SUZLON's chances of bankruptcy is LESS.....

People are talking about SUZLON ENERGY's bankruptcy & that the company cant service its debt in time ...blah blah...blah...Now they know the difference between a good asset company & bad asset company and still they talk like this shame....

ANYWAYS...here's what I feel about Suzlon, agreed that it has the debts of Rs.9,252 cr & Reserves of Rs.5,892 Cr.(which can take care of losses).

As for the question on loans repayments then here's the answer –

Suzlon took loans for acquisition of Hansen & REpower a german base company. They sold some of the stake in Hansen but they eventually raised their stake in REpower by 14.4 % to current 90.50%.

Share holding Pattern of Click  REPOWER AG -

SUZLON	90.50 %	83,25,845.245 Shs
FREE FLOAT	9.50 %	8,73,983.755 Shs
TOTAL	100 %	91,99,829 Shs

Current Market Price of REpower – 114.5 Euros/Sh (JAN 12 2011)(58.72/1Euro)

The Free float of REpower is 9.5% - 8,73,983.755 Shs = 100.07 m Euros, around Rs.587.62 Cr, According to German laws Suzlon has to buy the entire 9.5 % of REpower in order to integrate REpower’s assets into itself.

NOW , REpower has Total Asset of 1,032.62 m Euros; Shareholders Fund – 475.97 m Euros, EPS – 6.34 Euro/Sh; Dividend paid 1.54 Euro/sh; Total debt of 556.6 m Euros; Debt/Eq – 0.40. NP – 57.93 m Euros.

So, my friend SUZLON adds Rs.2794.89 Cr to its books by just paying Rs.587.62 Cr.Suzlon's debts of Rs.9,252; Reserves of Rs.8686.89 Cr (5,892 + 2794.89 of Repower); D/E ratio will be 1.05. NOT BAD..

The stake buy of REpower’s 9.5% will cost Rs.587.62 cr which is possible as Suzlon has recently completed its rights issue of Rs.1180 cr & has restructured its debts .. Off course this may take long time, say up to a year but fundamentals will improve once this REpower stake is bought..

NOW WHAT YOU THING ABOUT THISSSS

Here are some details of REPOWER AG - CLICK HERE

	Fiscal 2009/10 (m Euros)	Fiscal 2008/09 (m Euros)
SALES	1,303.5772	1,209.0907
EBIT	98.316	76.8988
PBT	83.85	76.5526
NET PROFIT	57.9303	51.9365
Total Asset	1,032.6242	928.3723
Share Holders Equity	475.9717	408.34
Number of Shares (1 Euro)	9199829 shs	9177039 shs
EPS	6.34 Euro	5.75 Euro
Total Dividend	14.44373153	NIL
Opert. Cash flow	119.3
TOTAL DEBT	556.6
Net Working Capital	195.6
Net W.Capital Ratio	14.8 %
Share holders fund	464.498048
Minority Interest	11.473691
Revaluation Reserve	0.776
Retained Earnings	147.707203
Cash	211.719

My previous post on SUZLON CLICK - http://bhavikkshah.blogspot.com/2010/12/suzlon-on-restructuring-merges.html

GITANJALI GEMS LTD - Buy on every Dips

Scrip Code : 532715 / GITANJALI

CMP :  Rs. 210.85; Buy at Rs. 190-195
Target: Rs. 370.00 - DIWALI 2011
Market Cap : Rs. 1776.83 cr
52 Week High/Low : Rs. 394.95/Rs. 92.55

Total Shares : 84270000 shares; Promoters : 45472424 shares – 53.95 %; Public holding : 9754593 shares – 11.58 %

Book Value : Rs. 241.60; Face Value : Rs. 10; EPS : Rs. 20.99

P/E : 10.08 times; Ind P/E : 12.73; EV/EBITDA : 12.65
Total Debt : Rs. 1601.46 cr; Enterprise Value : Rs. 3384.28 cr.

Gitanjali Gems Ltd - Gitanjali Gems is one of the largest manufacturers and retailers of diamonds and jewellery in India. It sources rough diamonds from various primary or secondary sources then engages in the cutting and polishing the rough diamond for export to the international market as well as manufacture and sale of diamond and other jewellery through its retail operations in India and abroad. The company was started in 1966 as a partnership. It came with an IPO in the year 2006 with 1.70 cr shares at the price band of Rs.170 -195. The demand for diamond and jewellery products is largely dependents on higher employment and economic levels, which leave higher disposable income in the hands of the consumers. In downturn consumers can quite easily scale down their consumption of jewellery and diamonds.

Gitanjali Gems has got two-diamond manufacturing facilities located at Borivali in Mumbai and at the Special Economic Zone in Surat. It has also got a 100% export oriented unit in SEEPZ Mumbai, which produces gold and platinum studded jewellery. There are also jewellery-manufacturing facilities at MIDC, Andheri, which produces branded jewellery for the retail operations in India. The company has a workforce of over 2300 employees.

