haber said. Government action typically does not work immediately, and banking crises around the world often require multiple interventions, he said.Still, optimists remain in the minority on Wall Street. Most investors seem to believe that the credit crisis will do substantial damage to stocks and overall economic activity.“We have never before seen for such sustained periods of time such a sustained turn away from risk taking,” said Steven Wieting, the chief United States economist for Citigroup. “This has broken out of the boundaries we’ve seen.” Economic activity appears to have slowed sharply in September, Mr. Wieting said. The panic last week took the biggest toll on financial companies, as well as companies that are highly leveraged. But stocks fell 10 to 30 percent even for companies typically thought to be resistant to economic downturns, like the manufacturers of consumer staples.For example, Newell Rubbermaid fell to $12.82 on Friday from $17.34 on Oct. 1, a 26 percent decline in 10 days. Newell Rubbermaid now trades at its lowest levels since 1990, and just eight times its expected earnings for next year. Yet Newell Rubbermaid, whose brands include Calphalon, is profitable and insulated from the credit crisis, said William G. Schmitz Jr., who follows household products companies for Deutsche Bank. “There’s really no balance sheet risk,” Mr. Schmitz said. The company also pays a 6 percent dividend.Newell Rubbermaid said in July that it would earn $1.40 to $1.60 a share for 2008, excluding restructuring charges. For 2009, stock analysts predict it will make $1.53 a share. And while a slowing economy may mean that people will be buying fewer products from Newell Rubbermaid, the recent plunge in oil prices will reduce its costs, Mr. Schmitz said.“The way the stock’s reacted, you’d think they were going out of business,” he said. Martin J. Whitman, a professional investor for more than 50 years, said that as long as economies worldwide could avoid an outright depression, stocks were amazingly cheap. Mr. Whitman manages the $6 billion Third Avenue Value fund, which returned 10.2 percent annually for the 15 years that ended Sept. 30, almost two percentage points a year better than the S.& P. 500 index. The fund is down 46 percent this year.“This is the opportunity of a lifetime,” Mr. Whitman said. “The most important securities are being given away.”

