Coal tangle worsens – Now coal secy issues idiotic statement

Every other day the government seems to regress back to the ’80s. Witness these statements by the Coal Secy who is on the board of Coal India..

Coal Secy Ashok Perti said their first loyalty of independent directors should be towards the company and not its minority shareholders.

So will the government look to replace them or take any action against them? Perti said no such action was being planned against these directors. And top coal ministry sources added that any such decision—taking action against independent directors—would involve a very lengthy process which the ministry perhaps wants to avoid.

This is bizarre. Independent directors are there to protect minority shareholders, and here is the coal secy saying something totally differnt. And it seems, all independent directors had opposed the new coal FSAs

Is the bull market back? And is Opto a shady stock..

In bull markets, some companies tend to make frequent announcements/press releases with the main objective of keeping excitement alive in the stock.

Opto Circuit is very good at this game. Check today’s announcement by Opto –

Medical device maker Opto Circuits (India) has signed a contract with Criticare Systems Inc to supply patient monitors to hospitals in Russia’s Tyumen Oblast province.

This came in Hindu Businessline. And moneycontrol gives this a distinct spin..

Opto Circuits US arm has got order to supply monitors to Russian hospitals, reports CNBC-TV18. Opto Circuits India touched an intraday high of Rs 224.80 and an intraday low of Rs 217.50. At 11:28 hrs the share was quoting at Rs 223.65, up Rs 7.90, or 3.66%.

So is the bull market back? I mean, what the f is the Tyumen Oblast province in Russia? Why shud companies be releasing silly announcements like this…

Shady stock, this Opto Circuit.

Note this in the Hindy story – Opto Circuits, however, did not disclose the value of the contract.

Of course it cant, most likely it is some two-bit contract which means nothing much for the stock price if the value was revealed.

Ending 2011 with a lovely native Indian prayer

(picked something from idle web surfing today, too good. Doesnt quite fit the blog, but good way to walk away from 2011)

Walking in Beauty:  Closing Prayer from the Navajo Way Blessing Ceremony

In beauty I walk

With beauty before me I walk
With beauty behind me I walk
With beauty above me I walk
With beauty around me I walk
It has become beauty again

Today I will walk out, today everything negative will leave me
I will be as I was before, I will have a cool breeze over my body.
I will have a light body, I will be happy forever, nothing will hinder me.

I walk with beauty before me. I walk with beauty behind me.
I walk with beauty below me. I walk with beauty above me.
I walk with beauty around me. My words will be beautiful.

In beauty all day long may I walk.
Through the returning seasons, may I walk.
On the trail marked with pollen may I walk.
With dew about my feet, may I walk.
With beauty before me may I walk.
With beauty behind me may I walk.
With beauty below me may I walk.
With beauty above me may I walk.
With beauty all around me may I walk.
In old age wandering on a trail of beauty, lively, may I walk.
In old age wandering on a trail of beauty, living again, may I walk.
My words will be beautiful…

3i Infotech in debt trouble – where’s the corporate governance

3i Infotech is in serious debt trouble, reports The Economic Times today.

Lenders, investors shun debt-laden 3i Infotech; prospect of distress sale looms

I had written earlier how 3i was a great example of a sleeping board (3i Infotech – An example of lax corporate governance) . Here, the chairman, CEO and CEO has unchanged for 8-10 years. It is clear they have practiced cowboy capitalism, and use public and borrowed funds, and run them to the ground. The destruction of other people’s money is simply amazing.

Yet, we have no change in leadership. How come these people havent been fired yet? Now, it appears the company is defaulting.

The ET story says: “The company has been facing a temporary cash flow issue as refinance is not happening on time for shorter maturity loans,” says V Srinivasan, managing director & global CEO of 3i.

3i Info was floated by ICICI Bank, and it no wonder it is still lending to 3i. The CEO is quoted saying “We have borrowedRs200 crore in long-term loans from ICICI Bank in October. Also, ICICI Bank is working on loan syndication for a long-term loan of Rs 300 crore. We are capable for paying the salaries through operations,” he adds

ICICI Bank is still the largest shareholder in 3i. Wonder if it is violating some RBI guidelines, or even corporate governance ethics, by continuing to support 3i at a time when no one wants to touch it. What’s it about ICICI, and corporate governance? The other company floated by it, First Source is in a similar mess.

 

 

 

Exports controvery gets murkier

I have written earlier how the export data makes no sense. The govt made this bizarre statement yday saying there was a $9.6bn accounting error in data this year. They have not come clean in FY11. Clearly there is a scandal here. RBI or somone independent needs to investigate.

Firstpost has a good article:

Bad data? Why $9.4 bn export reporting ‘mistake’ is a scandal

How real are Madura numbers?

There was a news item last week that Aditya Birla Nuvo may want to unlock value in the Madura Fashion & Lifestyle business, either by  a PE round, or an IPO. While the article was a little speculative, but the financial numbers seem to indicate that Madura is being dressed up for a sale.

FY11 has seen a dramatic, almost flashy performance, which has no precedence in the earlier 10 years. Revenues grew almost 45%, from Rs 1251 crore in FY10 to Rs 1809 crore in FY11. The reported numbers even show a sharp upswing in profitability, with PBITDA of Rs 137 crore compared to a loss in FY10. In the preceding 9 years, Madura has made a total EBIT of only Rs 52 crore, with losses in 5 out of those 9.