Company sells its jewellery under the brand - Asmi - Premium work wear collection & has 104 outlets, 2 exclusive stores; Sangini - Entire product range including bridal jewelry; Nakshatra - Entire product range including bridal jewelry available with 374 retailers and 1 franchisee. More franchisees are being added; Gili - Diamond jewelry at reasonable prices having 256 outlets of which 3 are exclusive stores; Vivvaha - Wedding jewelry; Maya - Gold jewelry for wedding and other similar events; D’Damas - International quality designs combined with Indian values sells through 380 retailers, 2 exclusive outlets, 3 shop-in-malls and 21 franchisees; Hoop - Fashion Silver Jewelry.

The Gitanjali Group has acquired Lucera for Rs 25 crores in 2008. In October 2009, the UK-based Brand Finance, valued the four leading brands of the company at Rs.514 crore (Nakshatra), Rs.468 crore (Gili), Rs.309 cr. (D'Damas) and Rs.210 cr. (Asmi), respectively. GGL is not only gearing towards improving sales but is also looking at multiplying the value of these brands by 1.5 to 2 times by 2011-2012.

Recently, Gitanjali Gems Ltd. (GGL) is in talks with global PE investors Blackstone and CX Partners to divest 10 % of equity to raise $100 million in its restructured jewellery brand holding company. According to sources, in a separate valuation prepared by these PE players, the holding company is valued at close to Rs 5,000 crore, three times the current market capitalisation of Rs 1,700 crore of the entire group. Sources say, around Rs 50 crore will go to the GGL account, while the remaining Rs 400 crore will be re-invested in the company for working capital and inventory build up.

So the question comes that how the subsidiary would have a higher valuation than the parent company? The answer may be that the subsidiary would be a low-debt company, with a minimum working capital cycle, along with high possibility of return on investment. Considering half of the PE multiple of the industry leader, Tanishq, the valuation could be much higher. GGL’s current book value is close to Rs 2,200 crore. This company is in a low margin business because of raw material costs, which is Gold. Now Gitanjali holds gold stock from 11000 levels, so no more margin pressure from raw material side till now. 

On 28^th December 2010 - Promoter Mr.Mehul Choksi bought 15113 shares at Rs.195.75/sh, making his holding to 38274421 shares a 45.42%.   

On 29^th December 2010 - Promoter Mr.Mehul Choksi bought 100000 shares at Rs.213.57/sh, making his holding to 38374421 shares a 45.54%. 

MORE PROMOTERS DEAL - CLICK HERE 
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FMP's Better than Bank FD's

Fixed Maturity Plans are being offered by various banks now a days, So what are these FMP's ?


A Fixed Maturity Plans (FMP) is that instrument which invests in bank Certificates of Deposits (CD) & which are compared with bank FDs & a FMP that invests in corporate debt are compared with fixed deposits of corporates of similar rating of credit.

FMP's also invests in Debt & money market  instruments- typically AAA rate corporate bonds. The tenure's are around One year & almost 100 % of their funds are invested in Commercial paper (CP) & CD's. These CP's & CD's rates tend to shoot up in a raising interest rates regime, making FMP investment more attractive. Fund managers of  FMP's does not need to Buy/Sell the instrument on continuous basis, which means low management fees.

FMP's have a minimum investment of Rs 5000. Capital gains on FMP will be short term capital if hold for less than 1 year and at short term capital tax rate, which is clubbed to your income for that year and taxed according to the tax bracket you fall in. If you hold for more than 1 year than long term capital gain tax will be applicable

Whereas in FD's the tax on income is based on the tax slab the investor is in (which can be as high as 31%) the investor can earn tax free dividends (subject to dividend distribution tax of 14 % for retail investors & for corporates 22 %). So if you are in top tax bracket then the capital gain on that FMP will be taxed accordingly. Indexation method will apply to FMP's if holded over a year. So I would prefer to go for 2 year FMP rather than 1 year as they give better tax adjusted returns.

PRAJ Industries Ltd : A Value BUY!!!!

Scrip Code: 522205 / PRAJIND

CMP: Rs. 70.60; Buy at Rs. 68 - 70 levels

Target: Rs. 76.00

Market Cap: Rs. 1304.25 cr.

52 Week High-Low: Rs. 113/Rs. 63.90

Total Shares: 18,47,38,492 shares; Promoters – 4,21,06,432 shares – 22.77 %;

Total Public holding – 6,52,37,191 shares – 35.31 %

Book Value: Rs. 28.82; Face Value - Rs. 2.00; EPS - Rs. 3.69; Div – 72.00 %.

P/E – 19.08 times; Ind P/E – 23.98; EV/EBITDA: 9.73

Total Debt – ZERO; Enterprise Value: Rs. 70.50 per share;

FAIR VALUE – Rs. 77.00 per share.

PRAJ INDUSTRIES -  A global green technology provider,an Ethanol manufacturer, A ZERO DEBT company, having a confirmed order-book of Rs 600cr to be executed over 12-14 months period. Offers a very good Value buying opportunity. US senate has passed the law making 15% ethanol mixing mandatory for Oil companies. This move by US will create demand for additional bio refinery capacity of approx 4 Bn gallons per annum. Capex required would be of  $ 1.75 for each gallon of bio refinery capacity created. Thus this move will be an business opportunity of USD 7-8 Bn for Praj Industries. Company have started receiving enquiries for the same. US has promoted this law for employment generation in this business. Praj will be able to win good chunk of this business.

