Sensex emerges as the best of the world indices

After suffering the ignominy of languishing among the worst-performing markets for the past few months, matters have slightly improved for India. Outlook on equities continues to remains dismal —barring the occasional surge — but Indian equities have shown better resilience than what most market watchers had expected it to.

After a fall in more than a third of its value in the six months of CY2008, the Sensex has rebounded remarkably to become the best-performing index amongst major indices in the last month.

Easing of crude prices has provided some relief to the bulls who have been battling a flood of negative newsflow for the past few months. The price of crude has fallen by 20% from its peak of close to $150 a barrel. This has reduced the inflationary pressures to some extent, though experts feel it is too early to celebrate.

Indian shares, one of the worst performers in the first six months of the year, is gradually regaining some of its lost ground. A return to a degree of political stability after the trust vote as well as the strengthening rupee made Sensex the outperformer in the list of major global indices. The BSE Sensex recorded a rise of 18% in the period since July 15 — the day when all global markets were at their latest bottom. Capital goods, banks and realty — the sectors most impacted in the crash propelled the resurgence. Those sectors possess a high beta — indicating a greater correlation to the benchmark index, which entails that these sectors outperform the index in good times.

Govt to ask R-Power for mining plan to find surplus coal

Government may consider allowing Anil Ambani group's Reliance Power use surplus coal from captive mines attached to its Ultra Mega Sasan Power Project for another project after it provides a mining map to establish that it has excess fuel.

A Group of Minister, looking at the fuel issues for Sasan project, has asked the company for the mining plans, informed sources said, adding that the issue could be considered only thereafter.

Any decision on allowing Reliance Power to use coal reserves from its captive mine for the 4,000 MW Sasan project at its other project in Madhya Pradesh would be taken after it is established the company has surplus fuel, sources added.

The power generated from the surplus fuel will be sold on tariff based bidding. Reliance Power spokesperson declined to comment on the issue.

The company had earlier asked for government's approval to use excess coal from its captive blocks for Sasan to feed its other project.

Ministry of Coal approved the mining plan for Moher and Moher-Amlori extension coal block relating to Sasan Power Ltd for Sasan Ultra Mega Power Projects.

The coal from the Moher-Amlori coal block would be used to generate power for 4,000 MW Sasan UMPP.

Reliance Power bagged 4,000 MW Sasan UMPP in July last year on re-invitation of bids, the company matched the tariff of Rs 1.20 per unit earlier quoted by the original winning bidder, a consortium of Singapore-based Globaleq and Lanco Infratech.

Following the cancellation of the project award to Lanco consortium, Sasan Power Ltd, had asked three other bidders RPL, NTPC and Jaiprakash Associates to submit fresh bids.

While RPL submitted a revised bid, NTPC and Jaiprakash Associates did not change the prices. - PTI

Reliance looking at diesel exports to Pakistan

Reliance Industries is looking at exporting diesel from its upcoming refinery at Jamnagar in Gujarat to Pakistan after Islamabad last month allowed import of fuel from India.

In July, Pakistan announced expanding bilateral trade with India by allowing more imports, including diesel and fuel oil.

Reliance is likely to commission its 29 million tons a year export-oriented unit by October and Pakistan will be one of the destinations besides the US and Europe of the high value fuel it will produce, industry sources said.

The company has been trying to get an entry into Pakistan for the past four years, which imports 7-8 million tonnes of diesel a year to meet its domestic needs and it is only now that the neighbouring country has allowed import of fuel from India.

Its existing 33 million tonnes a year Jamnagar refinery in Gujarat and the upcoming unit adjacent to it offer the cheapest option for Pakistan but the Islamic nation has been getting fuel from countries like Kuwait at a heavy discount and Reliance has to better that price.

Importing diesel from India will be cheaper for Pakistan due to the difference in transportation cost but Islamabad has traditionally relied on the Gulf nations for its oil needs.

Sources said Jamnagar is less than a day from the Karachi port against over three days distance from Kuwait. But the discounts and easier payment terms like Kuwait Petroleum Corporation's 180-day credit line make importing fuel from the Gulf nations more attractive.

Besides Jamnagar, only Essar's Vadinar refinery can offer a similar freight advantage.

Also, Indian Oil Corporation's Panipat refinery can export to Pakistan via rail but the state-run refinery has no surplus diesel to export after meeting a galloping domestic demand.

Besides discounts from Gulf nations, the only other roadblock for Reliance is the fact that Pakistan has not graduated to using high specimen clean fuels (Euro-III and IV grade), the kind Jamnagar will produce, sources said.

While Reliance's first refinery already produces mainly for export, the second will be devoted entirely to foreign customers.

High-value fuels are exclusively for export to the West, primarily to Europe and the United States. It will soak up excess heavy Middle East crude supplies and export high-quality gasoline, diesel and jet fuel to markets around the world.

The new plant - the most sophisticated in the world for its size - has a low cost base and high complexity offering it unrivalled global reach for its fuel, allowing it to shift exports to the highest-priced market. It will play a swing supply role that will redraw traditional trade flows, and has already embarked on a robust marketing campaign in Europe, Mexico and East Africa, capitalizing on delays and cost overruns faced by other big refinery projects. - PTI

Banking sector may see tough days ahead: Analysts

After taking a hit on their bottomlines in the first quarter of this fiscal, the Indian banks are likely to remain in tough terrains in the face of the tightening macro-economic environment, analysts say.

Bottomlines of banks in the first quarter of financial year 2009 were hit by higher than expected mark-to-market (MTM) losses and lower treasury incomes, as per an earnings review of banking sector by domestic brokerage firm Sharekhan.

