ATTENTION !! Dear Readers, BHAVIKK SHAH's BLOG is totally free website. Contents here should be viewed for Knowledge purpose only. Author does not charge for any kinds of the services. Kindly don't entertain to any of the paid services in a name of BHAVIKK SHAH's BLOG !!

Sunday, June 20, 2010

ONE SHOULD ALWAYS BUY GOLD

               Before the great depression, most of the world used gold as a currency. Of course, that did mean every time someone purchased something they paid for it in gold. Governments maintained a certain amount of gold in their vaults & paper currency was issued against the value of that gold. (In INDIA, the minimum reserve worth Rs.200 cr should be maintained at any point of time, out of these reserves Gold reserves should be worth Rs.115 cr @ Rs. 94/10 grams & a Forex reserve of Rs 85 cr at the current market price. If actual reserves are more than the minimum reserve RBI may prints new currency notes & issues them to deficit banks in form of loans against gold, foreign exchange, promissory notes & treasury notes) So every time you pay paper money you effectively using gold. This system was the “Gold Standard”. Citizens also had the freedom to exchange these currency notes for gold, as and when they deemed fit.

               The government ensured that no more notes are printed. The reason was simple if they had to print more money they needed more gold in their vaults because every paper currency note out there was essentially gold. And if citizens got the slightest hint that the government is printing currency, they would all land up at the bank to exchange their paper currency for gold. So even if the government was tempted to print money they would think twice before doing it.

               Now, during the time of the great depression, growth was a problem, unemployment was at its peak. Firms were shutting down. One way to create growth was the government printing notes & giving them to people in various ways to spend. Once the citizen got some money in their hands, they would go out and spend it. This ensures that they buy goods & services. And one man’s spending is another man’s income and so the cycle would continue and this would create some growth. And that’s what the government did; they moved out of Gold Standard and went into FIAT Currency i.e. a currency that does not have anything backing it but basically the fiat of government. This gave them the freeway to print any amount of money they want to.

               In fact, in the year 1933, the US government confiscated all the gold that its citizens had through Executive Order 6102 signed by the then President Mr. Franklin D Roosevelt, forbidding the hoarding of gold coins, gold bullion & gold certificates by US citizens. They were of course compensated for their gold at the rate of $20.67 per troy ounce (1 troy ounce=31.1grams). So because of this, the government across the world had the freedom to print currency whenever the economy was in trouble. And as per the basics of economics, an increase in supply leads to a decrease in purchasing power. That’s why economists who follow the Austrian school of economics, say that all paper currencies over a period of time go back to their intrinsic value i.e. zero.

               So that is why whenever there is a hint of a major financial crisis, people figure out that almost any solution that the governments might come up with will ultimately end up printing more & more money (which the US is doing to solve its financial problem and Europe cant due to its structure). This means decreasing purchasing power. The smart money in this situation always moves to gold. As it is now, people end up treating gold as nothing but what it was always used as i.e. CURRENCY. One should always have at least 25 % of its portfolio in Gold in order to hedge inflation.

Always buy gold in parts of SIP Systematic Investment Plans, or go into Gold ETFs...
Some of the GOLD ETFs are -
GOLD BeES (I prefer this as it is the first-ever launched, more experienced and of huge gold deposits)

READ MY POST ON US PRINTING MORE NOTES

GOLD PRICES PERFORMANCE

Gold Price Performance Silver Price Performance

Wednesday, June 9, 2010

SUZLON ENERGY : RIGHTS ISSUE DETAILS

SUZLON ENERGY gave rights issue in the ratio of 2 new shares for 15 held at Rs.63/share(Face Value-Rs.2 and premium of Rs.61), the record date is fixed at 10th June 2010, Suzlon goes ex- rights on 9th June 2010. The Issue Opens at 18th JUNE 2010, Closes on 2nd JULY 2010, Last date for receiving request for split form 25th JUNE 2010.

Here are some details about how will the proceeds from the issue will be utilised -

Gross proceeds of Issue  -                Rs. 1307.66 Cr.
Discharge of Promoter loans
(towards Promoter entitlement) -      Rs. 694.06 Cr.
Issue Expenses                                  Rs. 10.00 Cr.
Net Proceeds                                      Rs. 603.60 Cr.

*The amount of promoter loan Rs. 1175 Cr.