Management has decided to restructure its business plans. Accordingly the company has the current structure of Plant & Equipment for Ethanol and Breweries; Consultancy services to brewery & Ethanol industries.

Company will be entering into newer business lines to capitalize on its domain expertise –

Water and waste water treatment: The Company has already started with 50 man team for this business unit. The team comprises of people with relevant experience in the field. Praj has hired AT Kerney for detailed business plan and the consultant will be handing over the same to the management in next 1-1/2 month. The company has won small order in water and waste water treatment space Kerney. As per the estimates current market size in India for water and waste water treatment business is to the tune of USD 1.7 Bn per annum.

Customised Engineering and manufacturing: Company’s facilities are approved by key customers like General Electric Inc and Cargill and all their global units can source their requirement from Praj. The company has won a small order in this segment as well. The key thing to be noted here is that there are huge untapped opportunities both domestically & globally and estimated market per annum to the tune of USD 3.5Bn to USD 4 Bn. Key players in this space are L&T, Godrej & Boyce. Praj’s advantage is in customization of equipment as per clients specification. To tap this opportunity, company is erecting a new facility near Satara Road, approx 30 Km from Pune and they have facility at Kandla SEZ as well. They will be serving overseas market from Kandla facility while domestic market will be serviced from Satara facility. Their Kandla facility has been approved by GE Power, GE Oil, Cargil etc and they have registered themselves with 50 companies and are qualified to supply plants and equipments to them. Company will be spending approx Rs 100 cr to set up Satara facility.

Valuation &amp:

At the CMP of Rs 70.60, Praj is trading at 19.28 x FY11e EPS of Rs 3.66 and 9.67 FY12e EPS of Rs 7.30 which looks very attractive.

The Value of Praj at 15x FY12e EPS of Rs 7.72, gives the target price of Rs 116, an upside of 63%.

Mr. Promod Chaudhari (Promoter) has bought 14,73,379 shares from market on 25th & 26th November 2010 at an Avg price of Rs. 69.27 per share.

Ms. Parimal Chaudhari (Non Executive Director) has bought 3,25,050 shares from market on 9th & 10th of December 2010 at an avg.price of Rs.69 per share.

Mr. Promod Chaudhari lastly bought 4,34,200 shares from the open market on 9th & 10th December at an avg. price of Rs. 69.27 per share totaling to Rs. 3,00,77,627.45

As on 13th December 2010 – Mr. Chaudhari holds 3,15,00,000 shares 17.05%

Always Buy DVR shares (Differential Voting Rights) !!!

DVR shares are Differential Voting Rights – which is just like ordinary Equity shares, paying dividends as ordinary equity shares, has voting rights. But the difference is that these DVR shares carry lower Voting Rights and higher Dividends.

The class “A” DVR shares carries 1/10th of voting rights i.e. 1 voting Right for every 10 DVR shares held. The class “A” DVR shares offers 5% more Dividend than ordinary equity shares.

Because of such reasons, DVR shares normally trade at 10% to 15 % discount to the ordinary equity shares of that company. The Companies Act allows companies to issue differential voting rights upto 25 % of its total issued share capital with the conditions that it should have distributable profits & no default in filing annual returns in past 3 years.

We hold Equity shares in small quantities and we do not attend Annual General Meetings of the companies, also our vote does not have any importance or relevance to these companies. So, in order to let go my voting rights (which I normally don’t use) I get paid with 5% extra dividends, my return on investment goes up, Dividend yield goes up, all that by just letting away my voting rights go, that’s it….. 

Globally DVRS trade between 10 % - 15 % discount to its Equity shares depending upon the extra dividend offered to DVR, for e.g. If a company's equity shares trades at Rs.100/sh and dividend declared is Rs.10/sh and its DVR holders gets Rs.10.50 as dividend (Rs. 0.50 extra because he let go its voting rights) means that its DVR should be trading at Rs.89.50/share. According to Indian Company Law, 1) the shares with Differential Rights shall not exceed 26 % of the total post-issue paid up Equity Share Capital including equity shares with differential rights issued at any point of time (voting rights ratio should range from 2:1 to 10:1 only), 2) Issuing company to have consistent track record of distributable profits for last 3 years. But since the Indian audiences are not aware about this beautiful instrument, DVR trends to trade at 40 % - 50 % discount to its Equity shares. One should buy DVR at 40 % - 45 % discount to its EQ SH & Sell when DVR comes near to 10 % - 15 % discount to its EQ SH.

So, friends it makes sense to buy DVR shares. 

