Radico Khaitan Ltd: Bulk Deal (Historical Data)

Now, you can see from above, two very well known names in equity investing space: Mr.Rakesh Jhunjhunwala (RJ) who bought the shares of Radico Khaitan Ltd at Rs.167.75 and Prof. Kedal S Manekar at Rs.177.47. 

I feel most of you are perhaps are aware of Mr.RJ and his long term investing philosophy, but do you know that Prof. Mankekar is also a well known celebrity investor in the Indian Capital Markets?

The investments of the Mankekar family are in the name of Prof.Mankekar, his wife Laxmi and his son Kedar (Prashant has pointed out that some investments are made in the name of Om Kedar Investments also). CLICK HERE.

Sesa sees six-fold jump in iron ore output, Goa mining set to resume

[Editor: It is really surprising why the BJP leadership has not removed the Chief Minister of Goa, Mr.Manohar Gopalkrishna Prabhu Parrikar, after creating such mess both in the mining sector and casino business, apart from state's mounting debt!]

Photo: Goa Beach Huts

NEW DELHI Thu Jul 3, 2014: Sesa Sterlite Ltd expects its iron ore output to surge six fold this fiscal year as it resumes production in Goa in September after a 19-month mining ban in the state, an executive of the country's top private iron ore miner said.

A pick up in production as mines in India's biggest iron ore-exporting state restart could hurt global prices of the steelmaking raw material that have already lost almost 30 percent this year in an amply supplied world market.

Sesa Sterlite's total iron ore output from India, where it operates in Goa and neighbouring Karnataka, is expected to reach 9.29 million tonnes in the year to March 2015 from about 1.5 million a year ago, Aniruddha Joshi, a vice president at the firm, told Reuters in an interview on Thursday.

Most of the output will be exported as Indian steelmakers are not keen on buying the low-grade ore from Goa at global benchmark prices, Joshi said. The country is currently the world's tenth largest exporter of iron ore.

"It'll suffice to say that only China can use Goan ore," Joshi said. "Because it's hematite coarse fines which can be mixed with very fine concentrates that are only produced in China in high quantities."

The Supreme Court in April lifted the ban in Goa that was aimed at curbing illegal mining, but ordered firms to renew mining leases and environmental clearances before restarting work. It also capped Goa's annual output at 20 million tonnes.

Tom Albanese, chief executive of Vedanta Resources Plc that controls Sesa Sterlite, had earlier said its unit's operations in Goa would restart around October.Shares of Sesa Sterlite have surged more than 50 percent since the ban on mining in Goa was lifted.

CHINA DRIVEN

Goa rose to become India's biggest iron ore exporter over the past decade after China's insatiable steel mills started consuming even inferior grades, prompting many fly-by-night operators in the state to flourish with scant regard for rules.

But Joshi said Sesa Sterlite had never done anything wrong.

"I've not done anything wrong, no authority has found fault with any of my operations, and I have done all my applications properly," he said.

Sesa Sterlite had a capacity to produce about 14.5 million tonnes in Goa, or one third of the state's average output per year, before the ban. But now with the court-imposed limit, the firm's output is likely to be capped at 7 million, Joshi said.

In Karnataka, where there was a similar mining ban until last year, Sesa Sterlite's production is limited to 2.29 million tonnes per year, less than half of its original capacity.

Despite the restrictions and an export duty of 30 percent that pushed India down from being the world's third biggest exporter of iron ore, Joshi believes the country will still be able to find buyers in China without having to cut prices.

But the slide in global prices of the raw material has toughened competition among suppliers to China, prompting even top miners such as Brazil's Vale and Rio Tinto to offer discounts.

Joshi accepts that there are challenges.

"The problem is that if the government and courts in India decide to open the mines and close them at their will, finding a reliable customer and making them believe us will be tougher than finding a market."
(Additional reporting by Manolo Serapio Jr; Editing by Himani Sarkar)

Courtesy: Reuters

Radico Khaitan Ltd: A Low P/E Scrip

CMP: Rs.12.15

The domestic liquor industry is dominated by two large groups, the Vijay Mallya -controlled UB group and the Shaw Wallace group, which is controlled by the late Manu Chhabria’s family. The two enjoy a combined market share of about 55% in IMFL and about 70% in beer.  

The Indian Constitution says that, “The state shall endeavor to bring about prohibition of the consumption of intoxicating drinks”. But the liquor industry is one of the largest contributors to state revenues; the loss of which can severely affect their cash flows. Also, it is difficult to enforce prohibition given the nature of the demand for liquor.

Radico Khaitan Ltd (the 3rd or 4th largest player in the alcoholic beverage market) has a P/E of ONLY 20.92, against Industry P/E of 80.18. Even United Breweries Ltd is trading at a P/E of 83.59, while United Spirits Ltd is trading at a P/E of 106.95 and Empee Distilleries Ltd is having a P/E of whooping 165.94. Also, one of its nearest competitors, Jagatjit Industries Ltd is running into losses worth more than Rs.26 crores.

Therefore, a decent P/E re-rating can take the stock above Rs.200 or at least near Rs.165-170. The ace investors, Rakesh Jhunjhunwala bought the share in January, 2014 at Rs.167.75 per share. 

Conclusion: Government regulations at every level have affected the Indian liquor industry, introducing structural rigidities. Apart from the high level of taxes and levies (that account for up to 65% of the consumer price), regulations pertaining to licensing, creation or expansion of brewing/distilling and bottling capacities, manufacturing processes (grain-based or molasses-based), distribution and advertising impinge on the industry. Further, liquor being a state subject, every state has different regulations (including those on distribution) and tax rates for the industry apart from restrictions as well as levies on the inter-state movement of liquor.

These regulations have impacted the industry on all fronts. The high level of taxes and levies and the fact that companies have little control over distribution systems mean limited pricing flexibility. Consequently, players have low margin levels. Then, as a result of the restrictions on capacity expansions and inter-state movement of liquor, large players have either acquired or entered into contract manufacturing and bottling agreements with local players in various states. 

Therefore, the taxes and duties in the Alcoholic Beverage Sector has to be RATIONALIZED to provide it, a level playing field to compete in the international market. If the government is allowing the sale of liquor in the Indian Union, then it cannot go on showing step-motherly attitude towards the sector, for years. It is high time that the government of India takes note of the above facts and act accordingly, while preparing the Budget: 2014-15.

