THE RELIANCE RPL MERGER IN RATIO OF 16:1

The big piece of news from India’s corporate world this past weekend has been the merger of two companies under the Mukesh Ambani led Reliance Group. The news broke & developed over and was a done deal by the time the weekend was over. In every sense the affair has been handled in true Reliance style – quickly, efficiently and without making too much of a fuss. The integration of Reliance Petroleum Limited into Reliance Industries is being handled with a lot of care. Considering the ease with which Reliance has started to pull this off has been commendable.

The company has been careful enough to make sure that they do not get into the bad books of their shareholders.Tackling integration requires managing the priorities of both the companies being integrated. In this case the interests of the shareholders of both Reliance Industries and Reliance Petroleum have been safeguarded.

Mukesh Ambani in a statement was quick to point out that the deal would create “shareholder value”.

Shareholders themselves are pretty satisfied with the merger of Reliance Industries and Reliance Petroleum. They get to be part of a bigger entity with a much more simplified company structure.

Reliance Petroleum being the refining arm of Reliance Industries no longer needs to be kept separate from the company’s core business of oil and gas exploration and marketing.

By integrating the refinery business into the main fold they will be able to function as before with the petroleum wing being an internal subsidiary.

All that Reliance had to do was to simply re-purchase a 5% stake in Reliance Petroleum which until now belonged to Chevron. This being successful allows the company to increase its stake to seventy five percent in RPL thus making the merger a matter of detail.

RIL has agreed upon a price of Rs.60/share to buy Chevron’s stake in RPL. By no means has the company overpaid. In fact they’ve paid the IPO launch price for the stake. Shareholders can therefore be satisfied that the company has not overspent.

Reliance has also been fair with the share distribution ratio for RPL shareholders.The company has decided to fix the ratio of RPL to RIL shares at 16:1.

The ratio is a fair reflection of the current market value of both the companies.Therefore the shareholders have not been crossed in this matter as well.Small investors and fund managers alike agree on the ratio being a good deal thus the merger should not face any serious problems in the future.

RPL has just recently started commercial production. From a financial point of view it does depend on its parent company RIL for funds and easy credit access. The channel for credit being much simpler now that both companies come under the same name is a good move.

The RIL-RPL combine also catapults RIL higher into the list of the world’s biggest refining companies.Ironically RIL now replaces and gets ahead of Chevron which decided to exit its stake in RPL

India`s gold futures climb to new record

A weaker rupee makes the imported yellow metal expensive. The Indian rupee fell to its lowest in more than two weeks on Tuesday

Gold futures in India were trading above the psychological mark of Rs15,000 on strong global cues and support from a weak rupee. Internationally, gold prices continued their recent bull run as investors scramble for safe haven assets amid a worsening global economic outlook.

A weaker rupee makes the imported yellow metal expensive. The Indian rupee fell to its lowest in more than two weeks on Tuesday on expectations that FIIs would dump more local shares, while a stronger dollar overseas also dampened sentiment.

April-delivery gold gained as much as 2.9% to Rs15,131 per 10 grams on the Multi Commodity Exchange of India Ltd. (MCX), the highest since the bourse began trading the metal in November 2003. The contract had gained more than 3% last week.

Record high gold prices are serving as a major deterrent for gold buyers in India, notwithstanding the ongoing wedding season. Customers are postponing gold purchases due to record high prices and weak economic climate.

India is the world’s biggest consumer of gold.

India's import of gold this year may more than halve to 250 tons from 720 tons in 2008. India's gold purchases have declined for three consecutive months with imports in January slumping to about 2 tons from 24 tons in the year-earlier month, according to the Bombay Bullion Association.

Gold prices are up 30% in the past three months.

Funds are pouring huge amounts of money into gold and buying the metal at every support level. Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, climbed to a record 985.86 metric tons as of Feb. 13, gaining 14% last week alone.

Meanwhile, gold for immediate delivery advanced 1.8% to US$959.05 an ounce, the highest level since July 22. It was trading at US$958.74 at 2:05 p.m. Singapore time.

Gold for April delivery in New York advanced to US$961.10 an ounce, the highest level for the most active contract since July.

Be(ar) Aware : From The Street

One of the biggest fears for an investor in a bear market is the fact that he is in a sense trapped.The value of his investments is very very low. At this point he has to make a choice – either stay the course till his investment posts a return giving him a PROFIT or pull out immediately thus accepting a certain degree of LOSS .