U.S. bank failures almost certain to increase in next year

noreply@blogger.com (Traders Den) — Sun, 5 Oct 2008 20:44:00 -0700

SAN FRANCISCO, California (AP) -- Here's a safe bet for uncertain times: A lot of banks won't survive the next year of upheaval despite the U.S. government's $700 billion rescue plan to restore order to the financial industry.The biggest questions are how many will perish and how they will be put out of their misery, whether it's outright closures by regulators scrambling to preserve the dwindling deposit insurance fund or in fire sales made under government pressure.
Weakened by huge losses on risky home loans, the banking industry is now on the shakiest ground since the early 1990s, when more than 800 federally insured institutions failed in a three-year period. That was during the clean-up phase of a decade-long savings-and-loan meltdown that wound up costing U.S. taxpayers $170 billion to $205 billion, after adjusting for inflation.
The government's commitment to spend up to $700 billion buying bad debts from ailing banks is likely to save some institutions that would have otherwise died, but analysts doubt it will be enough to avert a major shakeout.
"It will help, but it's not going to be the saving grace" because a lot of banks are holding construction loans and other types of deteriorating assets that the government won't take off their books, predicted Stanford Financial analyst Jaret Seiberg. He expects more than 100 banks nationwide to fail next year.
The darkening clouds already have some depositors pondering a question that always seems to crop up in financial panics despite deposit insurance: Could it possibly make more sense to stash cash in a mattress than in a bank account?
"It sounds like a joke," said business owner Mauricoa Quintero as he recently paused outside a Wachovia Bank branch in Miami. "But it sounds safer than the turmoil out there right now."
Not as many banks are likely to fail as in the S&L crisis, largely because there are about 8,000 fewer today than there were in 1988.
But that doesn't necessarily mean the problems won't be as costly or as unnerving; banks are much larger than they were 20 years ago, thanks to laws passed in the 1990s.
"I don't see why things will be that much different this time," said Joseph Mason, an economist who worked for the U.S. Treasury Department in the 1990s and is now a finance professor at Louisiana State University. "We just had a big party where people and businesses overborrowed. We had a bubble and now we want to get back to normal. Is it going to be painless? No."
With more super-sized banks in business, fewer failures could still dump a big bill on the Federal Deposit Insurance Corp., the government agency that insures bank and S&L deposits. The FDIC's potential liability is rising under a provision of the bailout that increases the deposit insurance limit to $250,000 per account, up from $100,000.
Using statistics from the S&L crisis as a guide, Mason estimates total deposits in banks that fail during the current crisis at $1.1 trillion. After calculating gains from selling deposits and some of the assets of the failed banks, Mason estimates the clean-up this time will cost the FDIC $140 billion to $200 billion.
The FDIC's fund currently has about $45 billion, a five-year low. But the agency can make up for any shortfalls by borrowing from the U.S. Treasury and eventually repaying the money by raising the premiums that it charges the healthy banks and S&Ls.
Through the first nine months of the year, 13 banks and S&Ls have been taken over by the FDIC, more than the previous five years combined.
The FDIC may be underestimating, or least not publicly acknowledging, the trouble ahead. As of June 30, the FDIC had 117 insured banks and S&Ls on its problem list. That represented about 1 percent of the nearly 8,500 institutions insured as of June 30. Entering 1991, about 10 percent of the industry -- 1,496 institutions -- was on the FDIC's endangered list.
Although the FDIC doesn't name the institutions it classifies as problems, this year's June 30 list didn't include two huge headaches: Washington Mutual Bank and Wachovia. Combined, WaMu and Wachovia had more than $1 trillion in assets; the assets of the 117 institutions on the FDIC's watch list totaled $78 billion.
Late last month, WaMu became the largest bank failure in U.S. history, with $307 billion in assets, nearly five times more, on an inflation-adjusted basis, than the previous record collapse of Continental Illinois National Bank in 1984. The FDIC doesn't expect WaMu's demise to drain its fund because JP Morgan Chase & Co. agreed to buy the bank's deposits and most of the assets for $1.9 billion.
Regulators dodged another potential bullet by helping to negotiate the sale of Wachovia's banking operations to Citigroup Inc. in a complex deal that could still end up costing the FDIC, depending on the severity of future loan losses. On Friday, a battle of banking giants erupted when Wachovia struck a new deal with Wells Fargo & Co. without government help, and Citigroup demanded that it be called off.
The banking outlook looks even gloomier through the prism of Bauer Financial Inc., which has been relying on data filed with the FDIC to assess the health of federally insured institutions for the past 25 years.
Based on its analysis of the June 30 numbers, Bauer Financial concluded that 426 federally insured institutions are grappling with major problems. That's about 5 percent of all banks and S&Ls.
About 15 percent of the banks on Bauer's cautionary list have more than $1 billion in assets. Not surprisingly, the troubles are concentrated among banks that were the most active in markets where free-flowing mortgages contributed to the rapid run-up in home prices that set the stage for the jarring comedown. By Bauer's reckoning, the largest numbers of troubled banks are in California, Florida, Georgia, Illinois and Minnesota.
"It's important for people to remember that not all these banks are going to fail, just because they are on this list," said Karen Dorway, Bauer Financial's president. "Many of them will recover."
James Barth, who was chief economist of the regulatory agency that oversaw the S&L industry in the 1980s, doubts things will get as bad as they did then.
"It's scary right now, but it's not as scary as a lot of people are making it out to be," said Barth, now a senior fellow at the Milken Institute, a think tank.
Mani Behimehr, a home designer living in Tustin, California, isn't feeling reassured after what happened to WaMu and Wachovia. After he heard the news that WaMu had been seized and sold to JP Morgan, he rushed out to withdraw about $150,000 in savings and opened a new account at Wachovia only to learn about its sale to Citigroup two days later.
"I thought this is the strongest economy in the world; nothing like that happens in this country," said Behimehr, 46, who is originally from Iran.
The tumult is creating expansion opportunities for healthy banks. Industry heavyweights such as JP Morgan, Citigroup and Bank of America Corp. have already rolled the dice on major acquisitions of financially battered institutions in hopes of becoming more powerful than ever.
Smaller players such as Clifton Savings Bank in New Jersey are bragging about their relatively clean balance sheets to lure depositors away from rivals that are wrestling with huge loan losses. The bank, with about $900 million in total assets, says just one of its 2,300 home loans is in foreclosure.
"There is going to be a flight to quality," predicted John Celentano Jr., Clifton Savings' chief executive. "People are going to start putting their money in places that were being run the way things are supposed to be run: the old-fashioned way.