Tata Motors DVR – The first company to come with an DVR, Tata Motors DVR trades at 30 % discount to its equity shares market price. Normally it should trade at 10% - 15% discount to its equity shares. Globally DVR’s are traded at 10% discount to its equity shares, but see the ignorance of us Indian investors who buys the shares which have No Fundamentals but fails to understand such a beautiful instrument. They feel that DVR’s are complicated & offers lower rights, but ideally he should buy such shares if the company offering DVR share is good in fundamentals.

TATA MOTORS offered 6.42 Cr DVR share at Rs.295 which was at 10% discount to its equity shares price of Rs.330 on Nov 5th 2008 to raise Rs.1896.85 Cr with 1 voting right for every 10 DVR shares held along with 5 % extra dividend over ordinary shares. The class “A” DVR share is 15.8% of total share capital of Tata Motors. Tata Sons holds 34.25% stake.
After Tata Motor , Pantaloon Retail India & Gujarat NRE Coke have also issued its DVR shares.
Pantaloon Retail India issued 1 bonus share with different voting & dividend rights for every 10 held in 2008. the new class is called "B" shares with 5% more dividend than ordinary shares & would have 1 vote for 10 shares held.
Gujarat NRE Coke issued DVR in May 2010 as bonus shares in ratio of 1 DVR bonus shares for every 10 Equity shares held, here the DVR bonus shares would hold 1 voting right to 100 shares held.  

DVR's	Tata Motors DVR	Guj. NRE Coke DVR	Pantaloon Retail DVR
Total number of DVR Shares	6,41,76,680	5,07,14,292	1,59,29,152
Promoters Holdings	2,32,64,396 - 36.26 %	2,41,01,468 - 47.51 %	74,07,693 - 46.53 %
Number of Shares Holders	16,700	1,53,382	18,998

SOME BRIEF ABOUT COMPANIES ISSUED DVR's GLOBALLY

COMPANY	Country	Voting rights (ord)	Per Share DVR	Extra Dividend	Business
BMW	Germany	1	N0	€ 0.02	Automobile
Bombardier	Canada	10	1	$0.001563	Aircraft & Train Mfg
Brown Forman	US	1	No	---	Alcohol
Comcast Corp	US	1	No	---	Media
Fiat	Italy	1	Sp.cases	€ 0.31	Automobile
Forest City	US	10	1	----	Real Estate
Haverty Furniture	US	10	1	5 % of FV	Others
Hubbell Inc	US	20	1	----	Electrical s.
Lennar Corp	US	10	1	----	Real Estate
News Corp	US	10	1	----	Media
Samsung Electronics	Korea	1	No	----	Electronics
Telephone & Data System	US	1	No	----	Telecom
Viacom	US	1	No	----	Media
Volkswagen	Germany	1	No	€ 0.06	Automobile
Guj.NRE Coke	India	1	1/10th	----	Metals
Tata Motors	India	1	1/10th	Re 0.50	Automobile
Pantaloon Retail	India	1	1/10th	Re 0.10	Retail

GET MORE ON DVR - CLICK HERE

GET MORE ON TATA MOTOR STOCK/DVR - CLICK HERE

Punjab and Sind Bank : SUBSCRIBE IPO Fairly Valued

Price Band- Rs.113-120, Face Value- Rs.10, Discount to Retailers – 5%. Issue opens on- 13th December 2010, Monday
Issue closes on- 16th December 2010, Thursday
Listing on – th 2010, Lot Size - 50 
QIB Book- 1,90,00,000 shares.
Retail Book – 1,33,00,000 shares.
Employee Reservation- 20,00,000 shares
Total No. of Shares offered- 4,00,00,000 shares.
Equity Shares outstanding prior the Issue- 18,30,56,000 Sh
Equity Shares outstanding after Issue- 22,30,56,000 Sh
Total Size of the Issue- Rs.452 Crs. - Rs. 480 Crs.

FINANCIAL DETAILS AS ON – 31st March 2010
TOTAL ASSET – Rs.56099.58 cr
TOTAL INCOME - Rs. 4326.30 cr
NET PROFIT – Rs. 501.13 cr
NETWORTH – Rs.2106.58 cr
Equity Share Capital – Rs. 183.06 cr
Preference Share Capital – Rs.200 cr
Reserves & Surplus – Rs. 1723.52 cr
Earning Per Share – Rs. 26.70/sh.
Book Value – Rs. 104.15/sh.
FINANCIAL DETAILS UPTO – 30th September 2010
TOTAL ASSET – Rs.58343.02 cr
TOTAL INCOME - Rs. 2522.95 cr
NET PROFIT – Rs. 276.38 cr
NETWORTH – Rs.2382.07 cr
Equity Share Capital – Rs. 183.06 cr
Preference Share Capital – Rs.200 cr
Reserves & Surplus – Rs. 1999.01 cr
Earning Per Share – Rs. 15.10/sh.
Book Value – Rs. 119.20/sh.

