Tata Nano from Gujarat with pleasure (Sanand)

Friends,

Just now, in a press conference, Mr Ratan Tata and CM Narendra Modi have announced that 1100 acres of land has already been handed over to Tatas. The new plant will come up now in Gujarat near Ahmedabad at Sanand. Mr Tata has endorsed the the site is just perfect and the atmosphere is very congenial. The time line will be maintained. So, in the end, the clamouring for the project by other states is over.

There is no question about it, the state of Gujarat would be the engine of growth for the country and will a model state, in governance and friendly relations between the industry and labour. Here attitude is very constructive and pervades the govt machinery too.

Mr Tata has also said that the terms are slightly better than they previously had in WB. Not only this the land is being bought by Tatas at market price. The road network is already in place around the site.

Let us all celebrate the festive times with a satisfying feeling in mind of all countrymen that the dream car, the revolutionary car, that has changed the way the cars will be built in future, is finally going to take shape beautifully and fast.

HariOm,
Krsna Khandelwal

BIRDINFO Stock Rx – A prescription for stock market

Singur Land Acquisition policy at fault for Tata exit

By krsna Khandelwal – A veteran market analyst

Friends,

Tatas have finally decided to leave Singur and have announced so. This is a very sorry state. It should have been negotiated with due appreciation of others point but somehow no body bent enough to placate the agitating farmers mood. Tatas say that the land acquisition had been done within the legal provisions. This is not a right thing to say with regard to such matters. I find a fault with Tatas as they could have offered an amount equivalent to the losses incurred in moving out for distribution amongst farmers but did not come forward. They were wary of running the plant under duress. This is a lame argument for continuous threat to security may not have been there and over time things would have settled down.

However, I would praise his resolve to deliver ‘Nano’ from out of an alternative site. There is, however, no need to consider WB or India as non-friendly to industry but land acquisition policy should put in place in after the recent experiences without further delay.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix – Fiscal deficit and inflation

By krsna Khandelwal – A veteran market analyst

Friends,

Control of fiscal deficit within 3 p.c. is the challenge thrown up by the Fiscal Responsibility and Budget Management Act and the govt would be able to meet it in spite of its purse-opening policies for the farmers and for the govt. employees, thanks to inflation. The direct collection would grow by 46 p.c. and there would be flows from auction of G3 spectrum,transfer of surplus generated by RBI to govt (Rs 15 K crs against Rs 11 K crs last year) and also out of PSU stake sales.

TATA’s Singur venture is under threat from Mamata’s agitating stance and she is refusing to see reason while Buddhadev has declared that the project would remain in tact, come what may. He has tried to have talks with Mamata to resolve the issue but politicians are politicians, their first priority is scoring political points. Indian industrial progress has to go on in fits and starts. What is, however encouraging is the extension of invitation to Tatas by half a dozen Chief Ministers.

The World Bank has endorsed the Indian achievement of bringing the people living below one dollar a day down from 33.3 p.c. in 1990 to 24.3 p.c. in 2005. In all likelihood the position in 2008 is much improved and the future years may well prove to be doing away with poverty almost entirely , thanks to the exposure of people living in interiors through telecommunication and extensive road network. The govt may do or not do other things, the poverty alleviation will be done on back of technology.

Asian markets have shown improvement and this should reflect on Indian bourses.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Market Matrix: Mid year 2007 economic news analysis

By krsna Khandelwal – A veteran market analyst

Friends,

Last week has seen markets improve but the comfort is missing somehow. The trading during the next week would be crucial as most of the results for the last fiscal have come and from now onward, the future will be more in question than the lingering flavour of the past. The winners will the ones who keep track of the news and new developments and reduce it in to the practical judgment of the course in future and act wisely upon it.

Tatas have decided to sell the US based ‘Energy Brands’ to Coca-Cola for $1.2 b. Tata Tea and Tata Group have stakes in Tata Tea GB which holds ‘Energy Brands’ and they would together stand to gain Rs 2122 crs from the deal.

China’s stocks fell by 6.4% on Wednesday, the 30 May 07 as the govt. raised stamp duty on share transactions to three times. The Chinese govt is continuously taking steps to cool down the fervour in Chinese economy and the share markets where the discounting is fanciful. China’s CSI 300 index is valued at 44 times earnings; some see it as a bubble waiting to be burst. May be in near future the flow of foreign money to China gets diverted to Indian and other smaller markets in some measure. This measure and other measures together may bring some moderation there and it would not be bad for any body. Luckily back home no such measures are called for just now but still the RBI has some reservations. Here, the PN route for the foreign investors may be blocked and direct equity participation may be encouraged. Concessions and curbs have been found to be for the purposes other than declared and serious students of economics find it difficult to reconcile with these things, a respectable world economy has to shed such things for good before gaining such status.

