Videocon Industries Ltd: Few Words
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| Photo: Mydigitallife.com |
Videocon Industries filed a writ petition in Bombay High Court seeking stay on NCLT proceedings initiated against it by RBI under IBC, Sources, say the company had proposed to raise Rs.10,000 crore by sale of its land assets in Chennai, Bangalore, Kolkata and Mumbai and raise another Rs.4,000 crore every year to pare off the debt.
According to the media reports more than half of it is dollar- denominated, borrowed from Standard Chartered, Bank of America Merrill Lynch and Deutsche Bank, Venugopal Dhoot, chairman and managing director of Videocon Industries, said in a phone interview with BloombergQuint.
Since, the INR is appreciating as against the USD, this could be a little solace for the company, while paying the overseas dues.
Since, the INR is appreciating as against the USD, this could be a little solace for the company, while paying the overseas dues.
Videocon, which traces its origins to 1950s, started making televisions and appliances in late 1980s. As India opened up its economy, it diversified into oil and gas in 1994 by signing a production sharing contract for the RAVVA oil and gas field off Andhra Pradesh along India’s east coast.
The company later acquired interests in oilfields in countries like Oman, Indonesia and Brazil, Mozambique and East Timor, running overseas operations through a Cayman Islands subsidiary, Videocon Hydrocarbon Holdings Ltd.
Videocon Industries Ltd offers range of products in televisions, washing machines, air-conditioners, refrigerators, audio products, home theatre systems and microwave ovens. The company operates in four segments: Consumer Electronics and Home Appliances, Crude Oil and Natural Gas, Telecommunications, and Power.
The company is engaged in manufacture, assemble and distribute a range of consumer electronics, products and home appliances, including finished goods, such as television, home entertainment systems, refrigerators, washing machines, air conditioners and other small household appliances and components, such as glass shell, compressors and motors.
The Company is developing the Pipavav power project through a wholly owned subsidiary Pipavav Energy Pvt Ltd. The company operates the global system for mobile communications mobile services through Videocon Telecommunications Ltd.
The company later acquired interests in oilfields in countries like Oman, Indonesia and Brazil, Mozambique and East Timor, running overseas operations through a Cayman Islands subsidiary, Videocon Hydrocarbon Holdings Ltd.
Videocon Industries Ltd offers range of products in televisions, washing machines, air-conditioners, refrigerators, audio products, home theatre systems and microwave ovens. The company operates in four segments: Consumer Electronics and Home Appliances, Crude Oil and Natural Gas, Telecommunications, and Power.
The company is engaged in manufacture, assemble and distribute a range of consumer electronics, products and home appliances, including finished goods, such as television, home entertainment systems, refrigerators, washing machines, air conditioners and other small household appliances and components, such as glass shell, compressors and motors.
The Company is developing the Pipavav power project through a wholly owned subsidiary Pipavav Energy Pvt Ltd. The company operates the global system for mobile communications mobile services through Videocon Telecommunications Ltd.
Now there are few points which I thought to highlight here:
#The crude oil prices was steadily rising up piggybacking on weak USD, before moving sideways. It seems that, in the short run at least, U.S. shale has killed off the oil price rally, which saw WTI move from $50 per barrel in October to the mid-$60s per barrel by January. Brent saw a similar jump from the mid-$50s to $70.
It is important to mention here that, typically, a weakening dollar pushes up oil prices, and the rapid run up in prices over the last few months occurred not coincidentally at a time when the dollar posted a steep decline. But the greenback has clawed back gains, particularly over the last week, with expectations of rising interest rates.
Hence, in the short run, though it seems that the Oil bears will be back as U.S. shale output is skyrocketing and there could be short-term liquidation of bullish bets from hedge funds and other money managers, after building up a net-long positioning that became overstretched adding up the losses for WTI and Brent, but on the flip side a price correction doesn’t mean that the market will settle in at lower prices for the long haul. Demand is rising and OPEC will likely maintain high levels of compliance with its production limits.
Moreover, the severe cutbacks in upstream spending that began when oil prices initially collapsed in 2014 have yet to really be felt in terms of supply. Large-scale projects that received FIDs before the market downturn were carried through to completion, allowing new supply to come onto the market even as the industry made sharp spending cutbacks. But that pipeline of projects is now on the verge of drying up, which raises questions about the availability of supply next year and beyond.
Earlier this month, Goldman joined other major banks in revising its oil price projections considerably, saying it expected Brent crude to break the US$80 barrier within the next six months. Goldman sees the price of Brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast.