PUNJAB AND SIND BANK
Punjab and Sind Bank, began its business in 1895, is the smallest of the state-run banks in terms of business. This Bank has its traces way back to the Swadeshi movement against the British, started with a capital of Rs200,000, working capital of Rs20,000 and a staff of 9 whom it paid a total monthly salary of Rs. 320, Is coming with an IPO to offer about 4 cr shares. the price band is declared at Rs. 113 - Rs.120 which according to me fairly valued in comparision of its peers. I expect Punjab and Sind Bank should grow at above 20%, at the end of the last fiscal in March, the bank had total deposits of Rs. 52,945.09 crore and advances of Rs. 35,859.97 crore. It had 926 branches as of 31 October.Bank’s Gross NPAs were Rs. 206.15 crore as of March 31, 2010, representing 0.63% of its gross advances and 0.36% of its total assets.
State-run banks have performed well over the years in the face of competition from aggressive rivals in the private sector and from foreign banks. Government-owned banks control 70% of India’s banking industry, foreign banks just around 7% and the rest is held by private sector banks.

SOME PEER COMPARISIONs
Punjab & Sind Bank - Face Value – Rs.10 ; Book Value – Rs. 104.15 ; EPS – Rs. 26.70 ; Price/Earning – 4.23 to 4.49  ; Price/Book Value –  1.08 to 1.15

Andhra Bank - Face Value – Rs.10 ; Book Value – Rs. 90.93 ; EPS – Rs.23.49 ; Price/Earning – 6.26 ; Price/Book Value – 1.62

Bank of Maharashtra - Face Value – Rs.10 ; Book Value – Rs. 55.84 ; EPS – Rs.9.80 ; Price/Earning – 6.64 ; Price/Book Value – 1.13

Corporation Bank - Face Value – Rs.10 ; Book Value – Rs. 402.60 ; EPS – Rs.90.83 ; Price/Earning – 6.85 ; Price/Book Value – 1.55

Dena Bank - Face Value – Rs.10 ; Book Value – Rs. 83.43 ; EPS – Rs.19.91 ; Price/Earning – 6.02 ; Price/Book Value – 1.44

United Bank of India - Face Value – Rs.10 ; Book Value – Rs. 91.61 ; EPS – Rs.12.19 ; Price/Earning – 8.70 ; Price/Book Value – 1.16

Vijaya Bank - Face Value – Rs.10 ; Book Value – Rs. 61.44 ; EPS – Rs.13.22 ; Price/Earning – 7.09 ; Price/Book Value – 1.53.

SO, I give a SUBSCRIBE/BUY rating to the PUNJAB & SIND BANK with the listing gains and expect to trade near 1.40 x times the book value. Rs. 146 to Rs. 170

SUZLON on Restructuring : Merges Subsidiaries

Wind energy major Suzlon Energy on 6th Dec 2010, said that its Board of Directors has approved the acquisition of the 'Tower Business Division' of Suzlon Towers and Structures Ltd and 'Operations and Maintenance Division' of Suzlon Infrastructure Services Ltd. Both are wholly owned subsidiaries of Suzlon and the merger would be done subject to receipt of all statutory and regulatory approvals.

Shares of Suzlon Energy closed at Rs 52.25, up 1.06 per cent on the BSE.

Some of the details of this Subsidiaries - As on 31st March 2010.

SUZLON TOWER & STRUCTURE LTD.

Issued,Subscribed,Paid up Capital - Rs. 45 crs.

Reserves & Surplus - Rs. 195.61 crs.

Total Assets - Rs. 506.70 crs.

Turnover - Rs. 533.11 crs.

Profit before Tax - Rs. 31.91 crs.

Provision for Tax & Deferred tax - Rs. 10.78 crs.

Profit After Tax - Rs. 21.13 crs.

SUZLON INFRASTRUCTURE SERVICES LTD.

Issued,Subscribed,Paid up Capital - Rs. 142 crs.

Reserves & Surplus - Rs. 121.58 crs.

Total Assets - Rs. 967.36 crs.

Turnover - Rs. 1105.28 crs.

Profit before Tax - Rs. 86.95 crs.

Provision for Tax & Deffered tax - Rs. 29.89 crs.

Profit After Tax - Rs. 57.06 crs.

So with the merger the networth of Suzlon will be increased by around Rs. 317 crs, which translates into an increase in its book value by about Rs.1.82 per share. Suzlon's debt of Rs. 9252 crs. Reserves & Surplus - Rs.5892 cr.(as on 30 Sept 2010)

Thomas Cook (India) LTD ; BUY ON EVERY DECLINE - TARGET Rs.76.00

Scrip Code: 500413 / THOMASCOOK .

CMP: Rs. 60.45; Buy at Rs.55 - 60 levels .

Target: Rs. 66.00 within next 3-6 weeks ; Long term - Rs.76.00.

Market Cap: Rs. 1279.59 cr.

52 Week High / Low: Rs. 78.65 / Rs. 55.65.

Total Shares: 211677560 shares; Promoters : 163471449 shares – 77.22 % .

Total Public holding : 48206111 shares – 22.77 %.

Book Value: Rs. 11.90; Face Value : Rs. 1.00; EPS : Rs. 1.89.

Div : 37.50 %;P/E : 31.98 times; Ind P/E : 59.60; EV/EBITDA: 23.31 . Total Debt : Rs. 167.65 cr; Enterprise Value: Rs. 70.57 per share.