Robert Zoellick, a former US Secretary of State, has been favoured for the post of World Bank President. World Bank is now not all that important as it used to be but US wishes to keep its hegemony.

Our PM recently advised that companies should resist paying large salaries to the executives at helm, which are not in consistency with the skill or contribution. Mr. Montek Singh Ahluwalia had than pointed out it was a debatable issue even in the western countries. This ugly side of corporate misdemeanor requires brushing and polishing.

JSW Steel, India’s fourth largest steel maker, has raised $325 million through convertible bonds to fund capacity expansion. Now, we are seeing the corporates, in the industry that is giving higher RoCE, coming out with public offering as the plans for expansion have been firmed up. For the last three years, the reaction to sudden high returns in metals industry was of surprise and an immediate step to raise capacity could not be taken due to skepticism about the sustainability of such high return. The fancy profits actually pocketed during last three years have emboldened the companies to start thinking bigger. Would they now be caught on the wrong foot or not, will be known only after some more time. Those of the corporates who are raising capital through risk bearing securities will be weathering the storms more easily so the fear of dilution of equity should be set aside for the time being. This would also take the market capitalisation of Indian Market to more respectable level, making room for greater investment by the investors from abroad.

JSW Steel would be giving free shares to displaced landowners while putting up 10 million tonne Rs. 35K crore steel plants in Saloni (200 KM from Kolkata) in WB. Of the land area of 4800 acres, 400-500 acres is under single crop and rest is owned by govt. hence the resistance would be minimal.

More westerners are now holding top positions in India due to narrowing gap in salaries and bigger size of operation in India. Now the talent is not bounded by boundaries, as is the case with capital too. Both can be moved with little cost involved. It was only the technology that crossed borders, even defiantly.

IT export are maximum from Karnataka followed by Maharashtra, Tamil Nadu and AP. AP now has 14 % share in total IT exports from the country.

GDP for 2006-07 posted growth of 9.4%, the highest in 19 years. In 1988-89 , it had touched the 10.5% growth mark but this time it is on a much higher base and that too after a series of good years so has an important connotation. The per capita income has grown to Rs 29382/- from Rs 25716/- last year. This is quite respectable in Indian context, particularly when we have better purchasing power parity. While China recorded 10.70% growth, India has kept pace too. Here we have distribution in a more justifiable manner and the salaries are growing faster than the growth rate.

Agriculture declined, however, from 5.7% growth in 05-06 to 2.7%. We have to worry for it. The conversion of agri-land in to SEZs by Neta-Baboo-Big Money may create havoc; furthermore, the intensive cultivation may erode the soil quality forever. There is one hope that the faster urbanisation will enable holdings getting bigger and more economically cultivable. There is hidden potential of doubling production of fruits, masalas, and cotton and grains/pulses/oil seeds only through improving technique, optimising farm size, using better quality seeds, proper research and exploiting irrigation resources in scientific manner. The share of agriculture is down to 22% from 31% in 93-94 and may reduce further.

For the first time the CSO has compiled data on final consumption expenditure of GDP. The final consumption expenditure stood at Rs 17.88 lac crores against Rs 16.75 lac crores earlier. The govts’ expenditure stood at Rs 3.34 lac crores against Rs 3.06 lac crores.

Core sector financing by the Banks would be difficult now as it stands at 40% of total against 20% about five years ago. As this comes out of the short-term resources, it will be difficult to raise the share of long-term infrastructure financing. This may actually prove a dampener for the infrastructure companies unless the foreign capital is ready to commit for long term.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market

Panch Tattva: Post Result: ACC, BIOCON, KIRLOSOIL, MRF at CMP on 18 Apr 2007

By krsna Khandelwal – A veteran market analyst

Friends,

Please note the following Panch Tattva post result points for four companies:

ACC @783/-(19/04/07) gets 1103 points and should be regularly bought, you may book profits in excess of 10% on part quantity but rest should be held until next result.

KIRLOSOIL @262/-(19/04/07) gets 959 points and is very good to buy on declines.