If he decides to stay the course then he has to contend with the bear market.A market that is ‘played’ by people who try to make money even in such a climate. Sellers not buyers call the shots and at such a time many traders get together to form infamous groups called ‘BEAR CARTELS’. The Indian stock market is not immune from attacks by such cartels. Many companies in the current marketplace have fallen victim to such cartels. Any of these companies could have been ones that you invested in and many companies you are investing in right now could fall prey to these cartels in future.

The biggest of companies are susceptible to bear maulings. When a market turns from being bullish to being bearish then bear cartels start operating. A few traders get together and decide to co-ordinate their efforts so that they’re able to drastically bring down the price of a particular stock.They start selling or shorting mass quantities of a company’s stock thus driving the price down by significant numbers.

An operating bear cartel is very much like a mafia. They target a stock that they believe can be damaged and put out a ‘hit’ on it like a mafia. Ultimately they shoot the price of the stock down with similar cartels and end up achieving their goal of profit.

Some of India’s biggest companies have fallen prey to the actions of these vicious cartels.

A few months ago immediately after the crash of Lehman Brothers, ICICI Bank fell prey to a bear cartel. Rumors were spread that ICICI was involved and positioned with Lehman Brothers and that it too would share a similar fate to Lehman Brothers. People who believed this panicked and sold ICICI bank shares in huge numbers that caused a fall in the company’s share prices mostly in September. The situation calmed down only after the central government issued a statement that ICICI was a safe bank and that the rumors were false.

Similarly Unitech, one of the country’s biggest real estate developers was brutally mauled by the Bear cartel. It is true that Unitech is leveraged but not to the extent that the bear cartel made it out to be. The result was that on October 24th ,Unitech’s stock fell by over 50% in a single day and has not recovered since. Just this month another company Rolta was mauled in the same way but thanks to timely intervention by the company and positive growth reports, the damage was minimized.

Guidelines for execution of block deals on the stock exchanges

1. SEBI had issued a circular (reference no. SEBI/MRD/SE/Cir-7/2004) on January 14, 2004 on disclosures of details of “bulk” deals with a view to impart greater transparency to the market on such transactions executed on the stock exchanges. In terms of paragraph 1.1 of that circular, a “bulk” deal constituted of “all transactions in a scrip (on an exchange) where total quantity of shares bought/sold is more than 0.5% of the number of equity shares of the company listed on the exchange”. Thus the quantitative limit of 0.5% could be reached through one or more transactions executed during the day in the normal market segment

2. There is however a felt need of the market to execute large trades through a single transaction easily without putting either the buyer or the seller in a disadvantageous position. In order to facilitate execution of such large trades, the stock exchanges are being permitted to provide a separate trading window. A trade, with a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore executed through a single transaction on this separate window of the stock exchange will constitute a “block deal” as distinguished from “bulk” deal defined earlier.

3. A “block” deal will be subject to the following conditions :

a. The said trading window may be kept open for a limited period of 35 minutes from the beginning of trading hours i.e. the trading window shall remain open from 9.55 am to 10.30 am.

b. The orders may be placed in this window at a price not exceeding +1% from the ruling market price/previous day closing price, as applicable.

c. An order may be placed for a minimum quantity of 5,00,000 shares or minimum value of Rs.5 crore.

d. Every trade executed in this window must result in delivery and shall not be squared off or reversed.

e. The stock exchanges shall disseminate the information on block deals such as the name of the scrip, name of the client, quantity of shares bought/sold, traded price, etc to the general public on the same day, after the market hours.

f. There is no change in regard to the disclosure of trade details of ”bulk deals” as specified in the earlier SEBI circular reference no. SEBI/MRD/SE/Cir -7/2004 dated January 14, 2004, and such disclosures shall be continued to be made by the stock exchanges to the general public on the same day after the market hours.

4. The stock exchanges shall ensure that all appropriate trading and settlement practices as well as surveillance and risk containment measures, etc., as presently applicable to the normal trading segment are made applicable and implemented in respect of the proposed special window also.

5. The stock exchanges are advised to

a. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision immediately.

b. bring the provisions of this circular to the notice of the member brokers/clearing members of the Exchange and also to disseminate the same on the website.

c. communicate to SEBI, the status of the implementation of the provisions of this circular in the Monthly Development Report for the month of September 2005.

6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

ZIMBABWE CURRENCY AND 231 MILLION PERCENT INFLATION.....!!