Total Assets : Rs. 440.11 cr.

Thomas Cook India (TCIL) is India’s largest travel and financial services company. The Company launched its Indian operation in 1881 & incorporated in 1978. Currently, it has presence in 55 cities spreading across 200 locations. On pan India level, the company has office located at Mumbai, Pune, New Delhi, Gurgaon, Chandigarh, Agra, Ahmedabad, Bangalore, Baroda, Bhubhaneshwar, Chennai, Cochin, Goa, Hyderabad, Jaipur, Jalandhar, Kolkata, Trivandrum and Vishakapatnam. With over 125 years of presence in India TCIL is focused on providing a broad spectrum of travel-related services that include foreign exchange, corporate travel, leisure travel, and insurance. The company’s overseas subsidiaries offices are located at Sri Lanka, Mauritius, Germany, France, Spain, Canada, UK, USA, Australia, Japan, Korea and China. The company has employee strength of 3000 people.

Business Division

Travel- The company provides different traveling destinations for domestic inbound/ outbound holidays. The company operates over 40 Group Inclusive Tours (GIT) spread across 5 continents.

Corporate Travel Management- The Company provides travel solutions and travel budgets of several large national and multinational companies

Foreign Exchange- The company is leading foreign exchange provider offering wide range of product and services.

Travel Insurance- Being the only travel company that has license to sell insurance co-brand travel insurance products with TATA AIG General Insurance Company.

Business Outlook

The company has entered into tie up with with cruise line operator Indian Ocean Cruises of London based Foresight Smart Ventures in order to market heritage cruise Ms Ocean Odyssey in India and Mauritius.

The company has announced the Gold Circle Programme (GCP), which is in place of nearly 3 years now and the idea behind this is to build franchise programme. The company have taken this upto 42 franchises over this period with the purpose to cover all markets within city or outside the city. The new GCP that has been appointed in Bangalore is primarily done to supplement companies coverage within the city. This is the policy that the company has followed for three years.

The company targets to settup in 120 cities, over the next two years. Which is at present 72 and hopes to achieve 100 in the year 2011 and to 120 by 2012. Essentially they are using foreign exchange business to drive the growth and the leisure business follows. So today they operate in 72 cities, the leisure operates in 42 cities which are targeted to grow by another 10 cities while growing GCP infrastructure by a larger number by during the same period.

MOIL (MANGANESE ORE INDIA LTD) : IPO SUBSCRIBE

Price Band- Rs.340 - Rs.375, Face Value- Rs. 10 , 5 % Disc to Retailers

Issue opens on- 26th NOV 2010;

Issue closes on- 1st DEC 2010,

QIB Book- 1,64,64,000 shares (50 % of Net issue)

Retail Book -  1,15,24,800 shares (35 % of Net issue)

Non-Institutional Bidders - 4939200 shares (15 % Net issue)

Employee Reservation- 6,72,000 shares (2 % of Total issue)

Net Public Offer - 3,29,28,000 shares (98 % of Total issue)

Total No. of Shares offered- 3,36,00,000  shares or 20 % of Paid up capital

Equity Shares outstanding after the Issue- 16,80,00,000 Sh

Equity Shares outstanding prior Issue- 16,80,00,000 Sh

Total Size of the Issue- Rs.1142.4 Crs - Rs.1260 cr. 

Standalone Result as on – 31st March 2010

Total Income - Rs. 1,087.853 cr

Net Sales - Rs. 969.395 cr

Net Profit Before Tax - Rs. 706.793 cr

Net Profit After Tax – Rs. 465.62 cr

Share Capital – Rs. 168 cr

Reserves & Surplus – Rs. 1508.716 cr

Earning Per Share – Rs. 27.72/sh.

Book Value – Rs. 99.80/sh.

Cash on Books - Rs.1700.14 cr , Rs. 100/sh.

MANGANESE ORE INDIA LTD - A MINI RATNA PSU

MOIL, India’s biggest & 5th largest in the world in manganese ore production & a public sector company setup in 1896, having its mines in MP& Maharashtra with an combined capacity of 1.093 million tonnes of manganese ore which constitutes 50% of total requirement of the country . The company operates at 60 % plus margins. MOIL is a profit making company for last 15 years and a Debt - Free Company with a cash reserve of Rs.1700 cr is coming with an IPO of about Rs. 1500 cr or 20 % of dilution (may offer 3.38 cr shares). Through this IPO the Central government will divest 10 % of its stake in the company, while Madhya Pradesh & Maharashtra government will divest 5 % each. The entire amount from the IPO will go to central & state governments. Central government holds 81.5 % in MOIL, whereas state government of Maharashtra holds 9.62 % & State government of Madhya Pradesh holds 8.8 % in MOIL.

