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Possible Japanese Candlestick Chart Trades for December 27, 2007

2010-03-15T13:24:07Z

Possible Japanese Candlestick Chart Trades for December 27, 2007 - by anderson

Thank you very much for the emails and messages of support and encouragement. You are helping me to fine tune my trading skills. Keep those cards and letters coming!

What do I do on a Dow Down 200 market, with the S&P losing 1.5%? Simple. Keep going, fine tune my stop loss points, look for opportunities, and even (see below) make a trade or two. Even on the worst day of 2007, with the Dow down 400 points, there were still thousands of stocks that went up. Today, the dry bulk shippers were on fire, because of an an investment by DryShips (DRYS - up 6.5%) in a Norweigian bulk shipper. You would have done as well in Paragon (PRGN) or Diana Shipping (DSX), both recent Jim Cramer picks. Full disclosure: I am long DRYS.

Some more of my rules:
1) I am not a day trader. After I buy, I want to hold for at least one day, so I can analyze at least one candle. I buy only if the stock trades consistently (for about a half hour or so) above its previous day's close. This may seem against the idea of buying for the lowest price, but I'd rather see that the stock has legs. If the price never gets there, I don't make the trade. After the buy, I set a stop loss that's below the previous day's low with the idea that if I'm stopped out there must have been a real bad reversal during the day. Hopefully, that's a rare occurrence.

2) I look for stocks that are a bit beaten down, with a tentative price target the most recent high. I'm looking for stocks that can retrace to this level. If the stock starts to lose momentum, I sell.

3) As the stock goes up, I adjust the stop loss point to eventually cross break-even and then lock in profits. I don't sell at the market but rather at a stop loss very close to the market price.

UPDATE ON PRIOR TRADES

URI had some news that could potentially help its stock price. Moody's upgraded their debt because the Cerberus merger failed. Though the market was down 1.5%, URI closed at 18.42, down only 0.5%. I also raised the stop loss point on URI from 17.50 to 18.

TRADES TODAY

I bought BioAvail (BVF) at 13.45, with a stop at 12.50. BVF closed at 13.42, essentially flat - good performance for today. Since UNTD and CROX did not sustain my price target, I did not pull the trigger.

POSSIBLE TRADES FOR DECEMBER 28, 2007

I will be looking at the price action in these three stocks, which generated a favorable candle pattern today, and closed up in spite of Benazir Bhutto's assassination and the durable goods report.

1) UnderArmour (UA) generated a bullish harami, closing at 43.06. I will buy if it sustains a price of 43.15 with a target of 60.

2) Guess (GES) generated a hammer after a downtrend - a bullish signal. It closed at 40.40. My target is 46.

3) NutriSystem (NTRI) generated a bullish engulfing pattern, closing at 28.09. I will buy if it sustains a price of 28.15 with a target of 32.

Three Japanese Candlestick Chart Trades for December 26, 2007

2010-03-17T04:51:25Z

Three Japanese Candlestick Chart Trades for December 26, 2007 - by anderson

Based on my candlestick chart analysis, and reinforced with some Western style technical analysis, I am suggesting the following 3 trades for Wednesday, December 26, 2007. Even though the market was open just until 2 pm on light volume, I think these show favorable patterns. I use a 1 month candlestick chart for my analysis.

1) Echostar (DISH). DISH has been in a downtrend, from 43 on December 3, to its close on December 24 at 37.68, on a bullish piercing pattern. The downdraft gives fuel to this bullish sign. My plan is to buy at the market at 37.80 or higher if DISH trades there in the early morning. My target is price 44, its 200 day moving average, but I will sell at the next day market open if a negative daily candle (close price lower than open price) appears before then. If DISH goes above 44 with no negative candles, I will still hold.

2) United Rentals (URI). URI fell sharply, from a high of 34 in mid November, to a low of 18, because the deal with Cerberus fell through. The news that URI will seek a $100 million payout from Cerberus as a penalty for pulling out sent the stock into a bullish reversal (a bullish harami on the candlestick chart). This combination of a nearly 50% pullback with a reversal should send the stock higher, retracing much of the move. URI closed at 18.70 on December 24. I plan to buy at 18.90 or better if the stock reaches this price before 11 am, with a target price around 34, but sell on any negative rectangle at the open the day after it occurs.

3) Focus Media (FMCN). FMCN showed an extremely sharp bullish kicker on December 24. It closed at 58.96. I plan to buy in the early morning if FMCN can sustain a price of 59.10 or more. It traded as high as 66 in November. That's my target price. I'll sell on any negative rectangle, as with the other trades.

I'll report on these trades after the close on December 26, and then later as conditions warrant. I welcome all comments.

Quasi - racism, barely camouflaged in the nam e of branding

2010-03-17T04:58:30Z

Quasi - racism, barely camouflaged in the nam e of branding - by niranjanms

Ratan Tata says he is a nice guy who does not believe in hostile takeovers. But this has consequences, it means that a takeover target can spit in your face and say that mere association with you will be demeaning, leaving you looking like an oppressed Harijan. This is the situation Tata faces after being spurned in no uncertain terms by Orient-Express Hotels, the international luxury hotel chain.

Till now, Tata has negotiated several friendly global takeovers, ranging from Tetley Tea to Corus. However, his group ran into rough weather after Indian Hotels, its group company, wooed Orient-Express Hotels. Indian Hotels built up a double-digit stake in the multinational, and then proposed a strategic alliance. This looked like the first step in an acquisition.

. Orient-Express bristled at the proposal. It declared that any association on of its brands and hotels with a predominantly domestic Indian hotel chain would hurt its brand image and hit its ability to charge premium rates.

This was quasi-racism, barely camouflaged in the language of branding. However, berating Orient Express is somewhat beside the point. If global business was a white racist citadel, then Orient-Express' slur, no matter how hurtful, would be factually accurate. In fact, global money today is largely thought not totally, colour-blind.

This was proved when Lakshmi Mittal bid last year to take over Arcelor, the top European steelmaker. Arcelor's chief, Guy Dolle, declared that his company produced perfume, whereas Mitlal merely produced eau-de-cologne. But this supposedly suave put-down fell flat on shareholders more interested in future profits than a perfumed balance sheet, and Mittal won the battle.

The company's share price skyrocketed after takeover. The very name Mitlal now smells of money, and hard-headed investors prefer it to French perfume.

Cultural attitudes are not easily changed, but money can do the job. In the days of apartheid, South Africa gave visas only to white businessmen. But when the Japanese became too powerful to be ignored, South Africa bestowed "honorary white" status on them.

In the last decade, the US has become dependent on Asian countries, to buy its treasury bills and finance its huge trade deficit. After the recent financial crisis arising from sub prime mortgages, Citibank turned to Abu Dhabi for a $ 7.5 billion bailout and UBS (of Switzerland) to Singapore for $10 billion.

Nothing drives home the end of white supremacy more than the appointment of Vikram Pandit to head Citibank. After sinking into the quicksand of the sub prime mortgage crisis, the world's biggest bank has turned to a non-white for rescue.

But while global finance is mostly colour-blind, white snobbery still lurks in luxury goods. Ford is selling its Jaguar and Land Rover brands. And the three bidders are Tata, Mahindra and One Equity Partners. The association of US car dealers says a sale to Tata or Mahindra will affect the brand value of these luxury brands. This is on par with the racist slurs of Guy Dolle and Orient-Express. Yet, it is clear that the once-proud Jaguar brand has sunk close to termination under a series of white owners, including Ford.

Scotch whisky is a luxury item associated with Scots in kilts. Vijay Mallya, India's liquor baron has taken over Whyte and Mackay, which has 9% of the scotch market. Its sales have boomed after acquisition. The colour of the owner has nothing to do with the success of a luxury brand.

Let's return to the Orient-Express slur. Tata can claim that the Taj the brand name of its hotel chain has more cachet than the Orient Express. That's why Donald Trump named his mega-casino resort in Ailantic City the Trump TajResort. But the Orient-Express management is not listening. It has a controlling shareholding in the company, so a hostile takeover is not technically possible. But it will be possible in future cases. Learning from this episode Ratan Tata would do well to re-examine his opposition to hostile takeovers. Such timidity is a weak foundation for a global empire.

Tata's philosophy is doubtless influenced by his Indian experience. Tata Sons, the holding company of the group, has historically held. a minority share in various Tata companies, and is fearful of being ousted by a hostile bidder.

However this historical Defensiveness sits ill with the requirements of a global multinational. Tata managers tend to talk in disparaging terms about Mittal and his business tactics. Yet, the Tata group itself would not be where it is today but for the pathway cleared by Mittal. By becoming world No 1 in steel, he gave Indian business a cachet it never had earlier. But for this, Tata would not have been able to acquire Corus.

Hostile takeovers are only one of many routes to global expansion. For a limited period, any company can steer clear of hostile battles. But if you give up a crucial weapon available to others, the gap in your armoury will leave you vulnerable in the inevitable battles of the future. The history of business is littered with the corpses of nice guys. To flourish as a global multinational, Tata needs to become more like Mittal. He needs to inspire fear no less than respect.

Rediif - Red or Balck?

2010-03-07T17:26:53Z

Rediif - Red or Balck? - by prakash

Rediff.Com India Ltd (NASDAQ GM: REDF)

Indian Internet Industry

During the first three years of VSNL monopoly, the Internet subscriber base grew very slowly. By the end of March 1998, it had barely reached 140,000 subscribers. The end of VSNL’s monopoly changed things dramatically wherein, the entry of private players, unlimited and open competition, and the lowering of tariffs, among other factors, led to the phenomenal surge in the subscriber base growth. Between March ‘99 and March ‘01, the subscriber base grew more than 200 percent per year, from 280,000 to 3,000,000. However, from April 2001 onwards, the growth rate started declining on all India basis. The current Internet subscriber base in India is 3.3 Million and the user base is 16.5 Million. The planned projection is 230 Million by the end of this year.

The reason for this slow growth is because the Government of India is slow in the implementation of Information Age and Convergence policies. The ultimate goal of such initiatives is Internet for All. The delay is mainly due to various operational, procedural & regulatory issues and supporting legal framework. This in turn is inhibiting the reach and benefit of Internet to the masses in the Country. The growth rate in the subscriber base which was as high as 54% per quarter during the period Apr ‘99 to Mar ’01 is on a constant decline and was of the order of 3-4 % during the quarters ending June, Sept & Dec 2001. It is, therefore, imperative that the Internet Scenario in India be reviewed and effective steps initiated to trigger a faster growth of Internet penetration and usage.

Company Background

Rediff.com is an online service provider of news, information, communication, entertainment and shopping. Focused on the Indian sub continent, Rediff.com provides a platform for Indians worldwide to connect with one another online. Rediff.com additionally offers the Indian American community the largest Indian weekly newspapers, India Abroad. Rediff.com was founded in 1996 and is headquartered in Mumbai, India. Registered users as of September 30, 2007 are 59.8 million. This is a 25% increase over the number of registered users as of September 30, 2006, according to the company. In India it earns money from advertising and fee-based revenues and in the US from the Publishing Business.

Strengths

The Company’s video platform iShare launched last quarter has gathered momentum. Rediff added a new video and audio player with auto play, facility to view videos in full screen mode and a lighter version of the iShare client.
To gain greater momentum the company is beta testing Rediff Language Search in eight Indian languages. It allows users to enter Indian language queries using QWERTY keyboards and obtain results in their desired language.
It’s Consumer Finance Channel, Moneywiz with Market Voices, a live running commentary that is updated every few minutes during the trading hours of the Indian stock markets is its latest attraction, which is slowly gaining momentum.

Weaknesses

Heightened competition from Yahoo, Google, MSN and AOL due to which the company incurred high capital expenditure, as well as expenditure on product development and bandwidth.
Rediff is finding it difficult to retain talent as its competitors have greater resources to train and retain their employees.
Rediff has not come out with any innovation that can be termed as a “killer app”.

Financials

Gross margins increased to 82% for the quarter ended September 30, 2007, compared to 80% for the quarter ended September 30, 2006. Operating EBITDA decreased marginally to US$1.04 million for the compared to US$1.14 million for the quarter ended September 30, 2006. Net income for the quarter was US$0.89 million, or 3.04 cents per ADS, compared to a net income of US$1.50 million, or 5.14 cents per ADS, for the quarter ended September 30, 2006.

The number of companies advertising on Rediff’s website totaled 190 which is a slight increase from 160 during the same quarter in the prior fiscal year. Consumer Finance, Employment, Travel, Matrimonial and Insurance accounted for 56% of the Company’s advertising revenues in this quarter.

Operating EBITDA decreased marginally to US$1.04 million for the quarter ended September 30, 2007 as compared to an Operating EBITDA of US$1.14 million for the corresponding quarter last fiscal year.

There was a foreign exchange loss of US$0.12 million during the quarter ended September 30, 2007 arising from the conversion of cash deposits and other balances held in US Dollars into the Company’s functional currency (the Indian Rupee) for financial reporting purposes due to the strengthening of the Indian Rupee against the US Dollar.

Outlook

Investors were excited about the India growth story sometime back and Rediff.com became the Indian dot-com darling. But with severe competition the company is struggling to grow in the world's second-most-populous country.

The India Online market is entering a phase of accelerated growth with the increase in the number of mobile subscribers, higher PC sales and the increased penetration of broadband connections as recognized and encouraged by the TRAI. The India online advertising industry is in a promising stage of development with more marketers experimenting with the medium with significantly larger budgets. Growth in this industry is largely dependent on the advertising industry collaborating with online providers like Rediff to cohesively promote the medium to leading marketers across the country.

The stock price surged earlier this year when New Delhi's Hindustan Times reported that the company was receiving interest from companies like Yahoo! and Google for a possible acquisition but nothing has happened so far.

Rediff is a great Indian dot com story, considering others who are still struggling to maintain functionality. But unless Rediff conjures something new and innovative, its growth story will be interspersed with lots of struggle. So is Rediff in red or black?

PLEASE READ!!! NEW POSTING REGULATIONS FOR NON-ORIGINAL CONTENT!

2010-03-17T21:49:41Z

PLEASE READ!!! NEW POSTING REGULATIONS FOR NON-ORIGINAL CONTENT! - by VTCastle

Fingad authors,

It has come to our attention that several members have posted reviews that are 100% verbatim copies from other websites. These actions must and will stop immediately.

We are running into duplication issues with social bookmarking sites like Digg.com, and thus, hurting our chances of gaining new visitors to our site. I ask that anyone who has posted an article from a copied source remove their article, or it will be removed for you within 24 hours of this posting.

If you find an article that you wish to share with Fingad.com members, please write your own review of that article and reference/quote, the sections of the article that inspired your to write a review in the first place. Simply giving the author his/her due credit for writing the article is not satisfactory.

My reasoning is two-fold:

1) Duplicated material hurts our search engine rankings.
2) We lose public credibility by providing non-original content.

If you have questions, you may direct them to the Fingad management team.

Thank you,

Matt Castle
SVP of Research & Operations

Global Telecom: 3 Emerging Market Plays with Massive Upside!

2010-03-17T21:26:10Z

Global Telecom: 3 Emerging Market Plays with Massive Upside! - by VTCastle

The wireless telecom revolution of the late 20^th century has no doubt been one of the great global paradigm shifts since World War II. It doesn't rank as high as the internet, penicillin or dare I say – Viagra. However, wireless telecom is a technology that has changed, and will continue to change the way we interact with our fellow mankind.

Initially, mobile phones were a hulking piece of plastic with horrible reception. Now its 10 millimeter thick, full color touch screen with download/upload speeds that seem to double every year. Quite amazing to think the technology has matured as quickly as it has, and as a certifiable technology addict, I'm chomping at the bit for each tidbit of news.

Next time you catch yourself marveling at your newest gadget, consider the unlimited potential that wireless technology offers when viewed on the global scale. If you can't, take a look at how William Shatner and Star Trek changed the world.

Whether you are in a remote location in Mexico on a road trip that went off track, or hiking through the scenic back country of Thailand, chances are its going to be difficult to find a traditional land based telephone. So as a govermental leader looking to provide communications for your nation, or a CEO looking to cut infrastructure costs, building a completely wireless telecom system is ostensibly the way to go. Not only can you save capital by avoiding investment of traditional land line systems, but their eventual replacement by wireless networks is a realistic possibly. Case in point, the major American landline companies like AT&T or Verizon rushing to grab as much of the wireless market as possible in the mid 1990s. Its not a question of “will it happen,” but more appropriately “when will it completely dominate the world?”

This article highlights 3 global wireless telecom companies that will play a key role in connecting our world through satellite based communications. They have either been in place for several years, or just beginning to show up in the emerging markets with immense growth potential. Thus, I have purposely excluded what I deemed markets that are near saturation points, such as the USA, Australia, most of western Europe (some Eastern to), and Japan.

America Movil S.A.B de C.V. (ADR)

America Movil (NYSE: AMX) is the dominant wireless telecom company in Central and South America. Based in Mexico, this 69.5 Billion dollar company controls 70% of the wireless market in Mexico as well as a growing market share in 15 other counties throughout Central and South America. It has aggressively pursued acquisitions such as Oceanic Digital Jamaica and Compania Dominicana de Telefonos in Puerto Rico during 2007. It currently maintains a massive number of subscribers at a total of 147 million and growing.

Current estimates project a growth rate of 35% for 2008 and 32% over the next 5 years, which would outperform its industry competitors on a percentage basis of 40% and 50% respectively.

Mexico alone has an annual increase in wireless subscribers of 50%, so AMX is well positioned to take advantage of this. As of now, very little penetration of wireless internet has been achieved and this will undoubtedly grow thanks to Apple's Iphone and Research in Motion's Blackberry (aka – Crackberry).

AMX has traded sideways for the last year, but at a price of $59 its a steal now that the P/E ratio is in the low 20s. Especially when AMX has a 5 year average Return on Investment 8 times higher than its industry competitors (19.1 vs. 2.4).

Vimpel-Communications (ADR)

Vimpel-Communications (NYSE: VIP) is the largest wireless telecom provider by market cap in Russia, and the majority of the former satellite countries from the former Soviet Union. However, it has fewer subscribers than rival Mobile TeleSystems OJSC (NYSE: MBT), but appears to be gaining ground in this category.

VIP has sought to strengthen its telecom position by adding value to its services portfolio, namely in the areas of business related services. Announcing today that it has agreed to purchase Golden Telecom (NASDAQ: GLDN), which provides broadband connectivity via fixed land systems (fiber optics) and mobile (satellites) based systems for faster voice and data devices. The approach is obviously to gain market share by providing a superior product portfolio to business customers and the net savvy citizen.

Looking at the financials for VIP, one has to be IN AWE of the stock performance. Forget Google, how about a near 500% return on your money in 3 years time, which outperformed Google's 250% over the same 3 year time period. Shockingly, VIP is still cheap with a P/E ratio around 33 it isn't exactly cheap, but the forward P/E is around 13, so you're paying a little extra for all that potential growth. Speaking of which, the growth estimates for 2008 is 39% thus far, which is 50% greater than its industry competitors. This hasn't yet calculated the additional revenue that Golden Telecom should bring in so its quite possible that growth will exceed the prognostications this year in the earnings year.

Matter of fact, Ken Heeber of the CGM Focus fund and Morningstar's top fund manager of 2007 has a substantial state in VIP having a whopping 6% of the funds assets in this one company. Heebner coming on board with his past success is a very bullish sign for those who are currently on the fence. Checkout one of Heebner's latest interviews from CNBC on his core holdings of his 5 star CGM Focus Fund discussing VIP as well as Petrobras (NYSE: PBR).

Videsh Sanchar Nigam Limited (ADR)

Videsh Sanchar Nigam Limited (NYSE: VSL) doesn't quite fit the mold of a pure play wireless provider, but VSL encompasses a growing telecom company in all aspects of a rapidly growing dominant power. By covering several aspects of India's telecom market, VSL offers a diverse opportunity for the entire India telecom market as well as being a player in the global markets by having acquired Teleglobe in 2006. Specifically, it has strategically placed assets in Western Europe, South America and Southeast Asia.

VSL is building a core infrastructure to permanently secure its place as a high speed information provider. Its currently constructing two massive telecom cable systems to Southeast Asia and Europe at a total cost of $550 million dollars to supply its growing portfolio of user based products such as internet telephony (VoIP) and Wi-Fi hotspots which attract the everyday consumer as well as the growing businesses seeking enhanced connectivity. As of December 2007, VSL has a subscriber list of 500,000 customers and with recent deals like teaming up with Marshall Media to provide streaming Video on Demand (VOD) its appeal among users will only grow.

VSL earnings history has been unstable at best, but the current outlook is that the company will turn itself around to be a bigtime revenue generator. With sales doubling from 2006 to 2007, it presents a generous opportunity for share price appreciation over the long term. In addition to being a state owned company, its doubtful that the Indian government will be liquidating its shares in the future plus any potential preferences to invest nationally versus internationally when a foreign corporation pursues interests similar to those of VSL.

My estimation is that with a strong broadband product portfolio, the broadband wireless markets will be a viable new investment now and many years to come for VSL. Being that India has a low cell phone per citizen ratio, the selection of a new generation wireless device could likely be the first mobile phone purchased by many of India's growing middle class.

Disclaimer: Author does not own stock in any of the companies mentioned prior to publishing (Jan 11, 2008). As always, this is for informational use only and should not be endorsed as a professional recommendation.

Sadia: Now Serving 6.7 Billion People Everyday!

2010-03-17T23:18:05Z

Sadia: Now Serving 6.7 Billion People Everyday! - by VTCastle

The human population is now topping 6.7 billion people. Yes that was a billion with a “B”, which equates to 4 babies being born every second. Quite staggering when you think about it... right?