A strong buy is recommended in the counter with a short term Target of Rs.128-129.

Confidence spurs Indian M&A surge

The value of M&A deals involving an Indian company has seen an increase this year compard with same period in the last two years. 

Merger and acquisition deal value 
Source: TheAustralian

JULY 04, 2014: Deal-making activity in India is off to its best start in at least three years, as companies and investors become optimistic about the country’s prospects.

Nearly $US35 billion ($37.3bn) worth of mergers and acquisitions involving an Indian firm as either a target or a buyer were announced in the first half of this year, versus $US21bn in the first half of last year and $US26.5bn in the same period in 2012, according to data from Dealogic. The last time India experienced this level of deal activity was in the first half of 2011.

Investment bankers say many deals that hung in the balance last year as India’s economy slowed have lately started to close. Companies have become more confident that India’s growth will pick up, partly due to optimism over the new government that came to power in May. Prime Minister Narendra Modi campaigned on a pro-business platform.

“There is certainly euphoria about what the new government can do,” said Ajay Arora, head of India investment banking at Ernst & Young.

Among the large deals announced this year are Mumbai-based Sun Pharmaceuticals Industries’ acquisition of Indian drugmaker Ranbaxy Laboratories for nearly $US4bn, Vodafone’s buyout of minority shareholders in Vodafone India, the British telecom giant’s Indian unit, for $US1.6bn, and Diageo’s acquisition of a 26 per cent stake in alcoholic-beverage company United Spirits for $US3.14bn.

Acquisitions by foreign companies are on the rise. In the first half of this year, inbound merger-and-acquisition deals totalled $US14bn, rising from $US11bn in value a year earlier, according to Dealogic.

Bankers say part of India’s current attraction is that its economic prospects look relatively better than some other countries in Asia. In China, growth has been slowing, and in Thailand a military junta recently seized power.

“India is seen as relatively safer in terms of political stability and security,” said Ganeshan Murugaiyan, head of India investment banking at BNP Paribas.

Investment bankers say companies in India’s fast-moving consumer-goods sector continue to be prime targets for overseas buyers, because these companies are expected to keep recording healthy returns as the economy picks up. Foreign companies have been looking at makers of liquor, including Delhi-based Radico Khaitan, which makes 8PM whiskey, Mumbai’s Tilak Nagar Industries, which makes Mansion House brandy, and Bangalore’s John Distilleries, bankers say. All three companies were unavailable for comment.

Indian pharmaceutical companies, which make generic drugs, also continue to be attractive targets for foreign firms.

Over the coming months, bankers say deal activity will also be driven by large Indian companies looking to dispose of assets to cut debt levels that grew when the country was booming five to seven years ago.

In February, Indian construction conglomerate Jaypee Group sold two of its hydro-electric power plants to a consortium led by Abu Dhabi National Energy Company for about $US1.6bn, in a bid to cut its debt.

“Pressure on some of those companies to sell will remain,” said Sanjay Bhandarkar, managing director at Rothschild (India).

Deals would also be driven by private-equity funds looking to exit investments that were made five to seven years ago, said Anup Bagchi, executive director at Mumbai-based investment bank ICICI Securities. Private-equity funds have had trouble exiting their investments over the past two to three years as they found it difficult to raise new equity locally and as the Indian rupee lost value against the US dollar.

Bankers caution that though many discussions are under way, deals will close only if Indian sellers are realistic about valuations. As Indian stocks have risen this year, “expectations of Indian founders have also risen”, said Vinod Wadhwani, director of investment banking at Mumbai-based Ambit Corporate Finance.

Bankers say overseas acquisitions by Indian companies this year will be limited mainly to major energy companies, which have historically been on the hunt for foreign coal or gas reserves.

The “search for resources will always be there,” said Anantharaman Venkataraman, head of investment banking at Standard Chartered in Mumbai. He said state-run ONGC Videsh, the overseas investment arm of state-run Oil & Natural Gas Corporation, and Coal India will continue to look at acquiring overseas assets.

Both companies declined to comment.

Courtesy: The Australian

Radio Khaitan Ltd: Do you know?

 CMP: Rs.112.15, 
R1--Rs.130 & R2--Rs.149; S1--Rs.100 & S2--Rs.85.

Japan's oldest liquor company Suntory Holdings and India's Radico Khaitan created an alliance whereby Radico got the rights to market Suntory's Yamazaki single malt and Hibiki blended whiskies in India. 

Japanese liquor makers such as Suntory are keen to expand into a growing market like India as liquor sales plummet in a rapidly aging home market, where the total population is expected to decline by a third in the next few decades. 

Spirits sales in India are expected to reach 360 million cases by 2017 from 261 million cases as more than 60% of India's population is between the 15-45 age bracket.

Radico Khaitan Ltd accounts for 18 million cases in the Indian spirits market, with 8 PM whisky alone crossing four million cases. Suntory has been trying to ramp up its presence in India through acquisitions. In 2009, it launched an unsuccessful attempt to acquire a stake in Indage Vinters. 

The Radico Khaitan Ltd acquisition, if and when it happens, will underscore multinational liquor companies' hegemony over the Indian market. The Khaitans began talks with Suntory in 2011, but a deal did not materialise due to issues over majority control, said industry experts.

Earlier there were media reports that the Japanese spirits major is expected to pay close to Rs.870 crore for the stake, valuing Radico Khaitan Ltd at Rs.3,500 crore, or close to 20 times its FY13 operating profit. British drinks giant Diageo bought 53.4% in Vijay Mallya's United Spirits (USL) for close to Rs.12,000 crore in November 2012 at a valuation of 20 times the operating profit of USD.

After Market Opening Chart Check

The Nifty moved in a range yesterday, after it pulled a gain on last Wednesday and closed with a nominal loss of 10 points. Nifty traded dull during all through the day after an initial volatility. It made a high of 7754 and low of 7707 and finally settled at 7715.
Nifty is now trading above 7700 and  hence a new uptrend seems to have resumed. Nifty is slowly moving towards an uncharted territory with no visible resistance. Long is a Hold with a SL of 7430. There was some selling in the small cap space yesterday, but today, the small cap index is marginally up along with the IT and Pharma indices. The investors are therefore, suggested to buy only good companies and keep holding. However, since India VIX is up more than 4%, you should keep your Stop Losses ready, in case of any short term fall.The Nifty (Spot) is now trading at 7690.

