RELIANCE TREASURY STOCK SALES : BUZZZ....

RELIANCE INDUSTRIES

Scrip Name: RELIANCE INDUSTRIES

CMP: Rs.990;

Buy at Rs.950-1000 levels

Traget : Rs. 1130

Market Cap : Rs.318046 cr

52 Week High/Low : Rs.1129/Rs.910.30

Total Shares : 3270714336 shares; Promoters - 1463923343 shares - 44.74%

Book Value : Rs.392.41 ; Face Value - Rs.10; EPS - Rs.53.26;

P/E – 18.56; DIV (%)- 70%

Enterprise Value : Rs.1163.60 per share ; EV/EBITDA – 11.52;

There are the talks of Reliance selling its treasury shares worth Rs.3400 crs. About 4crs of treasury shares.Here are some of its past deals and the at present position of its treasury stocks..

DETAILS OF TRANSACTION

SEP 17 2009 – 1.50 cr shares @Rs.2125 = Rs.3188 cr in value a 0.91% of Stake.

(RIL bought at Rs.158 in year 2002)

JAN 04 2010 – 2.58 cr shares @Rs.1035 = Rs.2675 cr in value a 0.79% of Stake.

JAN 11 2010 – 3.30 cr shares @Rs.1050 = Rs.3465 cr in value a 1.00% of Stake.

A total of 7.38 cr shares @ Rs.9328 cr on an average of Rs.1263.95/share.

NAME OF SHAREHOLDER/SUBSIDIARY HOLDING RIL SHARES.

Reliance Universal Enterprise holding 5.69 cr shares (1.73%).

Reliance Polyelefins holding 6.12 cr shares (1.86%).

Reliance Chemicals holding 6.22 cr shares (1.89%).

Others holding 80 lakhs shares (.25%).

A total of 18.84 cr shares (5.73%). This also includes 12.05 cr shares or 3.67% held by Petroleum Trust.

At present RELIANCE has 30.89 cr shares (9.4%) of treasury stock including RIL shares held by its Subsidiary firms named above.NOW, at Current Market Price of Rs.1000 RIL’s Treasury stock are worth Rs.30,089 cr.

ULTRATECH CEMENT LTD ; BUY

Scrip Code : 532538 / ULTRACEMCO

CMP :  Rs.857.95 ; Buy at Rs.840-850 levels

Traget : Rs. 1087

Market Cap : Rs.10,711.1 cr.

52 Week High/Low : Rs.1163.1/Rs.702.8

Total Shares : 124487079 shares; Promoters - 68193101 shares - 54.78%

Book Value : Rs.370.05 ; Face Value - Rs.10; EPS - Rs.73.76;

Enterprise Value : Rs.989.31 per share ;

UltraTech ‘s results for Q1FY11 net realisation declined 4.9% due to its substantial exposure 33% to southern region which was affected by lower off take and shortage of wagons.

The increase in operating expenditure resulted in 1371 basis points YOY decline in operating margins to 23.5% (37.2%) , Going ahead, UltraTech will benefit from its Samruddhi merger % will not face comparatively lower pricing pressure. Post merger UltraTech will have aggregate capacity of 49 million tonne of cement production.. Ultra Tech’s net sales declined 8.1% YOY because of 3.6% decline in dispatches to 5.12 million tonnes. Power cost increased due to higher open market power purchase & reduced coal supply through linkages.

The incorporated post merger number of UltraTech will be 45.3% CAGR in top line over FY10-12 by higher volumes. At current level the stock is trading at an EV/EBITDA of 6.7 times & EV per tonne of $94 on FY 12 estimates.

At an average target of EV/EBITDA of 7 times Ultra Tech’s fair value comes at Rs.1087.

Samruddhi Cements

Share capital (Eq + Prf) – Rs.85 cr

Share Capital Suspense – Rs.45.84 cr.

Reserves & Surplus – Rs.4452.56 cr.

Total Assets – Rs.8562.49 cr.