Source:- http://www.cnn.com/2008/US/10/05/shaky.banks.ap/index.html

N-deal with India to support 2.5 lakh jobs in US

noreply@blogger.com (Traders Den) — Wed, 24 Sep 2008 11:30:00 -0700

Washington, September 23: America's premier trade body has projected that the Indo-US nuclear deal could revitalise the US nuclear industry and support 2.5 lakh high-tech jobs in the country, much higher than the estimate of the Bush Administration.
Lobbying lawmakers to approve the 123 Agreement before the close of the 110th Congress, the world's largest business federation, the US Chamber of Commerce, says that if American companies are allowed to compete in India, even modestly, it could support 2.5 lakh high-tech jobs.
"If US companies are allowed to compete, a modest share of that business could support 250,000 high-tech American jobs," R Bruce Josten Executive Vice President of the apex body representing more than three million businesses, said in a recent letter to the US Congressmen.
With India's 34-year nuclear isolation now history, the opportunity for US companies today is tremendous, with an expected 30,000 to 60,000 MW of new nuclear generating capacity by 2030, representing a potential USD 150 billion of new investment, Josten said.
He emphasised that Congressional nod was essential to compete with French and Russian nuclear firms who are already operating in the Indian market.
At the same time, William J Burns, Under Secretary for Political Affairs, who testified before the Senate Foreign Relations Committee last Friday had given a more modest figure of 3,000-5,000 new direct jobs and about 10,000-15,000 indirect jobs in the US if American firms won two bids for new nuclear plants in India.
Stating that the Indo-US civil nuclear deal enjoyed the support from the US nuclear industry, Burns had pointed out that New Delhi had indicated that it planned to import at least eight new 1,000-megawatt power reactors by 2012, and additional reactors in the years ahead.
"Preliminary private studies suggest that even just two of these reactor contracts for US firms would add 3-5 thousand new direct jobs and about 10-15 thousand indirect jobs in the United States," Burns had said.
Burns had also pointed out that by 2025, India will likely rank among the world's five-largest economies. "It's already among our fastest-growing export markets. It will soon be the world's most populous nation."
He said the bilateral civil-nuclear initiative also advanced the common strategic vision.
Environmentally, the Initiative will help India's population to meet their rapidly rising energy needs.
India is growing at rates of 8 to 9 per cent per year, and to sustain those rates of growth, it must expand its supply of energy exponentially.
Between 1980 and 2001, India's demand increased by a staggering 208 per cent, Burns said.
By contrast, China, so often described as the world's next big energy consumer, saw just a 130 per cent increase -- about half of India's -- over the same period, he pointed out.
India will soon outstrip Japan and Europe as an oil importer, he predicted.
The senior Bush Administration official also drew the attention of the lawmakers that India planned to double its capacity to generate electricity in the next seven years.
However, India relied primarily on domestically-produced coal whose ash content was double that of American coal and emitted far more nitrogen oxide, an element in smog, and carbon monoxide, a poisonous gas.
"This means that India will be one of the world's largest-producers of greenhouse gas emissions. And so its decision to rely, in part, on clean and efficient nuclear energy positively affects our own environmental future, not just India's," Burns had said.

Source:-http://www.expressindia.com/latest-news/ndeal-with-india-to-support-2.5-lakh-jobs-in-us/364946/

.S. stocks end sharply lower on bailout uncertainty, oil

noreply@blogger.com (Traders Den) — Mon, 22 Sep 2008 13:14:00 -0700

Stocks fell sharply on Monday, giving back all of their sharp gains from Friday, amid uncertainty over a $700 billion plan to take the bad assets off of ailing financial firms' balance sheets to stem the year-long credit crisis. Adding to the market's woes, crude oil futures saw a surprise jump of nearly $25 to briefly trade at $130 a barrel, shortly before closing at $120.92, up $16.37 on the New York Mercantile Exchange. The Dow Jones Industrial Average ($INDU:11,015.69, -372.75, -3.3%) fell 373 points, or 3.3%, to end at 11,015. The S&P 500 index ($SPX:1,207.09, -47.99, -3.8%) lost 48 points, or 3.8%, to close at 1,207, while the Nasdaq Composite (COMP:2,178.98, -94.92, -4.2%) fell 94 points, or 4.2%, to end at 2,178.