CAPITALIZATION STATEMENT
STANDALONE - DETAILS  
                                   
SHORT TERM DEBT -  Rs.1883.52 Cr.
LONG TERM DEBT - Rs.5717.70 Cr.
TOTAL DEBT - Pre issue- Rs.7601.22 Cr ; Post issue - Rs.6426.22 Cr.
SHARE CAPITAL - Pre issue - Rs.311.35 Cr ; Post issue - Rs.352.86 Cr.
ESOPs O/s - Pre issue -Rs.15.68 Cr ; Post issue -Rs.15.68 Cr
RESERVES & SURPLUS - Pre issue - Rs.5277.24 Cr ; Post issue - Rs.6543.39 Cr.
TOTAL SHARE HOLDERS FUND - Pre issue -Rs.5604.31 Cr ; Post issue -Rs.6911.97 Cr.
TOTAL DEBT/EQUITY RATIO - Pre issue - 1.36 ; Post issue - 0.93

CONSOLIDATED -  DETAILS  

SHORT TERM DEBT-  Rs.3337.11 Cr.
LONG TERM DEBT - Rs.9330.83 Cr.
TOTAL DEBT - Pre issue -Rs.12667.94 Cr ; Post issue -Rs.11492.94 Cr.
SHARE CAPITAL - Pre issue -Rs.311.35 Cr ; Post issue - Rs.352.86 Cr.
ESOPs O/s - Pre issue -Rs.15.67 Cr ; Post issue - Rs.15.67 Cr.
RESERVES & SURPLUS - Pre issue -Rs.6274.21 Cr ; Post issue - Rs.7540.36 Cr.
TOTAL SHARE HOLDERS FUND - Pre issue -Rs. 6601.27 Cr ; Post issue -Rs.7908.93 Cr.
TOTAL DEBT/EQUITY RATIO - Pre issue - 1.92 ; Post issue - 1.45.

Now, when the markets price per share are quoting at Rs.53/sh why would anyone subscribe to its Rights issue...........This issue is only meant for SUZLON Promoters....same story as Fortis health care..here SUZLON's promoters will subscribe all 20,75,65,299 shs at Rs.63/sh , raising their holding to 103,38,33,299 shs from 82,62,68,000 shs from 53.08% to 58.59% on new Eq of 176,43,05,042 shs from 155,67,39,743 shs. But will surely reduce some of its debts...which is good news.

Tuesday, June 1, 2010

SUZLON DECLARES RIGHTS ISSUE AT Rs.63

As declared earlier Suzlon energy declares rights issue of equity shares of Face value Rs.2.
 Share holders will get 2 shares for every 15 shares held. The rights is priced at Rs.63/sh (including a premium of Rs.61 for each equity share). Record date - 10th June 2010. 

This will mean a 13.33 % of dilution of shares a nearly of 20,75,65,299 shares on the total outstanding shares of 155,67,39,743 shs. The rights issue will garner Rs.1307.66 crs to Suzlon enabling the company to reduce its total debts of Rs.10153 cr. Which will bring down the debts to Rs.8845.34 crs.

It should be noted that Suzlon has restructured its FCCBs at Rs.97.26/sh v/s Rs.359.68/sh ($/Re=44.60).
This means, total number of shares to be issued on conversion of FCCBs - 23,71,52,577 sh (a dilution of 15.23%). Yester day the share prices of Suzlon tanked 8% on bad results but the rights issue news will take back SUZLON to Rs.70

SUZLON ENERGY ANNUAL RESULTS INSIGHTS FY 2009-2010

SUZLON ENERGY ANNUAL RESULT INSIGHTS – FY 2009-2010
NET DEBT REDUCTION- FY 10
- Consolidated net debt as on 31st March 2010 - Rs. 9764 cr.
- Consolidated net debt as on 31st December 2009 - Rs. 10488 cr.
- Net consolidated debt reduced by Rs. 724 cr.
- Net debt of Suzlon Energy Wind as on 31st March 2010 – Rs.10153 cr.
- Net debts reduce by 17% a Rs.2036 cr Y-O-Y.
- HANSEN STAKE NOW AT 26.06%.
- REpower Systems AG stake now at 90.50% v/s 90.71% (due to further issuance of shares as ESOPs)
- RIGHTS ISSUE ANNOUNCED.

SALES FIGURES- FY 10
- India = Q4 FY10- 361 Mw; FY10 - 688 Mw v/s 749 Mw FY09.
- Internationally = Q4 FY10- 290 Mw; FY10- 773 Mw v/s 2041 Mw FY09.
- Total Mw Sales (Suzlon Wind) – Q4 FY10 - 650 Mw; FY10- 1460 Mw.