Resistance: N/A
Support: 7700 /  7680
The benchmark US indices ended firm on Thursday, with the Dow Jones breaching the 17000-mark for the first time on the back of higher-than-expected monthly jobs data.
Asian indices are trading flat to positive, on positive cues from the Wall Street overnight.
Fundamentally speaking, the domestic share indices are expect to cut their losses and close in the green on the positive optimism from easing of the crude oil prices by ~$4/bbl from their recent highs and taking cues from the positive trend in global markets. The Union Budget 2014-15, which is due on 10th July will provide further direction to the market.

Today's call: 
(i) Buy Radico Khaitan Ltd at Rs.13.50, T--Rs.140, SL--Rs.109. In this company the ace investor, Rakesh Jhunjhnwala  (RJ) is holding stake. Some of the scrips like A2Z Maintenance Engineering Services Ltd (Rs.21.90),  Shashun Pharma Ltd (Rs.160.70), etc where the RJ has stake are already in the Upper Circuits. In January, 2014, the big bull Rakesh Jhunjhunwala's firm Rare Enter purchased 6.85 lakh shares (0.5% stake) at price of Rs.167.75 a share. Therefore, the counter may witness upmove. The scrip has not taken part in the current rally in a major way, and hence there is opportunity to mint money. 
(ii) Those who have bought the shares of Western India Shipyard Ltd at  higher prices are suggested to average at around Rs.2.70-2.79. The scrip is on an uptrend on the Budget Optimism and could reach Rs.5, where you should book profits.
Important: 
(i)There are some optimism regarding 49% FDI in defense deals, and some of the stocks in this sector like Rolta Ltd (Rs.11.7.5) is already buzzing. Even Avantel Ltd (Rs.78) is showing some upward momentum. However, the scrip have already move up much on this optimism and hence it would be prudent to buy the scrip (if at all you think to play on this story), only in declines. 
(ii) The debt ridden Lanco Infratec Ltd (Rs.12.12) is in talks with some strategic investors for selling stake in its thermal projects, and due diligence for the same is in process.  
(iii) Network18 Media and Investments Ltd founder Raghav Bahl, who resigned on May 29, 2014 after Reliance Industries Ltd took control of the company, is likely to return as a director.
(iv) Hatsun Agro Product Ltd (Rs.276) commenced commercial production at dairy plant in Poolam village in Tirunelveli with effect from Jul 1, 2014.

Resurgere Mines and Minerals: Location of Mines

CMP: Rs.3.22 (BSE in Lower Circuit) and Rs.2.70 (NSE in Upper Circuit)

Inference: Strong Buy 
Target: Rs.10 plus

Company Overview:
Resurgere Mines & Minerals India Limited is a Public Limited Company engaged in the business of extraction, processing & sale of Ore and exploration & development of mining assets. Presently the Company is enjoying long term raising and purchasing rights for Bauxite Mine in the State of Maharashtra and mining rights for Soapstone in the State of Rajasthan.

The Company has also 99.98 % equity holding in Shree Warana Minerals (India) Pvt. Ltd. having another bauxite mine in the State of Maharashtra through its wholly owned subsidiary i.e. Warana Minerals Private Limited. 

The mining is already taking place in Soapstone Mine in Dhelana, Rajasthan. In case of some of the mines, the company had been given allotment, but the approvals in the form of environmental and forest clearances are yet to be obtained. This is normal, for commencement of any mining activity. If the clearances are given fast by the current NDA government, then mining activities, can start at any time, after the monsoons.

Initial Mine Development Expenses:
In open pit mining operations, removal of initial overburden and other barren waste materials are necessary for economical extraction of ore. The process of mining overburden and waste materials is referred to as stripping. The management has decided to amortise such expense in 60 months from the date of incurrance of the expenditure at Maharajpur Mines.
Expenses on initial development at “Tatibha Mines” continue being amortized over a period of 5 years from the month in which the expenditure is incurred as estimated by the management.

Subsequent Mine Development Expense:
During FY13, the Company during the course of excavation activity at the Nuagaon mine situated in the State of Orissa has found soft ore (blue dust) in the said mine. Soft Ore has significantly lesser economic value and the company after considering all commercial implications has decided to discontinue excavation activity on the said site within the mine. The company has already started development of an alternate site immediately adjacent to its existing mine site. The management has decided to amortise the expense in 18 months from the date of incurrance of the expenditure. 

Important: 
Face value of equity shares has been consolidated from Re.1 to Rs.10 each with effect from 15th June 2012. (Shareholder’s approval was taken by way of postal ballot, of which the results were declared on 20th March, 2012. Corporate action with stock exchange was done with effect from 15th June, 2012, the record date)

Subsidiary Companies:
As on March 31, 2013, it has six subsidiary companies, namely:
1. M/s Warana Minerals Private Limited
2. M/s Shri Warana Minerals (India) Private Limited
3. Resurgere International FZE
4. M/s Resurgere Sponge Iron Limited
5. M/s Resurgere Ferro Alloys Limited
6. M/s Resurgere Industries Limited
The above companies are wholly owned subsidiaries of the company. M/s Resurgere Sponge Iron Limited and M/s Resurgere Ferro Alloys Limited were incorporated on 1st March, 2011 and the M/s Resurgere Industries Limited was incorporated on 10th March, 2011. In addition to the above, the company has one limited liability partnership namely “Resurgere Coal India LLP” with a 70%stake. 

Please Click on the Photo to get an Enlarged View

Associates:
a. M/S Exfin Shipping (India) - Partnership Frim
b. Victory Sponge Private Limited -Company
c. Eminent Steel private Limited -Company
d. Runwell Steel Private Limited -Company
e. Spear petroleum Private Limited -Company

Therefore, the shareholders are sitting on a "Huge Pile Of Wealth"--waiting to be unlocked and distributed. Am I right?

There are talks that Narendra Modi government will form a single window to hasten such clearances. The NDA government has already made arrangements for online submission of papers, to get the clearances.

It is surprising to see the shares of a company having so many MINES and whose IPO was placed in the price band of Rs.263--272, in August, 2008, is trading below its face value of Rs.10; and which perhaps can happen in India only, because here most investors are either not well informed about the markets or have no idea, about the scrip they are purchasing.  When I was asking all to buy A2Z Maintenance Engineering Services Ltd at Rs.11-12, many were reluctant, to touch it with a stick, and today I see, there are more than 13 lakh bids at Rs.20.90, as the scrip moves from one Upper Circuits to another. What do you call Indian Markets? Immature?