We are now in a parabolic growth curve which only means more of us are required to share the real estate currently under your feet right now. According to the law of causality, all of the things we require to exist - or more appropriately coexist - are going to be increasing at the same parabolic rate.

Unfortunately for us, the basic commodities we take for granted everyday will eventually be of far more importance than an Iphone or keyword tags for a search engine. Consider the impact of 2 to 3 years of poor grain harvests due to droughts during summer months. Hunger would quickly elevate the prices of these commodities as we are currently witnessing with the increasing probabilty that the US ethanol quotas will be tightening the current supply of corn. As of this week (January 14th, 2008) corn has reached an all time high, and this happened without any type of unnatural weather patterns.

This isn't intended to frighten, but to enlighten all of us upon the microtrends of change are becoming macrotrends of a permanent nature.

So what can we do to eliminate or reduce these types of events? Lets start by identifying a way to do more with less, and identify a streamlined corporation that provides a life sustaining resource... food perhaps.

Sadia S.A. ADR

Sadia (NYSE: SDI) is a Brazilian food processing company specializing in refrigerated and frozen protein rich products (beef, chicken, pork). From the farm to the grocery shelves, Sadia operates an all inclusive business that covers the gambit of meat production for Brazil, as well as being one of the leading food distributors in the world.

Literally translated as “healthy” in Portuguese, Sadia produces over 1000 different products worldwide. An estimated total of 2.6 Billion pounds of protein are consumed around the world each year thanks to Sadia and with the ever growing world population that number is sure to increase. Half of Sadia's products are consumed in Latin America, while the remaining 50% is shipped to its other customers in Asia, primarily China and India.

Despite a 90% return in 2007 and a 3 year return of near 200%, SDA is surprising cheap by posting a very conservative P/E ratio of 11.3 (Chart #1). However, SDA is much more than a growth company. It is also a prime example of a value stock for dividend investors, which happens to have a current dividend yield of 4.17%. Within a volatile stock market, it presents itself as a possible defensive stock as well.

Chart #1: 3 year chart of Sadia.

The Numbers

Sadia, like most large food companies, is not high paced growth company. It has a forecasted a 12% - 14% increase in sales for 2008, but did not give any guidance on EPS which could leave some extra “wiggle room” to sneak in an earnings surprise. When looking at Sadia's conservative management, its best to consider this a glass half-full versus the alternative.

Several other key numbers/ratios jump out that separate SDA from its competitors, such as:

SDA has a Cost of Goods (COGs) result that is roughly 20% lower than its industry competitors. This is significant because it increases the net profit and EPS even if competitors achieve higher sales increases than SDA.
The dividend growth rate is three times higher than industry competitors. Combined with a stock price that doubled in 2007, it makes SDA twice as attractive to mutual fund investors as a play on growth stocks, but also as a high yield dividend stock as well.
Sales are roughly 28% higher than industry competitors over a 5 year basis.
3^rd quarter 2007 was 180% higher than the year over year quarter.
Estimates range from only 10% to 17% of mutual fund or institutional ownership in this stock. Could be very significant if some type of positive news is released, and the investment managers begin to take notice of a solid growth company with little downside risk.

SDA is also a master of globalization. With partnerships in the United States, Russia, Asia, Europe, Africa, and the Middle East, its quite possible they could become the global standard of protein based foods in years to come. Sadia has maintained a high rate of quality, and therefore their products are well received. In many countries, their products are viewed as the best in their respective category.

Summation

Sadia is a well managed, international food company with a realistic chance of becoming the #1 protein supplier in the world. It is growing quickly for such a large food based company, but this is due to its consistent ability to penetrate new markets, both domestically and internationally. Amazingly, it has integrated a well planned business model into the high tech western world as well as the emerging markets.

Impressively, the management team must be recognized for having the strategic foresight and sales skills to perform so well with an extremely diverse portfolio of clients.

The closing price of Sadia (NYSE: SDA) upon the publishing date (01/16/08) of this article was $56.98.

Disclaimer: Author does not have a position in Sadia S.A. prior to submitting this article. Always do your own research before making any investment based on a 3rd parties recommendation

Investing in Sin: 7 Recession Proof Stock Picks. PART I

2010-03-17T13:13:46Z

Investing in Sin: 7 Recession Proof Stock Picks. PART I - by VTCastle

In an attempt to calm fears of a US based recession, I thought I would begin writing a 7 part series on Investing in Sin. The purpose is not to display specific lifestyles, but to illustrate a contrarian method of stock selection that identifies defensive stock plays to protect one's portfolio in case we are (or are not) in a recession.

Those of us here in the Fingad.com community come from many diverse backgrounds in terms of culture, religious beliefs, and educational backgrounds. Granted we all have our differences, but we can all agree there certain "No No's" for each of our practiced religions. I was raised under the Christian faith, and was subsequently taught the specifics of the Seven Deadly Sins, which will serve as my underlying story line for the remainder of these articles.

The Basic Concept

If we plunge into recession (global or country specific), one of the best areas of the market to invest are the basic needs and desires that we as humans find essential to our survival and allow us to enjoy the precious time we have on the 3rd big rock from our sun.

The trick is - finding the companies that are poised to take the lead in supplying or resolving the products/services in question. Now then, without further adieu, let me introduce you to...

GLUTTONY

When most of us think of Gluttony, we think of lazy and/or lethargic individuals who refrain from physical activity or spend too much time eating at Kentucky Fried Chicken. Therefore, it took very little time to chose a wide spread and deadly disease that follows gluttony hand in hand... Diabetes.

As many of you know, diabetes is an incurable (to date) disease caused from several different factors. Obesity is often one of the main culprits of this life threatning disease.

In fact, the Centers for Disease Control (CDC) and the World Health Organization (WHO) have gone so far as to classify obesity as a global epidemic due to its leading role in heart disease and certain types of cancer.

Often considered an affluent-only condition, epidemiologists have concluded that obesity is definitely a global problem requiring immediate action. However, it doesn't take a PhD in psychology to understand that people will continue to a high calorie, high fat diet due to its taste appeal. Thus, obesity will pose a seemingly impossible disease to cure.

All of this reasoning points to a strong demand for treatment products for those afflicted with diabetes, as well as a rapidly growing market of potential LIFELONG customers thanks to the increasing popularity of fast food chains in non-US markets from companies like McDonalds and Yum! Brands (Kentucky Fried Chicken, Pizza Hut, Taco Bell), as well as increasingly educated work force that generate a sedentary lifestyle.

The Business Minded Person Checklist

We have a growing number of customers (diabetics) with no end in sight
A constant demand for our product
Once the patient is diagnosed, it soon equates to a consistent revenue stream.
Increasing global health standards will allow undetected cases will be more accurately diagnosed, equating to new patients.

I SMELL OPPORTUNITY RISING!

Novo Nordisk A/S (ADR)

Novo Nordisk A/S (NYSE:NVO) is a pharmaceutical/medical device company focusing upon insulin treatments for those afflicted with diabetes. Based in Denmark, NVO is currently the world's largest producer of insulin based treatments.

With an estimated 250 million people currently classified as a diabetic, and an estimated 450 million more classified as a "pre-eminent" diabetic, the demand for NVO's products are quite staggering. In fact, when considering that obesity affects an estimated 60% of Americans (CDC data), and the rapid introduction of western based, high calorie foods into the Asian markets, demand is likely to skyrocket in the next 5 to 10 years. At present, an estimated 40 to 45 million diabetics reside in India and China, which will likely increase in the near future.

The stock value is up a very generous 37% over the last year, and a whopping 353% over the last 5 years (Chart #1).

Chart 1: 5 year chart of Novo Nordisk A/S

With a P/E in the low 20s, it presents an attractive purchase price. The basic fundamentals could not be better for NVO. The company grew profits by 32% in 2007 and has guided analysts higher for 2008 expecting a minimum net profit increase of 25%.

Summary

Novo Nordisk is a company whose products are in very high demand, and will continue to be in demand for the foreseeable future. Being the world leader in the insulin supplier market, and having many distributing partnerships located all over the world, it is poised for a strong and prosperous future.

Disclaimer: Author does not have a position in Novo Nordisk at the time of publishing (02/05/2008). This article is not a recommendation, but an informational resource only.

Petrobras: The Global Leader in Hydrocarbon Production by 2050?

2010-03-17T15:08:33Z

Petrobras: The Global Leader in Hydrocarbon Production by 2050? - by VTCastle

A Prologue to Brazil.

Ten years ago if someone mentioned Brazil, I automatically thought of three things:

Save the Rainforest
Beautiful scantily clad women
A killer soccer team

Today when Brazil is mentioned, the beach bunnies still come to mind first but I tack on one of the largest developing economies in the world. Who can possibly deny that Brazil was one of the great sleeping giants of the world? Best of all, their alarm clock doesn't have a snooze button.

From my studies of Brazil thus far, Brazil is a country who has made many astute prognostications regarding their long term growth. More importantly, they have done a significant amount of growth by using their natural resources to their own advantages unlike many countries around the world that were either forced, or have chosen to rely on foreign trade.

A perfect example of this are the lessons learned from oil rationing during the 1970s due to the gas shortage/oil embargo from the OPEC cartel against many of the western nations. Brazil quickly adapted to the real possibility that oil could become growth prohibitive unless alternative fuels were found, and found quickly. Thus, began the first great ethanol infrastructure switch that is now paying tremendous returns by releasing Brazil from oil dependency.

I'm not sure if this was luck or a great display of managerial foresight, but I wish we had some of those minds running our national energy policy now.

The Largest Oil Company in the World by 2050?

Petroleo Brasileiro (NYSE: PBR), also called Petrobras, is a state owned hydrocarbon energy production company headquartered in Rio de Janeiro. PBR has a multipronged business model by aggregating many of the segments of the involved in hydrocarbon discovery and production business together. Whereas, many large energy conglomerates contract smaller specialization companies, Petrobras performs many of these services “in house.” The list below outlines these four segments

Exploration and production – PBR conducts its own exploration and discovery efforts in addition to its refinement and distribution.
Gas and Energy – PBR operates all natural gas markets (foreign and domestic) within Brazil.
Downstream – PBR controls the bulk petroleum byproducts (i.e. Plastics, fertilizer) in Brazil.
International – PBR is investing heavily in global exploration and discovery to a total of 15 billion dollars.

Over the last two years, PBR has seen a 250% increase in share price – primarily in the 2^nd half of 2007 (Chart #1). This could be due to the increased coverage of international growth story stocks when compared to many lagging US domestic companies. Irregardless of the cause, PBR is a stellar performer and quite possibly the soon to be global oil power in the world.

Chart #1: 2 year chart of PBR vs. S&P 500

The Numbers

Despite the recent run up in price, PBR's P/E ratio is about 30% higher than its industry competitors by being in the low 18 range, yet with a future P/E of only 9 its still at very attractive share price.

PBR operates essentially competition free on its own soil, as well as for multiple offshore oil fields. The rights to these fields may be partially owned by other international oil companies, such as BG Group based in the UK and Galp Energia based in Portugal, but PBR own upwards of 50% or more of these natural assets.

Of particular importance are two new discoveries made by PBR in Q4 2007. One of which being the Tupi Field announced in November 2007, which is estimated to contain up to 8 billion barrels of light sweet crude. The second discovery even more massive, is estimated to contain 5 times more than the Tupi field, which goes by the name Sugar Loaf field. As if this wasn't enough, the extra cherry on top of these two discoveries is that the oil discovered is Light Sweet Crude. For those who aren't familiar with the difference between Light and Heavy oil, Light oil is far less expensive to refine thanks to its lower heat requirements during the hydrocarbon extraction process.

The estimates are so mind blowing that these two discoveries will almost certainly allow Brazil to compete on a global basis with Middle Eastern nations and potentially put an end to the downtrend of global oil production. Therefore, this has the effect of extending the worlds known oil supplies and provides more “cushion” to those worries about oil shortages in the near future.

PBR has not yet completed their full analysis of these new discoveries, so any numbers to this point are educated estimates. Rest assured however, they will certainly improve the bottom line of PBR. Currently, growth estimates for the 2008 calendar year are around 20% but once the Tupi and Sugar Loaf fields are tapped, my estimation that growth will increase far beyond 20% per year.

VIDEO INTERVIEW! As a confirmation, Ken Heebner who Morningstar voted the top fund manager of 2007 whose CGM Focus Fund saw an 83% increase in 2007, recently commented on PBR's massive earnings potential (link opens to Bloomberg as a video feed)

Stock Performance

As mentioned, PBR has had a nice uptrend of recent which can be seen in Chart #2. The stock price still maintains a very bullish indication by its consistent rebounds from the low point trendlines (seen in green). However, a well tested resistance level at $119 has proven difficult on 2 occasions (possibly 3 if counting the December 10^th peak).

Chart #2: 6 month Technical Analysis chart of PBR.

Technical analysis should never overrule fundamental analysis, but it provides an accurate method of dissecting a stocks past performance and identifying any potential risks not seen by fundamental analysis. Using the 80/20 Fast Stochastic (bottom segment) allows identification of an overbought / oversold indication and can be useful in knowing when to buy and when to sell (or short).

In case of PBR's share price around $108 (reference: 01/07/08), a possible buy signal is developing due to the close proximity to the lower support level of the uptrend line. However, with the volatility in the markets at this time and he overbought signal in the stochastic (see yellow circle in Chart 2), waiting several days for more directional confirmation is advisable.

Reasons to pull the trigger.

PBR has multiple selling points, so much in fact that they don't need to be sold. The strong stock performance and earnings growth alone are enough to justify its purchase. With the addition of a potential 40 billion barrel oil discovery in one quarter, that's a definite trigger pull.

Analysts agree that these two discoveries will influence Brazil and PBR for many years to come, as well as putting them among the worlds largest light sweet crude suppliers as seen below.

“Tupi changes everything for Brazil and Petrobras,’’ said Carlos Renato Nunes, an oil analyst with São Paulo-based brokerage Coinvalores CCVM. He currently maintains a buy recommendation on PBR.

Of course, one would expect such a statement considering these discoveries are the largest hydrocarbon discoveries in the last 30 years.

The discovery of the two new oil fields and the stock run up from the 2007 trading year is best summed up by President Luiz Inacio Lula da Silva:

"God must be Brazilian"

The closing price of PBR from the previous close is on January 7, 2007 was $107.61.

Disclaimer: Author does own stock in this company which was purchased in August 2007. As always, this is for informational use only and should not be endorsed as a professional recommendation.

Essar OIl - Buzzing

2010-03-05T08:51:33Z

Essar OIl - Buzzing - by prakash

Essar Oil Limited

Industry Overview

India ranks sixth in the world in terms of petroleum demand and by 2010, India is projected to replace South Korea and emerge as the fourth-largest consumer of energy, after the United States, China and Japan. Since India is dependent on imports for nearly 70 per cent of its petroleum requirements, energy security has become a prime Government concern. In recent years this has taken the form of trying to get a stake in oil and gas fields from Myanmar to central Asia and Africa. However, the major thrust still lies in searching for hydrocarbons in onshore and offshore blocks in India. Recent finds are making oil majors take notice of the potential in prospective basins. Estimated to be a US$ 110 billion industry, the Indian oil and gas industry is among the largest contributors to the central and state exchequers in India. Its share approximates US$ 13.58 billion. Most of the country's 19 refineries, barring two, with a capacity to process about 160 million tonnes per year are run by state-run companies. The country's crude oil output for the financial year ended March 2007 was up 5.6 per cent to 33.98 million tonne (mt) compared with 32.19 mt in the previous fiscal. During the same period, the country produced 31.55 billion cubic meters (BCM) of natural gas. The cost effectiveness of refining in India is drawing many global players here. This is because India is logistically well placed for refineries. Besides being a major market for crude oil and petroleum products, it adjoins major demand centers such as China. Also, crude oil from West Asia can easily be brought to refineries in India. In May this year, Steel magnate L N Mittal was allowed to pick up 49 per cent stake in Hindustan Petroleum Corporation (HPCL) refinery in Bathinda. This could mark the beginning of several others moving in, who are also looking to tie up with Indian refiners. They include Saudi Aramco, world's largest oil producer, Cairn Energy, Exxon Mobil, Petrobras, Shell, and China Petro (CNPC).

To become a major global fuel exporter, the Indian government plans to expand refining capacity by 62 per cent to 4.82 million barrels per day (mbpd) over the next five years. While state-run refiners are planning to add about 1.06 mbpd of capacity by 2012, about 50 per cent of their present capacity, private companies would undertake the rest. Indian Oil Corp (IOC) plans to spend US$ 13.8 billion over the next five years on expanding its refining capacity from 60.2 million tonnes per annum of crude oil to 76.7 million tonnes. ONGC plans to invest more than US$ 16.5 billion in the refining business over the next four to five years to scale its refining capacity up to 45.5 million tonnes by 2009-10. Bharat Petroleum Corp Ltd (BPCL) has lined up US$ 492.8 million at the 7.5-million-tonne-per-annum Kochi refinery. HPCL is looking for a strategic partner for the US$ 4.43 billion expansion of its Vishakhapatnam refining complex to 300,000 barrels per day by August 2010 RPL is setting up a US$ 6 billion Greenfield petroleum refinery and polypropylene plant at Jamnagar, Gujarat, with a capacity of 580,000bpd. While the new refinery (which is going to be the world's only full-export-oriented refinery) will be the world's sixth largest, the combined capacity (RPL along with RIL) will turn the Jamnagar complex into the world's largest single-location refinery.

During 2006-07, refined petroleum products formed the largest chunk of total exports overtaking the Gems and jewellery sector. Besides the refining sector, giants such as ONGC, RIL, Cairn India, Gujarat State Petroleum (GSPC) and others are making heavy investments in the petroleum exploration and production (E&P) sector. India's production of natural gas is also slated to double in the coming couple of years as the gas fields off the eastern coasts commence production. Of late, a number of players have evinced a keen interest in laying pipelines in the domestic market to supply gas to the consumers. For example, Gujarat State Petronet Ltd, a group company of the Gujarat State Petroleum Corporation, plans to connect all 25 districts of the state with 2,200-kilometre high-pressure gas pipeline laid down across the state. Reliance will invest US$4 billion to lay a 1,386-kilometer pipeline from Andhra Pradesh to Gujarat. India is also one among the four countries, which have the world's richest gas hydrate reserves. Overseas Investments To meet its spiralling demand, India is investing heavily in oil fields abroad. India's state-owned oil firms already have stakes in oil and gas fields in Russia, Sudan, Iraq, Libya, Egypt, Qatar, Ivory Coast, Australia, Vietnam and Myanmar.

Oil and Natural Gas Corporation (ONGC) has signed agreements with ENI to take 20-25 per cent stake in a Congo oil block and in return give the Italian firm 30-35 per cent stake in its Mahanadi basin block.

ONGC's foreign arm, ONGC Videsh Ltd (OVL) is all set to acquire 33 per cent stake in the Egyptian deepwater block from operator Royal Dutch Shell for an investment of US$ 380 million.India has 20 per cent participation in Russia's Sakhalin I and has 20 per cent participatory interest in that country's national company, Rosneft.

IOC and Oil India Ltd (OIL) are set to pick up a 50 per cent equity stake in Sunetra Nigeria OPL 205 Ltd with an investment of over US$ 60 million. Brazilian oil major, Petroleo Brasileiro S.A. (Petrobras), has offered 25-30 per cent stake to ONGC in three exploration blocks and, in return, ONGC has offered 15-40 per cent stake in its three deep-water blocks. Currently, 100 per cent FDI is allowed in petroleum refining, petroleum product and gas pipelines and marketing/retail through the automatic route. A number of global majors have already made their presence in this sector. Shell has invested in refining and retail; British Gas has invested in city gas distribution; BP has invested in to lubricants and exploration; Exxon Mobil has invested in lubricants; other significant foreign players in India include Gaz De France, Chevron, Total, BG Group among others. The Government is working on increasing the country's investment potential to US$ 250 billion. And with the current investment wave, it appears that day would not take long in arriving.

Company Background

Essar Oil is a part of Essar Group and is engaged in the exploration and production of oil and gas properties. It also operates an oil refinery and sells petroleum products through its retail outlets across the country. The company primarily operates in India. It is headquartered in Jamnagar, India. Shareholding pattern

Other Investors include Private corporate bodies and NRI’s.