The company plans to invest Rs.770 cr to expand its production capacity from current 10,93,363 tonnes to 1.475 million tonnes in next 5 years which is a 35 % of increase in its production capacity. MOIL has set up a Ferro Manganese Plant of 10,000 tonnes per year capacity & Electrolytic Manganese Dioxide (EMD) with an annual capacity of 1,000 tonnes per year

MOIL wants to acquire mines in Turkey, South Africa & Gabon. Company operates 10 mines - 6 in Maharashtra & 4 in MP. In recent years, the requirement of manganese has increased due to raise in Steel production; this has lead to greater demand for ore.

The company has a joint venture worth Rs.600 cr with SAIL & Rashtriya Ispat Nigam Ltd for setting up steel plant which is to be commissioned by June – July 2011. These two companies would be undertaking production of steel & MOIL will supply manganese ore. The Debt – Equity ratio in this JV is 1:1.

MOIL has been allotted 814 hectares of land for mining manganese ore in & around Nagpur. Most of these mines are underground (they have reached at 309 meters in depth) and are more than 100 years old; the company has all the required clearances from the Union Environment Ministry for both the states.

SO, I give a SUBSCRIBE / BUY to the MANGANESE ORE IPO.

Net Asset Value - Rs.99.8 (31 March 2010) ; Rs.110.71 (30 June 2010).

Net Worth - Rs. 1676.716 Cr (31 March 2010) ; Rs.1859.963 Cr (30 June 2010)

EV/EBITDA - 6.283 (31 March 2010) reasonably valued.

EV/EBITDA - NMDC - 18.05

EV/EBITDA - SESAGOA - 10.55

EV/EBITDA - SANDUR MANGANESE - 13.27

READ COMMENTS FOR MORE DETAILS.....

US PRINTING NOTES AGAIN: DEBASEMENT OF CURRENCY

"MONEY MONEY MONEY!!!!"

On November 3, 2010. Federal Reserve chairman Ben S Bernanke decided to have a second round of Quantitative Easing (QE2). He decided to pump in $600 billion into the US economy by buying an additional Treasury Bond through June in order to reduce unemployment & avoid deflation by printing money. And printing more & more money would be more “Debasement of your Currency”. This will lead to surging commodity prices & asset bubbles not only in the US but also in Emerging Markets. The US Fed reserve calls it liquidity into the financial system by merely printing more & more dollars, which are not backed by real assets such as Gold. Technically, there is no limit to this printing, i.e. No supply restriction on paper currencies. This is what economists called “Debasement of Currency”.

Gold has a unique characteristic of a store of value which is not with paper currencies, which tend to lose value over a period of time due to inflation (loss of purchasing power) caused by an oversupply of printed money.

We will compare the Currency in Circulation issued and the underlying Gold held by concerned Central Banks in developed countries. Divide the Gold reserves (in tonnes) held by Central Banks with the currency in circulation (in billion $) of the respective countries will give us a ratio, a Gold to currency ratio.

In 1973, Gold held by the US central bank was 8,584 tonnes & the currency in circulation was $61 billion. Dividing the gold held by the currency in circulation, we get a ratio of 140.2 for that year. i.e. 140.2 tonnes of gold was held per $1 billion of currency in circulation. In the year 2007, the US central bank held 8,133 tonnes of Gold & the money in circulation was a whopping $759 billion. The ratio comes to 10.7 .i.e. only 10.7 tonnes of gold held per billion dollars in circulation.

If the US were to get back to the 1973 ratio of gold held per billion $ in circulation, it would have to increase its Gold Reserve to whopping 1,07,153 tonnes from the current 8,133 tonnes, an increase of more than 13 times in potential demand. With the financial crisis not over yet, Central Banks like FED would continue to inject more & more money into the financial system. Thus the debasement of currency will continue, making real assets like GOLD & SILVER more & more attractive as a hedge against reducing purchasing power & loss of faith & confidence in paper currencies.

We should thank GOD that the US does not have a printing press for Gold. The YELLOW metal may be the only Savior of our wealth over the longer term. That sure makes a case to buy GOLD. As far as our INDIA is a concern, India’s M3 supply in INM3MS=ECI as of July 16,2010 was Rs.57,821.41 billion from Rs.56,770.76 billion (June 18,2009) & Rs.4984.46 billion on July 3,2009. GOLD RESERVE AS ON SEPTEMBER 10, 2010 – 557.7 tonnes.

SO..GOLD IS ALWAYS A BUY EVEN AT THIS PRICE. BUY IN GRAMS IT SURELY WILL MAKE YOUR WEALTH SLOWLY BUT SURELY.....