Total Liabilities – Rs.5217.73 cr.

Investments (Eq) – Rs.4.43 cr.

Investments (Bonds/Mutual Fund) – Rs. 1234.11 cr.

Turnover – Rs.4290.63 cr.

PBT – Rs.941.99 cr.

PAT – Rs.617.96 cr.

UltraTech Cement

Share capital (Eq + Prf) – Rs.124.49 cr

Reserves & Surplus – Rs.4482.17 cr.

Total Assets – Rs.6673.44 cr.

Total Liabilities – Rs.3736.33 cr.

Investments (Eq) – Rs.21.07 cr.

Investments (Bonds/Mutual Fund) – Rs. 1616.68 cr.

Turnover – Rs.7049.68 cr.

PBT – Rs.1588.16 cr.

PAT – Rs.1093.24 cr.

NIFTY TRADES IN US FROM TODAY : S&P DOW JONES WILL JOIN INDIAN MARKETS SOON

Scheduled to Launch Monday, July 19, 2010

CME Group has partnered with The National Stock Exchange of India (NSE) and Standard & Poor’s to offer trading institutions two smart new ways to take part in the dynamic opportunities of the Indian stock market. E-mini and E-micro S&P CNX Nifty futures (Nifty 50 futures) are scheduled to begin trading on Monday, July 19, 2010.

The contracts will be listed and traded on the CME Globex platform, providing nearly round-the-clock trading access. Trading hours will be Monday-Friday, 3:30 p.m. – 3:15 p.m. the next day (except Friday, which closes at 3:15 p.m.) with a trading halt Sundays-Thursdays from 9:30-10:30 p.m. CDT (8:30 p.m.-9:30 p.m. CST) coinciding with the hour prior to the NSE open.

Cross-Listing Arrangement on March 10, 2010, CME Group and NSE announced cross-listing arrangements that Include license agreements covering benchmark indexes for U.S. and Indian equities. The agreement provides CME Group with rights to create and list U.S. dollar-denominated futures contracts for trading on CME, while providing NSE with rights to create and (subject to the regulatory approval) list Rupee-denominated futures contracts on the S&P 500 and Dow Jones Industrial Average (DJIA) for trading on NSE. Combine with other benchmark index contracts to express views on the direction of India’s market vs. the U.S. stock market (E-mini S&P 500 futures), vs. a broader view of world’s emerging markets (E-mini MSCI Emerging Markets futures) or to capitalize on arbitrage opportunities from short-term price differences vs. the SGX futures contract on the S&P CNX Nifty Index. You also can trade the contracts outright to hedge your risk from existing exposure to the Indian stock market.

ANIL PLAYS THE GAME AGAIN...!!!!!!

Anil Ambani decided to merge RNRL with Reliance Power today....The ratio as I thought was 1 Reliance power for every 4 RNRL. The merger deal is valued at $11 billion. This merger values RNRL at Rs.7157 cr.

Reliance Power will dilute around 40.8 crore Sharea a 17.00 %. This merger will be negative for Reliance Power shareholders, while very good for RNRL, Rpower pays for a shell co with no real asset to invest into....whereas RNRL shareholders will now have a real assets to invest. Anil Ambani holds 42.39 % in Rel.Power & Rel Infra Holdes - 42.39 %. The combine market cap will be Rs.50,000 crs. 

RNRL shareholders including the promoters will get shares of RELIANCE POWER worth Rs.7157 cr, out of these,promoter would get shares worth over Rs.3600 cr. Here are some details of this both company -

RELIANCE POWER

Equity Sh (nos. in Cr) - 239.68 ;  Equity Cap (Rs. In Cr) -2396.80 ; Market Cap (Rs. In Cr) -41979.95 ; Net Sales - FY10  - 0.00 ; Net Profit - FY10  -683.89 ; Other Income - FY10  -843.38 ; Earning Per Share - 2.85 ; P/E Ratio  - 61.46 ; Face Value -10.00 ; TOTAL ASSET -  FY09  - 15111.64 ; Market Price -175.15 ;26- week H/L avg price - 152.58 ; 2 - week H/L avg price - 170.46 ; Promoter Share holding % - 84.78 ; Public Share holding % -15.22 ; No. share holders - 3595703 ; EV - 175.15/sh ; Book Value - 57.55/sh ; EV/EBITDA - 162.44 ; Long term Debt - 0.00