“Most of the banks under our coverage witnessed margin pressures during the quarter, in line with the recent rate hikes announced by the RBI. Further, a weaker treasury performance on account of the higher bond yields, the downturn in the equity markets and the high base of the last year added to the woes of banks,” the Sharekhan report said.

However, the banks themselves are putting a brave face and dismiss the talks of any slowdown in the sector. Disagreeing to the view that there is a slowdown in the banking space, Indian Bank Chairman and Managing Director Mr M S Sundara Rajan said, “Ther e is no slowdown at all. Indian Bank had a credit growth of 4,200 crore in the first quarter this year as against Rs 800 crore last year. There is high demand from every industry including power, telecom, infrastructure, cement, sugar or composite sugar mills.”

The highlight of the quarter was the MTM provisions, which significantly affected the earnings of the banks. The quarter gone by saw a significant spike in bond yields, resulting in high MTM provisions on banks' bond portfolios, the report said.

Banks with higher proportion of their investment portfolio held in the 'available for sale' category had significantly higher MTM losses during the quarter, it added. - PTI

BUY ROHIT-FERRO TARGET 200

DATE -15/08/08

CMP - 127.40

TARGET - 180

STOP LOSS - 110






Report card

PE ratio	5.54	13/08/08
EPS (Rs)	23.28	Mar, 08
Sales (Rs crore)	309.67	Jun, 08
Face Value (Rs)	10
Net profit margin (%)	10.07	Mar, 07
Last dividend (%)	15	23/06/08
Return on average equity	16.93	Mar, 07

Simple Moving Averages

Days	BSE	NSE
30	132.42	132.67
50	136.83	137.03
150	110.23	110.48
200	102.70	102.90

COMPANY TEHNICALS

A well-differentiated player in the Ferro Alloy manufacturing sector, Rohit Ferro-Tech Limited (RFTL) operates with a vision that inspires, and a business strategy that sustains. An active player in both domestic and international markets, RFTL’s product mix is aimed at catering to the high demand globally as well as maximizing on returns. The Company manufactures High Carbon Ferro Chrome (H.C.FeCr), Ferro Manganese (FeMn) and Silico Manganese (SiMn) through Submerged Arc Furnace (SAF) route.

RFTL had started it’s operations in October’03 with a Ferro Alloy plant comprising of 2x9 MVA Submerged Arc Furnaces, and then, expanded it’s capacity by installing further 2x9 MVA furnaces to produce 55,000 TPA of High Carbon Ferro Chrome at Bishnupur in the state of West Bengal. Currently, the same unit is again undergoing an expansion with another furnace of 9 MVA to enhance Bishnupur plant’s total capacity to 70,000 TPA.

The Company has also set up another Ferro Alloy plant comprising of 4 x 16.5 MVA Submerged Arc Furnaces at Kalinganagar Industrial Complex, Jajpur in the state of Orissa to produce 110,000 TPA of Ferro Alloys comprising of High Carbon Ferro Chrome, Silico Manganese & Ferro Manganese with the versatility of all the furnaces to produce any of these kinds of Chrome or Manganese based ferro alloys.

With the total combined capacity of more than 175,000 TPA, the Company is trying to enhance its competitive advantage and has also applied for mining lease for Chromite & Manganese Ore to the State Government of Orissa. Rohit Ferro-Tech Limited was incorporated on 7th April 2000 under the aegis of Impex Group having interest in manufacturing, trading, import & export of various kinds of Ferro Alloys. Since then, the Company has come a long way to position itself as a leading producer of High Carbon Ferro Chrome. Being accredited ISO 9001:2000 in August 2004 and receiving Two Star Export House Status are some of the notable milestones in it’s journey.

OUR VIEW....
1.Company is showing good track records in annual sales with Rs 613.11 cr in Mar 2008 vs Rs 199.17 in Mar 2007

2.Company registered its profit Rs 115.27 cr in 2008 vs Rs 28.18 cr in 2007 . Company Net Profit Margin is 12.83% vs 9.44% yearly.

3.Company PAT 20.44 in 2008 vs 7.75 in 2007

4.Stock gained a great momentum in this bearish market.With this view it may give a good returns to investors in near term.For long term this stock will give good returns.In charts company is strong..

5.One should buy this stock at dips, so that avg can be lowered. and can put stop loss at 100-110.

Dalal Street proves tough for Anil Ambani; Infratel IPO scrapped

The stock market woes for India's second richest person Mr Anil Ambani, it seems, are unending with Reliance Infratel scrapping its estimated Rs 6,000-crore IPO plans for now - amid huge secondary market loss for the group companies.

Reliance Infratel, the tower business arm of the group's telecom entity Reliance Communications, has allowed the regulatory approval to lapse without coming out with an IPO and is unlikely to revive the process soon.

A company spokesperson did not take queries on lapse of the approval period and on whether the company was looking to revive the process by filing a fresh draft IPO prospectus with market regulator SEBI.

On the secondary market, Reliance Infrastructure, formerly Reliance Energy, has logged the biggest loss among the top 30 blue-chip companies in the country in the seven- month downslide at the bourses and the group as whole has lost market value worth ov er Rs 2,00,000 crore in the same period.

The public offer, which was planned, had got a regulatory go-ahead with SEBI's issuance of observations on the draft red herring prospectus (DRHP) on May 12. As per the norms, it was required to close the IPO within 90 days of issuance of SEBI's observat ion - the period that ended on August 11.

The group had announced the IPO for telecom tower firm Reliance Infratel, which was estimated to raise close to Rs 6,000 crore in February after a stupendous response to Reliance Power initial offer, which raised over Rs 10,000 crore and was the the grou p's first ever public issue.