MRF @3621/-(19/04/07) gets 995 points and is very good for buying on declines.

BIOCON @508/-(19/04/07) gets 1047 points and you should buy it for medium to long term and remain guided by Panch Tattva advice.

RBI may consider putting a check on the ECB borrowing by the realty sector. This sector has raised $802 million in 2006-07 and some $10 billion worth of sanctions are in the pipeline. This thinking in my opinion is faulted, as any curb here would result in lesser supply in the market of built properties. Roughly, it may be said that each million of investment in this sector would create a supply of 3million worth. This additional worth would come from value addition, which will be shared, by labour, artisans, architects and others. Why on earth when an entrepreneur is seeing an opportunity and the lender is coming forward, the RBI should be intervening. I have earlier said that the govt. should neither guarantee the loans nor be a party to agreements and then what problem they are supposing. The economic upheavals will take place in any case, when time comes. The RBIs wisdom may not prevent it and equally it may be responsible for it. But the power drunk think, if not used than what use the power. I again call for the free currency regime.

Tatas would be funding their $12.9 billion CORUS purchase by raising equity money and debt in ratio of about 50:50 against earlier planned. They already have $640 million through conversion of warrants by affiliated entities. A further $2.4 billion would come from further issues planned. The conversion of shares at around 480/- per share is OK for the promoter group but it is detrimental for the other shareholders. For right issue per share cost is slated to be 300/- . Tatas would be raising debt of $6.1 billion. All this adds up to some comfort from the angle of safety but the share price of Tata Steel would remain range bound for a year or two and no great returns may be expected in remaining invested here. It is best to keep buying around 480/- and keep selling above 520/-. SAIL will have better investing times but the price is already very high for comfort.

India’s steel production is slated to be of the order of 120 million tonnes by 2016. You may note that this level of production was achieved by USA in seventies and they are now producing 98 million tonnes while China is producing 418 million tonnes and Japan 118 million tonnes. In my opinion India should be going with some what lesser speed a s the steel production capacity world wide is enough and requires replacement of the high energy consuming plants only. Further India is such a country, which can create its equivalent infrastructure at lower steel consumption levels. Too much of urbanisation is in any case not right thing to do. Connecting villages by motorable good roads is more important in India. In fact every part of the country in inhabitable and should remain so. Telecom and television have now made it possible to live in countryside even for the elite and the important.

Mobile Phone base in India has touched 149.62 million connections as on 31/12/06.The revenue per user has been moderating spelling difficult times for the operators. The two large players i.e. Bharti and Reliance have 37.14 million and 28 million users with them respectively.

China now has 140 pairs of high-speed trains (200 km/hr) running on its trunk routes. India had run its first high speed train on Delhi Howrah route way back in seventies clocking the speed of 160 km/hr. It is note worthy how far behind we have been left just for keeping fares low for the public. Paradoxically public suffered immeasurably for it by giving on monies to running staff and booking clerks and the agents. Finding lack of surplus money Railways could not add capacities and could not modernise in time. I have first hand knowledge how the quota is sold by the Railway officials for which the money passes many a hands. It is every body’s knowledge that the season time tickets used to be sold as soon as windows opened. Now the things have improved but only slightly and one may not easily undertake railway journey at short notice. The competing modes of transport i.e. road travel and air travel although costing the nation much more in real terms are some responsible for giving some relief to traveling masses. Their is case for making railways free to charge as much as can be paid by the market and utilise the surplus in improving the traveling conditions and creating more capacity on routes with demand on them Learn from China in this respect at least.

General Motors must have made the Maruti people lose their sleep. They have announced introduction of small car models under Chevrolet Spark brand name at a very competitive pricing between Rs three lacs and Rs four lacs. The Halol plant in Gujarat would take away a major chunk of market with Maruti and Hyundai. Gujarat would be going for General Motors’ cars in a big way if the there is pricing differential as the buyer in Gujarat is very cost conscious.Also Gujarat may demonstrate that it is the most cost effective and peaceful place for making cars. It is only surprising that the industry has been so reluctant to come here so far.

The paid TV channel market would be worth Rs 42 k crores by 2011. This will be making India a very important content providing nation. Sports, music, art etc will be providing career opportunities like never before. Academies catering to these should start coming up in an organised way with funding arrangement possible through banks even for such studies and courses.

Hari Om

BIRDINFO Stock Rx – A prescription for stock market