---- Market Watch

Find the holdings of Lehman group in indian stocks which are in risk

noreply@blogger.com (Traders Den) — Mon, 15 Sep 2008 09:47:00 -0700

GPIL 413832 ,
EMKAY 982134 ,
GTC- 300000,
IOLN -- 400000 ,
KPIT CUMMINS -- 862823,
ORBIT -1750000,
Anant Raj -- 5362500,
DCB --5300000,
SPIC MOBILE - 3289774,
CCL-- 503000,
Prithvi-- 476160,
West Coast paper- 2500000,
Kalpataru Power--350000,
IVRCL-1600000,
Pioneee Emb- 394356,
Eidelweiss-- 1350000,
SPice Tele-- 9203000,
Philips Carbon- 1000000,
PSL-980408,
TULIP-811004,
IOLN-585000,
Moser Bear -2252000,
Ruchi Soya--2270000,
Mastek-1423406,
Fedders LLyod-1505918,
Dhampur Sugar- 2277272,
NorthGate Tech- 1454904,
Triveni Eng-5873053,
NIIT- 2117926,
United phos-2489609,
CAIRNSOFT-3427000,
AMTEK AUTO--2947000,
KPIT CUMMINS-5700000,
PLEX--455625,
GATI--1112000

NSE to start live trading in currency futures

noreply@blogger.com (Traders Den) — Wed, 20 Aug 2008 21:03:00 -0700

THE National Stock Exchange (NSE) has announced the launch of trading in currency futures from August 29. For the first time in India, it would be now possible to trade on the currency futures on a stock exchange platform. Currency futures are standardised foreign exchange contracts traded on a recognised stock exchange to buy or sell one currency against another on a specified future data, at a price specified on the purchase or sale data. Currently, RBI has approved only USD-INR currency futures to be traded on the approved exchanges. The size of the contract would be $1,000 and the contracts would expire on the last business day of any month at 12 noon. The contracts will be quoted and settled in rupees and the settlement price of the contract would be RBI's reference rate on the last trading day. This is expected to benefit participants such as corporates and individual investors, and also banks that are allowed to become members of this segment. However, at the moment foreign institutional investors (FIIs) and non-resident Indians (NRIs) would not be permitted to trade on the segment. The NSE is the first exchange to have received an inprinciple approval from Sebi to set up a currency futures segment. All trades done on the exchange would be cleared, settled and risk-managed by National Securities Clearing Corporation (NSCCL), which is set up as a separate and independent entity. In India, there is an active OTC market for forwards with an average daily turnover of $34 billion. World over, exchange-traded currency derivatives are also available and around 334 million contracts get traded annually.