The record response notwithstanding, Reliance Power met with a dismal response at the time of its listing, which happened days within the Reliance Infratel IPO being announced. - PTI

L&T proposes to raise Rs 2,400 cr thru securities

--------------------------------------------------------------------------------------------
Future plans

The company may opt for issue of securities through qualified institutions placement

It has embarked on a project to look beyond 2010 and formulate a perspective plan till 2015

---------------------------------------------------------------------------------------------

Chennai, Aug. 9 Larsen & Toubro Ltd plans to raise about Rs 2,400 crore through a placement with qualified institutional buyers, for which it is seeking its shareholders’ approval.

In its notice to shareholders for the annual general meeting scheduled for August 29, L&T has said that the company requires adequate capital to meet the needs of the growing business. To leverage available business opportunities, the company may opt for issue of securities through qualified institutions placement (QIP). A QIP of the company’s shares would be less time-consuming and more economical, the notice said.

At the meeting, L&T will also seek its shareholders’ nod to re-appoint six directors, including Mr A.M. Naik, the Chairman and Managing Director. The others are: Mr J.P. Nayak, President (Machinery and Industry Products); Mr Y.M. Deosthalee, Chief Financial Officer; Mr K. Venkataramanan, President (Engineering and Construction Projects); Mr K.V. Rangaswami, President (Construction); and Mr V.K. Magapu, Senior Executive Vice-President (IT and Technology Services).

The company last year increased the retirement age of its senior management from 65 to 70 years. Mr Naik is 66 years old and Mr Nayak 65 years.

Reorganisation

L&T’s 2007-08 annual report talks about the company’s plans to re-organise its businesses to industry or customer segments. As part of this, it plans to create 12 operating companies within the existing L&T corporate structure. Each operating company will be responsible for its strategic and operational decisions and performance.

Each operating company will have independent support functions, such as finance and accounts, HR, supply chain management, and corporate centre.

The annual report says that due to encouraging changes in the opportunity landscape, the company has embarked on a project to look beyond 2010 and formulate a perspective plan till 2015. This exercise is meant to align the company’s investments (both capital and manpower) to the long-term trends, while addressing emerging opportunities and unseen challenges.

Leadership development

L&T has also initiated a structured leadership development programme to identify leaders and develop them. “This exercise is expected not only to meet short-term operational challenges but also create a band of leaders to take on larger responsibilities in future,” says the annual report.

Indian Hotels plans to invest Rs 2,100 cr; will stay invested in Orient

Mumbai, Aug. 14 Indian Hotels Company (IHCL), operators of the Taj Group of Hotels, plans to invest Rs 2,100 crore to add 5,900 rooms in the next three years.

The Chairman of the Tatas-owned company, Mr Ratan Tata, told shareholders at the company’s annual general meeting on Thursday: “We plan to invest Rs 1,500 crore over the next three years to add about 1,900 rooms in the five-star and luxury category, and Rs 600 crore to add around 4,000 rooms in the premium and budget segments.”

Replying to a shareholder’s query on the company’s investment in the US-based Orient-Express Hotels Ltd, Mr Tata said: “Orient Express have a certain set of iconic standalone hotels and taking a small stake in it was expressing our interest in working with them.

“It was misunderstood (by Orient Express) to be an attempt to try and get involved in a hostile manner with the company.”

IHCL acquired a 11.57 per cent stake in Orient Express in 2007 for about Rs 1,000 crore ($246.9 million) and had proposed an alliance which the latter rebuffed.

Mr Tata added: “If ever we were to get involved with that hotel on a friendly basis, I think it would be a tremendous addition to our portfolio but there is no way that we would make a hostile attempt on that company.”

Later Mr Tata told us : “One should not read much into our (Orient Hotel) investment.”

The Director of Tata Sons, Mr R.K. Krishna Kumar, said “we would stay invested.”

The share price of Indian Hotels closed flat at Rs 79.90 on Thursday

High inflation turns marketmen extra cautious

Mumbai, Aug. 14 Surprising marketmen on Thursday was the higher-than-expected inflation figure. Thanks to the high fruit and crude price, inflation sky-rocketed to 12.44 per cent for the week ended August 2 from 12.01 per cent in the previous week. A Ministry of Finance statement said that “after being nearly stable for four weeks, this rise has come has a major disappointment.” Marketmen too echoed this thought.

“The figure came as a surprise, as it was much higher than what we were expecting. We were expecting it to be around 12.3 per cent. It won’t be surprising if the central bank will take further measures to reduce the excess liquidity,” said Mr Hitesh Agarwal, Head of Research, Angel Broking.

Fruit prices surged almost 9 per cent, light diesel oil climbed 16 per cent and aviation turbine fuel by 3 per cent. The prices of pulses dropped 1.4 per cent and vegetables by 3.7 per cent.

Playing safe

Investors could have been anticipating high inflation figures, said analysts, which could be one of the reasons why the markets ended the day in the red. “There was definitely some amount of nervousness in the market today, especially during the last few hours of trade. There could have been people who knew the figure before hand and or some of them might be playing it safe before the long weekend ahead,” said Ms Anita Gandhi, Head of Institutional Business, Arihant Capital Market.

Mr Agarwal said that interest-sensitive sectors such as banking and realty witnessed the most selling today. The BSE Realty was down close to 8 per cent and the BSE Bankex 5 per cent.

Those who thought that the inflation would touch 13 per cent in a few months, now feel that this could happen in a few weeks time. Inflation could reach as high as 13 per cent in less than a month, as already we are at 12.44 per cent and 13 per cent is not very far away,” said Mr V.K. Sharma, Whole Time Director and Head of Research at Anagram Stock Broking.

Looking ahead

Mr Prashant Bhansali, Director, Mehta Equities, said that once inflation reaches 13 per cent, we could see it stabilise and gradually decline. A recent report by Enam Securities stated that inflation could see a peak of around 13 per cent before easing.