RNRL

Equity Sh (nos. in Cr) -163.31; Equity Cap (Rs. In Cr) - 816.56 ;Market Cap (Rs. In Cr) -10394.94 ; Net Sales - FY10 (Rs.In Cr) -298.39 ; Net Profit - FY10 (Rs.In.Cr) -90.75 ; Other Income - FY10 (Rs.In.Cr) -167.63 ; Earning Per Share (In Rs) -0.56 ; P/E Ratio (In Times) -113.66 ; Face Value - 5.00 ; TOTAL ASSET - FY09 (Rs.In Cr) -3323.44 ; Market Price -63.65; 26- week H/L avg price - 62.60 ; 2 - week H/L avg price - 64.61 ; Promoter Share holding % - 54.84 ; Public Share holding % - 45.16 ; No. share holders - 2534917 ; EV - 72.97/sh ; Book Value - 11.02/sh ; EV/EBITDA - 71.45 ; Long term Debt- Rs.1522.05 cr - Rs.9.32/sh

THE YUAN DE - PEGGING STORY........

                    Almost for 2 year’s Chinese government with the help of People’s Republic Bank Of China – the Chinese central bank had managed to keep the value of their currency Yuan pegged to the value of US dollar. One $ was worth around 6.82 Yuan.

                    China is an export driven economy. Their main export market is the US. So when an Chinese company exports goods to US it gets paid in US$. These $ are converted to Yuan, it means $ are sold and Yuan is bought. Over a period of times, as exports keeps going up, more $ are sold and more Yuan are bought. This of course increases demand for Yuan & it starts to appreciate or increase in value against $. And an appreciation in currency is detrimental to exporter.

                    This means, suppose say a Chinese exporter exports goods worth $100000. When he converts them at 1$=6.82 Yuan he gets 682000 Yuan ($100000x6.82) in return. Now say the Yuan appreciates and 1$=6.6 Yuan, then the exporter will get 660000 ($100000x6.6). Thus he will not make the same amount of 682000. If he wants to make the same money he will have to raise prices. It’s well known that Chinese compete on price & not quality, the exporter may not be in position to raise prices. This is were the government comes in by ensuring that the value of the Yuan stays constant around 6.82 to $, so that the exporter does not have to deal with any fluctuation in currency.

                    Government of china in order to maintain Yuan at 6.82 to $ starts selling Yuan & buys $. Because when lots of $ come into china to buy Yuan, pushes up the demand of Yuan & Central Bank of China starts selling Yuan & buys $. This ensures that there are enough Yuan in market & its value dos not appreciate.

                    Now China has suddenly decided to de-peg its currency as US feels that China is a currency manipulator, US feels that china has held the value of Yuan against the $ constant & this is what has kept their export machinery chugging along. They feel this has led to situation where Americans citizens continue to buy cheap Chinese goods instead of home grown ones.If Chinese government had not involved itself with the foreign exchange market & let it work independently then the flow of $ into china would have ensured that the Yuan would have appreciated against $.

                    Suppose if 1 $ = 6 Yuan, means exporter exporting goods worth $100000 would make 600000 Yuan. Under the pegged regime he would have earned 682000 Yuan. Now, to earn that much, he has to sell goods for $113666.7 (682000/6). This means he has to increase its price to 13.67%. This in turn would make Americans buy American goods instead of low priced Chinese goods. Nobel Prize winning economist Pual Krugman had earlier proposed to impose a 25 % surcharge on Chinese imports to US. He felt that this will make Chinese goods expensive & will result into Americans buying more US goods. Basically the allegation against china on being currency manipulator have been growing in US, and US the biggest market for china do not want US to take any strict steps that would hurt its exports. So it wants to de-peg it currency against US$.