Core projects

noreply@blogger.com (Traders Den) — Wed, 20 Aug 2008 11:30:00 -0700

"Education is the most important element for growth and prosperity of a nation. India is in the process of transforming itself into a developed nation by 2020. Yet CORE has have 350 million people who need literacy and many more who have to acquire employable skills to suit the emerging modern India and the globe. "- Dr. APJ Abdul Kalam
CPTL is well positioned in the IT-Education spaceCPTL is a IT Product and services solution provider, mainly focused on education,logistics and ERP verticals, having presence in US, UK, Africa, Middle-East andIndia. CPTL has acquired 6 companies which have a presence in the ITEducationspace. Its subsidiaries like KCMG, Aarman, Emacs and ECS offerssuperior value to its entire business space. CPTL has good positioning inschool management system, accountability systems, assessment systemsand IT infrastructure systems which is considered to be a backbone to alleducation operations like data management systems and data analytical andreporting systems. The only segment in education space where currently CPTLdoesn't have presence is curriculum management which is considered to be apremium segment in education space. But CPTL is likely to fill up this businesssegment through tie ups or inorganic route in near future.Education presents a huge market opportunity in IndiaIndian economy has been growing at accelerated rate of 8-9% over past fewyears. The Indian government is taking steps to ensure that there is a sustainablewidespread economic growth that is inclusive in the future. This requires largeinvestment in education and also ensuring a uniform high-quality of education.This year, the Union Budget's allocation for school education went up 35% fromRs 171.3bn to Rs 231.4bn. It also announced that it intends to appoint 200,000more teachers and construct 500,000 more class rooms. This will increasefunds flowing into IT deployment in schools. The government is also targettingto raise the public spending on education from 3.7% of GDP to 6% of GDP in aphased manner. This clearly represents a huge growing market pie. 1)The company is expected to set up 40 IGNOU centers by FY09 and another 100 by FY10.It also plans to set up another 100 IGNOU centers every year for next 5 years.Core projects is expected to earn Rs 3 crore as one-time income for installation per centre and Rs 2.8 crore per year per centre as recurring income depending on the usage per hour.The development should catapult core projects into a unique league post 2009.
2)Real estate plays had a dream run post 2005 and players like unitech and several others made fortune for lot of people.At that point of time we had few listed scrips and that fuelled the rally.At some point of time i expect the same to happen in these educational plays.Hardly 4-5 companies available with stunning growth prospects.Core projects is one of the great plays which i feel everyone should opt in their core portfolio.
3)The company has also tied-up with IL&FS–ETS to offer comprehensive IT solutions in the education programmes under space.The JV is targeted at state governments that are initiating various education SSA.The JV expects to earn approximately Rs 1,000 per year/child as a typical state has about 8 million students.Hence, the project could result in potential revenue of Rs 800 crore each year for the next 5 years.The JV could earn a fat 120crs revenue per year.
4)IT spend in the education sector is expected to increase to US $62 billion by 2010. An end-to-end solution provider with three recent acquisitions,The company is becoming a major player in the global IT education space.The company currently has more than 30 products in the education space with clients in the US, UK, Africa and Nigeria.
Conclusion:-The company is expected to become a 1000crs company these year with NP expected to be around 165crs.Core projects is moving up the value chain from a pure IT player to an ITeducation-infrastructure company.Core projects is quoting at less than 10 times its fy09 earnings.The company is all set to get rerated in the bourses.I expect the counter to outperform markets in a major way. · During the financial year 2007-08, CORE has set about consolidating and strengthening their foundation in the endeavor to emerge as the most formidable player in the Global Education space. · Today, Core Projects and Technologies has a resource base of more than 650 people across 5 countries with offices spread across the globe in India, US, UK, UAE and Africa.· During the year, the Company reported Net Sales of Rs. 4,459 million , a growth of 130% over the previous year. The Net Profit too witnessed a growth of 153% at Rs. 845 million. · The Education space, in line with their strategy holds the centre stage in terms of year on year growth and its contribution to their topline. For the year under review, it represents 62% of the total revenue-pie. · The US and the UK markets have thus far been their key markets, where CORE has established significant presence over the year. It is a matter of pride that CORE has associated with various state governments and central governments across regions.