As for what one can expect on Monday, marketmen said that we have to see how the global markets behave in the next two days, as well as the direction of the crude prices.

“We should look at how the US markets perform in the next two days and the price of crude. There is likely to be a knee-jerk reaction on Monday,” said Mr Agarwal. “If we assume that all things remain normal and take into consideration the high inflation figure, the markets will definitely react negatively to this,” said a head of research at a domestic brokerage.

Private provident funds allowed to invest up to 15% in stocks

New Delhi, Aug. 14 Private sector managed provident fund and superannuation trusts can now have greater exposure in the stock markets.

They can soon directly invest up to 15 per cent of their investible funds in shares of companies on which derivatives are available in the Bombay Stock Exchange (BSE) or National Stock Exchange (NSE).

This has been provided in the new investment pattern for non-government provident, superannuation and gratuity funds issued by the Finance Ministry here today.

The new investment pattern, which would come into force from April 1, 2009, has been issued after factoring in the developments in the financial market and economy.

They have been revised to make it more flexible and give the trustees of these funds more autonomy and discretion. The investment pattern was last revised on January 24, 2005.

At the draft stage of these new guidelines, the Government was looking to allow these funds to invest upto 10 per cent of their portfolio in shares of companies that had an investment grade debt rating from a credit rating agency. It was also proposed to allow investments in shares of BSE Sensex and NSE Nifty companies and equity-linked schemes of mutual funds.

Official sources said that the latest move to specify the investment universe as those on which derivatives are available was intended to ensure that these PF, gratuity and superannuation funds get invested in good quality stocks with large trading volumes and market capitalisation.

“We don’t want these non-government PF trusts to get saddled with illiquid stocks. Non-government PF trusts are being allowed to invest in high liquidity shares and so the linkage to derivatives; we have now allowed for greater exposure of 15 per cent as against the earlier planned 10 per cent”, sources said.

Currently, about 228 single stock futures are traded in the futures and options segment of NSE, with about 39 more to be added from the last week of August.

The other changes made in the investment pattern include merger of Central Government Securities, State Government Securities and units of gilt Mutual Funds into a single category and allowing investment up to 55 per cent of the investible funds; providing a flexible ceiling for various category of instruments instead of fixed investment ceiling as at present; providing new category of instruments, such as rupee bonds of multilateral funding agencies, money market instruments and permitting investment in term deposit receipts of not less than one year duration issued by scheduled commercial banks.

The new investment pattern also recognises the fiduciary responsibility of the trustees and the need for exercise of due diligence by them. It gives them greater flexibility in terms of a wider variety of financial instruments as well as greater freedom to actively manage the portfolio.

Moreover, the trustees will have freedom to exit from a rated financial instrument when their rating falls below investment grade as confirmed by one credit rating agency;

The trustees have also been given freedom of trading in securities, subject to the turnover ratio (i.e., the value of securities traded in the year divided by average value of the portfolio at the beginning and end of the year) not exceeding two.

Equity markets may rebound by early 2009

China and India have suffered the biggest fall in the global equity market slump over the past six months but a possible recovery may ensue by early 2009, the Prime Minister's Economic Advisory Council said on Wednesday.

"Both emerging and development markets are down with China and India having dropped the most, developed countries by relatively less and commodity exporting countries like South Africa, Brazil, Russia and Soudi Arabia the least," the EAC said in its latest economic outlook for the current fiscal.

The Shanghai Stock Exchange has registered maximum fall (56 per cent) from its peak, while the benchmark index of the Bombay Stock Exchange dipped by as much as 40 per cent and the Manila Stock Exchange dropped by 39 per cent, registering the third largest fall.

The report added that "having lost one fifth to one third of their value, equity assets would appear to have greater upside rather than down side prospects. If there are no major further shocks, a slow albeit hesitant recovery may be envisaged."

Don't let greed cloud your financial decisions

Greed is a factor which makes the financial decisions for most people. Given an option, majority of us would prefer to retire rich fast or lead a better lifestyle among other things. Greed, in the last three to four years, led many individuals into a major debt trap. Like a whirlpool, once you get caught, it’s difficult to get out.

Why this happened and who is responsible for this is very important to understand so that none of us repeat the mistake.

Let’s go back to the years 2004-05. The property market was going up by 25-30% annually and the borrowing rate for loans was as low as 8-9%. Similarly, the stock markets were going up. At times in a day small investors were making Rs 10,000-15 ,000. Personal loans were given in the range of 15-16% to invest in stocks. If an investor held shares, then one could also get money against those at better borrowing rates. What does this indicate? Opportunity to make money as the differential between the borrowing rate and property appreciation was as high as 16-17% and in the stock market it could be as high as 30-40%.

This is the situation greed had created. The story does not end here. Even if you are not keen on getting into this, banks were so aggressive on lending money that everyday you would get marketing calls for loans at cheap rates. This would induce even a sane person to think why not make some money from this boom.

To worsen things, every third person became an advisor on stock and property market and would laugh if you kept money in a fixed deposit. At parties and social gatherings one will hear stories about people making big money from either property or stocks. People, who in the normal course of life would have bought one house, went ahead and bought their second and third house for investment purpose. For this, they started borrowing money from banks and every source to invest in stocks and real estate for making some quick profits.

But reality dawned in year 2008. The cost of borrowing for all loans has gone up by 2-3 % annually. The property market is declining with a correction happening in some areas in the range of 20-25%. The Bombay Stock Exchange’s Sensex, which was at a high of 20,000 plus, fell to 14,500 and no one wants to take a bet on when it will recover.

China stocks end lower; data confirms slowdown

China's main stock index fell for a fifth straight day on Thursday, to a fresh 19-month closing low, after data on industrial production and money supply appeared to confirm that the economy was slowing.