Also, have you seen, a stock, hitting the UPPER CIRCUITS in one EXCHANGE (NSE) and the LOWER CIRCUITS in another (BSE), on the SAME DAY (and at the same time) in India. Our Stock Exchange Regulators are really, world-class, who can create such miracles, unparalleled in the world.....Huh!! Another thing is that in one exchange the circuit limit for Resurgere Mines and Minerals Ltd is 4.72% and in another it is 3.85%--don't know which fertile brains are regulating such activities in BSE and NSE. Do they deserve Nobel Prize in Economics? Think!! 

After Market Opening Chart Check

Yesterday, the market traded range bound, with positive bias.  Nifty moved between 7625 and 7650 for entire day and finally setting at 7634 with a net gain of 23 points. Nifty which was trading range bound since the last 3-weeks between 7450 and 7700, roughly, today broke out and is now trading at 7725. The undertone of the market has turned highly bullish and any dip appears to be a buying opportunity. The investors are suggested to give more stress on buying the scrips from small and mid cap space.
Besides, there is a demand from the beleaguered Pharma, Biotech and CRO industries to Increase Overall Healthcare Expenditure to 2.5% of GDP and allow 100% Foreign Direct Investment in Health and Medical Services. Inspite of UPA government's apathy and no real impetus in the last budget plus the margin pressures on account of Pricing Policy and Drug Prices Control Order (DPCO), the Pharmaceutical industry including Biotech has been one of the most consistent performers registering double-digit growth throughout. This makes this sector again look attractive after Narendra Modi government came in power, with sky-high expectations.
Today's call: Buy Rohit Ferro Tech Ltd (BSE Code: 500002) at Rs.11.50-11.55 for a target of Rs.15. The company has acquired 60% equity stake in a coking coal mine in Indonesia owned by M/S PT Bara Prima Mandiri through its Subsidiary M/S SKP Overseas Pte. Ltd, Singapore. The mine located in Central Kalimantan Province of Indonesia has an estimated coking coal reserve of 10 MN Tonnes.
The company is also having 60% economic interest in the thermal coal mine in Indonesia owned by M/S.Pt Palopo Indah Raya through its aforesaid Subsidiary. The mine located in Central Kalimantan Province of Indonesia has an estimated thermal coal reserve of Rs.20 MN Tonnes. 
My recommended Marg Ltd hit the upper circuits at Rs.20. This scrip has been recommended a number of times in this blog and I hope most of the investors have money from it. 
Shiv Vani Oil and Gas Exploration Ltd tanked after a sell call was given in the counter yesterday. The short term investors are suggested to book profits and exit the counter. 
Birla Shloka Edutech Ltd which was strongly recommended in this blog today hit the buyer freeze at Rs.5.59. A company of the size of Birla Shloka Ltd should not trade below Rs.20. The scrip, is therefore expected to hit some more buyer freezes from here. 
Dr.Datsons Labs Ltd (Rs.15.35) should be accumulated further if and only if yesterday's low of Rs.15.25 is honored by the market, on a closing basis. Or else simply hold on to your positions with a SL of Rs.14.70 (Exit). There is as such not much problem in the company except servicing of the debt, but some traders are selling out on the fear of equity dilution, which I feel is over-done now. 
Resurgere Mines and Minerals Ltd which owns a number of mines today hit the Upper Circuits in both the exchanges, viz. BSE and NSE. The NSE authorities are requested to increase the circuit limit for the scrip which is being traded there, so that its price becomes at par with that in the BSE (Rs.3.39). Today the volume in the NSE is only 19,678 shares. So, if you think you will get the same easily in the NSE, then you are terribly wrong. Therefore, buy the scrip in BSE and keep holding for a target of Rs.10. A simple "Funda" is that, a mining company cannot trade below its face value (Rs.10). So, in any case Rs.10 is coming. Buy the scrip in Bulk and Keep Holding--you will definitely take my name after few months.

 IVRCL CDR proposal approved

CDR is a mechanism that permits viable companies additional time to meet debt obligations, subject to certain terms and conditions

Hyderabad, July 1, 2014: IVRCL Ltd, has informed BSE on Tuesday that the Corporate Debt Restructuring Empowered Group (CDR EG), at its meeting held on June 28, 2014, had approved the CDR proposal submitted by the company.

The company's board, at its meeting held on Monday, had passed necessary resolutions for the implementation of the approved CDR scheme and also to obtain the shareholders approval for passing the necessary resolutions.

In January 2014, IVRCL, which incurred a net loss of Rs 853.37 crore in 2013-14, had initiated the process of CDR prescribed under the Reserve bank of India (RBI) guidelines by way of reference to CDR Cell.

CDR is a mechanism that permits viable companies additional time to meet debt obligations, subject to certain terms and conditions.

IVRCL had earlier decided to raise Rs 300 crore either through a rights issue, preferential allotment or institutional placement to fund its projects.

IVRCL scrip closed at Rs 26.50 on BSE today, marginally down 0.19% compared to the previous close of Rs 26.55 crore.

Courtesy: The Business Standard

Dr.Datsons Labs Ltd: Slowly, To Come out of the Blues

CMP: Rs.15.55

The shares of the company fell since a last few days after the board of directors of Dr Datsons Labs approved the issuance of 34.5 lakh shares to bondholder, Autor Investments Ltd on conversion of foreign currency convertible bonds (FCCBs) for a value of $3.5 mn at Rs.55 a share. Following this, the company’s share capital has increased to Rs.53.37 crore from Rs.49.91 crore. 

However, it seems from the movement of the scrip, that for the time being, the downturn has come to an end and the scrip should move up. The company has a board meeting, on 5th July, 2014, which is likely to have a positive rub-off on the company's share price.

Moreover, according to the Business Standard, 1st July, 2014, Dr.Datsons Labs has received, the International Star Award for Quality; which will be conferred upon the Company at the ISAQ Convention. 

The Company has been chosen for:

- Being the third-largest quinine salts manufacturer in the world. This level of operational success demonstrates a clear commitment to ongoing good practices.

- The high quality of its production process, as demonstrated by its ISO 9001:2008, ISO 14001:2004 and ISO 22000 certifications.