Quarterly results

	Sep ' 07	Jun ' 07	Mar ' 07	Dec ' 06	Sep ' 06

Sales	176.60	191.33	265.27	137.21	27.43
Other Income	3.65	6.62	2.90	3.61	2.59
Stock Adjustment	-0.68	-28.81	21.00	-59.41	19.60
Raw Material	0.00	0.00	239.43	0.00	0.00
Employee Expenses	0.52	0.56	0.48	0.54	5.72
Admin And Selling Expenses	1.08	1.22	1.00	1.17	17.81
Other Expenses	192.59	229.02	1.50	193.22	13.51
Operating Profit	-16.91	-10.66	1.86	1.69	-29.21
Interest	-0.01	1.17	2.57	3.80	1.78
Gross Profit	-13.25	-5.21	2.19	1.50	-28.40
Depreciation	0.73	0.29	1.07	1.17	1.14
Taxation	0.11	0.17	0.13	0.21	0.16
Net Profit / Loss	-14.09	-5.67	0.99	0.12	-29.70
Equity Capital	1,139.53	1,139.53	1,139.53	1,139.53	1,083.58
Agg.Of Non-Prom. Shares (in lacs)	1,371.62	1,371.62	1,371.62	1,371.62	1,371.63
Agg.Of Non PromotoHolding(%)	12.04	12.04	12.04	12.04	12.66
OPM(%)	-9.57	-5.57	0.70	1.23	-106.48
GPM(%)	-7.35	-2.63	0.81	1.06	-94.60
NPM(%)	-7.81	-2.86	0.36	0.08	-98.93
EPS (in Rs.)	-0.12	-0.05	0.01	0.00	-0.27

Balance Sheet

	Mar ' 07	Mar ' 06	Mar ' 05	Dec ' 03	Sep ' 02
Equity Share Capital	1,156.13	1,100.18	955.90	371.75	371.75
Reserves & Surplus	1,839.00	1,420.55	1,448.92	1,288.65	1,268.01
Secured Loans	7,739.08	5,602.96	4,833.06	5,826.75	5,188.83
Unsecured Loans	832.36	464.62	281.65	267.52	333.50

Total	11,566.57	8,588.31	7,519.53	7,754.67	7,162.09
Gross Block	303.86	279.12	233.52	217.65	582.76
Less : Accumulated Depreciation	107.59	94.76	88.63	73.52	198.12
Net Block	196.27	184.36	144.89	144.13	384.64
Capital Work-in-progress	10,633.63	8,304.07	7,429.74	8,241.48	7,109.35

Investments	109.37	89.65	73.05	78.19	76.27

Current Assets, Loans & Advances	4,637.07	942.77	1,124.18	887.66	762.60
Less : Current Liabilities & Provisions	4,009.77	932.54	1,252.33	1,596.79	1,212.93
Total Net Current Assets	627.30	10.23	-128.15	-709.13	-450.33
Miscellaneous expenses not written	0.00	0.00	0.00	0.00	42.16

Total	11,566.57	8,588.31	7,519.53	7,754.67	7,162.09

Book Value of Unquoted Investments	109.37	89.65	73.05	78.19	76.27
Market Value of Quoted Investments	0.00	0.00	0.00	0.00	0.00
Contingent liabilities	3,842.63	1,051.72	1,580.39	1,831.65	1,382.24
Number of Equity shares outstanding (in Lacs)	11,395.31	10,835.77	9,392.98	3,551.44	3,551.44

The company recorded revenues of INR4, 843.8 million (approximately $107.3 million) during the fiscal year ended March 2007. The net loss was INR675.1 million (approximately $15 million) in the fiscal year 2007. The 300 per cent jump in Essar Oil’s stock over a fortnight has confounded company watchers. The company had planned to triple its 10.5-million tonne capacity in its Jamnagar refinery with a $6-billion investment. But that was hardly the reason for the stock to make the spectacular climb. The market got wind of the Ruias’ decision to pump in $2 billion — of the $3.5 billion raised abroad using Vodafone-Essar stock as collateral — as owner’s equity into an issue of global depository shares (GDS) by Essar Oil (the remaining $4 billion will come from other investors in the GDS).

The buzz was that Essar would invest this amount at Rs 200 a share through its Cayman Islands-based holding company Essar Global. This price was at a huge premium over Essar Oil’s share price on BSE of Rs 57 on 5 November. Over the next fortnight, the market ramped up the price to Rs 200 and touched Rs300 recently.

With its rival, the 27-million tonne Reliance Petroleum (RPL), being valued at $20 billion, it’s hoped that Essar Oil’s expansion will match that kind of valuation; one that could feed even bigger and more ambitious plans, such as building a special economic zone.

The sudden rush to raise the game stems from both monetary and operational imperatives. First, a refinery that can refine both heavy and light crude could play a significant part in transforming Jamnagar into Asia’s refining hub. Second, significantly larger refining capacity can improve the Ruias’ bargaining power in world crude markets. Third, they could sell a stake in Essar Oil — perhaps part of Essar Global’s GDS — to an international partner. (The Ambanis sold a 5 per cent stake to the US oil company Chevron recently.) That could help shift sales from domestic to high-margin exports, and a partner who could give them access to global markets. That’s a far cry from a decade ago, when the Ruias were running from pillar to post to stay afloat, under pressure from lenders and with some businesses on the verge of defaulting on their loans. They were also trying to hold on to their proposed Jamnagar project, one that lenders insisted they shelve unless they could put up owner’s equity. Ironically, Shashi Ruia, chairman of the Essar Group, spotted the potential of the location ahead of his rival, the late Dhirubhai Ambani, but was unable to capitalize on it. So the Ruias — brothers Shashi and Vice-Chairman Ravi — borrowed from family, friends and relatives and put up their equity, and held on to the refinery project, now Essar Oil. Last year, fortune smiled on them. When Hutchison sold its share of the telecom joint venture with Essar to Vodafone, the Ruias’ 33 per cent was valued at $6.5 billion, which allowed them to raise $3.5 billion abroad against the collateral. But the group’s shareholders have not been a very happy lot; their returns have not been exactly spectacular. One wonders whether Dame Fortune will smile on them as well this time.

Comparative Valuation study

Focusing on Essar Oil, it is very tough to value the company, which is going into production, which does not have earnings as of now. The total valuation would be different if the comparison is with plans to manufacture a certain amount of oil versus future plans, which would kick in 2010. The returns made by these two companies - Essar Oil gave a return of a whopping 50% over the last one-week compared to about 9% by RPL. On valuation parameters, the capacity of RPL is about 0.58 million barrels per day and that of Essar Oil is 0.21 million barrels per day. The Nelson Complexity index for RPL is 14 and for Essar Oil is 12. The Enterprise Value for RPL comes to around Rs 28,000 crore and that of Essar Oil comes to around Rs 10,000 crore. If EV/bpd is taken into consideration, the valuations for RPL is about USD 48,000 compared to Essar Oil’s USD 46,700 and on EV/comp bpd - the valuations of RPL is about USD 3,430 compared to Essar Oil’s USD 3,900. On the basis of these numbers, Essar Oil seems to be fairly valued with respect to RPL, but it might be slightly overvalued too. But the management has decided to infuse USD 6 billion more to triple the capacity all the way from 10.5 mt p.a. to about 34-mt p.a. This is going to be completed by 2010 with a Nelson complexity of 12.8. Taking the expansion plans into consideration, the enterprise value by bpd comes to around USD 14,800 and enterprise value by complex bpd comes to around USD 1,160, which is much cheaper than what RPL is commanding at this point in time. It depends on the perspective, but that’s the reason why the stock is buzzing at 17-20% increase on a day-to-day basis.

Essar group that owns Essar Oil Limited is acquiring 50% stake in a Kenyan refinery firm from international oil players as a part of its move for a global footprint. The refinery in Mombassa has an annual production capacity of four million tonnes and is owned 50% by the government of Kenya. Essar is also looking forward to buy out the remaining 50% stake held by three global energy giants -- Chevron, Royal Dutch and British Petroleum -- in Kenyan Refinery and Petroleum Ltd. Today Indian government announced that it would offer 57 oil and gas blocks for bidding in the seventh round of auctions under New Exploration Licensing Policy (NELP) on 13 December. Bids are due on 11 April 2008 and the awards would be decided by June. Essar will be one of the contenders as it unleashes its positional in the E&P segment adding more muscle to its refinery business.

Source: Businessworld,moneycontrol,www.bseindia.com

Financial Crisis in USA Financial making the world looks vulnerable..........

2010-03-17T17:38:12Z

Financial Crisis in USA Financial making the world looks vulnerable.......... - by rajiv

Friends,
That is how market is!Did anyone expect that market will bounce back to normal after it went down for over 700 points?
I would like to ask chartist and technicals analyst whether there was any respite seen yesterday on charts when market actually covered all the loss but ends in positive.......Is there any clue that charts is now showing..after making a double bottom at 12500!
Was there any thing that pointed that we should recover all the loss ground and close in positive territory?
And after seeing this..what does the charts fortell.....are we still to see the 9k levels......by Jan /Mar 09?Is there any significance when our market has made a double or triple bottom?
But it is clear that
1) It is not the fundamentals that is deteroitating but the sentiment is making the trouble.
2) When Dow went down by over 400 points why our market is showing strenght?
3)As I have written in comments, the short position created by Lehman Br is closed...is it that effect?
4)All the previous correction or whatever happened.....was due to high levearaged position of traders in F&O and also in cash stocks while while borrowing finance from the Brokers....etc....
5)The fundas are still in tact.....8% GDP is no mean less by any standard.
6)That is the only reason I am still writing about bullish view....
7)Crude is coming down , hence inflation will come down.....
8)3 out 5 big banks has gone bankrupt and only two is left.........eg.Bear Stern,Lehman,AIG gone ....Morgan Stanly and Goldman remains....there are news that now is the turn of UK banks to go bankrupt.....but I need to ask are they big enough like Lehman and Bear Stern to make that big an impact?

The summary of the above is, Can we go below 12500?
I would like to know what technicals analysis says after todays recovery............
The only problem Indian Market was facing is selling of FII and looking at the way market reacted positively from the days low of 12500 put me in a dilemma whether the wrost is over for our market.The only thing haunting our market was FII selling and I think with Lehman Brs bidding a good bye to Financial World....there seems no one more remaining to sell in India.
I am even seeing cross transaction between 2 FIIs which seems to me a very good sign.
These are levels of market sentiments and not of fundamentals....The sentiment is low and hence we are seeing these prices which seems to me a life time chance to have it.
First Global Shankar Sharma is bearish for 2-3 yrs.He says that we will not be able to see the highs for 2-3 yrs.His prediction is on the world economy slowing down and the Financial Mess that has come out.
I also some times gets surprised and even annoyed how the top Honcos who are having so big a salary can just take down a 140 year old company, Lehman Br to ZERO in a quater or maybe couple of quaters!I need to pat them on back that even a simple and a lay investor would not make mistakes like they did and they are said to be the most learned people of the world.
The biggest mistake according to me was made by Lehman Br was investing in Sub prime Mortgage papers for $140 bn and that is Zero?
I can't understand how the things happened so suddenly and the value becomes Zero....Lehman Br 52 week high is $68 and it went to $.65, means 65 cents.Does it mean that what they invested in the papers of Sub prime Mortgage , $140 bn , has become Zero?How that can happen?How a value of $140 bn can become zero....the houses are still there...they can atleast fetch 50% of the original high....so it comes to atleast $70bn...
But buying Sub Prime Mortgage papers is a biggest mistake and there can be no mercy on those to took the decision and who approved the transaction.They have put the whole world economy at risk.
But I think the whole Model of western world financial sector need to get sae change and am sure there will be sweeping changes.

PVR Ltd (NSE: PVR) - Exploring Emerging Markets

2010-03-17T15:14:02Z

PVR Ltd (NSE: PVR) - Exploring Emerging Markets - by prakash

PVR Ltd (NSE: PVR)

The economic boom in India has empowered consumers with loads of free cash in their hands. The demand for entertainment is growing as consumers have started demanding premium services to satiate their needs. The entertainment industry is one of the fastest growing segments in India. According to PriceWatrehouseCoopers, the size of this industry is $5 billion and is growing at a compounded annual growth rate of 20 percent each year. This is estimated to cross $10 billion by 2010. Technological advances have opened various distribution channels such as broadband Internet, mobile entertainment and satellite television.

The film industry has provided a staple entertainment to the Indians. But Television is slowly catching up due to innovative and interesting programming content. The movie business now caters to the demand from Indian diaspora worldwide. Revenues from overseas box office collection have an impact on the popularity and success of Indian movies. International movies exhibited in India is gaining wider acceptance. This is due to the rapid growth of multiplexes that aim to provide a lasting entertainment experience. Digitalization of movie exhibition has brought down the cost of distributing and exhibiting movies.

PVR (Priya Village Roadshow) Cinemas is the largest cinema multiplex chain in India. The company, which began as a joint venture agreement between Priya Exhibitors Private Limited and Village Roadshow Limited, began its commercial operations in June 1997 with the launch of PVR Anupam in Saket, India's first multiplex. By introducing the multiplex concept in India, PVR Cinemas brought in a whole new paradigm shift to the cinema viewing experience: high class seating, state-of-the- art screens and audio-visual systems.

As of 2007, PVR has a total of 101 screens in 24 multiplexes across India. PVR commands a significant presence in New Delhi and NCR with 46 screens in 14 multiplexes. PVR also has a strong presence in Lucknow, Indore, and Bangalore. It is a relative newcomer to other parts of the county, especially in Mumbai where there are other established multiplex companies, like Adlabs Cinemas, Cinemax, FAME Cinemas, and INOX Cinemas. PVR currently operates India's largest multiplex, PVR Bangalore, which has 11 screens.

PVR recently launched its premium brand, PVR Premiere, targeted at urban consumers in metros, with the opening of PVR Select Citywalk. The company operates two other brands, PVR Talkies, the no-frills cinemas for consumers in tier II cities and the original PVR Cinemas targeted at the urban & semi-urban consumers. PVR additionally plans to invest Rs 300-400 crore to open 250 screens by 2010.

38 year old Ajay Bijli is the Chairman and Managing Director of the Company. 15 years of experience in the film exhibition industry has enabled him to steer PVR Ltd in the right direction. He revamped and refurbished ‘Priya Cinema’, a movie hall owned by his family and based on the response received by ‘Priya Cinema’ and foreseeing the potential for the film exhibition business in India, he started PVR as a joint venture with Village Roadshow Ltd of Australia in 1995. Ajay pioneered the multiplex concept in India by setting up 7 Multiplex Cinemas in India, in a span of eight years.

Board of Directors

Board of Directors	Details
Chairman & Managing Director	Ajay Bijli
Joint Managing Director	Sanjeev Kumar
Nominee	Sumit Chandwani
Directors	Vikram Bakshi
	Amit Burman
	Renaud Jean Palliere
Company Secretary	N C Gupta

Share holding Pattern

During the year under review , the Company had launched a new brand of cinema called 'PVR Talkies' to cater the demand of the cinema viewing public in class B & C cities at a lower price range of Rs. 40 to Rs. 60 for an enhanced movie viewing experience. The first of PVR Talkies multiplexes were opened at Aurangabad and Latur in the state of Maharashtra. In current financial year, the Company has entered into the business of Food Court by launching its first outlet at Sahara Mall, Gurgaon, and Haryana in the name of 'PVR Food Union'. This has increased the bouquet offering available to the movie-viewing Patrons who now have a better mix of movies followed by variety of delicacies on offer

The growth in the Income was achieved through a healthy mix of growth in Income of existing cinemas and by opening of new cinemas. The total number of patrons who watched movies during the current year was 14.73 million, as compared to 8.78 million in the previous year. The average occupancy during the same year was 43% as compared to 46% in the previous year. The Occupancies of the cinemas halls that operated for full year both in 2005-06 & 2006-07 increased from 46% to 49% however, new properties that operated for a part of the year 2006-07 had lower occupancy levels as the same were in the process of stabilizing.

During the year under review the Company commenced commercial operations from seven new multiplex projects and one project became operational during the current financial year thereby adding 31 new screens under its operation.

Consequent upon the allotment of shares to the eligible employees under the Employee Stock Option Scheme the paid-up equity share capital of the Company has increased from Rs.22, 87,73,700/- to Rs.23, 01,38,700/- divided into 23013870 equity shares of Rs.10 each.

As on March 31, 2007 the Company has two subsidiary companies namely M/s. PVR Pictures Limited (PVR Pictures) and M/s. CR Retail Malls (India) Private Limited (CRR) in which it holds 100% shareholding. In current financial year Company has also acquired the entire share holding of M/s Sunrise Infotainment Private Limited (SUNRISE) thereby making it wholly owned subsidiary of the Company.

PVR Pictures is now looking at establishing a bigger foothold in the Hindi film distribution business and is exploring options for alliances, tie-ups with producers to exploit film rights. PVR Pictures has during the year tied up with M/s. Aamir Khan Productions Private Limited to co-produce two movies, which are in an advance stage of production. PVR Pictures will start distributing these movies on a pan India basis.

Total Income of the Company grew by 62% from Rs.10, 602 lacs in previous year to Rs.17, 196 lacs for the year under review. Earnings before interest depreciation and tax (EBIDTA) increased from Rs.1, 893 lacs in previous year to Rs.3, 266 lacs for the year under review, marking a growth of 73%. Profit after Tax (PAT) increased by 93% from Rs.548 lacs in previous year to Rs.1, 053 for the year under review.

During the year under review Directors declared and paid:

- 5% interim dividend on 20,000,000 Redeemable Preference Shares and

- 10% interim dividend on 22,915,370 Equity Shares of the Company held by the respective shareholders of the Company as on 21st, March 2007, for the financial year 2006-07.

Directors have recommended that these be treated as the only dividends for the year.

Quarterly results

Particulars	Sep-07	Jun-07
Type	2Qtr	1Qtr
Net Sales (cr)	61.89	54.57
Other Income (cr)	2.05	2.02
Total Income (cr)	63.94	56.59
Total Expenditure (cr)	49.13	42.74
Operating Profit (cr)	14.81	13.85
Interest	1.5	1.42
Gross Profit	13.31	12.43
Depreciation	3.75	3.44
Tax	3.31	2.99
Deferred Tax	0	0
Reported Profit After Tax	6.25	6

Ratios

Years	Mar-07	Mar-06	Mar-05	Mar-04	Mar 03
Debt-Equity Ratio	0.31	0.44	0.91	1.17	1.3
LongTermDebt-EquityRatio	0.31	0.43	0.9	1.17	1.3
Current Ratio	2.77	2.77	1.69	1.39	1.1
Interest Cover Ratio	3.5	3.5	3.05	2.38	2.46
PBIDTM (%)	17	15.31	15.49	17.39	19.95
PBITM (%)	10.74	9.81	9.1	9.42	12.05
PBDTM (%)	13.93	12.51	12.51	13.43	15.05
ROCE (%)	8.3	7.14	9.82	9.08	13.52

Profitability ratios

PBDIT / sales	22.17	18.85	18.26	20.4	25.14	23.7
PBDT / sales	19.17	15.66	14.62	16.81	22.54	21.28
PBT / sales	12.15	9.75	5.74	8.2	16.24	15.22
PAT / sales	8.24	7.72	4.22	5.41	11	10.1
Capital	22.88	22.88	22.88	23.01	23.01	23.01
EPS (Quarterly)	1.33	1.34	0.6	0.84	2.48	2.6
Price	218	255.25	227.35	175	207.7	204.95
P/E (Annualized)	69.27	69.35	55.45	38.14	36.13	29.26

Outlook

The above graph shows the movement of share prices of the company has not been synchronous to the market. The stock price is negatively correlated with the market movement. It had fallen to low levels such as Rs154.30 from a high of Rs 330.00. The balance sheet looks healthy but it is strongly suggested that one could wait for a small correction period before investing in this stock.

Interest coverage ratio is a ration that is used to determine how easily a company can pay interest on outstanding debt. The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) of one period by the company's interest expenses of the same period.

From the financial ratios table it is evident that the company generates enough revenue to pay its debt on time. The ratios also indicate that the company has been performing consistently and is financially strong to pay its debt on time.

The spike seen in the graph happened after the management announced plans for expansion. The company is targeting metros and cosmopolitan cities in the country to set up 30-40 screens of the new brand by 2010. The company will fund this expansion through a mix of equity, debt and internal accruals. Besides Mumbai, the Premiere brand will be introduced in five other places including Gurgaon, Bangalore, Kolkata and Chennai over the next two years or so. PVR Premiere tickets ranges between Rs 150 and Rs 750.

So, stay invested if you hold the shares. For the others, this is the right time to invest in an emerging stock in an emerging economy.

Philippine Pharmaceutical Industry - Medicines Cost Second Highest In Asia

2010-03-17T19:28:26Z

Philippine Pharmaceutical Industry - Medicines Cost Second Highest In Asia - by lovephileo

In BMI's Q2 08 Business Environment Ranking of 14 key markets in the Asia Pacific region, the Philippines is regarded as only the tenth most attractive pharmaceutical market. While BMI expects the country to improve this position over the next five-year period as the market matures, with more people being able to afford healthcare and with 68 percent of medicines and pharmaceutical products coming from multinational companies.

Forecasts for the Philippines' pharmaceutical market, is expected to top us$4bn in 2012, up from an estimated us$2.61bn in 2007. Double-digit year-on-year (y-o-y) growth over the next five years is also a major encouragement for foreign pharmaceutical players,

It was because The cost of medicines in the Philippines is second highest in Asia next to Japan. The world Health organization has documented that medicines are sold in the Philippines at 4 to 18 times higher than international comparator prices.For example, over-the-counter pills sold in the Thailand and in India at p2 to p4 are sold in Manila at p20 to p40 each. Based on statistics, as many as eight or nine out of 10 filipinos to date have not been able to buy medicines and more and more Filipinos have died access to essential medicines.

Now, the increase in the prices of oil has a direct impact on the prices of medicines. The decrease in buying power is high due to high cost of basic commodities such as rice and gasoline. Filipinos buy the basic commodities first before medicines. They don't really get a budget for their health. They only buy when they almost need it. This time, many people put it as none priority. That is why small and medium sized retail drug stores in the country are changing their stores layout to bring in more customers and increase revenues. Drug stores were reconfiguring their stores to sell a combination of convenience and pharmaceutical products to cope with low revenues brought about by the decrease in public's purchasing power. They are forced to do that. They have to find other means to earn profit from consumer products.

Good, the anticipated cheaper medicines bill will result in lower prices, thus ioncrease consumption as those on the lowest incomes will be able to afford some pharmaceuticals. The public will have access to quality yet affordable medicines. It will also provide pressure competition for multinational corporation so that eventually they will lower prices. The new law allows small pharmaceutical companies to maximize their potential in supplying cheap medicines.