           Bunch of Banana's for 50 CR (1 Million = 10 Lakhs)

100 Lakh Cr (1 Trillion = 1 Lakh Cr)

10,000 Cr (1 Billion = 100 Cr)

SEVEN LAKHS FIFTY THOUSAND

From 1000 Cr to 10,000 CR (1 Million = 10 Lakhs)

50 CR (1 Million = 10 Lakhs)

10 CR (1 Million = 10 Lakhs)

5000 CR (1 Billion = 100 Cr)

ON 18th April 1980 Zimbabwe was born from British colony of Rhodesia & Rhodesian Dollar was replaced by Zimbabwe Dollar at PAR.

In 2004, Zimbabwe’s inflation was 624 %

In February 2007, the central bank of Zimbabwe declared inflation "illegal", outlawing any raise in prices on certain commodities between March 1 and June 30, 2007. Officials arrested executives of some Zimbabwean companies for increasing prices on their products. Such measures, frequently tried during other episodes of hyperinflation, have always failed.  In March 2007, inflation surged to a new high of 1,730%, and in June the government released a figure of 7,638%. The predictions for the annual inflation ranged from 3,000% (according to the IMF) to 8,000%. In fact, inflation that month rose to 11,000% from an earlier estimate of 9,000%. U.S. ambassador Christopher Dell predicted it would reach 1.5 million percent by December 2007, although in the event the IMF estimated a rate of "only" 115,000% for that month, and 150,000% for January 2008. The government then circulated a Z$200,000 note, and reports of extreme shortages of basic foodstuffs, fuel, and medical supplies abounded. The government instituted a six-month freeze on wages on September 1, 2007. Hyperinflation in Zimbabwe began shortly after destruction of productive capacity in Zimbabwe's civil war and confiscation of white-owned farmland.  Food output capacity fell 45 %, manufacturing output 29 % in 2005, 26 % in 2006 and 28 % in 2007, and unemployment rose to 80 %. During the height of inflation from 2008–09, it was difficult to accurately account and monitor for Zimbabwe's hyperinflation because the government of Zimbabwe stopped filing official inflation statistics. This cessation in filing made it difficult to accurately observe how severe inflation was in the country. However, Zimbabwe's peak month of inflation is estimated at 6.5 sextillion percent in mid-November 2008. In 2009 Zimbabwe abandoned its currency; at present in 2012 a new currency has yet to be introduced, so currencies from other countries are used.

Hanke Hyperinflation Index for Zimbabwe (HHIZ)

Date	Index	Monthly Inflation Rate	Annual Inflation Rate
5-Jan-07	1.00	13.70%
2-Feb-07	1.78	77.60%
2-Mar-07	3.14	76.70%
5-Apr-07	6.90	56.20%
4-May-07	6.75	-2.15%
1-Jun-07	20.70	207.00%
6-Jul-07	53.00	60.40%
3-Aug-07	49.10	-7.29%
7-Sep-07	82.50	70.60%
5-Oct-07	219.00	165.00%
2-Nov-07	642.00	193.00%
28-Dec-07	2,010.00	61.50%	215,000%
25-Jan-08	2,250.00	11.80%
29-Feb-08	8,260.00	259.00%
28-Mar-08	17,700.00	115.00%
25-Apr-08	57,100.00	222.00%
30-May-08	442,000.00	498.00%
26-Jun-08	23,600,000.00	5,250.00%	41,400,000%
4-Jul-08	49,200,000.00	3,740.00%	93,000,000%
11-Jul-08	81,800,000.00	2,080.00%	167,000,000%
18-Jul-08	122,000,000.00	1,030.00%	250,000,000%
25-Jul-08	157,000,000.00	566.00%	317,000,000%
29-Aug-08	6,330,000,000.00	3,190.00%	9,690,000,000%
26-Sep-08	794,000,000,000.00	12,400.00%	471,000,000,000%
3-Oct-08	3,570,000,000,000.00	15,400.00%	1,630,000,000,000%
10-Oct-08	32,300,000,000,000.00	45,900.00%	11,600,000,000,000%
17-Oct-08	1,070,000,000,000,000.00	493,000.00%	300,000,000,000,000%
24-Oct-08	124,000,000,000,000,000.00	15,600,000.00%	26,100,000,000,000,000%
31-Oct-08	24,600,000,000,000,000,000.00	690,000,000.00%	3,840,000,000,000,000,000%
7-Nov-08	4,890,000,000,000,000,000,000.00	15,200,000,000.00%	593,000,000,000,000,000,000%
14-Nov-08	853,000,000,000,000,000,000,000.00	79,600,000,000.00%	89,700,000,000,000,000,000,000%

Sources: Imara Asset Management Zimbabwe and author’s calculations