The Shanghai Composite Index ended down 0.38 per cent at 2,437.082 points, off an intra-day low of 2,409.010. Turnover in Shanghai A shares shrank to 27.6 billion yuan ($4.0 billion), its lowest level since November 2006, from Wednesday's 35.2 billion yuan.

The government said on Thursday that annual factory output growth slowed to 14.7 per cent in July, a 19-month low and down from 16.0 per cent in June, as manufacturers struggled with weakening export demand and rising input costs.

The market had expected July growth of 15.9 per cent.

"The figure will intensify the market's worry about an economic slowdown," said Lu Zhenwei, chief economist at Industrial Bank in Shanghai. "Although exports still seem strong in value terms, I think that's a bit exaggerated. Export growth is still trending down, which is affecting industrial output."

BHEL lines up $2.5 bn investment in next 4 years

Power equipment major BHEL announced on Thursday an investment of $2.5 bn (over Rs 10,000 crore) in the next four years to ramp up capacity to meeting the growing electricity needs.

"We will be investing Rs 5,000 crore in the first phase till December 2009 to reach 15,000 MW capacity. Besides, the Board has also approved an investment of similar amount to take the capacity to 20,000 MW by 2012," BHEL CMD K Ravi Kumar told PTI.

The investment is in line with the order book of the company, which has crossed the 1,00,000 mark and is still growing.On the issue of delay on part of BHEL to supply the equipments, Ravi said, BHEL was not responsible for it as most of the projects which have been facing time overrun are due to changes in the parameters. "Any change in the parameters requires a complete redesigning of the project and that causes delay sometimes," he said.

On the overseas expansion, the company is looking for acquisitions and is likely to appoint global consultants to advise them. Earlier BHEL had set aside Rs 10,000 crore for overseas expansion and were scouting for companies on its own. BHEL had earlier formed a separate unit for the same but the company did not take off, "Our model was perhaps not right, we should have a global consultant to advice us," Kumar said.

BUY IOC TARGET 580

DATE-07/08/2008

CMP-450

TARGET-600

STOP LOSS-400







COMPANY TECHNICALS

Share Holding Pattern as on : 30/06/2008 31/03/2008 Face Value 10.00 10.00 No. Of Shares % Holding No. Of Shares % Holding PROMOTER'S HOLDING Indian Promoters 958077855 80.35 958077855 80.35 Sub Total 958077855 80.35 958077855 80.35 NON PROMOTER'S HOLDING Institutional Investors Mutual Funds and UTI 14309657 1.20 14854619 1.25 Banks Fin. Inst. and Insurance 38906963 3.26 38917249 3.26 FII's 20594301 1.73 19895526 1.67 Sub Total 73810921 6.19 73667394 6.18 Other Investors Private Corporate Bodies 110877363 9.30 112272771 9.42 NRI's/OCB's/Foreign Others 507704 0.04 490871 0.04 Government 1350000 0.11 1350000 0.11 Others 13612336 1.14 13232109 1.11 Sub Total 126347403 10.60 127345751 10.68 General Public 34138127 2.86 33283306 2.79 GRAND TOTAL 1192374306 100.00 1192374306 100.00
Mar ' 07 Mar ' 06 Mar ' 05 Mar ' 04 Mar ' 03 Income : Operating Income 216,498.85 174,895.12 139,214.32 116,888.54 109,049.96 Expenses Material Consumed 193,471.53 156,413.53 121,580.37 97,846.67 90,944.35 Manufacturing Expenses 1,112.87 961.22 1,252.79 898.08 787.12 Personnel Expenses 2,586.80 1,799.23 1,829.10 1,537.18 1,696.15 Selling Expenses 7,733.07 6,721.97 5,868.43 5,032.02 4,702.14 Adminstrative Expenses 1,375.23 1,596.65 1,270.69 1,217.72 1,286.01 Expenses Capitalised -542.83 -406.74 0.00 0.00 0.00 Cost Of Sales 205,736.67 167,085.86 131,801.38 106,531.67 99,415.77 Operating Profit 10,762.18 7,809.26 7,412.94 10,356.87 9,634.19 Other Recurring Income 1,836.69 1,426.92 1,121.31 957.23 1,189.18 Adjusted PBDIT 12,598.87 9,236.18 8,534.25 11,314.10 10,823.37 Financial Expenses 1,496.25 995.44 604.17 470.86 791.28 Depreciation 2,590.31 2,201.46 2,072.80 1,873.79 1,656.28 Other Write offs 113.43 10.47 0.00 0.00 0.00 Adjusted PBT 8,398.88 6,028.81 5,857.28 8,969.45 8,375.81 Tax Charges 2,949.46 1,790.38 1,063.80 2,646.40 2,299.11 Adjusted PAT 5,449.42 4,238.43 4,793.48 6,323.05 6,076.70 Non Recurring Items 1,973.32 178.24 76.45 537.44 -406.03 Other Non Cash adjustments 76.73 498.45 21.45 144.33 444.22 Reported Net Profit 7,499.47 4,915.12 4,891.38 7,004.82 6,114.89 Earnigs Before Appropriation 7,499.47 4,915.12 4,891.38 7,004.82 6,114.89 Equity Dividend 2,250.89 1,460.02 1,693.62 2,452.83 2,258.16 Preference Dividend 0.00 0.00 0.00 0.00 0.00 Dividend Tax 361.72 204.77 237.29 314.27 239.44 Retained Earnings 4,886.86 3,250.33 2,960.47 4,237.72 3,617.29
Jun ' 08 Mar ' 08 Dec ' 07 Sep ' 07 Jun ' 07 Sales 81,111.28 70,664.71 70,213.19 61,029.62 58,576.51 Other Income 14,275.97 7,429.23 1,346.31 1,269.79 1,691.05 Stock Adjustment -3,183.84 -1,115.59 1,497.47 -1,629.24 -710.73 Raw Material 37,109.23 29,583.24 26,252.24 22,439.92 23,073.78 Power And Fuel 0.00 0.00 0.00 0.00 0.00 Employee Expenses 1,560.41 784.73 695.43 750.21 683.84 Excise 6,238.68 6,301.12 6,154.66 4,880.92 5,714.55 Admin And Selling Expenses 0.00 0.00 0.00 0.00 0.00 Research And Devlopment Expenses 0.00 0.00 0.00 0.00 0.00 Expenses Capitalised 0.00 0.00 0.00 0.00 0.00 Other Expeses 51,953.55 42,025.46 32,645.91 29,466.55 28,396.42 Provisions Made 0.00 0.00 0.00 0.00 0.00 Operating Profit -12,566.75 -6,914.25 2,967.48 5,121.26 1,418.65 Interest 614.23 492.34 387.96 333.53 337.41 Gross Profit 1,094.99 22.64 3,925.83 6,057.52 2,772.29 Depreciation 672.63 692.16 666.29 676.47 674.78 Taxation 7.23 -255.25 1,168.85 1,571.78 632.44 Net Profit / Loss 415.13 -414.27 2,090.69 3,817.75 1,465.07 Extra Ordinary Item 0.00 0.00 0.00 8.48 0.00 Prior Year Adjustments 0.00 0.00 0.00 0.00 3.34 Equity Capital 1,192.37 1,192.37 1,192.37 1,192.37 1,192.37 Equity Dividend Rate 0.00 0.00 0.00 0.00 0.00 Agg.Of Non-Prom. Shares (in lacs) 2,342.96 2,099.34 2,342.96 2,342.96 2,342.96 Agg.Of Non PromotoHolding(%) 19.65 17.97 19.65 19.65 19.65 OPM(%) -15.49 -9.78 4.22 8.39 2.42 GPM(%) 1.14 0.02 5.48 9.72 4.59 NPM(%) 0.43 -0.53 2.92 6.12 2.43 EPS (in Rs.) 3.48 -3.47 17.53 32.02 12.29