ORDER BOOK – FY 10
- As on 26th May 2010 – 1126 Mw.
- Order book value as on 26th May 2010 – Rs. 6174 cr.
- Average realisation of Order Book -
 INDIA – Rs. 5.48 cr/Mw.
 INTERNATIONAL – Rs. 5.50 cr/Mw.
 RE Power order book as on 31st March 2010 – Euro 2.1billion(US$2.6bn).

REVENUE - FY 10
- Suzlon Wind Business Revenue – Q4 FY10- Rs.4150 cr; FY10- Rs.9635 cr.
- Consolidated Revenue – Q4 FY10- Rs.6084 cr; FY10- Rs.20620 cr.
- Karnataka wind energy tariff Rs. 3.70/Kwh from Rs. 3.40.
- Gujarat wind energy tariff Rs. 3.56/Kwh from Rs. 3.50/Kwh.
- Global Market Share – Suzlon + RE power – 9.8%; GE wind – 18.6%; Vestas – 19.8%; Siemens – 6.9% as on 31st March 2010.

OTHER FINANCIAL DETAILS -
- Net operating working capital as on 31st March 2010 – Rs. 5103cr v/s Rs.6153 cr.
- Absolute reduction of working capital of Rs. 1050 cr from March 2009 levels.
- Acquition Loans – Rs.2083 cr.
- FCCBs – Rs.2151 cr.
- Capex &Working Capital & Other Loans – Rs.6284 cr.
- Gross External Debt – Rs.10519 cr.
- Loans from Promoter group – Rs.1175 cr.
- Cash Holdings – Rs.1541 cr.
- NET DEBT – Rs. 10153 cr.
- NET EXTERNAL DEBT – Rs.8973 cr.
- Gross Profit/Mw - 9m FY 2009-10 – Rs. 2.03 cr v/s Rs. 2.07 cr in 9m FY 08-09.

DEBT MANAGEMENT EXERCISE –
- DEBT REDUCTION –
- Refinanced acquisition loan of US$465m in Rupee-denomination from SBI.
- Rupee loan refinancing of Rs.10624 Crs done from SBI.
- Rs.6587 cr & trade credits facilities (non-fund based) of Rs.3037 Crs.
- Holiday of 2 years in principal repayments done.
- Issue of GDRs for USD 108 million (Q2 FY 2009-10).
- FCCBs restructuring by removal of covenants & reduced the conversion price to Rs.97.26/sh from Rs.359.68/sh at Rs.44.60/US$.
- Infusion of funds through FCCBs – US$ 90 million.
- Total number of Shares to be issued on conversion of FCCBs – 237152577. (a dilution of 15.23%)
- Infusion of funds by promoters – Rs.1175 Crs.

Sunday, May 30, 2010

Suzlon's CFO Sumant Sinha quits to start his own advisory firm: ET reports

As I had reported in my previous post about Suzlon's CFO quiting and reasons not known, (ET confirms the news) but now he gives reason...
Sumant Sinha, has decided to step down from the position witheffect from 1st June 2010, he will pursue his own entrepreneurial interest and sets up his own financial advisory consultancy.
His first Signed - up client is SUZLON ENERGY LTD, to provide high level strategic advice and counsel to the board and managment team.
"I want to persue my own enterpreneurial path for sometime now and financial advisory firm allows me to launch off on my own and deeper dive in many interesting areas", Sinha said.
"I look forward to my continued association with Suzlon and I am delighted that it will be my first client," he added.
Suzlon's chairman, Tulsi Tanti, said that "Sinha's contribution in buliding relationships with important stake holders has been very valueable in getting Suzlon back on track where it is now well-positioned to ride through the current turbulance in the global environment and to rediscover success once again"

Mean while Suzlon's results was out as expected not good, giving Sales down by 28% at Rs.6160 cr, and Net Loss of Rs.188 cr vs Net Profit of Rs.315 cr. Group Revenue at Rs.20620 cr ($4.3 bn) for year FY09-10.
NET DEBTS as on 31st March 2010 down to Rs.10153 crs v/s Rs.12189 cr. Consolidated Net Debt Rs.9764 crs.
Company approves Rights issue of face value Rs.2 to its existing equity shareholders.
Related Posts Plugin for WordPress, Blogger...

Share

Why you should have a Stop Loss of 8 % ? Click to know more. Author is also on Facebook and Click here for SHORT STORIES

X