Read my previous post on GOLD - CLICK HERE -  MORE ON GOLD

THE POWER OF COMPOUNDING

HI Friends!! Many a times we have heard about the power of compounding, we have also learnt some of them too….but the things we learn from practical life can not be taught by textbooks…..Similarly I came across one investor who is about 60 yrs of age retired teacher who invested way back in 1980’s kept hold onto it and made….HOW MUCH….GUESS!!!!!!!! Lakhs…Millions…Crores….Just imagine…

He invested 30 years back by just investing Rs.1,000/- initially. He subscribed in 10 shares of this Company with a face value of Rs. 100/- in 1980…

• In 1981 company declared 1 : 1 bonus = he had 20 shares

• In 1985 company declared 1 : 1 bonus = he had 40 shares

• In 1986 company split the share to Rs. 10 = he had 400 shares

• In 1987 company declared 1 : 1 bonus = he had 800 shares

• In 1989 company declared 1 : 1 bonus = he had 1600 shares

• In 1992 company declared 1 : 1 bonus = he had 3200 shares

• In 1995 company declared 1 : 1 bonus = he had 6400 shares

• In 1997 company declared 1 : 2 bonus = he had 19,200 shares

• In 1999 company split the share to Rs. 2 = he had 96,000 shares

• In 2004 company declared 1 : 2 bonus = he had 2,88,000 shares

• In 2005 company declared 1 : 1 bonus = he had 5,76,000 shares

• In 2010 company declared 3:2bonus = he have 9,60,000 shares

At the end...now in 2010 he has 9,60,000 shares of this company

Any guesses about the company?

His present valuation is about Rs. 41.86 Cr. & the company is ‘WIPRO’ - Western India Vegetable Products Ltd.

This is the power of compounding. Take a look below - 

What this simple but astonishing table shows is how if money is allowed to quietly compound, it attains enormous proportions. See how a sum of Rs. 1 lakh per annum over a period of 25 years at a rate of return of 25 % becomes an incredible Rs. 2.64 crores. Imagine if you could save 10 lakhs every year, in 25 years you would have 26 crores !!

Wipro managed to rope in many shareholders and helped them reap profits. The process started with just 17,000 shares that Wipro issued to the public at Rs. 100 each in 1947. In 1971, the company issued one bonus share for every three share held. In 1981, it was a one for one offer and this history of bonus shares kept on moving with time.

Other such examples ….....

CIPLA = Investment of Rs. 10,000/- in 1979 will fetch Rs. 95 cr.+

INFOSYS = Investment of Rs. 10,000/- in 1992 will fetch Rs. 1.5 cr.+

RANBAXY = Investment of Rs. 1,000/- in 1980 will fetch Rs. 1.9 cr.+

COAL INDIA : SUBSCRIBE FOR LISTING GAINS.

Price Band - Rs.225-245, Face Value- Rs.10 , 5 % Discount to Retailers.

Issue opens on - 18th October 2010, Monday

Issue closes on - 21st October 2010, Thursday

Listing on – 4th November 2010, Thursday

QIB Book - 315818220 shares.

Retail Book - 568472796 shares.

Employee Reservation - 63163644 shares

Total No. of Shares offered - 631636440 shares or 10 %

Equity Shares outstanding after the Issue - 6316364400 Sh

Equity Shares outstanding prior Issue -6316364400 Sh

Total Size of the Issue - Rs. 14211.81 Cr's. - Rs. 15475.09 Cr's.

IPO GRADING – 5/5 by CRISIL , 5/5 by ICRA.

FAIR VALUE - Rs.265- Rs. 315

CONSOLIDATED RESULTS AS ON – 31st March 2010

TOTAL INCOME - Rs. 52592.292 cr

NET PROFIT – Rs. 9833.699 cr

Share Capital – Rs. 6316.364 cr

Reserves & Surplus – Rs. 19533.022 cr

Dividend – 35 % or Rs. 3.50 per share.

Earning Per Share – Rs. 15.57/sh.

Book Value – Rs. 40.92/sh.

COAL INDIA – India’s largest coal producing company. In FY 09 it contributed 81.9% of total India’s coal production. Largest producer of coal based on raw coal production in the world. Coal Reserve as on 1st April 2010 – 6421.8 cr. It operates 471 mines across 8 states in India. Also exploring opportunities in Australia, Indonesia, South Africa & USA.Raw coal prices lower than landed cost of imported coal in India. Coal India will help GOVT to raise 37.8 % of its disinvestment target.

According to the red herring prospectus of the company, on a consolidated basis, it had registered the three months profit ended June 30 2010, Coal India's total income was about Rs 13,110 crore, while net profit for the period stood at Rs 2,521.78 crore, Coal India had a cash and bank balance of Rs 38,046.34 crore and debt of Rs 1,779.45 crore. Coal India has set aside $1.2 billion (Rs 5,300 crore) in this financial year for foreign acquisitions,

CIL is 40% cheaper than it peers on EV/EBITDA, only 18% of its coal is of top quality. On a price to earnings basis, it certainly does not look overpriced. It is in line at 15 times with what a Peabody Energy or Bhumi Resources is trading at. If you were to look at it from an EV/EBITDA prospective, then it is certainly more than 30% or 40% cheaper vis-à-vis some of its global peers trading at about 6 to 6.5 times whereas the global average to EV/EBITDA basis stands at a 12-13 times. So clearly valuations seem to be on its side. According to me the fair value of CIL comes to Rs. 1,67,383.65 cr - Rs. 1,98,965.47 cr or Rs. 265 - Rs.315

SUBSCRIBE FOR LONG TERM & IF FOR TRADING PROSPECTIVE GO FOR IT ON LISTING GAINS......