Hindustan Unilever gains in a dull market condition

Our Bureau

Kolkata, Aug. 12 Hindustan Unilever, the biggest listed FMCG player, which has turned ex-dividend recently, today finished in the green while the benchmark index closed in the red. The rupee one stock finished at Rs 243, up around 0.60 per cent, while the BSE FMCG Index gained 0.69 per cent.

There were unconfirmed reports that the company might raise prices of its tea brands. However, analysts were not sure whether a price rise would actually result in greater profitability. According to Ms Deepti Singh of Parag Parikh Research Team, consumer response to recent price hikes in some products run the risk of hurting the topline.

Tea market

According to a recent note by Indiabulls, a sustained price war is a downside risk as it might further erode margins. The note, however, mentioned that the beverages segment revenue grew 16 per cent in the June quarter, year-on-year, but dropped by 2.2 per cent quarter-on-quarter.

However, volumes grew as both tea and coffee gained market share annually as well as sequentially and EBIT margin improved remarkably to 14.6 per cent after a poor 11.6 per cent last quarter. Tea and coffee accounted for over 65 per cent of the company’s foods division’s revenues. HUL is stated to command around 22 per cent share in value terms in the domestic tea market.

The Parag Parikh analyst said: “While we are impressed by the HUL’s topline growth, the difficulty to replicate the same in the bottom line makes us cautions on raw material prices. However, the recent correction in crude price is comforting on the input price and margins expectations.”

Increasing competition

Indiabull estimated that the total increase in expenditure on the consumption of raw/packing materials in the June quarter was controlled to 22.9 per cent year-on-year.

However, purchases grew sharply by 30.9 per cent year-on-year on account of higher material and trading goods costs.

The packaging and distribution cost also shot up, while staff cost rose by 25.2 per cent year-on-year. The company spent heavily on advertising, which is reflected in the volume growth and the increasing market share of premium products.

It said HUL seemed to be increasing its inventory stocks in order to cushion the impact of the input cost rise.

Mr Rajesh Agarwal of CD Equisearch said apart from cost pressure, HUL is also feeling the heat of increasing competition. The recent aggressive entry of ITC into home and personal care segment has resulted in HUL losing around 1-2 per cent market share. Additional expenditure for this segment would erode margins further, it is apprehended.

According to Mr Agarwal, almost all sectors are currently affected by pressure on the margins.

“In this scenario, HUL is being considered by risk-averse investors as a relatively safe bet because of its size and clout in the market place.”

ONGC receives nod to include Petrobras, Statoil in KG project

Kolkata, Aug 12 The Centre has allowed Oil and Natural Gas Corporation Ltd, the E&P major, to include Petrobras of Brazil and Statoil Hydro of Norway as strategic partners in the gas rich KG-DWN-98/2 block, after keeping the company in tenterhooks for nearly nine months.

According to the proposal, Petrobras and Statoil will pick up 15 per cent and 10 per cent participatory interests respectively in the exploratory asset.

ONGC currently holds 90 per cent operating stake in the deepwater block. The company has established presence of approximately 2 trillion cubic feet of gas in an ultra deepwater discovery. Post farm-out, ONGC would control 65 per cent operating interest in the block

“We have received the requisite approval to include strategic partners a week back,” an ONGC source told Business Line.

According to sources, the inclusion of partners would not only help ONGC to share risks and access the much-needed technical support in developing its first major discovery in recent years, but may also open the opportunity for securing ultra-deepwater rigs from its partners.

Digging deeper

The company has one deepwater offshore rig, Discover Seven Seas, at its disposal. While the same may be used in drilling two appraisal wells in the KG block this fiscal, ONGC is searching for rigs to drill at greater depths, which are in acute short-supply worldwide.