                    Currently if something worth $1000 it will be worth 6820 Yuan in china if it is imported, if 1$ = 6 Yuan, then it would be worth 6000 Yuan which is lower. So some experts believe that this will make Chinese buy more imported goods & that in turn will help the exports across the globe. China will take time to change its spending habits. Currently china’s saving rate is 54 %.

                    And off course in order to maintain the peg, the Chinese Central Bank bought $ & sold Yuan that explains Foreign Exchange Reserve of $ 2.4 trillion. And all this money found its way back primarily into US & other western economies, helping them to finance their fiscal deficits. Now if these Chinese really let the Yuan float even partially, its rate of accumulation of Forex reserve might slow down. This means lesser $ to help finance the fiscal deficit in the US.

SAMRUDDHI CEMENTS LISTS AT Rs.579.75

NAME - NSE - SAMRUDDHI ; BSE- 533209.

Share Price - Rs.488 ;

Market Cap - Rs.12,770.15 cr ;

Total Debts - Rs.2100 cr ;

52 Week High - Rs.590 ; Low- Rs.477.15 ;

P/E - 00.00 ; EPS - 00.00 ;

Book Value - Rs.175.15 ; Industry P/E - 8.95 ;

Fv - Rs.5.00 ; Dividend - 35 % ;

Total Shares Issued - 26,16,83,571 shares ;

Promoter's Holding - 16,99,99,988 shares ; Promoter's holding in % - 65%

SAMRUDDHI CEMENTS LTD today made its debut at Rs.588 on BSE after its demerger with GRASIM IND

Listing Samruddhi Cement on the bourses is a part of the restructuring process of the cement business of the Aditya Birla group.

The company has listed with 26.16 crore equity shares of face value of Rs 5 each.

Shares of Samruddhi Cement touched a high of Rs 600 and a low of Rs 478.15 on the Bombay Stock Exchange.

On the National Stock Exchange, the scrip listed at Rs 579.75. It touched a high of Rs 590 and low of Rs.477.15.

The company made its listing on the bourses after Aditya Birla Group flagship firm Grasim Industries, last year, approved the demerger of Samruddhi Cement with itself.

As part of the arrangement, the company will be merged with UltraTech Cement on 10 July 2010.

Accordingly, 4 shares of UltraTech would be issued for every 7 shares of Samruddhi.

Each Grasim shareholder had received one equity share of Rs 5 of Samruddhi Cement for every one share held in Grasim, as a part of the scheme.

The merged entity will have an annual capacity to produce 48.8 million grey cement with 22 plants. It will also have 11. 7 million cubic metres of ready mix concrete across 68 plants along with captive thermal power plants of 504 mega watts.

After the completion of the merger, Grasim would hold 60. 3% of UltraTech's expanded equity capital and 39.7 % would be held directly by other shareholders of UltraTech and Samruddhi.

It is to be noted that the Fair Value of Samruddhi Cements is 55 % Ultratech Cements price.

My previous post on this event click - GRASIM IND SAMRUDDHI DEMERGER

Cabinet Deferres the decision on Rupee Symbol

The rupee's entry into the elite club of currencies with their own symbols will take longer with the government on 24th deferring a decision on the issue. The Cabinet was to finalise the symbol on 24th June 2010, but the matter was deferred after Finance Minister Pranab Mukherjee asked for more time to go through the short-listed signs, sources said.

                   The issue was on the agenda of the Cabinet, which met under the chairmanship of Prime Minister Manmohan Singh here, but was deferred, sources said.