- Its social and environmental initiatives, like its support of IDA programs (focused on the elimination of animal abuse).

The risk taking investors are suggested to buy this high-risk-high-gain stock on all declines, for a short term target of Rs.18-19, in the coming days.

IVRCL Ltd: Update

CMP: Rs.26.50

IVRCL Ltd has informed BSE that the Corporate Debt Restructuring Empowered Group (CDR EG), at its meeting held on June 28, 2014, have approved the Corporate Debt Restructuring proposal submitted by the Company.

The Board of Directors of the Company in its meeting held on June 30, 2014 passed necessary resolutions for the implementation of the approved Corporate Debt Restructuring scheme and also to obtain the shareholders approval for passing the necessary resolutions.

This is a superb news for the shareholders of IVRCL Ltd who have been waiting patiently for this news; since  a long time. The share is likely to cross Rs.30 in the coming days. The next targets are: Rs.37-39-41.

After Market Opening Chart Check

Yesterday the Bulls came back strongly and pulled the Nifty to a high of 7623 before closing at 7611 with a spectacular gain of 102 points. It was a gap up opening followed by sustained buying all through  the day.
Nifty seems to have entered into a trading zone between 7450 and 7700 which is evident from its trading patterns since last couple of weeks. Meanwhile, the undertone has become bullish and any dip appears to be a buying opportunity. Today, since the morning, Nifty is clearly is holding, 7600 mark, which could mark the beginning of a pre-budget rally. The investors are suggested to focus on the small and mid cap counter, buy them and keep holding till the budget.
Resistance: 7650 /  7700
Support: 7570 / 7535
Today's call: (i) Buy Dr.Datsons Labs Ltd at Rs.15.50-15.60, for a target of Rs.18-18.50, in the short term. The company is having a board meeting on 5th July, 2014, which is likely to give a positive rub-off on the scrip.
(ii) Buy Marg Ltd at Rs.18.50, T--Rs.24, SL--Rs.16.50. This week, I shall be speaking with the sources, regarding the open offer, at Rs.91.
Birla Shloka Edutech Ltd hit the upper circuits today at Rs.5.34 today and could become only buyer any time from now. The scrip could be moving towards Rs.7-8 in the coming days.
Allied Digital Services Ltd hit the buyer Freeze at Rs.23.10. The scrip was strongly recommended a buy in this blog and report was also placed at SumanSpeaksPlus.
Important:
(i) Those who are holding Gitanjali Gems Ltd (Rs.92.10) should look for a target of Rs.110-112 in the coming days. The government of India, will invariably declare some positives for the battered down Gems and Jewelry Sector.
(ii) IVRCL Ltd (Rs.26.40) could be dark horse after the restructuring gets completed. The company is expected to complete the process by 31st July, 2014.
(iii) If a stock in the same space as Resurgere Mines and Minerals Ltd (Rs.3.17), named SVC Resources Ltd having Face Value of Re.1, can trade at Rs.3, then why can't Resurgere Mines and Minerals Ltd of Face Value of Rs.10, Book Value of Rs.26.49, Market Cap of only Rs.64.04 Cr, having a Soapstone Mine (where mining is going on) and a couple of Bauxite mines trade at least at Rs.20. I think Rs.10 is coming for Resurgere Mines and Minerals Ltd--investors need to buy the share of the company, on every dip, and keep holding, patiently. Also the NSE authorities are requested to increase the circuit limit of the scrip of Resurgere Mines and Minerals Ltd, to make its price at par with the BSE.
(iv) For the short term Shiv Vani Oil and Gas Exploration Ltd (Rs.24) may not show much upward movement, because of the deferment of the Gas price hike. Hence, you can book profits and enter some happening sectors like Infrastructure or Mining...or Shipping....etc. Later you can again enter....however long term investors can keep holding with a SL of Rs.21 (exit)...

 Birla Shloka Edutech Ltd: Updates

Birla Shloka Edutech Ltd, the Yash Birla Group of company is having around Rs.500 crore-plus order book in hand. Moreover, it is slated to get a project from Orissa soon. It already has orders from Maharashtra and Tamil Nadu Governments. The company is looking to reduce its debts on the books. In March, 2014, the company declared that it has received an order from School Education Department, Government of Tamil Nadu for implementation of information and communication technology scheme in 1820 Government High & Higher Secondary Schools in Tamil Nadu State with a total project value of Rs.359 crore. It is already doing a 5-year contract from the Maharashtra government.
The scrip has a book value of Rs.50.36 and its market cap is only Rs.10.07 crore. According to Money Life of February, 10, 2014, it bought a piece of land in Oshiwara (a Suburb of Mumbai near Andheri West) at Rs.16 crore.

Financials:
Net profit of Birla Shloka Edutech rose 27.08% to Rs.3.52 crore in the quarter ended March 2014 as against Rs.2.77 crore during the previous quarter ended March 2013. Sales declined 37.81% to Rs.33.19 crore in the quarter ended March 2014 as against Rs.53.37 crore during the previous quarter ended March 2013.

For the full year, net loss reported to Rs.3.28 crore in the year ended March 2014 as against net profit of Rs.5.05 crore during the previous year ended March 2013. Sales declined 71.54% to Rs.63.63 crore in the year ended March 2014 as against Rs.223.56 crore during the previous year ended March 2013.

Conclusion:
The scrip is currently trading at Rs.4.85 and is looking highly undervalued. The investors can buy the scrip for a target of Rs.7-8 in the next 4-5 months time frame. According to my close sources, the company is going do well in the subsequent quarters. However, it is not a momentum counter.

Note: This information was put on the Paid Blog, on last Sunday, i.e, on 29th June, 2014. The scrip hit the upper circuits yesterday (30th June, 2014) at Rs.5.09. Join the Paid Service or trade through my recommended brokerage house/s to stay ahead of others. Also, allow experts to trade on your behalf and cover all your losses. For details mail me at: suman2005s@rediffmail.com.

WINNING STROKES: THINK DIFFERENT

Jai Balaji Industries Ltd has been moving up since my write-up was put in SumanSpeaksPlus. The company has  a number of mines and the current price, does not reflect the true value of the scrip. Today the scrip hit the buyer freeze at Rs.26.95.

Gitanjali Gems Ltd recommended in this blog, only a couple of days back today touched Rs.93.10, before closing at Rs.92.10. The scrip would be moving towards Rs.110-112, in the coming days, and hence have this scrip in your portfolio. 