The government has been actively promoting the use of generics in recent years, as branded pharmaceuticals are expensive in a country with low GDP per capita. There is a large potential market for generics but sales have been low. The government has been criticized in the past for not doing enough to promote generics, now they are doing the work double time by pushing the controversial cheaper medicine bill which will impact the Philippines pharmaceutical market in a number of areas, including IP laws, competition and drug price control mechanisms. The market is expected to be specially volatile in the 2008-2010 period. There is only one thing that the Bureau of Food and Drugs needs to strengthen - their pursuit of counterfeit medicines. For sure, a mass influx of fake generic medicines are expected.

The Philippines is a relatively poor country where only a small majority of the country has access to adequate healthcare provisions and even fewer can afford the high drug price. Filipino patients are dying enmasse because they cannot afford the medicines they need. If we truly have the interest of the Filipino patient at heart, then we should make medicines affordable in this country.

VmWare IPO - Great long term investment

2010-03-16T07:22:46Z

VmWare IPO - Great long term investment - by aandy20

VMware IPO - Great long term investment value

For many who don't necessarily have a technology background, this post will offer some insight into the business value of the VMware product space from a working experience perspective. Being involved on the business development side & the vice versa side of a client, I will offer my take on this partial IPO and why I think it makes a killer investment value.

This post will get somewhat technical - to truly understand why this technology is of great value we must dig deep into its ability.

The challenge that IT departments have is how to keep IT cost down while business and service level requirements continue to increase? The computing infrastructure plays a foundational role in most business processes. Industry surveys indicate that 70%-80% of TCO is consumed by the people and processes used to maintain existing systems and applications.

Traditionally, companies have deployed applications with separate development teams from different business units. But to serve customers, the business requires cross-organizational communication from different business units. So there exist two directions of views: horizontal view from business and vertical view from IT.

The tiered silo infrastructure complexity brings the following problems:

Lack of consistency among platforms, configurations, architectures, management tools and processes

Inefficient resource utilization (infrastructure & staff)

Inefficient to reclaiming and re-purposing hardware and software that is underutilized

Inefficient to provision new services

A virtualization layer enables application mobility and a hardware-agnostic dependence, which make it possible for application to not be bonded to underlying computing infrastructure, and additional resources to be provisioned on demand with the growth of the business. Virtualization allows for an underutilized physical server to be partitioned into several virtual servers (server partition) to improve utilization. Multiple physical servers can be provisioned as one virtual server with more processing power (grid computing).

Virtualization is often integrated with automated infrastructure management software (Like OpsWare, or many others) to provide the following benefits:

- Improve IT resource utilization and ROI by reducing idling computer power

- Aggregate hardware and software to reduce TCO by eliminate overlapping and underutilized resources

- Improve business agility through quicker time-to-market for new service and capacity due to more efficient resource provisioning (dynamically performed by automated management software)

- Improve operational efficiency due to simplified, automated management for server and application provisioning, change management

- Improve IT service due to IT staff being able to focus on value-added business processes while complicated infrastructure administration is managed by automated software

- Improved SLA due to reduced frequency and downtime for applications with the advantage of data and application mobility in the virtualized environment

- Provide better cost-effective high availability and disaster recoverability with dynamic resource allocation and application mobility due to eliminating dedicated stand-by system for fail-over

- Facilitate IT audit for regulatory compliance due to centralized management system for change management as well as policy-based automated provisioning

The competitive advantage for enterprises is built with dollars spent on business services and applications to efficiently and effectively satisfy customer needs. With a fixed amount of IT budget, any technologies and best practices which can reduce cost on infrastructure operation and maintenance will leave more dollars for business services and applications.

Aggregation and consolidation on standardized infrastructure through server virtualization and automation will reduce hardware and maintenance cost as well as operational cost, hence reduces TCO. Meanwhile, virtualization and automation improves business agility in response to market changes, quicker time-to-market, as well as enhanced application availability and recoverability, hence an improvement in ROI. This helps the business gain competitive advantage.

For customers, the following are excellent questions to ask when looking for a virtualization solution:

Service Level Management

- What & how many applications are being used today?

- Do you have an inventory for those applications?

- What are the interdependencies between applications?

- Do you have defined SLA for your applications?

- How do you measure SLA for those applications?

- How & when are those applications used?

- Does the usage have a particular pattern?

- Does user experience performance degrade during peak usage?

Capacity Management

Service capacity:

- How do you monitor the usage of those applications?

- Do you measure the performance of those application?

- How does application usage peak impact your network?

- Do you have scarcely used applications that tie up dedicated server resource?

Resource capacity:

- How do you measure server utilization for applications?

- Are those applications CPU intensive or data intensive?

- Are servers experiencing CPU or memory constrains during peak usage?

- Do you measure software licensing usage?

- Do you have overlapping of software licenses?

- Are you interested in audit of software license usage to eliminate overlapping and thus reduce cost?

- Are you interested in software license consolidation project?

- Are you interested in aggregating servers for scarcely used applications?

- Are you using dedicated servers for develop/test/staging/productions?

- Are you interested in using virtualized servers for application development/testing?

- Are you interested in automated system for repurposing, reclaiming servers for different projects?

- Are you interested in policy based on demand infrastructure that enables automatic provisioning during peak usage and automatic decommission after peak?

Scalability:

- How do you plan to address the scalability request? Scale up or scale out?

Availability Management

- What is the business criticality of those applications?

- In case of failure, how are they recovered? And how long does the recovery take?

Continuity Management

- How do you recover those applications in the event of disaster?

- Are your current disaster recovery backup infrastructure costly but mostly idling?

- What do you think of server and storage virtualization to help improve recoverability?

- Would you like to evaluate and implement cost-effective disaster recovery infrastructure with virtualization technology?

Financial Cost Management

- Do you have a bill/charge-back module for your IT resource utilization?

- Would you like to conduct a proof-of-concept to evaluate the benefits of server virtualization technology on operational efficiency and financial savings?

Compliance

- How do you keep track of change on your server configurations?

- How do you demonstrate compliance to regulatory requirement for those applications?

- Are you interested in a centralized automated system to track compliance for your resources?

Now lets look at the competitive vendor space:

Out of these vendors, VMware has proven itself to be the reliable, and most importantly, selected by customers. Strategically, VMware has done excellent moves such as releasing the VMWare server free of charge to allow customers try out the technology. However, to really gain a benefit the ESX line provides the full horsepower of what VMware can offer. I have seen environments that run 2 high end 4U Dell systems that are partitioned with 4 Linux Operating systems each, and each server has a 4 port NIC interface. Each OS has a dedicated NIC. This allowed for load balancing of a website with 1 million+ visitors/day on 2 optimized systems - as opposed to 8 physical machines.

John Premus, CTO of Sumitomo Mitsui Banking Corporation gave a public presentation on how VMware helped his large environment. According to the presentation: 309 servers have been consolidated in the US and more in Europe & Asia.

The summary of his message:

Reduce IT COST:

Reduce Server numbers by 82%

Reduce server rates to 17 to 6

Provide 3 year TCO calculated to be in Millions

GOALS:

Increase utilization (CPU, Memory)

Quarantine Legacy Apps

Improve Service Delivery

Improve Business Continuity

Given that IT infrastructure continue to get larger and applications become more complex, and with the information provided here (and research firms like Gartner have plenty of their own) I think this is a worthwhile investment.

BGR Energy - IPO from an Emerging Economy

2010-03-17T03:49:58Z

BGR Energy - IPO from an Emerging Economy - by prakash

BGR Energy Systems limited – IPO

Industry Overview Global Energy Scenario

The International Energy Agency (the “IEA”) estimates that more than US $16 trillion, or US$550 billion a year, needs to be invested in energy-supply infrastructure worldwide over the three decades to 2030, an amount equal to 1% of projected gross domestic product. The average annual rate of investment is projected to rise from US$455 billion in the decade 2001-2010 to US$632 billion in the decade 2021-2030. For the energy sector as a whole, 51% of investment in production is estimated to be made to replace existing and future capacity. Almost half of total energy investment is estimated to take place in developing countries, where production and demand are expected to increase most. Total investments in the oil and gas sectors is expected to amount to more than US$3 trillion, or around 19% of global energy investment. The following chart sets forth certain information relating to the estimated investment in the different project segments in the energy industry.

Indian Energy scenario According to CRIS INFAC, over the next five years, Indian investment in generation capacity is expected to increase, with the central sector accounting for the largest share of such increases. CRIS INFAC expects the impact of generation delicensing in the Electricity Act will be felt largely in the period from 2002 to 2012, given the minimum three year construction period for greenfield power projects. According to CRIS INFAC, construction investment in the power sector is expected to be approximately Rs. 450 billion from 2005-06 to 2009-10. Although capacity additions are expected to be the highest in the thermal power sector, much of the construction activity will be driven by hydel capacity additions. This is because hydel projects have a larger construction component as compared with thermal projects. According to CRIS INFAC, the hydel – thermal power mix in India currently stands in favor of thermal power at 25:75 as against the global mix of 40:60. However, the government of India is taking initiatives to change this breakdown.

The government’s focus on hydel power can be gauged from the fact that 36% of the planned capacity addition during the period from 2002 to 2012 is in hydel power. This should translate into a sharp increase in construction activity. Again according to CRIS INFAC, captive power capacity, at 19,103 MW, accounted for 16% of the total installed capacity in India in 2004-05. The dependence on captive power has been increasing, due to the continuing shortage of power generation and India’s economic growth. This has resulted in high growth in the captive power sub-sector over recent years, in terms of increased capacity and generation. The Electricity Act provided impetus to captive power generators by exempting them from license requirements. This resulted in an increase in captive power capacity additions by industrial units. Reliability of power supply and better economics are other factors pushing industries to opt for captive generation. However, the growth of captive power plants has been affected by issues such as lower plant load factor (“PLF”) (due to idle capacities and fuel-related concerns). Diesel prices have soared due to rising crude oil prices; as most captive units are based on DG sets, the cost of generation has shot up. Some states are exploring the possibility of bringing captive capacity into the grid. This is expected to increase the PLF of plants. The proportion of captive capacity to total installed generation capacity in India is approximately 20%. Industries such as metals and chemicals account for 50% of the total captive power capacity, while they account for 66% of the power generation by captive units.

This discrepancy is because they require reliable and continuous power supplies on account of the processes used by them. Group captive power production enables these industries to meet their demand by pooling resources together.

Company Background

The Company was originally incorporated in 1985, as a joint venture between GEA Energietechnik GmbH, Germany and B.G. Raghupathy, to produce and sell on-line condenser tube cleaning systems, debris filters and rubber cleaning balls used in thermal and nuclear power plants. In 1993 Raghupathy and members of his family became the sole shareholders of the Company and began to expand the product and services range in the power and oil and gas industries. On June 28, 2007 name was changed from GEA Energy System (India) Limited, to BGR Energy Systems Limited. Products & Services / Business division

    * Established track record in executing Balance of Plant (BOP) contracts for power plants.
    * Currently strong order book position, which is likely to be sustained given the buoyant investment prospects in the major business segments the company operates in.
    * Experienced managerial personnel along with in-house design engineering capabilities provides it with competitive edge
    * Technical collaborations with foreign licensors, which has enabled it to absorb the technology required for design engineering and manufacturing of products such as air-fin coolers, deareators, and oil and gas equipments
    * The company’s returns on capital employed (RoCE) and on net worth (RoNW) remain strong despite moderate profit margins, because of the low fixed-capital intensity of its business.

Concerns

    * Increasing competitive pressures from domestic and international players in all business segments.
    * Relatively limited track record in EPC segment for complete power plant , which is going to be its thrust area, going forward
    * Absence of backward integration into the manufacture of critical plant equipment such as boilers, turbines and generators (BTG)
    * The company’s operating profitability remains vulnerable to fluctuations in the prices of basic raw materials and bought-out components, given the fixed price nature of contracts in the projects business.
    * High working capital intensity, which has resulted in company reporting negative operating cash flows.
    * Execution risks involved in scaling up business volumes given the increasing complexity of projects that the company is handling. The company’s success in recruiting and retaining skilled engineering personnel would be critical
    * The company has not been able to execute certain road projects in timely manner, and has incurred losses of around Rs. 230 million over the period of 2004-05 to 2006-07.

Financial statement

	Fiscal 2007	Fiscal 2006	Fiscal 2005
Other income	2,866,164	2,304,478	2,153,939
Profit/Loss after tax	2,393,135	2,267,930	2,142,796
Reserves and Surplus	14,986,038	12,592,903	10,324,973
Equity capital (par value Rs. 10)	7,480,950	2,490,000	2,490,000
Earnings per share (Rs)	3	9	8.6
Book value per share	30.03	60.57	51.4

As the company procures item from outside for its BOP and EPC contracts, working capital requirements are quite high. Due to this, Sundry Debtors as at 31st March, 07 were at Rs 369 crore. Sundry Debtors on 30-06-07 were at Rs 421 crore, almost 172% of first quarter top line.

BGR Energy has shown significant growth in turnkey project services business, which grew from 52% to 71%. Its CAGR stood at 58% and PAT CAGR at 61%. It is available at a PE of 27-32 on the EPS of Rs 11.80 for FY08 at respective price band.

BGR wants to use Rs 826 million for Mundra, China and Bahrain projects and Rs 1250 million for working capital requirements. They are investing huge money into power sector. The order book stood at Rs 33.20 billion for September 2007.

The company may report a top line of Rs 1,500 crore and bottom line of Rs 120 crore for FY 08 which would translate into an EPS of Rs 17. As against this, BHEL, maker of Turbines and Boilers, is likely to report an EPS of close to Rs 72 with top line of Rs 25,000 crore and bottom line of Rs 3,500 crore for FY 08. If BHEL is now ruling at a PER of 36 times, what is the justification of valuing this company at a PER of 30 times.

The company does not have its own manufacturing facilities of the equipments and most of them are outsourced. Expertise of the company lies in sourcing and financing coupled with technical expertise of execution. BGR faces heavy competition from large players like Reliance Energy, Engineers India, L&T and other EPC players in the time to come, thus bringing down the margins of the company as well as putting huge working capital pressure. Cash Accruals of Rs100 crore may not be able to give good growth thereafter.

BGR is issuing 91,36,000 equity shares of Rs 10 each for cash at a premium of Rs 470 per share.

This is a good company to invest in. The stock has been oversubscribed 3.5 times on the first day.

Biotechnology Industry in India

2010-03-17T20:41:13Z

Biotechnology Industry in India - by mittar_b

The Department of Biotechnology (DBT) was set up by the Government of India under the Ministry of Science and Technology in 1986 with the aim of enhancing the Biotech Industry in India. Since then there is no looking behind and DBT has produced one of the best scientists of the country since its establishment. India has become the Hub of Biotechnology since the last decade and has become the main center of attraction for global investments due to the skilled and knowledgeable manpower available in India.Due to the rich resources available, India has become one of the major areas for setting manufacturing units and Research laboratories by the MNC’s. Success of Biotechnology industry in India was a difficult one in the early stages due to the long research period and limited funding. The investors remained away from this industry for a long time period but once Biotech industry made its market presence, funds from investors flowed like rivers in this sector.In the next five years, biotechnology sector is expected for an investment of 7 to 8 billions which can result in a turnover of Rs. 9 to 10 billions. Biotechnology is a dynamic field which is inherited from various disciplines such as Biology, Biochemistry, Genetics, Cytology, Chemistry, Pharmacology, Bioinformatics and impacting important areas such as Medicine, Agriculture and environment.

Role of Biotechnology in Medicines

The field of medicine has reached a new high after the introduction of Bio-Technology in this field. Normal medicines has the capability to cure the symptoms of various diseases, but biotechnological process in combination with pharmacology have the capability to develop proteins and molecules which helps in providing a permanent cure for the disease. Microorganisms are used to produce insulin, human growth factors,blood clotting factors, fertility drugs,antibiotics, vaccines and enzymes which can be used to permanently cure human diseases.Gene theraphy can be used in curing genetic diseases which involves replacing defective genes which may or maynot be tranmitted to the next generation.Diseases like AIDS, Cancer, sickle cells Diseases like AIDS, cancer, sickle cell anemia, hemophilia, cystic fibrosis, diabetes and many more can be detected and treated with the advanced technologies provided by Biotechnology.

Role of Biotechnology in Agriculture

The production of high yielding and disease resistant crops through biotechnological concepts has boosted India’s Agriculture sector. New genes can be inserted to the plants which helps in generating more nutritious fruits and vegetables. Their color and size too can be manipulated by replacing defective genes or incorporating new genes. Disease resistant crops can also be produced with the help of Biotechnology by injecting Bt (Bacillus thuringiensis) gene in the crops. The toxin acts as a metabolism and causes the death of the pest. Now we can enjoy our favorite fruits, vegetables and flowers throughout the year without waiting for the particular season with the help of Biotechnology.India is the second largest food producer after China and offers a huge market for Biotechnology products Transgenics of rice,brassica, moonbean, pigeonpea, cotton, tomato and some vegetables like cabbage, cauliflower. Genetically engineered seed market was estimated at $250 million from a total seed market worth US$ 500 millions in 2001.

Role of Biotechnology in Environment

Environment around us is undergoing alot of changes due to the large ammount of pollutants and climatic changes acoss the globe In order to have healthy environment around us it is necessary that the environment should be clean and healthy and Biotechnology has played a vital role in improving the environment by controlliing the oil spills in coastal regions and petroleum leakage in water bodies by incorporating microorganisms that can degarde the harmful products.

In the year 2006 India was ranked 3rd in the South Eastern Asis region after Korea and Japan on the basis of Biotech industries.India has about 280 companies in this particular sector.Indian Biotech industry has achieved a market value of Rs. 6521 crore(US$ 1.45) by registering a growth of 37.42% and is estimated to grow to US$ 5 billion by the year 2010.India’s biological and population mixture has played an important and vital role in the areas of research and drug discovery in Biotech sector.India's biotechnology industry is just 1.1 % of world's Biotech industry but the pace with which the industry is growing, India's biotech industry will become one of the prominent leaders in this field in the coming decades.Bangalore has emerged as the largest Biotech hub in India with a total annual sales of about Rs. 1400 crore. There are about 175 companies working in different areas of bioagri, bioindustrial, bioservices, nutraceutical, biopharma, bioinformatics, herbal products and biosuppliers.Some of the achievements of Biotechnology sector in India is as follows:-

Biotech Industry has registered a growth of 37.42% per annum
Biotech industry has reached US$ 1.5 billion
Bioservices has reached US$ 160 million
Bioagri sector has crossed US$ 130 million
Biopharma has reached US$ 1 billion

The following is the list of Top 10 Biotech companies in India

Biocon
Serum Institute of India
Panacea Biotec
Piramal Healthcare
Wockhadrt Limited
GlaxoSmithKline
Bharat Serum
Krebs Biochemicals and Industries Limited
Cadila Healthcare
Indian Immunologicals

The following graph shows the turnover of some of the Biotech Companies during the Quarter Ended, June 2008.

Arvind Mills - A Textile Bull

2010-03-15T07:28:10Z

Arvind Mills - A Textile Bull - by prakash

Arvind Mills Limited (BSE: ARVINDMILL)

Industry Overview The denim production capacity in India was approximately 230 million metres per annum at the end of 2005. This is estimated to have increased to about 550 million metres per annum by the end of 2006-2007. The estimated demand in the domestic market is growing at an impressive rate of over 25%. However, supply far exceeds this demand, leading to tremendous pressure on prices and volume. This increase will initially focus on the domestic intermediary market before the necessary expertise is created to service the demanding export-oriented business. The situation is compounded by the fact that the Bangladesh market, which has traditionally been a first choice for export, is also experiencing a supply boom. Denim production capacity in Bangladesh is projected to increase from around 40 million metres per annum at the end of 2005, to 160 million metres per annum by the end of 2007. Fabric retail is under tremendous pressure as markets rapidly shift towards ready-to-wear clothing. The proliferation of large-format retail stores is further contributing to the slowdown in demand for fabric. WTO estimates for 2004 put world exports of textile and clothing at $566 billion, more than 6% of total world exports. The clothing sector takes the lion’s share with $322 billion .The export market for various product groups continues to be stable and offers opportunities for the business to grow. The import of cotton apparel into the US grew by an estimated 6% for the calendar year 2006. In the same period, the export of cotton apparel from India to the US grew by an estimated 14%, imports from China grew by 31% and imports from Mexico fell by 15%. The primary objective for Indian apparel manufacturers is to replace the space being vacated by Mexico, Honduras, Guatemala and other countries in South and Latin America. Further, in the total export basket of cotton apparels from Asean and Sub Saharan countries, the markets for Indian fabric have grown by an estimated 20%, demonstrating a positive and rapid shifting of sourcing base. The total textile and apparel import into the European Union (EU) for 2006 has grown by an estimated 3% by value over 2005, while volume has dropped by an estimated 8%. This indicates an increase in prices. Imports from India during the same period grew by 15% in value terms and 9% in volume terms, indicating an improvement in price realization. Interestingly, the data indicates that imports from China in the same period grew by 11% in value terms and only 4% by volume The international denim market is estimated to be about 6 billion square metres. While most of the production is based out of Asia, the main consuming markets are the Americas and the European Union. While capacity in Asia is rapidly increasing as stated earlier, manufacturing units in the EU and Americas are fast becoming unviable and closing down. In the near future, the revenue and earnings composition of your Company is set to shift in favour of the retail and apparel businesses. Business logic dictates that where apparel manufacturing is viable, the fabric business will follow. With the apparel manufacturing base decisively shifting to Asia, even remaining capacity in EU and America will turn unviable or remain with niche players operating in specific segments.