The government has shortlisted five designs for the rupee from among the symbols suggested to the Ministry of Finance by the public.
In the Budget this year, Finance Minister Pranab Mukherjee had said that "in the ensuing year, we intend to formalise a symbol for the Indian rupee, which reflects and captures the Indian ethos and culture."
With this, the rupee will join the select club of currencies, such as the US dollar, British pound sterling, euro and Japanese yen that have a clear distinguishing identity, he had said.
Last year, the Finance Ministry had invited design suggestions from the public for the Indian currency.
"The government of India proposes to have a symbol for the Indian rupee to be selected through public competition," the Finance Ministry had said.
The symbol, the ministry had said, should represent the historical and cultural ethos of the country as widely accepted across the country and should be applicable to the standard keyboard.

My favourite one is number- 4

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)

Kotak Gold ETF

Reliance Gold ETF

Religare Gold ETF

SBI Gold ETF

UTI Gold ETF 

READ MY POST ON US PRINTING MORE NOTES

GOLD PRICES PERFORMANCE

Gold Price Performance

Silver Price Performance

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.

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.

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.

RE Power FY10 net income up at Euro 57.9 mn (Rs.333.504 cr), But SUZLON's CFO QUITS

RE Power, a subsidiary of Suzlon Energy, has announced its financial year 2009-10 results.

It has reported net income of Euro 57.9 million (Rs.333.504 cr) as against Euro 51.9 million (Rs.298.944 cr) (YoY).

Sales rose 8.5% to Euro 1.3 billion (Rs.7488 cr) versus Euro 1.2 billion (Rs.6912 cr) (YoY).

Earning before interest and tax (EBIT) margin improved at 7.4% versus 6.3%. Order backlog rose 40% to Euro 2.1 billion (Rs.12096 cr) .

REPower Guidance -

-Management expects a 10-20% increase in the overall performance

-Sales guidance of approximately. Euro 1.5 to 1.6 billion (Rs.8640 - Rs.9216 cr)

-EBIT margins seen increasing to 7.5-8.5% .

BUT, Suzlon Energy Ltd's Chief Operating Officer Sumant Sinha has quited today.

Sinha was considered to have been responsible for the company’s recent refinancing of its overseas bonds. An official announcement may be made today, Sinha was previously with Aditya Birla Retail and the Son of fromer finance minister Mr. Yaswant Sinha.....With Sumant quiting future of Suzlon's debt restructuring seems to be in dark........Meanwhile waiting for the official declaration of Suzlons results......

Suzlon Energy's result on 29th May 2010. at 4.30pm Pune, (please notice the timing of post...reported much earlier than all...)

UPDATE : GRASIM IND SAMRUDDHI DEMERGER

Details as on 21-May-2010

Share price- Rs.2,452.95;

Market Cap- Rs.22,370.79 cr;

52 Week- H- Rs.2,988.00; L- Rs.2,005.55;

P/E- 10.24; EPS- Rs.238.26;

Book value – Rs.1,033.36; Industry P/E - 19.26

Dividend – Rs.30; Fv- Rs.10;

Total Share Issued- 9,16,83,571 shares;

Promoter’s holding- 2,33,81,176 shares; Promoter’s holding in %- 25.50%;

As known to everyone earlier in my previous post Grasim has 65% stake while Grasim's shareholders will have 35% direct stake in Samruddhi Cement. So Grasims share price should adjust for 35% of Samruddhi's business.

On MAY 26 2010 (ex- date) by Ultra Tech Cement closing price (May 25,2010) the merger ratio of 4:7 ie 4 Ultra Tech Cement for 7 Samruddhi Cements. based on 26th May 2010 wednesday's closing price Grasim's share price should adjust by Rs.543 (Ultra Tech share price Rs 950x 4/7).

Samruddhi is expected to be listed by June,2010 & be finally merged with Ultra Tech by July,2010 (merger effective July 01,2010). Samruddhi Cements has 26 crore shares with a Face value of Rs.5.00 , Book value of Rs. 250 , Grasim will transfer Rs.2100 crore debts to Samruddhi Cements

My previous post on this topic on GRASIM SAMRUDDHI DEMERGER MARCH 14,2010

INDIA's FIRST IDR: THANKS TO STANDARD CHARTERED BANK PLC.