IVRCL Ltd recommended last week in this blog hit the buyer freeaze at Rs.26.55. The company will be one of the major beneficiaries of the government of India's largesse. The scrip would be slowly moving towards Rs.31-32, in the coming days.

PVP Ventures Ltd today touched Rs.9.75, intra-day, before closing at Rs.9.29. The stock might be slowly moving towards Rs.10-11, in the coming days. However, this is a very volatile counter and hence investors must be very cautious while entering this scrip.
Birla Shloka Edutech Ltd, which is expected to get an order from Orissa (Odisa), has an order book of around Rs.500 crore-plus and Book Value of Rs.50.36, today hit the upper circuits. The investors were repeatedly asked to buy the scrip, after Aditya Birla Group, supremo, Mr.Kumar Mangalam Birla, came in aid of his cousin, Mr.Yash Birla and Birla Family virtually throwing their weight behind  him. Earlier, Rs.30 crore was advanced to Mr.Yash Birla by cousin and businessman Kumar Mangalam Birla to repay FD investors of Birla Power Solutions. Moreover, Mr.Kumar Mangalam Birla is recently in news for increasing his stake in the B K Birla Group of companies. 

Shiv-Vani Oil and Gas Exploration Ltd today moved to Rs.24 before closing at Rs.23.65, up 2.16%. At present the company is implementing the CDR scheme. 

Government to start consultations afresh on raising gas prices

After putting off implementation of a contentious gas pricing formula, the new government will start consultations afresh with all stakeholders to arrive at an acceptable increase in natural gas rates.

Sunday, 29 June 2014: The Cabinet Committee on Economic Affairs had on June 25 deferred a decision on raising gas prices based on a formula approved by the previous UPA government by three months to hold consultations with all stakeholders keeping public interest in mind, government officials and industry sources said.

"The key word in the Cabinet decision was public interest. Public interest in this case can be defined as ensuring that the increase in gas price is affordable," an official said.

The formula approved by the previous government would have led to prices of gas, which is used mainly for power and fertiliser production, more than doubling to around USD 8.8 per million British thermal unit.

Every dollar increase in gas price will lead to a Rs 1,370 per tonne rise in urea production cost and a 45 paise per unit increase in electricity tariff. There would be a minimum Rs 2.81 per kg increase in CNG price and a Rs 1.89 per standard cubic metre hike in piped cooking gas.

Considering a USD 4.5 dollar increase, power cost would have gone up by over Rs 2 per unit and CNG rates jumping by over Rs 12.6 per kg. Besides piped cooking gas price would have gone up by Rs 8.50.
Sources said it is unlikely that a new expert committee will be formed and the oil ministry will take a proposal for raising gas prices to the Cabinet after holding consultations with user ministries of power and fertiliser as well as finance. Gas producers and user industries will also be consulted.

The impact of the UPA government approved formula on power and CNG rates were among a host of other reasons that led to postponement of gas price hike.

The UPA's pricing formulation had been challenged in the Supreme Court and an FIR is pending in Delhi's Anti Corruption Bureau on the issue.

Also, the Parliamentary Standing Committee on Finance and the Standing Committee on Petroleum had made adverse comments on the formula, the sources said.

If the government decided to insulate the general public from the price rise, then there would have been substantial increase in burden of subsidy, the officials said.

Gas producers want gas prices to be raised as they feel the current USD 4.2 per mmBtu rate is insufficient to make many discoveries economically viable to produce.

They feel an increase in rates will help raise output by bringing hereto economically not viable fields to production and help cut imports. 

Courtesy: DNA India

NHAI concession may help Reliance Infra, others disentangle Rs.4,500-cr debt

[Editor: The article misses an important name in the road-project space, IVRCL Ltd (Rs.25.30); whose finances worsened because of too much focus on the BOT projects. IVRCL Ltd will also be a major beneficiary of such largesse from the government of India, though the according to the sources, it has now decided to incline more toward the EPC projects]

New Delhi | June 27, 2014: The National Highways Authority of India (NHAI) last month’s move to reschedule the premium that developers of road projects have to pay to the government for securing the right to build and operate them will facilitate faster completion of the beleaguered projects and help companies service the debt associated with them.

Companies like IRB Infrastructure, Sadbhav Engineering and Reliance Infrastructure (R-Infra) that will benefit from this move have a total debt obligation of Rs 4,500 crore associated with the road projects they are developing and which are eligible for rescheduled premium payment.

Premium is the amount developers have to pay NHAI for bagging road projects on a build-operate-transfer basis. Developers have to bid the premium amount that they pay NHAI upfront, based on future traffic estimates. The term for payment of the premium is typically 20-25 years, with a 5% increase annually.

In March, a committee headed by then chairman of the Prime Minister’s Economic Advisory Council C Rangarajan had suggested a mechanism whereby the rescheduling of payment of such premium will be allowed for only those projects where the toll collected is insufficient to meet project expenses such as servicing of debt, operations and maintenance, along with the premium payment.

For instance, say a road developer has to pay a premium of Rs 100 to NHAI for a road project, but is able to pay only Rs 60 now, after deducting project expenses from toll collection. In such a situation, the government will allow the developer to capitalise the remaining premium amount over the concession period. The developer will have to, at a later date, pay this shortfall in premium with a 10.75% interest.

The government had approved this scheme before the model code of conduct came into force ahead of the Lok Sabha election. The NHAI allowed nine road projects to reschedule premiums in the last week of May, leading to a total premium deferment of Rs 5,960 crore. For FY15, the amount of deferred premium stands at Rs 652 crore.

The developers whose projects have got the benefit are calling it as a much needed breather in a stressed environment.

“The moment a project becomes operational, I, as a developer, do not have the kind of cash flows needed to service my repayments in the initial years,” said Lalit Jalan, chief executive of Reliance Infrastructure. “This mechanism is to ensure that the banks don’t get stressed.” R-Infra’s Rs 925-crore Hosur-Krishnagiri road project has been approved on premium restructuring.

IRB’s Rs 2,226-crore Ahmedabad-Vadodara project and Rs 839-crore Tumkur-Chitradurga projects are among the beneficiaries of the scheme. According to the final approval given by NHAI for IRB’s projects, Rs 236 crore will be the revised premium that the developer will have to pay NHAI in FY15 for the Ahmedabad-Vadodara project and Rs 81 crore for the Tumkur-Chitradurga project, said Virendra Mhaiskar, the chairman of IRB. “It certainly comes as a relief for us and will be helpful in smooth operations of the projects,” he said.