Global Denim Production

The Indian retail market is the most promising of all market spaces. It is present through the branded apparel business as well as through sale of fabric to apparel manufacturers. It also supplies, on a small scale, ready-to-wear garments for store labels to large format retail stores. Recent research has indicated tremendous growth in the organized retail sector in India. This sector is currently estimated at around Rs.16000 crores with an approximate growth rate of 30%. Organized retail, which is currently only about 3%-4% of the annual retail spend in India, is expected to rapidly gain share and grow to approximately 1 lakh crores by year 2010. In the international market, 58% of the organized retail spend is on grocery and only 22% is on apparel. In India, however, apparel accounts for roughly 39%. That would put the estimated market size of apparel sold through organized retail at Rs.39, 000 crores in 2010.

Retail Distribution

Company Background

Arvind Mills manufactures and sells garments, fabric, and branded garments. It has an Electronic Division of EPABX and RAX systems, information technology services. Some of its best selling brands include Flying Machine, Newport and Ruf and Tuf in Jeans and Excalibur in Shirts. Arvind Mills, Sales distribution

Share holding pattern

Sanjay Lalbhai-led Arvind Mills is likely to spin off its retail business under Megamart brand into a separate entity with outside investor participation. This will be part of a larger restructuring of Arvind’s brands and retail business, which is expected to report Rs 450 crore turnovers this year, sources said. Arvind Mills wants to create a retail company under the discount fashion store chain Megamart. Tentative talks with private equity investors have taken place even though the spin-off plans may gather momentum only in the next financial year. Although Megamart is being seen as the major retail growth driver over the next 4 years - the company is targeting revenues of Rs 2,000 crore from the value chain format by the end of FY 2011 -Arvind Mills could look at premium formats to expand the retail play. Megamart’s current turnover is in the region of Rs 150 crore. The spin off move could come when the chain more than doubles its turnover to Rs 275 crore within next 12-18 months. Arvind is focused on developing Megamart into Rs 2,000 crore entity by 2011 with over 2 million sq ft of retail space across India. Megamart currently has over 2 .5 lakh sq ft locked up and is expected to end this financial year with over 4.5 lakh sq ft space. In the fourth quarter of the ongoing fiscal, Arvind is expected to unveil large format stores of Megamart in Chennai, Pune and Hyderabad. These stores may vary between 50,000 sq ft and 1, 00,000 sq ft in size stocking around 80-100 brands. With this, Megamart, which hitherto retailed only Arvind’s own or associate brands, will be opening doors to brands from competing companies. The move will see it pitched directly against Pantaloon’s Brand Factory in the value fashion segment. Megamart is projected to show up with 90 odd stores by March 2008, including the three large format outlets and take this to 200 doors by 2011. With rival brands Arvind adding more international brands like Cherokee and US Polo, Megamart is expected to see its revenue move up to Rs 34/35 per sq ft, up from around Rs 25/26 currently. At present, Megamart stocks Arvind’s own brands Ruggers, Flying Machine, Newport, Excalibur and licensed ones like Lee, Wrangler and Arrow. Arvind Mills’s net profit after extraordinary items more than doubled to Rs 10.50 crore for the quarter ended September 30 as compared to Rs 4.74 crore for the corresponding period last year. Total income of the company has increased 14.61% to Rs 565.39 crore in the September quarter as against Rs 493.28 crore for the same period a year ago. Even if the Company manages to capture only 5% of market share, this would translate into revenues of almost Rs.2000 crores, giving a CAGR of 60% for its branded apparel and retail business. Arvind’s Shirting product group is facing a challenge in the domestic intermediary market. The growth in apparel exports from the region will help strengthen the relationship of the Company with major American brands to create larger business volumes. For the time being, denim continues to be the mainstay both in terms of revenue and earning.

As on 31st March 2007, 7, 49,692 GDRs (previous year 11, 50,042) are outstanding. Each GDR represents one underlying equity share.

Performance Snapshot

PE Ratio	14.64
EPS (Rs)	5.71
Sales (Rs crore)	563.74
Net profit margin (%)	1.36
Return on average equity	1.68

HDFC Bank - Banking on growth.

2010-03-09T08:37:20Z

HDFC Bank - Banking on growth. - by prakash

HDFC Bank Ltd (NYSE:HDB)

The average growth rate of the Indian economy over a period of 25 years since 1980-81 financial year beginning April has been about 6.0% p.a., with the growth rate averaging 9.1% p.a. during the last two years.

The strengthening of economic activity in the recent years has been supported by a persistent increase in the domestic investment rate from 22.9% of GDP in 2001-02 to 33.8% in 2005-06 coupled with more efficient use of capital. Domestic saving rate improved from 23.5% to 32.4% of GDP during the same period. The services sector continues to be the driver of growth with a share of around 60% in the overall GDP and contributing almost three-fourth to overall growth. The manufacturing sector has shown good growth supported by domestic as well export demand. The Real GDP Growth for 2006-07 is expected to be 8.5-9.0%.

India’s merchandise exports recorded a growth rate of 22% during April-December 2006 as compared with 22.9% in the corresponding period of 2005. Imports rose by 24.8% as compared with 37.8% a year ago. While petroleum, oil and lubricants imports rose by 39.2% during April-December 2006 as compared to 46.9% a year ago, non-oil imports showed a lower growth of 18.7% from as against a growth of 34.3% in the previous financial year.

Exports have been growing at an average rate of around 25% during the last three years. Sustained growth in export of services and remittances continued to provide buoyancy to the surplus in the invisible account, which enabled financing a large part of trade deficit. There was a significant strengthening in the capital account with the foreign exchange reserves crossing US $ 200 billion; the reserves currently exceed the country’s external debt of about US $ 140 billion as on September 2006.

During 2006-07, non-food credit expanded by 31.2% compared to 25.2% a year ago. The Y-o- Y growth in aggregate deposits at 22.5% was higher than that of 17.2% a year ago and was also the highest since 1993-94 on a comparable basis. Bank deposit rates increased by 100 – 300 basis points during the year across various maturities on account of tighter liquidity conditions coupled with high credit growth.

The financial year 2006-2007 started with the banking system remaining surplus in liquidity till mid of December 2006. However, thereafter due to the tightening of monetary policy by way of increase in CRR and advance tax outflows, the banking system remained net borrowers of funds from RBI for most part of the January - March 07 quarter. Tight liquidity coupled with high credit growth led to an increase in rates offered on deposits by the banks. During the financial year, the benchmark reverse repo rate was revised upwards by 50 basis points to 6.00% presently. Similarly the repo rate was revised upwards by 125 basis points to 7.75%. The Cash Reserve Ratio was also increased from 5% to 6% during the financial year 2006-07.

The one year Government Securities (G Sec) yields which reflects the liquidity condition in the economy climbed from 6.54% in March 2006 to 7.31% in March 2007, an increase of approximately 77 basis points through the year. The 10-year G Sec yields showed a smaller year-on-year movement of 42 basis points to 7.94% at the end of the year.

The capital markets remained buoyant in the last fiscal with the stock indices touching their all time highs in the recent months. During 2006-07, the Assets Under Management (AUM) of mutual funds has grown by Rs. 95,283 crores, an increase of 41.2% over the previous year’s AUM.

HDFC Bank is a private sector bank and financial services company in India. The bank operations are broadly classified as Wholesale banking services, Retail Banking services and Treasury operations. In the wholesale banking segment it offers commercial and transactional banking services, including working capital finance, trade services, transactional services, cash management, etc. In the retail banking segment it offers individual customers, financial products and banking services such as ATMs, Phone Banking, Net Banking and Mobile Banking. In the treasury operations it deals with Foreign Exchange and Derivatives, Local Currency Money Market & Debt Securities, and Equities. It has 684 branches in 316 cities.

Shareholding pattern

The financial performance of bank during the fiscal year 2006-07 was good as total revenues increasing by 42.4% to Rs. 5225.8 crores from Rs.3669.8 crores in 2005-06. The revenue growth was driven principally by an increase in net interest income. Interest income grew by 45.7% due to an increase in the average balance sheet size by 36.6% and an increase in net interest margin from 4.0% to 4.3%. The increase in net interest margin was due to better mix of deposits with a higher proportion of current accounts and an increase in lending rates was partially offset by higher costs of deposits and costs of borrowings. The Bank increased its Benchmark Prime Lending Rate (BPLR) thrice during the year as a result of increase in interest rates in the banking system due to tight liquidity conditions.

The other income increased by 34.9% to Rs. 1516.2 crores due to fees and commissions and income from foreign exchange and derivatives. In 2006-07, commission income increased by 23.7% to Rs. 1292.4 crores with the main drivers being commission from distribution of third party mutual funds and insurance, fees on debit/credit cards and transactional charges/fees. The Bank incurred net losses on sale /revaluation of investments of Rs. 68.4 crores as a result of the sharp increase in short term yields in the debt markets in March 2007. Large portions of the non-SLR investments were bonds in which the Bank had invested in previous years for meeting priority sector lending requirements. Foreign exchange and derivatives revenues grew from Rs. 118.6 crores to Rs. 280.3 crores

Operating expenses increased from Rs.1691.1 crores in 2005-06 to Rs. 2420.8 crores in 2006-07, due to significant expansion in new branch infrastructure, retail loan products and the credit card business. The ratio of operating cost to net revenues remained more or less stable at 46.3% as against 46.1% in the corresponding year. Staff expenses accounted for 32.1% of non-interest expenses in 2006-07 as against 28.8% in 2005-06, due to an increase in staff strength from 14878 to 21477 and also due to increase in salary levels. Specific loan loss provisions for NPAs and general provisions for standard assets increased from Rs.479.8 crores to Rs. 861.0 crores in 2006-07. In May 2006 and January 2007 the Reserve Bank of India increased the general provision requirement for certain standard assets such as personal loans, credit card receivables, capital market exposures and real estate exposures resulting in an extraordinary onetime general provision of Rs 158 crores for 2006-07. Provision for amortization of investments was Rs. 241.09 crores, principally due to the amortization of the premium of SLR investments in the ‘Held to Maturity’ category.

Net profit increased by 31.1% from Rs. 870.8 crores in 2005-06 to Rs. 1141.5 crores in 2006- 07. Return on average net worth was higher at 19.4% from the previous year figure of 17.5%. The Bank’s basic earning per share increased from Rs. 27.92 to Rs. 36.29 per equity share. The diluted earnings were Rs.26.33 per equity share in 2005-06 and for the current year is Rs. 36.06.

The Bank’s total balance sheet size increased by 24.1% to Rs. 91236 crores. Total Deposits increased from Rs. 55797 crores (as of March 31, 2006) to Rs. 68298 crores (as of March 31, 2007) with savings account deposits at Rs. 19585 crores and current account deposits at Rs. 19812 crores. In the January to March 2007 quarter time (fixed) deposit rates in the banking system increased sharply to levels which the Bank considered unattractive and unsustainable. The Bank, therefore, allowed some of its wholesale deposits to run-off, without affecting its liquidity position. As a result, demand (CASA) deposits were around 57.7% of total deposits as of March 31, 2007. During 2006-07, gross advances grew by 29.6 % to Rs. 49780 crores. This was driven by a growth of 33.4% in retail advances to Rs. 28327 crores, and an increase of 24.9% in wholesale advances to Rs. 21452 crores.

The latest quarterly reports indicate a healthy growth as well. The Bank has posted a net profit of Rs 3684.8 crores for the quarter ended September 30, 2007 as compared to Rs 2629.40 crores for the quarter ended September 30, 2006. Total Income has increased from Rs 19757.50 crores for the quarter ended September 30, 2006 to Rs 28451.40 crores for the quarter ended September 30, 2007.

Fund Exposure

Transportation	10.74%
Banks and Financial Institution	5.51%
Trade	4.52%
Automobiles and Auto Ancillaries	4.47%
Financial Intermediaries	2.88%
Food Processing	2.33%
Engineering	2.14%
Fertilizers and Pesticides	2.11%
Retail	44.10%
Other Industries	21.20%

HDFC bank’s biggest competitor is ICICI bank but there’s is a big difference between ICICI Bank’s functions to that of HDFC Bank. ICICI Bank is raising equity and using these proceeds to fund its own growth, which is expected to remain high, and its investments in other subsidiaries, which require very large capital like its insurance business. For HDFC Bank, there are no such subsidiaries and hence there is no such concern for the mortgage lender.

Preference is always given for HDFC Bank, as the risks are much lower than in the case of ICICI bank. It’s not very clear in the case of ICICI bank as to who will fund the insurance venture. Excluding that, one will find that ICICI Bank has a huge retail exposure and that has been showing some stress in the economy. If there is some problem say on the leverage side and ICICI Bank has really leveraged itself very highly in that area, then there are always going to be concerns. While HDFC Bank does not have such concerns and has a very stable outlook.

ABG Ship Yard

2010-03-17T20:16:29Z

ABG Ship Yard - by gsnarayanan

ABG Shipyard Ltd group was established in the year 1985 as Magdalla Shipyard Pvt. Ltd, with the main objects of carrying Shipbuilding and Ship Repairs. Now the company has become the largest shipbuilding yard in private sector of India. The corporate office of the company is in Mumbai and the registered office and the yard are situated at Surat located in Gujarat. The ship yard has modern ship building facilities such as a ship-lift facility with a capacity of 4500 tons, side transfer facilities, CNC plasma cutting machine, Bending rolls, Hydraulic press, cold shearing machine, frame bending machine and steel processing machinery. The facilities include a fabrication shop and a blasting shop. The manufacturing processes adopted by the ship yard are of world-class standards certified for ISO9001:2000. Multiple Building Berths are provided in the ship yard. There are two dry-docs incorporating the Computerised Synchronous Ship lift Platform. The Graving Dry dock is served by 80-T Goliath Crane of span 50 m and height 35 m. There are also cranes of 150 T capacity, 60-T capacity manufactured by Tata P&H, 50-T crane of HM make, and another 80-T crane. The "Ship lift Facility” has provided the yard a tremendous logistical advantage and flexibility by enabling simultaneous building and repairing of many vessels. These facilities have enabled the shipyard to execute many prestigious Shipbuilding and Ship-repair contracts against stiff International Competition in both Export and Domestic Markets. The company has constructed and delivered various types of vessels like Interceptor Boats, Self Loading and Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, etc. It has so far delivered about eighty eight vessels for leading companies in India and abroad.The reputation of the company has grown in to many folds in the quality at competitive prices and delivery periods, since the vessels produced in the ship yard have performed very well. Dredgers, Ethylene Carriers, Bulk Carriers, Offshore Supply Vessels and Coast Guard Vessels have been successfully repaired and refurbished in the Ship Repair Division. During 2007, the company has signed a Memorandum of Understanding (MOU) for acquisition of Vipul Shipyard (Vipul) situated adjacent to the Company's existing shipyard at Magdalla Port, District-Surat, and Gujarat

The following are some of the notable contributions of the company:· 2 Nos. of interceptor Boats (45 knots vessels) in Aluminium hull with Water Jet Propulsion to the Indian Coast Guard.· 2 x 4000 DWT Cement Carriers for Cement Ambuja International, Mauritius.· 4 x 50T Bollard Pull SRP Tugs for Wijsmuller, Holland (An A.P.Moller & Co.)· 4 x 60.8M Anchor Handling Tugs / Supply Vessels & 1 x 42M Well Head Maintenance Vessel (Aluminium Hull) for Halul Offshore, Doha, Qatar.· 1 x 50M Well Test / Supply Vessel and 1 x 56M Well Test / DPS-2 Vessel for Al Mansoori Production Services, Abu Dhabi.· 3 x 47M - 80T Multipurpose Vessel for Lamnalco Group, Sharjah.· 4 x Utility Vessel for Zamil Operation & Maintenance Company Ltd. · 1 No. 60.8M Diving Support Vessel - DP1 Halul Offshore Co., Doha · 1 No. 83.5M Dynamic Positioning - DP2 Type Vessel with Diesel Electric Propulsion for Consolidated Contractors Construction Co., UAE.

The following are some of the pending orders with the company:· 2 Nos. 53M - 90T B. P. ASD Vessels from Lamnalco Group, UAE.· 1 No. 90M Pipe Lay Barge, 5 Nos. 61M Anchor Handling Tug Supply Vessels and 1 No. 78M DPS-2 Diving Support Vessel from Maridive, Egypt.· 3 Nos. 94M Pollution Control Vessels for Indian Coast Guard.· 4 Nos. Articoupled Barges for Essar Shipping.· 4 Nos. 63M Anchor Handling Tug Supply Vessels from Sea tankers Management Co. Ltd., Norway · 1 No. 60.8M Offshore Supply / Supply Vessel from VROON B. V., Netherlands.· ABG Shipyard Ltd has also got a prestigious order for 500 passenger vessel from the Administration of Andaman and Nicobar Administration, Port Blair, which is under construction presently.· During the year 2006, the company secured order from Lamnalco, Cyprus and order from Vroon BV.· The Company has secured a repeat order, from Gujarat Ambuja Cements Ltd (GACL) for construction of 1 No. Self Loading & Unloading vessel of 4000 DWT Bulk Cements Carrier at a price of USD 9.90 Mio. Approximately. · During the year 2007, another repeat order has been received by the company from Lamnalco Ltd, Cyprus for 2 vessels amounting to USD 34.20 million. · ABG Shipyard Ltd has bagged a prestigious order for the construction of 3 units of sub-sea multi purpose vessels from Sealion Shipping Ltd on behalf of Toisa Ltd. These vessels are designed for a world class subsea and ROV support duties. The total order size is approx. Rs. 585 cr (US $ 136.65 Mio)Stocks and FinanceDuring the year 2005, the company entered in to the financial stack market by offering 85 lakh equity shares at Rs 155-185 per share.The fundamentals are given below:

Financial Year	2004	2005	2006	2007	2008
Net Profit(Rs cr)	12.91	44.75	83.68	97.45	119.13
Shares (in cr)	1.30	3.25	5.09	5.09	5.09
EPS(Rs)	9.93	13.77	16.43	19.14	23.39
% Growth		38.65	19.35	16.45	22.24
P/E (x)	25.07	18.08	15.15	13.01	10.64

Future growth possibilities· Booking It is understood that the company has orders in excess of Rs 2350 crores. Currently the order book position consists of 50 vessels which are likely to be executed in the coming two years time period. Thus ABG shipyard has the possibility of fast growth in revenues.· Indian Demand likely to go upIt is estimated that the average age of a vessel is about 16 years to19 years. It is expected that there will be a huge replacement demand in the next 4 to 5 years as a result of replacement demand. It has been estimated the at least 60% of the existing fleets would require replacement in the next five years. With this in view ABG is expanding its capacity by setting up a new ship yard at Dahej The new yard would have capacity to build vessels up to 120,000 DWT. · Exploration activities and demand for offshore vehicles:There is a possibility of increase in domestic exploration activities with the setting up of several oil rings This will increase the demand for offshore vessels used for transportation of oil.· The Government of India is providing a major support to the domestic ship building Industry by setting up a project Sagar Mala for developing the Indian maritime sector. This project is aimed at capacity expansion/modernisation and creation of new ports along the Indian coastlines. This would create additional demand for new ships.

Q1 results as on July 30, 2008

The unaudited results for the quarter ending June 30, 2008 indicates a profit after tax of Rs 470.129 million as compared Rs 334.038 million for the quarter ended June 30, 2007. Total Income has increased from Rs 2066.647 million for the quarter ended June 30, 2007 to Rs 2800.900 million for the quarter ended June 30, 2008.

Major concerns At present the Government of India is giving 30% subsidy to domestic ship builders. The discontinuation of this subsidy can result in substantial reduction in profit margin for the company. ABG is facing a stiff competition in domestic as well as international players. The domestic companies include the Cochin Ship yard, Bharti Ship Yard. The Chinese and South Korean companies pose a major challenge to ABG in the international sector.

Merchant Cash Advance - A Practical Key To Succesful SMEs Trading And Financing

2010-03-17T22:52:58Z

Merchant Cash Advance - A Practical Key To Succesful SMEs Trading And Financing - by lovephileo

For SMEs, let me discuss some guidelines and tips for your effective financial management.

I have several friends who already quit their professional careers and gone through putting their own small business. Most of their small businesses require additional working capital to expand their operations and most of them go through loan applications. But finding the best lender that gives the most reasonable terms can be hard and oftentimes strict requirements and a good credit standing is a major factor for loans approval. This is a common difficulty. It is often a standard operating procedure from these lenders to ask for collaterals, a good credit status and even a third-party guarantor in order to qualify for a loan. Non-compliance often resulted to denial of loans. With merchant cash advance or business cash advance, working capital to small and medium-sized entrepreneurs is now a simple and an easy thing to get it done.

Working capital, refers to a business organization's total current assets (short-term ones), marketable securities, accounts receivables, inventory and cash. Access to capital is important for businesses to advance to the next level or to sustain through a rough time. Traditionally, when a business needed additional cash, a trip to the bank for a business loan would solve the problem. But a traditional bank or financial institutions such as in business loan would require a minimum credit score for the business owners, tax returns, financial statements and takes weeks or even longer to secure . With the state of today's economy, businesses are looking for alternatives to the traditional business lending of the past.

A merchant or business cash advance is a very good alternative. A cash advance pays a business for its future credit card sales up front (before those sales are actually made). The amount of the advance is determined by the merchant's average monthly credit card sales. As future credit card sales occur, the cash advance is paid back with a small fixed percentage of the daily credit card sales. The merchant is charged a fee for the advance and that fee is included in the payback amount.