STANDARD CHARTERED BANK PLC

Standard Chartered PLC (STAN: LN) Bloomberg is all set to be the first foreign company to list in India through an Indian Depository Receipts (IDR) issue. India is the most profitable unit after Hong Kong. StanChart as it is called in short will offer to sell 24 crore IDR’s through public issue on May 25th 2010.

The issue will be 10 IDR = 1 share of Standard Chartered Plc of US$ 0.50. Like Global Depository (GDR’s) & American Depository Shares (ADS’s), IDR are the derivative instrument with shares as the underlying asset, they allow foreign companies to raise money in India.

StanChart expects to raise $500-$750 million (Rs 2250-3375 Crs). Calculation shows that an issue price of Rs 105-115 per share. This will be Stan Chart’s 3rd listing after London & Hong Kong & its next stop is Shangai.

StanChart is in India from 1858 in Kolkata; here it has 94 branches across 37 cities with over 20 lakh customers. It wants to show its commitment towards India which contributes 12 % of its global revenues. StanChart’s Net Profit grew 30 % CAGR in last 3 yrs, while Profit before Tax grew by 38 %. Base on 2009 results, StanChart’s Price to Book = 2 times, much better than 2.5 times of SBI. P/E at 14.6 times v/s 15.7 of SBI & 29.4 of HDFC Bank. Price band will be announced by May 24th 2010 depending on the closing price of the shares listed in UK.

What does IDRs means to an Indian sharesholders in terms of Taxations.....

Like Global Depository Receipts (GDR’s) & American Depository Shares (ADS’s), IDR are the derivative instrument with parent companies shares as the underlying asset, they allow foreign companies to raise money in India. An IDR holder acquires the same rights as a shareholder, except that he/she can neither attend the AGM nor vote on resolutions. NRI’s can trade in the IDR’s.

The biggest question doing the rounds is – what could be the tax implications for the Indian IDR holder? The good news is that IDR does not come under the purview of Securities Transaction Tax. But the IDR holder will have to pay tax on the dividend income earned. It is not yet clear whether the tax payable would be equal to the Dividend Distribution Tax which for the current fiscal stands at 16.61%. So tax seems sure but the rate is yet unsure.

Then there is the question of short and long term capital gains tax?

Currently, Long term gains made from Indian Stock Exchanges (stock held for more than 12 months) is completely exempted from tax while Short term capital gains tax (held less than 12 months) stands at 15%. But the IDR does not fall under the STT, so maybe it will not enjoy the same benefits as the shares listed on the Indian Exchanges enjoys. So this means that IDR’s will be taxed like any other asset –long term tax- held for over 36 months would be around 20%. Short term tax, when asset is held for less than a year, will be like regular income earned, at 30.9%.

There is no real clarity yet on this treatment of tax but surely, the Govt will have to bring a notification soon. A quick resolution on the tax angle is urgent and imperative or else it could undermine the very lure of this IDR.

According to the red-herring prospectus, the legal regime for IDR’s is still to be tested; investors in IDR’s may not get the benefits of a bonus issue or a rights issue; Even dividend income on IDR’s will be taxed in the hands of the investors and long-term capital gains tax will be another additional burden. Standard Chartered Bank has said whenever the company and/or the depository is unable to make bonus issues or rights issues available to the IDR holders, the depository will try and sell the deposited property that is the subject of the distribution on behalf of the IDR holders and distribute the net proceeds thereof as a cash distribution to the IDR holders.

Standard Chartered said it has agreed that for all corporate actions including voting, rights issues, the payment of dividends and other distributions, it will treat IDR holders on an equitable basis vis-à-vis other holders of shares in the home country (the UK). However, it pointed out that in circumstances where certain corporate actions, which are available to the holders of shares in the home country of the company and other jurisdictions where its shares are listed, are not permitted by Indian laws to be offered to IDR holders.

There is also a term called "Fungibility", now what does this means & how it relates to IDR/ADRS ?