Jonas Bhutta, Bank of America Merill Lynch (BoAML) research analyst, in a report in May said, “Premium rescheduling would lead to cash profits versus losses earlier on these IRB projects, and 100bp (basis points) arbitrage between interest cost on short-term debt (12%) and discount rate at which premium will be rescheduled (11%)”. The foreign brokerage has raised IRB’s FY15-16 earnings by 1%-6% on lower interest expenses.

Sadbhav Engineering had received an approval to defer premium for its Rs 1,213-crore Rohtak-Panipat and the Rs 480-crore Hyderabad-Yadgiri road projects. The company expects 100% deferment of premium in FY15 for both projects, which will mean it will not have to pay any premium in FY15, said a senior senior executive from Sadbhav Engineering. According to the original agreement, the company had to pay a total premium of Rs 60.1 crore for the two projects in FY15.

According to a Kotak Institutional Equities report in May, premium rescheduling will improve Sadbhav Engineering’s near-term cash flows and the potential valuation of the projects it is executing.

“The company seems well-placed to meet the increment equity requirement of Rs 380-400 crore for its underconstruction and development projects,” said Aditya Mongia, infrastructure sector analyst at Kotak Institutional Equities.

Courtesy: The Indian Express

Budget 2014: Government to create investment vehicle to boost infrastructure sector

[Editor: This is another sector which is looking good before the budget, and it is expected that the government of India, would come up with some solid measures, to revamp this sector; which has been reeling under several problems. Therefore, one of the best options, for investors at this stage, is to buy a momentum counter (there are so many of them) in this space and keep holding till the budget day. One scrip which I again recommend, from construction space is Marg Ltd (Rs.18.40) which has a book value of Rs.111.71, the Open Offer price of Rs.91 and Market Cap of only Rs.70.14 Crore. Do you think a company of the size of Marg Ltd can have a market cap of only Rs.70.14 crore when HCC Ltd has a market cap of Rs.2,873.93 Cr, Punj Lloyd Ltd has a market cap of Rs.1,693.69 Cr, while IRB Infrastructure Ltd has a market cap of Rs.7,458.25 Cr?]

NEW DELHI, Jun 25, 2014:  The government is looking to create a new investment vehicle known as the infrastructure business trust to help cash-starved infrastructure developers raise long-term capital at competitive rates.

The finance ministry is considering a range of tax incentives for such trusts in the budget that's to be announced on July 10, in line with its promise to create a framework of fast-track, investmentfriendly and predictable public private partnerships (PPPs) to build large-scale projects that are of vital importance for India to compete in global markets.

 Though assets delivered through the PPP model and available for financing through securitisation have risen, Indian infrastructure firms are hard pressed with the development of existing projects delayed and the attractiveness of new projects diminishing for private sector funds and strategic operators.

"In order to provide a robust funding mechanism to the cash-starved sector, the government and market regulator Sebi (Securities & Exchange Board of India) will facilitate the securitisation of projects assets through infrastructure business trusts," said a person familiar with the development.

To raise long-term capital for the much-needed sector, the government will incentivise the creation of such trusts, so that investors will have a lower tax burden apart from avoiding multiple taxation at different levels. Infrastructure projects are now funded by bank loans, resulting in asset-liability mismatches in the banking sector.

The government has discussed the plans with senior officials of Sebi, Central Board of Direct Taxes and department of economic affairs to finalise the incentives. An infrastructure business trust will be set up as a trust and registered with the market regulator.

The regulator has proposed two categories of trusts. Category I trusts can raise funds through private placements from institutional investors only. These trusts can invest in multiple projects (at least two) that include those under construction as well as commercially-operational ones. The category II trust can raise funds from both local and foreign investors.

However, it can invest only in commercially-operational projects. It can invest in a minimum of four such projects. The proposed provisions will provide for the deferral of longterm capital gains tax on the exchange of shares of special purpose vehicles that own the infrastructure projects with the unit of the trust in the case of the trust's sponsor. However, capital gains arising from the disposal of the units by the sponsor would be subject to tax at normal rates.

The units of the trust (referred to as InvITs by Sebi) may be treated at par with equity shares, so as to attract the current benefit available under Section 10 (38) of the Income-tax Act.

This provides a preferential tax rate with long-term capital gains being exempt from tax and short-term capital gains being levied at 15%. This implies that unitholders will pay securities transaction tax at the time of transfer of units to another unit holder.

The trust will also be exempt from taxation of income earned in line with existing exemption for venture capital funds available under Section 10(23FB).

In the case of resident investors in InvITs, withholding tax would apply. In the case of non-residents, withholding tax on interest income from both investors as well as lenders of money to the trust may continue to be provided at the current level of 5% on the lines of concessional rates applicable to external commercial borrowings.

Courtesy: The Economic Times

Govt hints at cut in gold import duty; May exports up 12.4%

[Editor: The commerce secretary Rajeev Kher says: “There is a clear perception that there could be something that could have to be done. It will happen in the Budget if it has to happen". So, it is only time that the government will rationalize the duties of gold, to lift this beaten down sector.  Therefore, the best option for the investors at the present moment is to buy a share in this space, which looks good and keep holding, till the date of the budget; for sure shot returns] 

Mr. Rajeev Kher, Commerce Secretary, GOI
Apr 04, 2014, FICCI, New Delhi

June 11, 2014: In the clearest indication ever that the plans were afoot to cut taxes on gold, the government on Wednesday said that there was a need to ease norms for bullion imports to boost supplies and jewellery exports.

“There is a need of rationalisation in (gold import) duty and (gold import) procedure....We have already made it clear that there is a need to look at the current gold import regime,” commerce secretary Rajeev Kher told reporters in New Delhi.

India had raised the import duty on gold from 4% to 10% in order to control the current account deficit (CAD) — a broad measure of dollar inflows and outflows. The CAD had hit a record high of 4.7% of GDP in 2012-13 and the rupee had plunged to a record low of 68.85 against a dollar.

The gap has tapered down sharply over the last three quarters as the government and the Reserve Bank of India launched a string of steps including curbs on gold imports and measures to attract foreign capital.