“Our rig position will not allow us to drill more exploratory wells in the block at this juncture. To overcome the problem we have sought the help of strategic partners for sharing rigs from their worldwide operations and pave way for expansion of the KG reserve and faster monetisation of the same,” the source said.

“Though we have not received any commitment in this regard either from Petrobras or Statoil, they are reportedly looking into the possibility of such rig sharing,” the source said.

RIL to start crude production from KG basin next month

Hyderabad, Aug. 12 With a FPSO (Floating, Production, Storage and Offloading) vessel set to stream into Kakinada from Singapore shortly , Reliance Industries Ltd is gearing up to extract crude from its Krishna Godavari basin wells by the second half of September.

This will be the first deepwater well in the country to produce crude. The FPSO managed by Aker of Norway is being built at Jurong Shipyard, Singapore, and is being leased by RIL for a three-year period.

The MA Fields in the D-6 block in the KG basin will produce about 40,000 barrels a day. The crude evacuated through pipeline grid set up will be shipped through tankers to refineries, according to RIL officials.

However, the gas produced from the KG wells will be pumped back into the wells as there is no possibility to store the gas. Meanwhile, the onshore gas processing facility at Gadimoga is nearing completion.

“After the FPSO moves to Kakinada shores from Singapore, within a couple of weeks we expect production to commence from these wells. Initially, it could be about 15,000 barrels a day to be gradually ramped up to 40,000 barrels a day,” the official explained.

Asked about the gas production in the KG basin, the official said that most of the installations and pipeline work of 1,400 km from Kakinada to Bharuch had been completed barring small link-ups.

The undersea equipment has been procured. It is likely that by the fourth quarter of this year, the gas wells will be ready for production.

Dhirubhai-I, the floating oil production unit chartered by Reliance, has been built by converting a large tanker in Singapore .

According to information reaching here from Singapore, the floating unit left Jurong yard last Wednesday and is scheduled to arrive at the eastern coast of India by Friday.

The floating oil unit is on a 10-year charter from the Norwegian company Aker and the initial contract value was $750 million. Aker will also operate and maintain the FPSO under a separate five-year contract.

Once the FPSO is anchored and connected to the oil wells, which is expected to take at least two weeks, oil production from a developed field can commence within a month, said an oil industry expert.

Unlike normal tankers, which need dry-docking at least every two years, the FPSO is designed to operate for 10 years without dry-docking.

Dhirubhai-I can process 60,000 barrels of oil and 15 million cu m of gas a day and can store 1.3 million barrels of oil.

The 8.86 lakh dwt tanker –S.T.Polar – was originally built in the US. The refitting at the Singapore yard is expected to extend the 25-year-old vessel’s life by 15 years

Industrial growth in June slows to 5.4%

Our Bureau

New Delhi, Aug. 12 Amid a continuing lacklustre performance by the core sector, industrial output registered a modest 5.4 per cent growth in June 2008 compared with a much higher 8.9 per cent rise in production recorded a year ago.

The growth in June, however, was higher than the upward-revised 4.1 per cent growth estimated in May this year, with both manufacturing output and electricity generation picking up on a sequential basis despite a downward trend year-on-year. The continuing recovery by the consumer durables sector during the latest reported month was accompanied by a sequential jump in output in case of the crucial capital goods sector.

Meanwhile, the key infrastructure industries, which contribute slightly over one-fourth of the Index of Industrial Production, grew 3.4 per cent in June against a 5.2 per cent rise in output a year ago, according to latest estimates released by the Ministry of Commerce and Industry on Tuesday.

The IIP figures announced by the Central Statistical Organisation showed a partial recovery on a sequential basis in manufacturing output, which accounts for nearly four-fifth of the total weight of the Index.

Manufacturing output rose 5.9 per cent in June compared with a 4.2 per cent in May, even though the estimates were way below the 9.7 per cent growth recorded a year ago.

The electricity sector also showed a rebound, growing 2.6 per cent during June against the 1.2 per cent in the previous month.

The estimates were lower than the 6.8 per cent growth recorded in electricity generation recorded a year ago. The mining sector grew 2.9 per cent in June, sharply lower than the growth estimate of 5.1 per cent in May but higher than the 1.5 per cent recorded in June 2007.

For the April-June quarter, industrial production growth slowed to 5.2 per cent, down from 7.1 per cent in the same period a year earlier.

Use-based classification of the IIP shows that the consumer durables sector gathered momentum in June, registering a growth of 3.5 per cent against a negative 3.6 per cent estimated last year and May’s 2.6 per cent growth, pushing up the overall consumer sector growth to 10 per cent.

The capital goods registered a 5.6 per cent growth in output in June 2008, higher than the 3.4 per cent witnessed in May.

Voltas acquires 51 pc stake in electrical co

Voltas, a Tata group company, on Tuesday said it has acquired 51 per cent equity stake in unlisted Rohini Industrial Electricals for Rs 62 crore, in a move that would complement Voltas’ strengths in electrical products.

Mumbai-based Rohini Industrials undertakes large turnkey electrical and instrumentation projects. The Tata company reserves has the right to increase its stake in the future. There will, however, be no change in the management of Rohini Industrials, Voltas said in its statement.

TCS, Infy & Wipro marching ahead

Tata Consultancy Services (TCS), Infosys Technologies and Wipro Technologies, collectively referred as 'India-3', will emerge as the next generation of IT service megavendors, according to Gartner, Inc.

These vendors are increasingly being considered for strategic service deals, and will augment or, in some cases, replace today's acknowledged megavendors by revenue - IBM Global Services, Accenture and EDS - in this space by 2011.