The actual meaning of the word fungible is the ability to substitute one unit of a financial instrument for another unit of the same financial instrument. However, in trading, fungibility usually implies the ability to buy or sell the same financial instrument on a different market with the same end result.

Its a financial instrument (i.e. individual stock, futures contract, options contract, etc.) is considered fungible if it can be bought or sold on one market or exchange, and then sold or bought on another market or exchange.

For example, if one hundred shares of an individual stock can be bought on the NASDAQ in the US, and the same one hundred shares of the same individual stock can be sold on the London Stock Exchange in the UK, with the result being zero shares, the individual stock would be considered fungible. There are many fungible financial instruments, with most popular being individual stocks, some commodities (e.g. gold, silver, etc.), and currencies.

Fungible financial instruments are often used in arbitrage trades, because the difference in the price (the arbitrage part) often comes from a difference in location (the fungible part). For example, if the Euro to US Dollar exchange rate was 1.2500 in the US and 1.2505 in the UK, an arbitrage trader could buy Euros in the US, and then immediately sell Euros in the UK, making a profit of 0.0005 per Euro (or $5 per €10,000), because Euros are a fungible financial instrument. Similarly it implies to Stocks IDRs etc.

Suzlon's FCCB holders waives fine...Sets conversion price of Rs.95-100/sh.

Suzlon Energy had sought for the waiver of penalties that have accrued for breaching terms and conditions set by investors in its Foreign Currency Convertible Bonds. The penalties was amounted to 10 per cent of FCCBs, or $30-50 million. Suzlon told the exchanges that it has managed to remove covenants which was required to fulfil under the FCCB agreement in the meeting of bondholders,on April 29, 2010. The company proposed extraordinary resolutions in relation to the trust deeds and certain terms and conditions of the bonds, including the removal of financial covenants and waiver of any existing or prior breaches.

It has been learned that these two sets of FCCBs worth $300 million Zero Coupon Convertible Bonds(due JUNE 2012) and $200 million Zero Coupon Convertible Bonds(due OCT 2012), have three main financial covenants. First, Net borrowings to tangible Networth cannot be more than 1.5 times. Second, full-year EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) cannot be less than 1.33 times the debt service coverage requirement, ie, repayment and service cost. Third, Net Borrowings to Net EBITDA should not be more than four times.

Just to remind that the profit of the company has been under pressure for the last three quarters and hence, it has not been able to meet the Net borrowings to Net EBITDA margin,” this was a concern for FCCB holders as this invited penalty from bondholders. It has been learnt that, the company is not expecting an increase in EBITDA in coming quarters. EBITDA will continue to fall for the coming quarters. Suzlon reported an Ebitda of Rs 408 crore in the 9 months to December 31, down from Rs 1,996 crore a year earlier.

Suzlon has reset the conversion price of bonds between Rs 95-100 per share.Suzlon will become the first company to reset the conversion price of FCCBs after the ministry of finance relaxed the guidelines for companies to price their bonds based on share prices of the past six months. Suzlon will pay 1% fees to bondholders for the waiver. Earlier conversion price was Rs.360-370 per share.The covenants have been relaxed for the entire tenure. This new price is likely to result in a dilution of 15.05% for the company. UPDATE- (Set the price Rs.97.26/sh)

Since, Suzlon has already sold its 23,60,00,000(35.22%) depository interest in Hansen Transmissions International NV - HSN:LN held by AE Rotor Holding BV a wholly owned indirect subsidiary of Suzlon Energy Ltd at the price of 95 pence per Depository Interest amounting to USD 350 million, with a locking period for 6 months for the remining stake of 17,46,32,079(26.06%), Which is about to complete by this MAY 2010,this will pegg Suzlon some what around Rs.1000 crs,this will substantially help Suzlon to reduce its current debts of Rs.10,488 crs.

It is awaiting approval from the Reserve Bank of India for the FCCB restructuring.

