WINNING STROKES:

Ennore Coke Ltd hit the buyer Freeze: Computer Point Ltd hit another buyer freeze: My recommended I-Flex Soulutions Ltd and Reliance Communications Ltd shone yesterday: Buy Videocon Industries Ltd, which has huge promoter holding and very low public holding. This gives Premuim To the Scrip. Is Videocon Industries Ltd floating on Oil.........:

Free Recommendation:

Videocon Industries Ltd:

CMP: Rs.281.75

Target: Rs.450 in 3 months

52-Week High Low: Rs.868.65/Rs.242

Videocon Industries was incorporated in 1986. The company has two core activities, which include the manufacturing, assembly, marketing and distribution of consumer electronics and home appliances, and Exploration and Production of Oil and Gas.The company presently has seven operating business divisions, in which major divisions are consumer electronics, home appliances, components, etc

OIL AND GAS BUSINESS: Videocon Group has interests in oil & gas exploration, prospecting and intends to get into gas distribution. It produces 7% of all oil in the private sector in India. Ravva oil field, located on the Krishna-Godavari basin.The operating cost of the Ravva oil field is supposed to be the lowest in the world, at less than EUR 0.78 per barrel of oil. Internationally, it has interests in oil blocks, one in Oman, two in Australia and one in Timor Sea near Indonesia. Videocon's Ravva oil field produces 50,000 barrels of oil per day. Videocon is also actively looking for exploration and production opportunities in countries like Oman, Australia and the Timor Sea near Indonesia.

Rava Joint Venture, over the last 10 years, incurred a cumulative expenditure of about US $ 59 Cr on development. So far Videocon's contribution is 25% of the above, i.e. $ 14 Cr. Videocon plans to expand its activities in the oil and gas sector. It has recently obtained an Oil block in Egypt and is also exploring opportunities in the CIS block and other potential countries. The company is also hoping to be successful in the New Exploration and Licensing Policy – V (NELP V) for which it has already submitted bids. It is an ISO 14001 and OHSAS 18001 certified company and has received the CE approval for exports to the EU. It has also been certified by the VDE Testing and Certification Institute and corresponds with British standards as well.The company believes that its strategy of end to end supply chain integration with global scale and low cost base and with entry into the global brand space through the acquisition route will transform it into a global CE & HA powerhouse with a strong cash flow from the oil and gas business.

The Company has number of overseas subsidiaries in countries like Poland, Italy, etc. The Company is moving up the value pyramid through organic as well as inorganic growth plans. It has strategically integrate manufacturing bases both domestically and internationally, close to target markets. The company recently bought over the Salt Lake and Taratolla factories from Philips India Ltd. It has also bought over a factory from Kanchan Fooda Ltd in Siliguri and set up a colour Television-manufacturing Unit there.

The company has successfully integrated the Manufacturing of Glass shell and other intermediaries with its final product operations. Company's division, Videocon Narmada Glass with successful technical collaboration is the 3rd largest CTV glass producer and contributes about 16% of the revenues of Videocon.

Major Clients of Videcon includes, BPL Display Devices, JCT Electronics Ltd, Samtel Colour and Thomson Polska (Poland) and Toshiba International Ltd. WIth fully integratd manufacturing facilities in in low cost areas like China, Poland, and Mexico, the company is ideally positioned to offer the advantage of low cost manufacturing base for key components for end products.

Overseas Oil Blocks:

1. Block 103, Joint Petroleum Development Area, Timor Leste Australia; The consortium comprises Videocon Industries Ltd (25%), GSPC (25%), BPCL (25%), and Oilex (25%).

2. Block EPP 27, South Otway Basin, Australia: Videocon Industries Ltd, has taken a farm-in interest in Block ERP--27 in South Otway Basin along the Oilex and GSPCL of 20% each with balance 40% being retained by original license holder, Great Artesian Oil and Gas Ltd.

3. Block 56, South Oman Salt Basin: A Consortium comprising Videocon Industries Ltd, Oilex, GAIL, HPCL, BPCL, with Oilex as the operator, was awarded the Block 56. This block is located onshore adjacent to the producing fields operated by PDO, the Oman National Oil Company, in the South Oman Salt Basin, which is one of the major producing basin in Oman.

4. Brazilian Operations: Videocon recently bought over the Brazilian assets of Canadian gas producer EnCana Corporation Ltd, as part of a Consortium with Bharat Petro Resources Ltd, the Exploration arm of Bharat Petroleum. Here BPCL-Videcon will get 10 deeep water offshore exploration blocks. Brazilian Oil companies Petrobaras Anadarco also have a stake in EnCana Brasil and Petrobras is the operator in seven out of 10 blocks.

Recent Developments: Videcon Industries Ltd is planning ot enter mobile Telephony business through its subsidiary Datacom Solutions Private Ltd. The company has been granted letter of intenet for award of License to provide Unifiied Access Services (UAS) on All India basis. It is also planning to invest Rs.150 billion in West Bengal to set up Steel and Power Plant. It is also planning to set up a semiconductor and LCD Complex near Mumbai.

Major Achievements of Videocon Industries Ltd:

1.The largest panel production facility in the world under one roof providing very high economies of scale. 2. One of the world's largest and most respected CRT glass manufacturers 3. Firing the largest furnace of its kind in the world with a tank size of 3300 sq ft 4. One of the few companies in the world to convert sand to TV 5. One of the largest and most acknowledged CPT manufacturer in the world 6. Manufactured India's first rust-free Washing Machine

Valuation: Videocon Industries Ltd is a diversified conglomerate and trades at a significant discount to its comparable peer based on business mix. Thus Videcon Industries Ltd should command a P/E of 12--14,which comes around 500--Rs.575. If we assign the values of other initiatives in Telecom, Steel, and Energy Business, we can expect the stock to command a valuation of Rs.650.