India’s CAD has dropped sharply to 1.7% of GDP or $32.4 billion in 2013-14, primarily aided by plunging gold imports.

“If you feel that the initial concerns of CAD are fully addressed, as we hope to in the next several months, then there will be a reason to restore or at least to some extent the (earlier) position (on gold imports),” he said. “There is a clear perception that there could be something that could have to be done. It will happen in the Budget if it has to happen,” Kher added.

Gems and jewellery exporters, which approximately accounts for about 15% of India’s total outbound shipments, has been pitching for lifting gold import curbs. Gold imports in May dipped by 72% to $2.19 billion, as against $7.7 billion in May 2013.

India’s exports rose 12.4% in May to $28 billion, the highest in six months on high global demand. However, trade deficit — the gap between export earnings and import payments — galloped to a 10-month high of $11.23 billion during the month.

“It is definitely an encouraging sign. This is the first time in the last six months that we have recorded a double digit growth. If this trend sustains then I am sure we are reviving...It seems that they (export products) are now acquiring there natural levels,” Kher said.

Imports rose to $39.23 billion in May against $35.7 billion in the previous month.

Courtesy: The Hindustan Times

MARG Karaikal Port

[Editor: IL&FS, an infrastructure development company, is setting up a thermal power project near Karaikal Port. The company has agreed to use the port for bringing coal for the power project. The port, which belongs to Marg Ltd, could handle 5 million tonnes of coal in the coming years to feed the first two 600-megawatt (MW) units of the IL&FS subsidiary. This could mean revenues of about Rs.200 crore for Karaikal Port]

MARG Karaikal Port

Karaikal Port Private Ltd (KPPL) is a subsidiary of MARG Ltd, a leading infrastructure and real estate developer along the Chennai IT corridor.
• MARG Karaikal Port is envisaged to have a total of 9 berths capable of handling 47 MMTPA by 2018.
• The port is envisioned to be developed in 3 phases with the final phase getting operational in 2017. Phase - I of development, which was completed in April 2009, comprises two Panamax size general cargo berths.
• The Port hosts various other infrastructure facilities such as covered warehousing, open storage and Mobile Harbour Cranes.
• The Port has excellent evacuation facilities with 3 railway sidings and National Highways within a Kilometer from the gate. An area of around 600 acres is covered by the Port boundaries.

Financial / Funding data

• Series A Funding: Karaikal Port got Rs.150 cr equity from IDFC fund in 2010
• Series B Funding: Ascent Capital invested Rs.200 cr in Karaikal port in 2011.
• Series C Funding: Standard Chartered arm invested Rs.130 cr in Karaikal Port in 2012.
• Series D Funding: PE fund Jacob Ballas invests Rs. 200 cr in MARG Karaikal Port in 2012.
Total Funding: Rs.680 Cr.

Employees: 51-200
Industry: Infrastructure - Roads, Ports, SEZ
Description: India's Largest Private Port to handle large vessels and diverse cargo mix.

Milestones

• GRK Reddy awarded as "Business leader & Visionary of the year" at the 5th South East Cargo and Logistics Awards 2013, Chennai.
• MARG Karaikal Port adjudged as the ‘Best Project’ under the Port Development category at the prestigious ‘D&B – AXIS BANK INFRA AWARDS 2012’, Mumbai.
• MARG Karaikal Port Chosen as the ‘Innovative Port of the Year’ at South East CEO Conclave & Awards, 2012.
• MARG Karaikal Port recognized with 'EXIM Achievement Award' for its operational efficiency in EXIM operations by Tamil Chamber of Commerce on 7th February 2012.
• "Special Jury Award" for GRK Reddy at the 'Gateway Awards of Excellence – Port & Shipping 2012' on 19th January 2012 at New Delhi.
• MARG Karaikal Port bags the “Seaport project of the Year” at the ‘Construction Week Awards 2011’ at Mumbai.
• MARG Karaikal Port awarded as 'Emerging Port of the Year' at South East Cargo & Logistic Awards in July 2011 at Chennai.
• MARG Karaikal Port received the prestigious award for "Outstanding Achievement – Port Development & Port Management" conferred by SHIPPING, MARINE & PORTS World Expo 2010 on March 4, 2010, in Mumbai.
• GRK. Reddy has been awarded the 'South East CEO Conclave Award 2010' for Corporate Social Responsibility.

Courtesy: Coolavenues.com

Buy Gitanjali Gems; target of Rs 145: Way2Wealth

CMP: Rs.90.85

Way2Wealth is bullish on Gitanjali Gems and has recommended buy rating on the stock with a target of Rs.145 in its June 10, 2014 research report. Moreover, in May, 2014, Gitanjali Gems Ltd invested USD 15.5 million in overseas operations. 

Also, MV SCIF Mauritius, part of US-based asset management company Van Eck Associates Corporation, on 20th June, 2014 picked up 4.97 lakh shares of Gitanjali Gems Ltd, through open market route. Van Eck Global offers investment choices in a broad range of asset classes, including commodities and natural resource equities, emerging market equities and debt. 

Besides, though monsoon season is considered lean period for gold demand due to lack of festivals and weddings, Gitanjali Gems Ltd, Rajesh Exports Ltd and Kalyan Jewellers Ltd are promising everything from discounts to an opportunity to dine with Bollywood celebrities, to ramp up sales.

"Gitanjali Gems Ltd, will announce a rain and shine plan next month, offering discounts on ornaments and jewelry making charges. Sales are flattish at the moment because stocks are less and people are waiting for new policies to be unveiled by the new government. We expect demand to pick up because of these offers and the restrictions being eased as well", the Chairman Mehul Choksi said in an interview with Swansy Afonso of DNA India.

"With the kind of promotions and expectation of a change in import tax, we should see some normalcy in demand," C P Krishnan, a director at Geojit Comtrade Ltd, said. 

According to a report published in online portal, Eco-Business, the world’s fastest growing diamond and jewellery company is India's Gitanjali Gems Ltd. They have made employment of disabled a central part of their talent development and human resource strategies.

This initiative started because of a shortage of labour in Hyderabad that made it necessary for the company to hire local disabled people. Result: lower staff turnover, greater employee loyalty, an increase in productivity and more.

In short, what started out as an HR crisis became a competitive advantage. The disabled turned out to be undiscovered resources, and hiring disabled youth is no longer “just a CSR initiative” but an integral part of Gitanjali Gem’s talent management strategy.