These emerging megavendors are much smaller than the current megavendors but will increasingly compete for the same megadeals that had been the exclusive domain of the incumbent megavendors

Bharat Heavy Electricals to set up power plant in Tripura

ONGC Tripura Power Co (OTPC) has awarded a Rs 22-bn contract to Bharat Heavy Electricals Ltd (BHEL) to set up a 726.6 MW capacity gas-based power project in the north-eastern state.

The agreement was signed Monday in Delhi in the presence of ONGC chairman RS Sharma and BHEL chairman and managing director K Ravi Kumar. The contract was for two 363.2 MW cycle gas turbine power plants at Palatana in south Tripura.

According to an ONGC press release, the project, to be completed in the 11th Five Year Plan, will cater to the power demand of north-eastern states.

"The generation project combined with linked transmission project and upstream gas supply project is slated to bring in investments of around Rs 9,000 crore (Rs 90 bn) in the region," said the company statement.

Central transmission utility Power Grid Corp, OTPC and regional state governments are also jointly developing a trunk transmission line.

Besides, Power Grid will also develop inter-state and intra-state sub-transmission systems for the region.
ONGC has 50 per cent equity stake in OTPC, with 26 per cent held by Infrastructure Leasing & Financial Services Ltd and 0.5 per cent by the Tripura government.

What makes Reliance Industries a global player?

Agriculture Minister Sharad Pawar has said that Reliance Industries would not have been a global player today had its patriarch Dhirubhai Ambani not taken the "right steps" on government quotas for its chemical plant.

Pawar's comments have come in an interview,that appears in 'Fast Forward', a compilation of his speeches and interview, edited by journalist Aroon Tikekar.

"When Dhirubhai Ambani started his chemical project, the government had spelt out the guidelines pertaining to certain production capacities. When they did not adhere to the guiding principles, they were pulled up in the court of law.

"When I enquired with Dhirubhai, he said categorically that he wanted and aimed to be a global player. If that goal were to be achieved, he said he would not be able to work within the output constraints imposed or suggested by the government," Pawar said in the interview, which was taken by the author in October 2005.


According to Pawar, Dhirubhai had insisted that he would have to break the frames or confines within which he was expected to work.

"Today, the Reliance Petro-Chemicals figures among the top four or five producers of the world. If they had not taken the right steps then, they would not have been able to rub shoulders with the world's best in that field," Pawar said.

He was replying to a query on whether the services sector would be able to meet the growing demand for employment or there was a need for emphasising on the manufacturing sector.

"The services sector is fast expanding, no doubt. But for increasing employment opportunities, requisite and concomitant changes in the industrial sector would have to be undertaken," Pawar said.

He also noted that the work culture and the attitude of the government does affect the productivity and the employment generation potential of most industries.

TV18 (Rs 249.1): Buy

We recommend a ‘buy’ in Television Eighteen India from a short-term horizon. From the charts of the stock we note that its intermediate-term downtrend, which began from the early January high of Rs 599 ended at the 52-week low of Rs 184 on 18 July. The area around Rs 200 is a strong support from a long-term perspective as well.

The stock has been on short-term uptrend from this trough. During the course of this rally, the stock has moved above the 21 and 50-day moving average lines. The momentum indicators in both the daily and the weekly chart are beginning to look up.

We are bullish on the stock in the short-term. We anticipate the stock’s up move to prolong until it hits our price target of Rs 280 in the forthcoming trading sessions. Traders with short-term perspective can buy the stock while maintaining stop-loss at Rs 233.

L&T expects defence biz to grow with change in procurement norms

Chennai, Aug 11 Larsen & Toubro Ltd expects to benefit from the changes to the defence procurement procedure that will come into effect shortly, with more manufacturing opportunities being thrown up for the private sector.

L&T’s defence business comes under its heavy engineering division, which manufactures and supplies custom engineered equipment and systems to a range of industries such as fertilisers, refinery, petrochemicals, oil and gas, thermal and nuclear power, aerospace and equipment and systems for defence applications.

The Defence Procurement Procedure 2006 made it essential for overseas suppliers to have value addition from within India – or called offsets – for major defence contracts.

The offset stipulation would drive business opportunities in the defence sector in the medium term. DPP-2008 has been announced and will come into effect from September 1.

L&T’s annual report for 2007-08 says DPP-2008 is expected to pave the way towards allowing banking of offsets. This would benefit existing players such as L&T who are licensed to produce defence goods.

The armed forces are considering inducting a variety of weapon systems and engineering systems developed by DRDO.

“This opens up opportunities for the division (Heavy Engineering Division) as it has been a development partner of DRDO,” the annual report says.

The Government’s decision on granting “Raksha Udyog Ratna” status to select technology players is awaited.

The division has registered itself as the preferred player in the private sector for conferring this status.

SBI hikes PLR to 13.75%

Mumbai, Aug. 11 State Bank of India, the country’s largest bank, has hiked its Benchmark Prime Lending Rate by one percentage point from August 12.

The rate is now 13.75 per cent, up from 12.75 per cent.

Retail customers will by and large be protected from the hike in interest rates. The bank has decided not to change the rates on education loans or on existing and new home loans up to Rs 30 lakh.

For auto loans, the hike will be 0.50 percentage points.

“The bank believes that its action would contribute to revival of these sectors which have witnessed some strain recently and would also enhance demand for credit,” said a press release.

SBI has also increased interest rates on domestic term deposits with effect from August 16. Interest rates on deposits of select maturities have been raised by 0.25 to 0.75 percentage points. Senior citizens can also avail themselves of higher interest rates on some maturities. .

SBI is among the last of the big banks to hike interest rates, following the mark-up in key interest rates by RBI in its July monetary policy.

ICICI Bank, the second largest bank, hiked its floating reference rate for consumer loans, which also includes home loans, to 14.25 from 13.5 per cent, from July 31.