Talwalkars Better Value Pvt Ltd : TBVF

Price Band - Rs.123-128, Face Value- Rs.10

Issue opens on - 21th April 2010, Wednesday

Issue closes on - 23th April 2010, Friday

QIB Book - 30,25,000 shares (50% of Net issue)

HNI Book - 9,07,500shares (15% of Net issue)

Retail Book - 21,17,500 shares (35% of Net issue)

Total No. of Shares offered - 60,50,000 shares or 25.09%

Equity Shares outstanding after the Issue - 2,41,15,672 Eq Sh

Equity Shares outstanding prior Issue - 1,80,65,672 Eq Sh

Total Size of the Issue- Rs. 74.42 Crs. - Rs. 77.44 Crs.

Talwalkars Better Value Pvt Ltd (TBVF) - Commonly famous as Talwalkars, is India’s largest chain of health centers. The company established in 1932, it operates 58 health clubs in 28 cities, serves 55,000 clients in India.Hence demands premium. Talwalkars were the Official Fitness Partners for Standard Chartered Mumbai Marathon in 2008 and 2009 and Femina Miss India Contest in 2009.

The proceeds will be used for setting up of 27 additional health clubs about Rs.50.22 cr and repaying certain unsecured loans of Rs. 20.59 cr. The issue will constitute 25.09% of the fully diluted post issue paid-up capital of the company. Promoters’ stake will be reduced to 59.39% and non-promoters to 15.42% post issue.

At upper band of Rs.128 the stock is available at 53.9x the P/E & 2.6x the P/Bv based on FY10 post issue EPS of Rs.2.4 & BVPS of Rs 48.6. For the year ended on 31st March 2009 company reported PAT of Rs.5.687cr on total income of Rs.59.424 crs, For the period ended in April-September 2009 ,Company posted PAT of Rs.31.90 cr on the total income of Rs. 358.82 cr.

CARE has assigned an IPO Grade 3 to Talwalkars Better Value Fitness Ltd IPO. This means as per CARE company has 'Average Fundamentals'. CARE assigns IPO grading on a scale of 5 to 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals.

TBVF IS AT EXPENSIVE VALUATION: BUT GOOD BUSINESS

The company has set a price band of Rs 123 to Rs 128 per equity share of Rs 10 face value. At the lower band of Rs 123 per share, the P/E would be 51.6 times the annualized EPS of Rs 2.4 for the nine months ended December 2009 (on post-IPO equity) and 82 times the EPS of Rs 1.5 (on post-IPO equity) for FY09. At the upper price band of Rs 128 per share, the P/E would be 54 times the annualized EPS for the nine months ended December 2009 and 85 times the EPS for FY09. There is no comparable listed company. The very high valuation already factors in very high growth rates in future.

A LITTLE STORY ON MARKETS (On Request)

There was a small village, everyone there were living happily, one day someone from the big city came with his assistant, he announced that - "I will give Rs. 10 each for every monkey you catch and bring it to me", now the villagers started catching monkeys, soon villagers found a new job. They caught monkeys and sold to that stranger & made good money, after a short while villagers lost their interest. The stranger again announced that - "I will give you Rs. 15 each for every monkey", more monkeys came in, after a while the price of monkey went up to Rs. 60 !!! Suddenly one day the stranger was out of the village & his assistant said - "Look this guy does not pays me much, I want to sell all his monkeys at Rs. 50 each so when he comes back you can sell it back to him for Rs. 70" - the villagers agreed -The assistant sold all the monkeys to the villagers for Rs. 50 and went out of the village. Villagers were now left with their monkeys & still waiting........for the Stranger and his assistant to come... but none of this two came back & left villagers with their monkeys worth nothing...while that strangers made money out of nothing....

THE MORALE OF THE STORY - 

The villagers are we small Investors , our stocks are the monkeys and FII’s (Foreign Institutional Investors) are those strangers !!!

Do learn the lesson from this game.. and Invest safely, invest in good business and for long term... 


REGARDS

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