Cash advances are a safe and reliable means to acquiring capital for your business. But when acquiring additional capital, an entrepreneur must be sure to secure plan of action for the funds, to use the money wisely and let it help you advance your business to the next level. Business cash advance is a great way for small business owners get the funding they need, with a fast and simple process, merchants can be funded with up to $500,000.00 in as little as 10 days.

How merchant cash advance works?

A lender will purchase a small percentage of your future credit card sales, until the payback is completed and will give you upfront the money your business needs. Oftentimes, the business owner will be approved even with a less than great credit history record, making a merchant cash advance a top funding choice, although the approval is much easier than it is with most bank loans, few cash advance lenders will lend to new merchants or start-ups without a history of credit card statements. Even less lenders will approve amounts larger than what the business can predict to earn from credit card sales in a year. The lenders takes all of the risk, but since it is paid out of projected future sales, it is typically a risk worth-taking. Seasonal businesses that need cash flow to move them through slow seasons or merchants who have an unexpected low seasons, may find a need for a cash advance until business picks up.

There are many times when owners of healthy small businesses could use cash flow or working capital to help build their businesses but don't qualify for the traditional bank loans. These include franchise owners who have exhausted their personal savings to purchase their franchise and would like to open another one; merchants who can buy bulk inventory at discount rates or move into a new more efficient locations; expansions; new equipment or simply the desire to move forward on a great new opportunity would definitely avail cash advance.

Strategies to finance short-term working capital needs much greater attentions than are usually practiced. Precisely speaking, there are two short-term working capital financing options; business cash advance program and short-term commercial mortgage loan programs that have been often overlooked. But these two working capital funding options are excellent for small and new business ventures toward initial financial obstructions off their way. Business cash advance is one of the best financing options for businesses accepting credit cards as mode of payment.

For more clarifications - to acquire merchant cash advance:

A-B is not required

No tax return or financial statements are required

Business owner is not personally liable for the cash advance amount

No application fees or closing costs

A simple application process

Approve within 24 hours

Now, it is easy to understand why cash advances are widely accepted in the business community and steadily increasing in popularity. In the Philippines, many straight lending institutions are also playing with it; however, they used to convert customer's postdated checks into cash which is eligible to those whose business normally accept postdated check payments.

Google's Search Miracle

2010-03-17T12:05:37Z

Google's Search Miracle - by xpertwriter

Google made its name on the web by doing things differently. When every other search engine was trying to fit as many bells and whistles as they could onto the main search page, Google was doing the complete opposite by stripping out everything except their name and the search box. They focused on the getting high quality results, and users voted by leaving other search engines behind.

Now Google is a mega-billion dollar corporation with a huge range of unobtrusive feature such as the ability to “search by number” for ISBNs or patents, or other things sorted by number; web page translation which allows you to look at pages written in a foreign language in your own language (although imperfect you get a good flavour of what is being said); right the way through to US phone book entries and street maps/ satellite images.

Google offer many pieces of satellite software useful to office workers: spreadsheets; word processors, the works. As well as all those there is a simple and unusual currency conversion calculator online.

The first thing that you notice is that unlike almost every other currency exchange calculator you'll ever see online, Google does not have a separate set of input boxes for “from”, or “to” currencies. Nor is there any box specifically for the volume of currency that you'd like to convert.

You only get one box in which to put ALL your criteria, and you can use different formats for your currencies. Explaining this is much easier using examples. These are the examples as they appear on the Google calculator:

3.5 USD in GBP
currency of Brazil in Malaysian money
5 British pounds in South Korean money
2.2 USD per gallon in INR per litre

The first example is fairly easy to follow – convert $3.50 US to Pounds Sterling. This example uses the 3 letter international currency code to designate which currencies are involved – USD and GBP.

“Currency of Brazil into Malaysian money” is more of a naturally-spoken query, and not the sort of query most people would expect software to answer. But it does.

“5 British pounds in South Korean money” is essentially the exact same example, but with a number of units assigned (5 pounds) instead of “no volume” for either currency.

“2.2 USD per gallon in INR per litre”. If you're not sure what this is example is converting it may be because it is mixing the conversion of currency, and the conversion of units of measurement in the same query. It is asking Google to convert $2.20 (American) per gallon to how much that would be per litre in Indian rupees (as Indians buy their petrol in litres this is the most effective way of comparing the cost of petrol).

Incredibly, Google just says “yes, fine” and spits out the answer!

You can mix and match all kinds of price-per-unit for all kinds of units (weights, lengths, volumes) and all kinds of currency. It is actually shocking.

Bladelogic - Shying away

2010-03-17T05:53:42Z

Bladelogic - Shying away - by khanan

What is the new direction of IT?

Today’s IT organization plays a central role in virtually all business planning. Executives look to information technology as a primary source of business agility, an essential determinant of market success. IT is asked to provide critical, real-time business services and information to enhance the decision making of the entire enterprise. New IT requirements are attached to virtually every new business initiative, and the overall success of each initiative is tied to the cost effective delivery of new IT capabilities.

This unprecedented link between business decision making and IT requirements coincides with an equally unprecedented increase in the complexity of IT management. Smaller, denser and more powerful computing assets have proliferated. Internal customers require more readily available management information and more predictable service levels. The IT organization is adapting simultaneously to new technologies and to new expectations and is now facing an all-too familiar challenge: do new things with an old budget, and do them better.

The focus is on the customer rather then the technology. Requirements from customers drive all technology decisions; they are rapidly prioritized and rapidly executed. Service level promises are described in advance and thoroughly documented. Implementation deadlines are always met – unless otherwise communicated to the customer. Quality problems are closely analyzed and lessons are constantly ingrained to avoid repeated mistakes.

All decisions are based on a cost-benefit analysis. Decisions affecting both customers and the business are made with full analysis of cost versus benefit. Services are fairly priced. Off-budget investments are possible when analysis suggests a desirable return. Excess costs are redirected to the originating customer. Costs are consistently driven downward by best practice adoption and the effective use of enabling technologies.

The focus is on information rather than data. The business maintains a ready source of critical information to support all decisions; information is either proactively delivered or available in real-time. Environmental monitors report known or impending failures to meet established service levels. Requests from customers for new capabilities are met with accurate, timely cost estimates. New cost-saving, feature-rich technologies are rapidly researched and the results are proactively distributed.

These objectives represent the ideal goal for any company seeking to run IT as an internal service provider. The remainder of this paper will make concrete recommendations to help IT executives transform their approach, become better aligned with emerging trends in the market and reconcile rigid requirements for cost containment with equally firm requirements for agility and quality.

Traditionally, companies have deployed applications with separate development team from different business units. But to serve customers, the business requires cross-organizational communication from different business units. So there exist two directions of views: horizontal view from business and vertical view from IT.

The tiered silo infrastructure complexity brings the following problems:

Lack of consistency among platforms, configurations, architectures, management tools and processes
Inefficient resource utilization (infrastructure & staff)
Inefficient to reclaiming and repurposing hardware and software that is underutilized
Provisioning for new services

The current model further presents the following problems as it relates to the business of IT:

Server Provisioning - Preparing a server for operation once the hardware setup is complete.

IT organizations face constantly changing requirements from the businesses they support and the applications those businesses rely on.
Accuracy in the server provisioning requires the interaction of system administrators, security engineers, data center operators and others.
The operating system is installed, configured to work within the security and network environment, patched to established standards and then tuned with relevant utility packages.
Exacerbating this situation are server utilization rates that average less than 20% due to the widely accepted practice of creating dedicated hardware and software islands for each new application rather than re-purposing existing IT resources

Code Deployment - Deploying new code or content across the environment

Code deployment is done by using framework tools, manual methods, or ad hoc scripts that lead to inconsistency and risk outages.
The distribution of code, content and configurations to applications occurs across multiple operating systems, including Windows and various flavors of Unix – creating an even more complex task for administrators.

Application Change Management

No environment remains static for long. Changes are most often performed on applications and application servers and other software infrastructure – which unfortunately are also the most frequent sources of downtime.
To manage change safely and effectively, application installation parameters, configuration techniques, component installation orders and start-up prerequisites must all be available to authorize change agents – and withheld from those lacking authorization

Software Provisioning

Installing and configuring packaged software – database servers, messaging servers, web servers, application servers, directory servers, and other software infrastructure – is one of the most common and time consuming tasks system administrators perform
After basic installation, administrators often spend weeks or months configuring the software components to make the systems ‘work.’
The best practices that one administrator learns is rarely shared across the organization, making new deployments experience independent that contributes to more instability and downtime

Patch and Compliance Management & Security

Security is synonymous with control. Given how data center assets are managed today, IT organizations have very little control or visibility of what is happening with their servers, who is touching them, what changes are being made, by whom, and how the configurations of the servers and applications compare to their desired state
Due to increasing regulatory pressure to implement strict management controls, requirements such as Sarbanes-Oxley, SAS-70 and HIPAA have put an additional burden on IT organizations to allocate resources to document, track and measure the compliance of their data center processes and assets to regulatory and corporate policies
Non-compliance with security patching has cost CIOs billions of dollars in system damages over the last two years

Current Automation Process

In most cases, the “script-based” form of automation is the de facto prerequisite for more challenging work
Consideration is needed for how these tasks are performed with limited expertise and an incomplete, or inaccurate understanding of the environment
Lack of knowledge sharing seen throughout the environment as one SA writes the script and delegates responsibility to others for execution
Scripts are sometimes stored in system administrator’s home directories, making knowledge sharing of both script creation and execution more difficult

What is the future of computing infrastructure in a data center?

The number of servers in today’s data center is exploding due to the proliferation of Web-based applications.

Most IT organizations are still using manual processes or, at best, tools from mainframe or client/server eras to manage those servers and applications. Those existing techniques and tools cannot cope with the explosive growth of servers and applications in today’s data center. Compared to applications running on mainframes or in client/server architectures, today’s environment is characterized by:

More servers: Today’s applications run across more servers in an n-tier architecture to support more users and take advantage of the price/performance economics of commodity hardware.

More applications: Web-based applications are simpler for development teams to write, so the number of applications has mushroomed. Where IT organizations might deploy a handful of large client-server applications a year, they (or developers) are now deploying dozens of Web applications a month.

More complex integration: The “plumbing” ‘underneath applications has also become more complex, forcing IT teams to tie together infrastructure products such as operating systems (and their associated patches), databases, application servers, as well as link them to other existing applications.

More uptime: Because Web applications have become a mission critical part of the IT landscape, and since external customers and partners—not just internal employees—access applications, the need for 7x24 uptime has never been higher.

Without a new breed of automation solutions designed from the ground up to manage the complexities inherent in today’s Web-based architecture, IT teams are forced into the impossible position of deciding between increased spending (not likely in today’s environment), lower service levels guarantees, compromised security, or inflexibility (in other words, trying to put the brakes on new applications development because operations can’t manage them).

Fortunately, a new breed of IT automation solutions is now available to help IT organizations take a fundamentally different approach to managing their distributed server environment. These new types of automation solutions enables IT organizations to control costs without compromising quality or business agility. This new generation of automation solutions helps IT organizations answer key operational challenges, such as

How do I automate configuration and change management to ensure consistency, reliability, and accuracy?

How do I rapidly provision and deploy new applications to support the business, while maintaining cost controls?

How do I define and enforce best practice policies and processes to improve my organizational efficiency?

How do I ensure data center security, including managing access to servers and applications as well as patch levels to prevent internal and external threats?

How do I ensure rapid, cost-effective disaster recovery so I can quickly recover from a disaster scenario?

To address each of these challenges successfully, IT organizations need a comprehensive platform to automate IT operations.

This is where data center automation companies come in, like Bladelogic

Who gains the most?
IT departments responsible for large, geographically dispersed data center environments; those managing numerous, disparate technologies and platforms (e.g. UNIX, Linux and Windows); those who make frequent changes to their environment; and those with high rates of turnover achieve the highest ROI from implementing DCA solutions.

Measuring the ROI of DCA

The return on investment from DCA software is measured in terms of reduction in the number of IT staff required to operate the data center, increased IT efficiencies, improved accuracy of changes to improve the first try success rate, and improved quality of data center operations.

Improved server to system administration ratios

By enabling remote, scalable management of hundreds or thousands of servers, organizations can improve their server to system administration ratios. On average, non-automated IT departments currently achieve 18:1 server to administration ratios. Leveraging a data center automation solution has been proven to significantly improve those ratios, to as good as 100:1.

Increased efficiency

By automating many of the manual tasks involved in deploying and managing hundreds or thousands of servers running software, IT departments see productivity gains by using automation solutions to speed operational tasks. Deployments, upgrades and patching processes that used to take weeks and months can now be completed in minutes, hours or days.

Improved operational consistency and quality

Because data center automation technology allows for accurate record keeping and best-practices repository that maintains an up-to-date record of the customer’s environment, IT departments reduce their reliance on specialists and document management systems and processes. These specialists normally capture knowledge of the systems and take that knowledge with them when they leave an organization.

Reduced downtime

Because automation brings an improved consistency and hence higher level of quality to IT operations, system downtime and the costs associated with downtime are significantly reduced.

Improved security

Using a model-based, centralized tool such as RBAC (Role based access control) allows organizations to enforce processes and best-practices for building and making changes to servers. This reduces the risk of ad-hoc changes causing an unforeseen breach in overall system security. In addition, data center automation provides the ability to maintain automatic audit trails of all changes made to each and every managed server in an environment, and who made the changes. This creates a greater degree of accountability within a staff, and reduces the risk of internal tampering.

Improved IT visibility

Data center automation system maintains an always up to date inventory of the hardware and software running in your environment. This automated server inventory and software tracking gives IT greater insight into their operation activities, enables resource analysis, and provides IT with greater visibility into server and software states. IT departments can use data center automation tools to easily deliver detailed reports to finance or other departments for compliance and other accounting purposes.

Improved disaster recovery and business continuity planning

IT departments can use data center automation to manage geographically dispersed application environments from a single console. This allows for simultaneous updates across multiple data centers and ensures consistency in complex, distributed application environments. In addition, as server changes are made in one location, data center automation tools capture and store those changes in other data center locations – enabling rapid re-build of an entire environment in the even of a disaster.

Efficiency Gains from DCA (Data Center Automation)

The most significant gains are found in the following tasks:

Operating system provisioning

Organizations need an automated way to provision a complete server baseline onto new or existing servers so the application-ready system is in a known, consistent, and secure state. This need for automation is apparent when the task at hand is to provision just 1 or 2 servers – and so much more apparent when the need is to provision 20 or 30 servers over a weekend to quickly ramp up capacity for a demanding business application. Automated OS provisioning gives administrators the ability to provision operating system baselines quickly, consistently, and with minimal manual intervention onto bare metal servers. Automated OS provisioning provides greater improvements to IT efficiency by enabling rapid, scalable OS provisioning across UNIX, Windows and Linux servers.

Software provisioning

Installing software and business applications, across a large number of servers, requires significant time and expertise in the installation procedures, configuration, and best practices for each software package. Automated software provisioning improves the quality, consistency and security involved in installing software into the production environment – by capturing and leveraging the expertise required to deploy software. It also allows IT to rapidly and consistently deploy software simultaneously across hundreds or thousands of servers, using best practices and proven configurations. Users can reduce the time required to build new applications and reduce the cost of operations by automating knowledge transfer between organizations.

The automation system also models all software changes, validates changes before propagating to the physical environment; differences between the modeled environment and physical are automatically reconciled.

Patch Management

Typically, an organization must use several tools to detect vulnerable servers and patch levels, apply patches to large numbers of servers, and create patch reports. Adding to the overall cost, any new patch distribution to existing servers requires an update to the standard server builds, to include that same patch on any future servers. Research from the META Group estimates it takes 1920 hours to apply four patches (the average number an IT department deploys per month) across 120 servers. Multiplied by hundreds or thousands of servers, and again by the number of patches published per month, and an organization’s annual patch cost is typically measure in the millions of dollars. By automating the process of detecting and applying patches across hundreds or thousands of servers simultaneously, rather than manually one by one, data center automation saves IT organizations significant time and money.

Distributed script execution

Executing scripts can be a manual, repetitive process that entails logging to each server, executing the script viewing the output, taking any necessary follow-up action, and moving on to the next server to perform the exact same steps. An automation script solution automates script execution by allowing administrators to perform tasks across hundreds or thousands of Unix and Windows servers simultaneously, greatly improving IT productivity.

Code Deployment & Rollback

Deploying new code or content can be a tedious process that frequently causes outages in a customer’s operations infrastructure. An automated code deployment & rollback solution reduces the risk of causing downtime or poor performance by automating the deployment (and, if necessary, rollback) of code, content and configuration changes on multiple operating systems. Automation administrators use a console interface to manage the process end-to-end. Because code and configuration changes are a frequent cause of application downtime, the code deployment and rollback system has built-in rollback capabilities: administrators roll back to a last known good release across all affected servers with a single push of a button. Users can distribute changes across hundreds of servers at once, greatly increasing IT efficiency.

Some questions companies would ask before deploying a solution like Bladelogic

Companies that have paid attention to the importance of automation and its rapid growth in the industry are likely to implement these tools internally. They realize there is a significant gain in productivity from implementing these tools and have discovered ways of doing so. Some may have an internally grown tool created by application developers or other IT personnel that are custom suited for their environment. Others may have already formed alliances with vendors that specialize in automation tools. In either case, there exists a potential opportunity with the customer if they have an unsatisfactory result from using these tool(s) or if they wish to expand in other areas of server consolidation.

Questions that are relevant in this scenario are:

Is the company required for audit & compliance of servers? If the company already uses a tool, what is the tool and how are the results? Is management satisfied with the tool’s reporting?

Are there requirements for consistent change configuration of servers? If so, how is the company executing this change? If the company is using a homegrown or vendor tool(s), are they satisfied with the results? Are they able to rollback changes and are those changes recorded? Has the company experienced any problems with their tools?

Does the company have requirements for application provisioning? How is application provisioning performed? Are there external tools that are used? Is provisioning consistent across the environment or is it done on an “as is” basis?

If the company does have a tool in place, are they satisfied in the performance of application provisioning on many servers?

What are the staffing efficiencies for provisioning & configuration management in a multiplatform data center? What is the current server to admin ratio in the environment? Is the company satisfied with their amount of administrators related to the number of servers in their environment?

Are there requirements for patch management of servers? If so, what tool(s) is the company using to deploy patches? Is the company satisfied with this tool in terms of compatibility with heterogeneous operating systems (UNIX, Linux, Windows)? Are they using different tools for Windows and Unix patching?

Are there requirements for secure access of administration resources against a growing number of servers, applications and platforms? How is this access controlled right now? Is the company satisfied with their current security model with respect to servers and applications?

Are there requirements for gaining a structured environment through server standardization? How consistent is the company’s environment at the moment? How is this consistency maintained?

If the company is satisfied with respect to questions 1 through 7, the next line of questioning may be used to introduce virtualization. What are the utilization rates of your servers? If the utilization rates are between 20-40%, have you thought about consolidating your environment? Do you have tools that are used for server partitioning – making it possible for running multiple operating systems on one server and increasing utilization rates?

Conclusion

Although this article doesn't directly look into Bladelogic - it looks at the environment from a macro perspective and shows why this type of technology would be of interest. Also, time is not spent looking at the accounting side of things as that can be gathered from the annual reports. We are interested in focusing on the long term business potential.

What's important to understand is full blown automation does not exist. What does this mean?

Lot's of complex software cannot be automated. That is the kind of software that requires frequent manual intervention to have it operational. What falls into this category is software that is not yet mature or has a large user base. (Don't want to point fingers) The pitch the automation companies make sounds very compelling, but in the end manual intervention is still required and is still happening.

Another important view is that other verticals are not automated - for example storage. Bladelogic has to partner to fill this void & the same goes for networking. There is still lots of room for improvement there.

At the same time, the competition from the open source will continue to increase with very nice offerings.

This is very important because companies that invest in automation solutions shell out a lot of money. These costs have to be justified - and having another option, like an open source tool, can signficantly impact the numbers.

For these reasons, I would personally not invest for the long term in these type of companies. It is not certain how they will evolve with time, and how the competitors through acquisitions, HP & Opsware for example, will take over this space. The risks here are not in favor.

Smart Communications - Top Mobile Operator In Asia

2010-03-17T14:09:59Z

Smart Communications - Top Mobile Operator In Asia - by lovephileo

Philippines' wireless service provider Smart Communications was cited as the Mobile Operator for the year 2008, in the 5th Asian Mobile News Awards in Singapore, a leading cellular industry magazine in Asia which organizes the annual awards for the top mobile operators and handsets in Asia. It was the second time that SMART was recognized as the country's mobile operator of the year, having first received the award during the Asian Mobile News Awards 2005.

SMART, mobile communication arm of the Philippine Long Distance Telephone Co. Group (PLDT) has 32 million subscribers on its GSM network as of end-December 2007,equivalent to approximately half of the Philippine cellular market share. It operates a nationwide cellular network and a satellite phone service. It also has the most extensive and modern digital GSM network and infrastructure in the country, covering over 99% of the population.

SMART has built a reputation of innovation, having introduced world-first wireless data services, including mobile commerce services such as Smart Money, Smart Load and Smart Padala. It also offered Smart Link, a prepaid satellite telephony service and 3G service. Another subsidiary, Smart Broadband, Inc. offers a wireless broadband service, Smart Bro.