While one could say that Madura has turned around, but there is something fishy in their numbers. Some of the declared numbers dont add up.

A lot of growth has come from expansion of distribution.The company has declared inconsistent numbers for retail expansion.

In a presentation dated 30May’11, to explain its Q4 FY11 results, the company says it company added 250 exclusive brand outlets (EBOs) to reach 900 by end of FY11, a growth of 38% in the EBO channel. But this does not add up with what it said in its earlier PPTs.

A presentation in Feb’11, after Q3 results, says: ‘Expanded retail presence to reach a total of 506 Exclusive Brand Outlets (EBOs)’. If it was 506 on 30 Dec 2010, and then 900 by March 2011, how did the company add only 250 stores in entire FY11?  A presentation dated 30 July 2010, to explain Q1 FY11 results, says: ‘Launched 33 new EBOs (Exclusive Brand Outlets) to reach a total of 425 EBOs’. A simple math here tells us the Madura business started FY11 with 392 EBOs. Given that it ended with 900, the growth in EBOs seems to be 408 stores, or more than 100%.

While this inconsistency in numbers may not be anything serious, but for a company of Madura’s size (or one owned by AB Group) this shouldn’t be happening.

A hilarious article in ET post rate rise today

Housing prices may go up by 5-10% with rising interest rates

NEW DELHI: Housing prices may rise by 5-10 per cent in the next 3-6 months as the cost of funds for developers is expected to increase following the Reserve Bank of India’s decision to raise key policy rates by 25 basis points.

“Property prices are bound to go up in next 3-6 months by 5-10 per cent across the country,” Confederation of Real Estate Developers’ Associations of India (CREDAI) Chairman Pradeep Jain told PTI.  (Note: The man believes property prices go up as interest rates go up!)

Jain, who is also the Chairman of Parsvnath Developers , said the hike in repo and reverse repo rates would result in an increase in interest rates for builders and the same would be passed on to home buyers.

He, however, said demand would not be hit (LoL) despite the expected rise in interest rates on home loans. “People will continue to buy knowing that housing prices would go up further,” he said.

Instead of demand, Jain said supply would be affected, as the increase in interest rates would impact the liquidity situation of small developers.

Asked about impact of the hike in repo and reverse repo rates on the realty sector, DLF Group Executive Director Rajeev Talwar said, “The constant increase in interest rates over the last one year would definitely have an impact”, and suggested that the government initiate reforms to boost the supply of housing.

The Reserve Bank, for the tenth time since March, 2010, raised the repo rate by 25 basis points to 7.5 per cent and the reverse repo rate by a similar margin to 6.5 per cent today.

Echoing similar views, Credai President Lalit Kumar Jain said, “Any increase in the rate of interest will be counter- productive and my fear is that it will give rise to inflation instead of curbing it.”

“… The cost of funding from the developers’ point of view would also shoot up. This will be passed on to the customer, who is already under stress,” Jain, who heads Mumbai-based Kumar Urban Development Ltd , said.

Raheja Developers Chairman and Managing Director Naveen Raheja said: “As the cost of money goes up, the cost of construction and production will also go up. This will lead to further inflationary pressures.”

The need is to increase supply so that demand pressures can be eased and consequently, the prices are curtailed, he added.

So will Reliance Industries get a settlement with SEBI now?

An interesting chain of events is going on, if you join the dots a bit.

Bhave has been pushed out of SEBI. A few days ago, The Economic Times reported that two of his close confidants were being denied extension. The Finance Ministry had earlier wanted to give them an extension, both had agreed also. Now it is abruptly withdrawn.

See what the ET article says:

Abraham handled sensitive issues such as the investigation into the case relating to the alleged violation of portfolio investment rules by ADAG; the proposal of MCX-SX to offer a trading platform in equity and derivatives, and several other cases of insider trading. Sahoo is currently hearing arguments relating to the charges of insider trading raised against RIL.

And now, Reliance has approached SEBI for a third time for an out of court settlement. Would be interesting to see if it goes through quietly this time.

The Satyam about Rolta

Amazing how analysts of large brokerage firms keep putting buys on Rolta. Maybe they have not seen its cash flow statements. This is a company which has not generated free cash flow even once in the last 5 year.

The curious case of Geodesic

Goedesic declared its usual bumper results today. Net profit for FY11 is, hold your breath, Rs 344 crore. This is up 54% from Rs 223 crore declared for FY10. Revenues are up 37% to Rs 874 crore.

The market tho gives this company a M Cap of Rs 728 crore, or a P/E pf 2.1x. There is debt of Rs 590 crore, or the EV is around Rs 1300 crore. The EV/EBITDA is just 3x.

So is Geodesic a roaring buy? The market clearly does not think so. And why? Of course, operators always know the inside stuff.

Even for a layman it is not hard to spot. If a company does not pay tax, and does not pay dividend, you need not believe its financials. In the last 5 years, Geodesic has paid tax of Rs 35 crore or so. That is on PBT of around Rs 1100 crore. It has paid dividend of it seems around Rs 90-100 crore. All this is not much in comparision to its reported profits.

So how long before the Satyam (truth) comes out?