· The thrust on education in these developed nations remains high priority. The key focus areas of the education policy there, encompasses raising the bar for the coursework to make it more advanced, encouraging teachers to enhance the performance of the underperforming schools and providing financial assistance to parents regarding the educational needs of their children. · Core Projects and Technologies has emerged as a global service provider in this space, equipped with a robust product portfolio, which offers end-to-end solutions across the Education Chain. This includes the following key areas - Assessment and Achievement, Accountability, Grants and Financial, Maintenance and Operations, Safety Student Information/Child Tracking, Communication, Professional Development and Consulting, Curriculum. Examination Management System and Teacher's Training are two of their key activities and CORE has see tremendous scope for these in India. · Their strategy is two pronged in these markets. One is grow organically by client additions by understanding the needs of the markets in which CORE has are operating and provide optimal solutions. The second is the inorganic route to growth. Their Company has a track record of successful acquisitions, and more importantly, the ability to integrate the same into their business. This year too, CORE has made significant inroads into the international markets by acquiring companies in UK and USA.· CORE has now seek to leverage their successful overseas model to expand their foothold in the domestic market. CORE is in active dialogue with approximately 9-10 states. CORE has believe their partnerships with IL&FS, IBM, CHL & IGNOU will provide significant momentum to their efforts in India. · India's flagship education programme, Sarva Shiksha Abhiyan has been provided Rs.131, 000 million in the Union Budget 2008-09. The focus is now shifting from access and infrastructure at the primary level to enhancing retention and improving quality of learning. The Secondary Education segment has been allocated Rs.45,540 million and the Union Budget has also announced a Model School programme, with the aim of establishing 6,000 high quality model schools with a proposed allocation of Rs. 6,500 million for the new scheme. · CORE has believe that- their experience in the international markets fortified by a product portfolio catering to the entire gamut of education domain has laid a strong foundation for their domestic growth prospects. The Public Private 'artnership (PPP) is a mix of qualitative and quantitative resources resulting into public and private players assuming different roles of varying dimensions resulting in numerous Models of PPP. CORE has, at Core Projects strongly endorse this theory. It is their constant endeavor to partner with the Government using innovative models and spread their wings across the education segment. · Another major growth driver for us going forward will be their tie up with NASA's Center of Higher Learning, USA, (CHL). They will work exclusively with Core Projects and Technologies in the Asia Pacific region and train a large group of their Engineers in the latest technologies related to Immersive Visualisation. · Their Company has also signed a MOU with Indira Gandhi National Open University (IGNOU) for setting up Visualization· Learning Centres at all IGNOU centres in India. This project will mark the beginning of a new era in instructional technology and significantly improve the efficacy of learning materials. Resultantly, it will raise the quality of education across the board. This unique initiative by the Company is a significant landmark as it highlights their commitment to set global standards in the education space in India.· The ERP and Logistics/ITES, segments provided stable growth during the year led by new client additions, geographical expansion and the launch of new products. They now represent 38% of the total revenue pie.
clients CORE has managed successful projects in the following locations:·
United States of America –· Georgia · Michigan · North Carolina · Maine · Illinois · Oklahoma · California · Minnesota · South Carolina · Tennessee · Texas · Massachusetts · Ohio · CECAS: North Carolina Department of Public Instruction · MEDMS: Maine Department of Education · Chicago Public Schools · Bright from the Start: Georgia Department of Early Care & Learning · Trussville City Schools · Metropolitan School District of Warren Township · United Kingdom – · Royal Institute of Public Health · Royal College of Surgeons · Royal College of Physicians · University of London · British Red Cross · Fire Services Exam Board · Royal Air Force Benevolent Fund (NFP) · Allied Irish Bank · AXA Guardian Insurance · Barclays Bank · Birmingham City Council · Bradford & Bingley · Department of Health (DoH) · Department of Trade and Industry (DTI) · European Commission · Fleming Premier Bank · Foreign & Commonwealth Office · Home Office · Hull City Council · Kent County Council · London Borough of Havering · London Underground · Metronet Rail · Metropolitan Police · Ministry of Defence (MoD) · National Health Service (NHS) · NHS Logistics Authority · National Offenders Management Service (NOMS) · National Policing Improvement Agency (NPIA) · National Probation Directorate · Nottingham City Council · Office of Government Commerce (OGC) · Preston City Council · Royal Bank of Scotland · Royal College of Nursing · Scottish Fisheries Protection Agency · Scottish Natural Heritage · Scottish Executive · Tube Lines · West Yorkshire Police · India –· State of Jharkhand
Others·
Department of Examinations, Sri Lanka · Ministry of Education, Zambia · Ministry of Education, Rwanda · Ministry of Education, Ghana · Ministry of Education, Uganda · Ministry of Education, Ethiopia · Ministry of Education, Kenya · Ministry of Education, Mozambique · Ministry of Education, Lesotho · Ministry of Education, Bahamas · Ministry of Education, Cayman Islands · Ministry of Education, Jamaica · Ministry of Education, Caribbean Council Clients - Logistics· Reliance Industries Limited, India · Balmer Lawrie & Co. Ltd., India · Benediction, India · Bafna Motors, India · Bafna Consultancy Services (P) Ltd., India Clients - ERP· Applied Materials · Verizon · Cascade Communications · Windriver Technologies · Sony · Indira Gandhi Open University (IGNOU)

Source: Newsletter