As end-June 2007, Smart's GSM network consists of 100 switches and 100,000 base stations, over 2 of which are equipped with wireless broadband capability. Smart also has over 23 3G base stations nationwide. Smart ended the first quarter with 20.6 million subscribers while Talk N Text, a GSM prepaid service that offers the best value-for-money with more affordable voice rates and text packages and reasonably priced SIM cards and mobile phones - backed by Smart's nationwidest network, had 11 million and its wireless service revenues grew 8% to P22.5 billion.

The Philippines' success in promoting the usage of mobile phones is attributed to the introduction of various innovations in cellulars technologies and business models. The introduction of prepaid services in the 1990s which Smart has aggresively promoted has opened the door to just everyone - students, housewives, employees, blue collar workers, farmers, fishermen and families of overseas workers. Prepaid services were further enhanced with Smart introduced micro-tops through electronic loads or Smart Load in 2003. The sachet size of airtime tops in Smart Load, now as low as P10 per load has made mobile phone services affordable for many more low-income subscribers. At the same time, e-load has helped drive down the cost of providing mobile services, thus enabling Smart to profitably serve the low-income market.

In its 15 years of operation, Smart has led the way in putting mobile phones in the hands of more Filipinos than was previously thought possible by virtually all industry analysts. In the late 1990s, the conventional wisdom industry analysts was that mobile phones penetration in the Philippines could not exceed 2025 percent on account of the country's relatively low per capita income. By end-2007 however, over 60% of Filipinos had become mobile phone users. Before the telecommunication industry was deregulated in the mid-1990s, only 2% of the population had access to a phone. Now, 6 out of 10 Filipinos have access to a phone as mobile phone operators reinvested most of their fat profits in technology and infrastructure.

In the meantime, texting - a popular service of phone companies and a favorite pass-time of about 60 million Filipinos who own phones has been the focus of the transportation and communication department lately.

Just recently, Smart launched Umobile, the first advertising funded- mobile service in Asia that offered free minutes to the youth market last June. Wow! Its very inspiring to say that text should be free. It will roll out its umobile service nationwide this month with P100 worth of free monthly load to be given to every subscribers, who will also receive a 50-centavo load for every ad sent to his or umobile phone. Subscriber can also avail of mobile services such as a call and text for free and they will get rewards by simply receiving those mobile adds. The service will be the first of its kind in Asia and the second in the world, after Blyk in the United Kingdom. It will initially be on a prepaid subscription model. Of the estimated 60 million total mobile phone users in the country, about 98% are prepaid users.

Last month, Smart has made partnership with Yahoo, to provide users search results on mobile phones' default search option.

Indeed, the Philippines is a unique consumer market for mobile services which other countries are now trying to learn from. SMART and other mobile operators/companies are coming out with packages that will effectively bring down the price of voice call and text messaging to lower than prevailing rates. Well, they simply do their bit in helping ease the burden of high prices.

EUR/USD Daily Outlook 11-6-8

2010-03-16T16:51:28Z

EUR/USD Daily Outlook 11-6-8 - by Denese

Yesterday Federal Chairman Bernanke said that downside growth risks had diminished and left the interest rates at 3.0%. The US Commerce Department said exports showed the biggest gain in four years, thanks to the weak dollar, which makes American products more competitive abroad.

The EUR/USD remained stable though ahead of G8 talks and rumours of rate increases in the EUR. The EUR/USD traded up to 1.5487 before consolidating between 1.5475/85 in extremely dull Asian trading. Model fund
buying underpinned the EUR/USD as did hawkish comments from the ECB"s Liikanen who said that the ECB must act decisively if price expectations rose.

UK Employment data was lower than expected, but had little effect on the Euro.

Events in the US today that could influence the dollar price
       07:00 MBA refinancing index for Jun 07 week
       10:35 EIA petroleum inventories for Jun 07 week
       11:30 FRB Kohn (voter) at FRB Boston's research conference
       12:15 Fed Gov Kroszner on consumer credit in Cleveland, Ohio
       13:00 FRB St Louis' Bullard (non-voter) speaks an event in St Louis
       14:00 Fed's Beige Book a survey of regional economic performance

FXCM Analysts are targeting 1.5365, but I would keep the stops quite tight.

To Peg or not to peg

2010-03-10T23:19:10Z

To Peg or not to peg - by Denese

What is Currency Pegging?

Currency pegging simply means that a country fixes the exchange rate of its currency to the currency of another country or group of countries. The US dollar has been the most common peg and the rationale for pegging to the US currency is often the fact that much of the external trade and financial capital flows would be carried out with the United States. When a region engages in US$ denominated transactions, whether trade or credit loans, the peg eliminates uncertainty in the prices of goods and services and the value of debts due to fluctuations in the value of the currency. Simply put, the US dollar acts as an anchor for the pegging country, providing certainty as to the value relative to the US, dollar. It provides confidence to foreigners and investors and is a deterrent to capital flight and to a preference for the holding of the foreign currency over the pegging currency.

Recently, Pegging to the dollar has become a major debate in Asia and in the Gulf, for different reasons.

Pegging to the dollar under free capital mobility implies the abandonment of an independent monetary policy. Since the host country has to match domestic interest rates to the US level to maintain the parity rate, it has little room to use monetary policy to restore stability when experiencing economic shocks.

The latest currency crisis in Asia has raised important issues relating to exchange rate management, while rifts are growing across the gulf on how to tackle inflation which is peaking in the world's top oil-exporting region. The latest crisis in Asia has revealed the vulnerability of the traditional dollar-peg system widely adopted by the Asian countries and which has seemed to serve them so well in the past while the Gulf’s ability to fight inflation is restricted by forcing them to shadow U.S. monetary policy at a time when the Fed is cutting rates to ward off recession and Gulf economies are facing serious inflation on the momentous increase in oil prices over the past five years.

"The economies of the Gulf and the United States are completely out of sync and that is exposing the shortcomings of the dollar peg," said Simon Williams, Middle East economist at HSBC Holdings Plc in Dubai. With the yen fluctuating widely against the dollar, the traditional policy of pegging their exchange rates to the dollar has led to macroeconomic instability in Asia's developing countries. The experience of Hong Kong illustrates how pegging to the dollar can be destabilizing. The monetary policy adopted by the United States aggravated and prolonged the recession in Hong Kong, which fell into a liquidity trap where monetary policy became totally ineffective to stimulate demand because interest rates could not fall below the US level.
On the other hand, the pegs restrict the Gulf's ability to fight inflation by forcing them to shadow U.S. monetary policy at a time when the Fed is cutting rates to ward off recession and Gulf economies are surging on a near five-fold jump in oil prices since 2002.

Henry T. Azzam, CEO of Middle East and North Africa, for Deutsche Bank explains that “Because countries of the region have their currencies pegged to the dollar, they cannot implement an aggressive counter-cyclical monetary polices. They were not able to lower domestic interest rates when they needed to do so in 1980s while dollar rates were rising, nor are they able to raise rates now.” However the Saudi and UAE central bank chiefs spoke in favour on Monday of retaining dollar pegs, and Azzam warned that “Policymakers should avoid the temptation of adopting long-term polices (such as de-linking their currencies from the dollar after maintaining a credible fixed peg for more than 23 years) while addressing a short-term cyclical problem." In Asia where much of the trade relates to the Yen rather than to the dollar, fluctuations of the yen against the dollar have led to sharp swings in export performance as well as net capital inflow and as synchronization between Asian and US growth rates has weakened, leaving interest rates to be determined in the United States has led to macroeconomic instability. Finally, countries committing to fix their exchange rates against the dollar are vulnerable to speculation.

Defending a pegged exchange rate system can be costly in terms of the need to hold a large amount of precautionary foreign exchange reserves and to maintain high interest rates when under speculative attack. Furthermore, an unsuccessful attempt to defend a peg may be accompanied by adverse consequences. Market participants usually interpret a sharp devaluation as an indicator of failed macroeconomic management, which prompts further capital outflow. By raising the debt burden of banks and companies with foreign debts in local currency terms, a devaluation may lead to serious credit crunch problems and falling domestic investment.

An alternative to pegging to a single currency is the ability to peg to a basket of currencies

Kuwait’s central bank, which battled speculators for weeks to defend the US$ peg, said the dollar’s slide against other currencies had forced it to break ranks with fellow Gulf states to contain inflation from the rising cost of some imports.

Now Kuwait, whose dinar is pegged to a basket of currencies and where lending rates were kept relatively high, saw its currency surge by 6 percent against the dollar last year. However, Kuwait ended 2007 with an inflation rate of 7.3 C H Kwan, visiting Fellow to The Brookings Institution, has said that “given the very large impact on economic growth from fluctuations in the yen-dollar rate, stability of the yen-dollar rate is crucial for stability in the regional economy. Unfortunately, the yen-dollar rate is beyond the control of Asia's developing countries, or even of the major industrial powers, including Japan and the United States. One way for an Asian country to insulate its economy from the adverse effects of a widely fluctuating yen-dollar rate is to peg to a basket of currencies in which the yen carries a substantial weight. The higher the weight assigned to the yen, the stronger the synchronization between the host country's currency and the yen. By allowing the domestic currency to follow the yen up (down) when the yen strengthens (weakens) against the dollar, pegging to a currency basket should help stabilize exports. Should Asia's developing countries adopt this policy, the ups and downs in their business cycles would be moderated in magnitude, and the strong correlation between Asian economic growth and the yen-dollar rate would become a phenomenon of the past”.

“While a system of pegging to a basket of currencies with an appropriately chosen weight for the yen should contribute to macroeconomic stability in Asia, it shares with other fixed exchange rate systems such demerits as lack of monetary autonomy and vulnerability to speculative attacks. Compared with a system of pegging to a single currency, a basket-peg system is harder to administer and the commitment to the peg is interpreted as weaker. At the micro level, the cost of transactions is likely to be higher because all bilateral rates fluctuate.”

Floating

If the loss of monetary independence is the major source of instability, allowing the exchange rate to float is recommended however if domestic currencies are revalued under the pressure of speculation, it would encourage more speculation down the road.

Led by Thailand, many developing countries in Asia were forced to abandon their traditional dollar-peg system and to allow their exchange rates to float in the summer of 1997 amidst intense currency attacks by speculators. After a period of sharp depreciation accompanied by high volatility, exchange rates in these countries bottomed out against the US dollar in the autumn of 1998, thanks to the yen's rebound and a return of confidence in the economic prospects of these countries. However, most Asian currencies have not restored their stability against the dollar seen before the crisis. Freely floating exchange rates are particularly harmful to developing countries with underdeveloped financial markets and highly open economies. Compared with the industrial countries, their exchange rates would be more volatile and the availability of financial instruments for hedging against exchange risks would be limited, but for developed countries fighting surging economies, a floating rate regime allows the host country to choose its own rate of inflation that may differ from its trading partners.

Talking on the current gulf debate Greenspan told an investment conference in Jeddah, Saudi Arabia's second-largest city, that; in the short term free floating would not fully dissipate inflationary pressure although it would significantly do so, but Saudi Central Bank Governor Hamad Saud al-Sayyari, told Arabiya Television in response to Greenspan's suggestion that floating the Saudi riyal would not be appropriate for an economy that relies on oil exports, China abandoned the peg in July 2005 and he yuan has risen about 16 percent against the dollar since the link with the US unit was cut. China's huge trade surplus is the main reason pushing up the yuan's value, which shows massive money flows into the country, which I believe is the major reason triggering yuan appreciation," said Sebastien Barbe, senior economist at Calyon.

Conclusion

Given the current economic crisis faced by the US it is perhaps not the time to look to the US economy for credibility. However Azzam has mooted the possibility of the dollar first stabilizing and then strengthening as the year progresses. He fells that the aggressive interest rate cuts by the Fed may well help stimulate the US economy, getting America out of the down cycle ahead of Europe in which event Investors will start focusing on relative economic growth prospects rather than absolute borrowing costs. Countries with stronger growth prospects may well see their currencies rally in the months ahead.

RP Microfinance Industry - A Radical Encounter

2010-03-17T13:39:05Z

RP Microfinance Industry - A Radical Encounter - by lovephileo

All over the developing world people are waking up and learning the dynamism in microfinance industry - to engaged with, to merge with and to partner with, aiming at a world without poverty. An unprecedented positive global response to micro finance is now underway. It's high time to take a quantum leap of change from the world of the rich down to the Bottom of the Pyramid, the 4Bn poverty-stricken micro-poor entrepreneurs and make microfinance the mainstream for economic growth and eradicate worldwide poverty.

Poverty in the Philippines is largely a rural phenomenon. Study on the poverty situation in the country, 77% of poor households reside in the rural areas, mostly dependent on agricultural-related activities. This is the reason why most MFIs in the country prefer to rule over the rural communities and radically makes the legend of micro finance move on and on.

In November 2005, it was reported that the United Nations cited the Philippines as having the best implementation of microfinance among 160 countries during the launch of the International Year of Microfinance. One year after, the World Bank estimates that there are more than 7,000 microfinance institutions now operating around the world.

Today, microfinance institutions are encountering rapid growth in the Philippines. To date, 1,200 MFIs are operating in the country since its inception in 1980s. It became the sed-bed of the Filipino micro-entrepreneurs, investors, institutions abd even christian organizations who impacted the lives of SME clients with values transformation programs. Currently, MFI reaches about 30% of poor Filipinos. In 1995, its phenomenal growth inspired the Philippine government thus made this industry an official tool in poverty reduction through the Social Reform and Poverty Alleviation Act (Republic Act 8425). Five million families or rather 2.2 million poor Filipinos were benefited bythe micro finance players since 2005. One survey estimated an increment of micro clients to 1 million per year.

Just a couple of months, the much-awaited law of micro and small traders was signed - The Magna Carta for Micro, Small and Medium Enterprises, made into law by the President Macapagal Arroyo, the Republic Act 9501. With this law, it is expected that the MSMES economic contribution will increase from its 30% gross value added, upon the government's commitment to reinforce financial support to small businesses by addressing the problem of capitalization and access to credit avoiding such burdensome collateral requirements, access to modern technologies and entrepreneurship training program for workers and a comprehensive plan that would ensure its viability and growth.

Every year, the government allots certain fund for micro financing made available through local partners, microfinance institutions (private, public, NGO) with an aim to bring it right to the doorstep of the poor micro-clients. The government has P80 Billion available for micro finance program this year. The administration was committed to provide three million entrepreneurs with sufficient credit to contribute to the generation of six to ten million jobs by jobs. The repayment rate of micro loans has been impressive - up to 98%. Its loans grew 12% to P6 Billion last year. And to make the program more attractive, the President has ordered interest rates lowered from 12 to 10 percent per annum.

Microfinance Explosion And Innovation SMEs in the Philippines are more than 90% of the country's business and employs 70% of the workforce. if SMEs suffer, the country will suffer. About 229 banks are microfinancing, with a total client base 0f 780,000. The Banko Sentral Ng Pilipinas (BSP) has been encouraging banks to engage in microfinance, a flagship program for poverty alleviation. But despite BSP push for commercially large banks to tap microfinancing, members of the Bankers of the Philippines rejected the call. They tend to ignore SME services for they believe it were small and not very profitable for the bank. Nevertheless, HSBC has proven a big success where their SME clients have grown from retailing to trading companies and small manufacturers.

Unfortunately, for the SMEs - rejection of loan applications has been high either because they could not submit all the documents required by the banks or they do not have the collateral to secure their loans. Further, most banks are delaying plans to extend credit for the SMEs. Yet in the heart of many MFIs such as NGOs, rural banks and cooperatives are well motivated to serve the un-served and under-served poor farmers, fishermen, households, enterprises and communities in remote areas.

The MFI will still be growing even when the economy is hanging in the balance. Micro businesses need additional capital especially this time of crisis. If they need it, they will resort to MFI. Why? because loan processing is not as strict as in conventional or commercial banking also in any financial institutions. Most micro clients are even not qualified when it comes to documentations. This is why the Grameen Bank uses simpler documents for loan applications and accept collateral substitutes in the absence of a land title. Lately, government has launched housing microfinancing which allows poor households to avail of housing affordable and less documentation requirements. A maximum loanable amount of P150,000.00 for home improvement and repair and Php 300,000.00 for house and lot acquisition.

PLDT, the largest and diversified telecommunication company in the Philippines made a radical microfinance breakthrough among private companies in the country or rather around the world where casual, contractual and temporary employees gain access on micro financing. The funds were made available to janitors, waiters, drivers and guards who would have otherwise found it hard to apply for loans from regular banks or financial institutions.

Further, a breakthrough in mobile banking is a matter of great development as it accelerates the outreach of financial services of the poor. Roughly, 84% of the lower-income population in rural areas of the Philippines finds it difficult to access a telephone. The increasing use and diffusion rate of mobile telephony in developing countries is creating low cost alternatives for people to make deposits, remittances and payments (Smart Money and Globe G-Cash in the Philippines). The rapid growth of branchless banking including mobile phone banking is reducing the cost and expanding the availability of such services. In the Philippines, people would rather pay one percent to remit money via their mobile phone network than the 3-18 percent they are often charged by others.

Microfinance Motivation and Challenge
Yet, despite the successes of Philippine microfinance industry majority of MFIs are still institutionally weak to spread the "manna from heaven" and saturate the poorest provinces or the frontier areas. The challenge in Philippine micro financing is whether MFI could operate on rural areas where main economic and business activities are farm-based and farm-related enterprises.

I believe it takes a heart to face the challenge to invest this time to the poor. Bill Gates called it "social capitalism", we often call it "social responsibility" and then God called it "The Great Commission". That makes MFI more radical when it enables God and man meet together through a holistic ministry of financial working capital to finally bring man into its ultimate source of financial freedom ( Matthew 6:33, Bible). There is a need to reach these unreached and need of social passion and humility. Giving them self-determination, self-respect and dignity. But there is a need for us to sacrifice, to leave behind an old self-ego and to press toward into something worthy than silver and gold, something that would transform this world.

Let me challenge my Filipino brothers - explore all our resources and efforts to encourage developed countries to invest with our micro entre"pinoy" who said to be unbankables yet willing and able to pay amortizations. They toil day and night because they are bound to pay daily emergency lending communities or individuals who serve an excessive interest rates and let them pay their loan for a period of weeks or only a month. why? because MFIs are nowhere to be found.

I personally motivated by the Great Commission - to touch the life of the poor, change their way of living and transform their lives from the clutches of poverty and usher them into what God wants them to be. A life of freedom and abundance.This is the purpose of my journey in microfinance for 6 years. True, it's kind a difficult to invest and win the business with the poor. You must have the mind of the company's day-to-day operation, the heart that transform the character of the clients into faithfulness of loan repayment at the same time, and an elbow that protects the investment of the institution. As far as my experiences is concerned, collection is a thing of good deal of thought but creating a culture or values in them through moral education and transformation programs, a values formation orientation and constant investment of relationship - that would assure a certain MFI's sustainability, efficiency and viability.

Both profit financial and gain moral and spiritual uplifting especially in Christian MFI where I spent most of my microfinance experience as loan officer. The industry is spiced-up not only with social responsibility and acoountability but aims for life transformation. In fact, MFI changes life and life style of the poor entrepreneurs. The poor learns to pay more, to pay back, to fear God and go against bad debts, to work harder and smarter through social development program like livelihood, entrepreneurial skills developmental training, exhibits and spiritual encounter. We assist women in developing micro-finance projects, basically home-based to make them financially empowered. It worked with me - when crisis strikes, the company or the loan officer and the clients are working out together for the good. Changes and challenges are easily overcome due to constant social communion existing between the staff and the clientelle.

Indeed, this industry is not just a matter of weekly amortization from P5,000 initial credit, weekly savings, insurance and livelihood where 92% of the borrowers are women - rather, a ministry that would usher the 4Bn lies at the Bottom of the Pyramid (BoP) into a good and godly life.

FYI:http://www.microfinancecouncil.org/dload/MCPI%20Performance%20Report%20-%20December%202006.pdf

///Any comments and questions are appreciated and am willing to reply.

Allegheny Technologies, Inc - opportunity

2010-02-27T16:11:33Z

Allegheny Technologies, Inc - opportunity - by tucker

S&P500 Stock: Allegheny Technologies, Inc (NYSE: ATI)

Its Steel guys!!- Buy the stock

Steel is a highly lucrative business in the United States and critical to its economy. Critical because construction, transportation, manufacturing and a lot of consumer products are dependent on the supply of steel. For some time now steel is being increasingly recycled. Two- thirds of steel in now produced from scrap. The total enterprise value of steel is now estimated to be over $100 billion. The industry produces close to 200 million tonnes of raw steel and accounts for 12 percent of of the global market. Because of low cost imports U.S. steel industry has undergone tremendous changes in terms of technological innovations to become lean and fit. As an answer to competition, the steel industry has been in a consolidation mode and thus reducing the number of independent steel making facilities. Around 80 steel making units are spread across 140 locations. 80 percent of steel making activity comes from Indiana, Illinois, Ohio, Pennsylvania, Michigan, and New York. All steel mills are located near sources of iron ore, coal, and water and hence a lot of such units are located in the Great Lakes region. Steel and speciality metals are considered to be important for national security.