Amrita Sen, chief oil analyst at Energy Aspects, said on Bloomberg TV: “I do think there is a potential for spike … We’ve seen a huge amount of shale production growth, 1.5 million barrels per day, year-on-year in Q417, and still we are drawing stocks everywhere. That just shows you that we aren’t adding enough supplies elsewhere and demand growth is very high.” Amrita Sen says the market won’t go back to the days of $100-plus, but “it could be a spike up to $90-plus in 2019.
#As the Indian economy starts to do well post demonetization and implementation of the GST, there could be a phenomenal spurt in demand in the consumer consumer electronics space, which could push up its bottomline at a more faster rate than expected.
#E-commerce in India is at a very early stage. It would require a lot of investments to build the infrastructure that allows anyone, anywhere in India to find and buy anything. Once that infrastructure is built there could give a great lift to the sales of established consumer durable companies, from online buying community too, apart from the business from other sources.
#The government of India recently hiked import duty on smartphones, television sets, microwave, LED lamps and some other electronic items in a bid to protect domestic manufacturers. Customs duty on television sets has been doubled to 20% as also on LED lamps. "This is a significant step as it will boost the domestic manufacturing industry and give a fillip to the government's Make in India initiative," Videocon Chief Manufacturing Officer Abhijit Kotnis said.
Hence, I would suggest the RISK TAKING INVESTORS, to add few of the scrip of Videocon Industries Ltd, in your portfolio, following the cannons of value investing, for 9-12 months time frame, to get good returns from here.
Bibliography:
(i) Oilprice.com
It is important to mention here that, typically, a weakening dollar pushes up oil prices, and the rapid run up in prices over the last few months occurred not coincidentally at a time when the dollar posted a steep decline. But the greenback has clawed back gains, particularly over the last week, with expectations of rising interest rates.
Hence, in the short run, though it seems that the Oil bears will be back as U.S. shale output is skyrocketing and there could be short-term liquidation of bullish bets from hedge funds and other money managers, after building up a net-long positioning that became overstretched adding up the losses for WTI and Brent, but on the flip side a price correction doesn’t mean that the market will settle in at lower prices for the long haul. Demand is rising and OPEC will likely maintain high levels of compliance with its production limits.
Moreover, the severe cutbacks in upstream spending that began when oil prices initially collapsed in 2014 have yet to really be felt in terms of supply. Large-scale projects that received FIDs before the market downturn were carried through to completion, allowing new supply to come onto the market even as the industry made sharp spending cutbacks. But that pipeline of projects is now on the verge of drying up, which raises questions about the availability of supply next year and beyond.
Earlier this month, Goldman joined other major banks in revising its oil price projections considerably, saying it expected Brent crude to break the US$80 barrier within the next six months. Goldman sees the price of Brent reaching $75 per barrel within three months, lifting its short-term oil price projection from the previous $62 forecast.
Amrita Sen, chief oil analyst at Energy Aspects, said on Bloomberg TV: “I do think there is a potential for spike … We’ve seen a huge amount of shale production growth, 1.5 million barrels per day, year-on-year in Q417, and still we are drawing stocks everywhere. That just shows you that we aren’t adding enough supplies elsewhere and demand growth is very high.” Amrita Sen says the market won’t go back to the days of $100-plus, but “it could be a spike up to $90-plus in 2019.
Hence, we can look forward for a good pricing of the OIL ASSETS of Videocon Industries Ltd.
#As the Indian economy starts to do well post demonetization and implementation of the GST, there could be a phenomenal spurt in demand in the consumer consumer electronics space, which could push up its bottomline at a more faster rate than expected.
#E-commerce in India is at a very early stage. It would require a lot of investments to build the infrastructure that allows anyone, anywhere in India to find and buy anything. Once that infrastructure is built there could give a great lift to the sales of established consumer durable companies, from online buying community too, apart from the business from other sources.
#The government of India recently hiked import duty on smartphones, television sets, microwave, LED lamps and some other electronic items in a bid to protect domestic manufacturers. Customs duty on television sets has been doubled to 20% as also on LED lamps. "This is a significant step as it will boost the domestic manufacturing industry and give a fillip to the government's Make in India initiative," Videocon Chief Manufacturing Officer Abhijit Kotnis said.
Hence, I would suggest the RISK TAKING INVESTORS, to add few of the scrip of Videocon Industries Ltd, in your portfolio, following the cannons of value investing, for 9-12 months time frame, to get good returns from here.
Bibliography:
(i) Oilprice.com
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