Allegheny Technologies Incorporated is the world's largest specialty metals producers. In the year 2006, The company minted $4.9 billion. These specialty metals solutions are manufactured using innovative technologies to make it competitive in the global market. 9,500 employees around the world contribute to the company's growing success. These employees are engaged in the production of High Performance Metals, Flat-Rolled Products and Engineered Products. Exotic, that's the label for High performance metals. Nickel and cobalt-based alloys and superalloys are the widely known such metals. Titanium and titanium-based alloys, zirconium, hafnium, niobium, nickel-titanium are more exotic than the exotic metals. These metals are exotic simply because they are rare. Flat rolled products include stainless steel sheet, strip and plate; nickel-based alloys, titanium-based alloys. Tungsten powder, tungsten heavy alloys, tungsten carbide materials and carbide cutting tools belong to the Engineered Products division. Allegheny's sells all these products to the aerospace, defense, chemical process industry, oil and gas, electrical energy industry and for medical applications.

Check out its steel mill units and spread across the world!! ATI Allvac Ltd and sells high-precision threading, milling, boring and drilling components, tungsten carbide burrs, rotary tooling, and specialty abrasive wheels and discs for the European market from locations in the United Kingdom, Switzerland, Germany, France, Italy and Spain. Allegheny's 60%-owned joint venture, Shanghai STAL Precision Stainless Steel Company Limited (STAL) is in the People's Republic of China. This company produces Precision Rolled Strip products and sells it in the Asian countries. The Company's 50%-owned Uniti LLC joint venture allows it to offer titanium products to industrial markets worldwide.

Take a peek into its world wide sales distribution.

Hassey, L. Patrick is the President and Chief Executive Officer. He worked with Alcoa Inc. for a very long time before joining Allegheny.

Finances are taken care of by Richard J. Harshman. He is a Certified Public Accountant and joined the company as a member of the Corporate Internal Audit Department in 1978.

Douglas A. Kittenbrink is the Executive Vice President, Corporate Planning and International Business Development and plays a special role in the growth of Allegheny. He has been with the company for a very long time and understands the nuances of steel trade and operations.

Carpenter Technology WHX Corp compete with Allegheny. But the sheer scale of Allegheny's operations has kept them at bay. With ever increasing demand for metals India and China will keep Allegheny chugging for a long time. A short term view of 5 years gives a rosy picture for this stock and i conclude, shore up the stock at current levels. What say folks???

San Miguel Corporation - Keeping Strong Growth While Facing The Challenge

2010-03-17T15:39:44Z

San Miguel Corporation - Keeping Strong Growth While Facing The Challenge - by lovephileo

The 118-year old group, San Miguel Corporation, Southeast Asia's largest food and drinks group and the maker of SE Asia's oldest beer brand, arrived its net profit tripled in the first half, boosted mainly by gains from asset sales. Faced with challenging economic conditions affecting consumer spending behavior and scalating input costs, SMC booked net income of P19.7 billion ($444mn) in January to June, topping the P6.6 billion of a year earlier and its full-year 2007 net profit of P8.63 billion.

Financial Business Description :

The company has five breweries strategically located across the Philippines and a developed distribution system serving approximately 471,000 retail outlets. SMC employs over 26,000 people through-out the Asia Pacific. The company's beer brands include San Miguel Pale Pilsen, Red Horse, San Mig Lite and Gold Eagle. Other beers are marketed under the brand names Cerveza Negra. The company also sells Cali, the malt-based, non-alcoholic drink. Cali is available in three variants: Cali, Cali Ice and Cali Light. The company's product can be categorized into three classes based on the target market: Upper Popular, Broad Popular and Economy. Upper Popular products cater to upscale markets especially in urbanized areas, while the Broad Popular segments serves the majority of the population or the mass market.

The Group's principal activities are operating poultry, processing and marketing refrigerated and canned meat products, manufacturing and wholeseling flour and feeds products and manufacturing and marketing of butter, margarine, cheese, dairy and other related products. The Group is organized into three primary segments. Foods includes the breeding, hatching, processing and marketing of chicken. This segment also produces and markets feeds and flour, dairy products and processed meats. Beverage produces and markets alcoholic and non-alcoholic beverages. Packaging produces and markets metal closures, two-piece aluminum cans, plastic crates, pallets, corrugated cartoons, omposites, glass containers, glass molds and polyethylene terephthalate plastic bottles. Brands include Bake Best, B-meg, Pureblend, PBxcellent, Jumbo, Emperor Hard Flour, Queen Soft Flour, Baron all-Purpose Flour and Prince Noodle Flour. SMC also has real estate and agricultural subsuduaries. The conglomerate is in the process of shedding various operations as part of an effort to diversify into heavy industry, looking to invest in mining, infrastructure and energy.

Revenue as of September 2007

Operating Income

Annual Revenue (in billion pesos)

San Miguel has a long term strategy for growth, based on two key parts:

* Strengthening its core businesses of beverages, food and packaging and

* Pursuing new avenues of growth

The Group's first half revenues rose 9.0% to P79.8 billion, with San Miguel Brewery revenues also rising by 9.0 percent to P23.8 billion. In January, San Miguel sold a 35% stake in its packaging unit for $130 million to Japan's Nihon Yamamura glass. It also sold its 29.4% stake in unlisted property firm KSA Realty for P1.8 billion to Shang Properties Inc.

IPO Line-up

The Philippines' San Miguel surprised investors with plans for a new drastic reorganization by selling part of its core food unit and more of its finest chain beer operations but to retain controling interest of at least 51%. SMC was preparing for a secondary offering of its food businesses and its newly listed beer unit, San Miguel Brewery and an IPO for its packaging unit . It hopes to sell at least 20% of its packaging businesses. The intention is to list all of San Miguel's operating companies to make their operations more efficient and transparent.

The IPO values the beer business, considered the company crown jewel, at $2.9 billion and is the only big listing scheduled for this year. The parent group has a market value of around $3.45 billion. SMC would also consolidate all its food assets under listed unit San Miguel Purefoods, which may do a follow-on stock offering. The company's liquor business, Ginebra San Miguel Inc., and property development San Miguel Properties Inc. are already listed.

Tough Market Conditions

San Miguel faces a difficult operating environment in the second half due to high raw material costs and a rising fuel and food costs restrain consumer spending. The move into heavy industry has been criticized by some analysts who say San Miguel, which dominates its home market for beer, poultry and processed meats, does not have the expertise to run such business. However, SMC rest assuring its interest into making businesses that could give it at least 15% return on equity.

The company has so far been unsuccesful in bids to buy power assets at government aunctions. A San Miguel-led consortium lost in December to a Filipino-Chinese group in bidding for the 25-year concession to operate the Philippines' national power grid. SMC also lost in last year's bidding for a 60% stake in geothermal power producer PNOC Energy Development Corporation.

Feeding The Future Venture

SMC will spend up to $1.0 billion in a joint venture with Hong Kong's Kuok group to develop farm land. The project, in collaboration with the philippine government, would develop one million hectares of land. SMC with KH Kuok will offer financial assistance, technical expertise and a guarantee to buy all agricultural produce. The land may include logged-over aeas, idle portions of military camps and reservations, idle portions of lands granted to state universities or colleges and idle portions of ancestral lands. The goal is to help the government in any way possible, whether it is providing seed money to help farmers pay for shallow wells, basic agricultural inputs such as hybrid seeds and fertilizers and extending technical expertise.

Just recently both companies donated $500,000 each to the victims of typhoon Frank. This kind of partnership is what this country longs for. It offers a signal of sustainable, adequate supply of grains and other basic staples.

But the question was? Will its IPO/offerings turn to be productive as SMC makes an almost 180 degrees turn for a change? Will investors keep on its line up? The writing on its wall is plain to see: Despite economic pressures, SMC has sales momentum coming from both internal and external customers. They tapped customers in overseas markets. The company was not affected by the huge challenge and weakening economy.

VSNL - A good stock by all measures.

2010-02-26T23:11:23Z

VSNL - A good stock by all measures. - by prakash

Videsh Sanchar Nigam Ltd (NYSE:VSL) The Indian telecom industry has changed significantly over the last decade with all its segments opening to competition. This market is now highly competitive, complex and evolving rapidly, with numerous service offerings of different kinds, including fixed-line, mobile, Internet, long distance and various data services. India’s telecom market is growing rapidly and by 2010, telecom is expected to be Rs.1380 billion sector, contributing 5.4% to India’s gross domestic product (GDP). According to the latest figures from the Telecom Regulatory Authority of India (TRAI), during 2006-07 India’s mobile subscriber base increased approximately 68%, from 98.78 million to 166.05 million, while the fixed subscriber base declined approximately 1.82% from 41.54 million to 40.78 million. During the year, the broadband subscriber base grew 70%, from 1.35 million to 2.30 million. STD charges fell substantially after the announcement of new Interconnect Usage Charges with effect from 1 March 2006, while international private leased circuit charges dropped by about 10-20% and broadband tariffs fell by 30%. The rapid growth in this market offers a vast potential demand for VSNL’s various services. Effective 1 April 2007, the TRAI revised the access deficit charge (ADC - a component of the IUC that makes up for below-cost monthly rentals and local call charges for fixed telephones). The ADC was reduced on incoming International Long Distance (ILD) calls from Rs.1.60 per minute to Rs.1.00 per minute and on outgoing ILD calls from Rs.0.80 per minute to nil. The additional revenue share of 1.5% of the adjusted gross revenue (AGR) towards ADC was also reduced to 0.75% for all operators including international long distance operators. Recently, the Department of Telecom (DoT) further relaxed the license conditions in respect of security related obligations for provision of VPN services for international and national long distance services, and more new entities have been licensed to provide NLD/ILD services. The Government of India has enhanced the FDI limit from 49% to 74% in certain telecom services. Under the new policy, both direct and indirect foreign investment in the telecom licensee will be counted towards the FDI ceiling. The minimum Indian shareholding prescribed is 26%. FDI up to 49% continues to be permissible on the automatic route and FDI in the licensee company/Indian promoters/investment companies including their holding companies requires prior approval from the Foreign Investment Promotion Board if it has a bearing on the overall ceiling of 74%. Certain security conditions have been imposed on the licensee companies operating telecom services and these shall be applicable to all licensee companies irrespective of their level of FDI. VSNL operates in three key lines of business – wholesale voice carrier, enterprise data services, and other services (including broadband services). Global acquisitions of Teleglobe (TLGB) and Tyco (TGN) catapulted VSNL into the global arena as the largest international wholesale voice carrier with a market share of 16% (18 billion min). The enterprise data division offers services to corporates including private leased circuits, voice and security services, managed data networks, and virtual private networks. On the retail front, VSNL offers broadband services through its acquisitions of Dishnet, Tata Power Broadband (now renamed VSNL Broadband) and 7 Star.com. VSNL’s investments include Neotel in South Africa, VSNL Lanka in Sri Lanka, United Telecom Limited in Nepal, and Tata Teleservices. Government of India holds 26.12 percent stake in the company followed by corporate bodies (Tata group) that account for 50.11 percent. Financial institutions and the general public hold the remaining stake in VSNL. During the fiscal year 2006-07 VSNL earned total revenues of Rs.42.54 billion compared to Rs.40.10 billion during the previous year. Profit before tax for the year was Rs.7.13 billion, against Rs.6.87 billion in the previous year. Profit after tax was Rs.4.69 billion compared to Rs.4.80 billion in the previous year. On a consolidated basis, for 2006-07, the Company’s total income was Rs.88.57 billion, with an EBIDTA of Rs.12.99 billion and profit before tax of Rs.3.72 billion. During the same year VSNL paid dividends of Rs.4.50 per share for the financial year ended 31 March 2007. The amount available for appropriation is Rs.19.40 billion, out of which the Company is transferring Rs.468.60 million to general reserves, leaving Rs.17.43 billion to the balance sheet.

Key highlights of the current quarter

· Top line declined 6% sequentially and 1.9% Y-o-Y to INR 9.5 billion; with both carrier and enterprise divisions posting lower revenues sequentially and Y-o-Y.

· Enterprise business revenues fell 10% Q-o-Q to INR 3 billion, primarily on account of one-time accounting issues. Going forward improved growth metrics in this segment will come in led by strong global and domestic demand.

· Carrier segment revenues declined 5% Q-o-Q to INR 5 billion despite volume growth which is primarily on account of continued competitive pricing pressures coupled with increasing proportion of less profitable incoming voice minutes in the volume mix.

· EBITDA margins declined sequentially to 16.1% on account of a sharp increase in expenses by 15% sequentially. Costs will rationalize going forward leading to better operating performance over the next few quarters.

· Reported net profit fell 30% sequentially to INR 731 million on the back of a weak operating performance; net margins declined by 262 bps Q-o-Q, 335 bps Y-o-Y to 7.7%. Outlook for VSNL’s business projects top line will grow at a rapid pace, given traction in wholesale voice volumes (leveraged by acquisitions of Tyco Global Network [TGN] and Teleglobe International [TLGB]) coupled with steady growth in enterprise services segment. Competitive pricing pressures and absence of a captive telecom subscriber base (versus rival domestic operators) is a key risk to VSNL’s standalone topline and profitability. However, operating performance will gradually improve going forward as synergies from its global acquisitions, TGN and TLGB, in the form of higher volumes and optimization of network costs kick in. Despite scale advantages kicking in from the global subsidiaries, the integration of TLGB and TGN is likely to continue to dampen profitability over the near term. The stock trades at a P/E of 29.7x and EV/EBITDA of 14x FY09 standalone estimates. A significant portion of core revenues coming from the increasingly commoditised wholesale voice business is a key concern for VSNL, as bottom line growth is likely to be subdued on account of competitive pressures. Lower revenue share of higher margin enterprise and other services businesses coupled with higher depreciation expenses are likely to keep any significant net profit margin expansion at bay.

Videsh Sanchar Nigam Limited (VSNL) will be called Tata Communications Ltd, following the green signal from the shareholders for the change in name. VSNL will pay a fee for using the "Tata" word in its name as the Tata name will provide it the brand equity attached with the Tata's. The branding fee is 0.25 per cent of the turnover or 5 per cent of the profit before tax, whichever is less. VSNL has aggressively entered new businesses like enterprise services and retail broadband, which requires a high level of interaction and relationship building with the end customers as it has expanded its business operations beyond India. With the acquisitions of TGN and Teleglobe, it is emerging as a major player in the global telecom services market. It competes not only with large Indian business groups like Reliance and Bharti but also with globally renowned and well entrenched companies like AT&T, Verizon, BT, and Orange Business. One of the priorities for VSNL is to develop a very strong brand and presence, in India and overseas markets so it can derive marketing and cost synergies with the Tata Group's telecom and IT businesses. There is immense goodwill and brand awareness attached to the Tata mark, not just in India but globally. Due to the global acquisitions made by various Tata Group companies, the Tata mark has become highly visible and recognized in major global markets.

Saudi Pak Bank Limited

2010-03-16T14:45:48Z

Saudi Pak Bank Limited - by xpertwriter

Saudi Pak Bank is a subsidiary of SaudiPak Industrial & Agriculture Investment Company (SAPICO) and a joint venture between the governments of Saudi Arabia and Pakistan. The Saudi Pak Group comprises of Saudi Pak Insurance, Saudi Pak Leasing and Saudi Pak Bank. The Saudi Pak Group has holdings in diverse sectors of Pakistan's economy.

At present, the bank is providing services to its customers with a network of 50 online branches spanning in 21 cities of the country. In 2008, the majority shareholding of the bank was acquired by a consortium comprising of Bank Muscat S.A.O.G., International Finance Corporation (IFC), Nomura European Investment Limited and Sinthos Capital. A change in management has taken place with Shaukat Tarin as President and CEO of the organization

Saudi Pak Bank continued to show losses in 1Q'08 as well. Although operating profits of Rs 80 million were witnessed before accounting for provisions, overall the bank showed loss after tax of Rs 245.6 million.

Mark-up earned for the first quarter ending March 2008 was Rs 1,118 million, a decline of 3% compared to the same period last year. The interest expend on the other hand declined by 11.7%, resulting in a net interest income of Rs 145 million without taking into account the provisions. The non-interest income has nearly halved in the first quarter of FY08, on account of decline in all categories of income.

Deposits have shown a slight decline, while the advances and the investments, all experienced a decline as well. However, with the new management coming in, better results may be expected.

The loss amount has eroded the equity of the bank much below the MCR requirement. Saudi Pak Bank had issued 80% rights shares, the whole amount of which has been underwritten. The rights issue has enabled the bank to maintain MCR at the prescribed SBP level.

ANALYSIS OF FINANCIAL PERFORMANCE (FY03-FY07 )

The earning profile of the bank has shown a negative trend for most of the years, with a decline in profitability stampeding in 2007. Saudi Pak Bank posted a loss, which is considerably higher, around 850% increase, than its loss incurred for the corresponding period of FY06.

The main reason behind this decline is that the increasing NPLs of the bank have resulted in a massive provisioning that considerably lowered the profits and turned the net markup and interest income negative. As a consequent of this, all the profitability ratios have declined quite steeply. Though the non-interest income increased over the last year, this increase was not sufficient to counteract the decrease in net interest income. Moreover, the non-interest expenses increased more than the non-interest income.

The yield on earning assets has shown an increasing trend however with an increase in the cost of funding them. This pattern parallels the trend in the industry. The bank has maintained an increasing trend in the proportion of total assets it maintains as earning assets, despite the fact that the composition of these earning assets varied significantly over this period. On the other hand, the cost of earning assets has also increased. However, factors like consistent inflows, relatively less interest rate sensitivity of the depositor, not to mention the liquidity preference of the depositors for maintaining checking and transactional accounts, both saving and current, caused a relatively small increase in the cost of funds of the bank.

The liquidity profile of the bank shows a comforting trend. The liquidity situation of the bank has improved in general over the period under review, with increasing earning assets to total assets and a declining trend in advance to deposit ratio (ADR). This was possible because of the steady inflows, particularly foreign inflows that continued to provide liquidity support despite SBP's tight monetary policy during the last two years. The ADR of the bank has shown a decline over this period because of heavy growth in bank's deposits, outpacing the otherwise moderate advances growth rate.

The generally increasing deposits relative to the increasing non-performing loans of the bank may be of concern as it may pose liquidity problems in the future. However, the deposits have posted a decline in 2007 from 2006, along with a decline in advances net of provisioning which has been seen as an increase in the advances to deposits ratio. The deposits, both term and savings have declined, while the remunerative deposits from financial institutions have increased.

As for the industry, the deposit base rose significantly in 2006 due to a booming economy, apart from higher foreign inflows through workers remittances and FDIs as well as expanding branch networks, product innovation and better marketing. In 2007, the deposits slightly declined. The banks are now introducing new products for the public to attract fresh deposits.

The asset quality has shown a deteriorating trend. The NPLs have increased in 2007 after remaining steady for the last two to three years. The NPLs, as a proportion of advances, have increased to 0.022% mark, although, general level is about 0.02%. The increase in NPLs may be indicative of a slightly risky credit risk position for the bank. The NPL situation of the bank may be expected to improve in the coming years with an amendment in its lending policy with greater long-term loans. Its effect is yet to be seen. A decline in the provisioning for the NPLs that is being substituted by longer-term loans was anticipated, however, for the year 2007 the effect has been increased provisioning.

With regard to the entire industry, credit just grew by a mere 3% in 9 months of 2007. The deceleration in the credit expansion is mainly attributed to the increase in NPLs for the whole banking sector. The major portion of these NPLs has been constituted by consumer loans.

The solvency contour of the bank shows a deteriorating sign with all the three ratios decreasing in 2007. Equity financed 3.2 percent of assets in CY03, 3.65 percent in CY04, 6 percent in CY05, 7.3 percent during CY06 and 5.44 percent in 2007. The earning assets to deposits ratio for the bank declined in 2007, as the rate of decrease in equity was greater than the rate of decrease of deposits. The debt as apportion of assets witnessed an increase over here, perhaps due to the longer-term loans. However, at such high levels, debt may become risky for the company as its cost may out do the cost of equity. The bank is recommended to increase its equity base. Perhaps, the old management was waiting for the new sponsors to consolidate the bank by injecting fresh equity.

The market value of the bank portrays mixed results with the market to book value ratios increasing markedly in 2007. However, the price to earnings ratio declined. This may be attributed to negative EPS of the bank due to lower profitability figures.

The price per share has increased reflecting better future prospects of the bank. The price per share may be expected to continue the same momentum in the future. The bank is currently under the expansion phase and has made a significant investment in that regard. Therefore, it has not adopted a dividend distribution policy right now. However, the bank in terms of its profitability has not been performing that well, this investment in expansion may predict a better performance in the future. This may be complemented by a rise in the earning assets of the bank and a decrease in its NPLs with the enactment of an amended lending policy.

FUTURE OUTLOOK The current growth momentum of the banking industry is likely to hinder if certain factors are not taken care of. The banks should reduce their NPLs structure and should recover their bad loans to offset the likely impacts that will go to hurt their profitability. Attempts are required to improve the performing loans portfolio to earn a greater return on deposits. The SBP has reduced the Special Cash Reserve requirement from 15% to 5% on total deposits on daily basis. This step will help the banks to overcome the liquidity problems. In addition, the implementation of Basle II will help in strengthening the credit standards for better risk management.

As regards the bank, it has not been performing well especially with regards to its performance in 2007. However, it will show some signs of improvement in the future if appropriate actions are taken to reduce its NPLs and increase its equity through which it will receive dividend income that may help to alleviate the impact of higher NPL provisioning. The investment picture of the bank also needs to be further improved. This will help the company to safeguard itself against various risks.

The consortium of International Finance Corporation, Bank Muscat, Nomura International and Sinthosis Capital has acquired a controlling stake in the Saudi Pak Bank around 86%. The investment of Rs 213 million translating into Rs 29.30 per share but after the company declared a right issue, the price fell to Rs 20.72 a share. The bank will need to be very aggressive to thrive in deteriorating economic conditions, coupled with falling banking sector spreads.