Reliance Communications Ltd: Buy

CMP: Rs.75.10

Anil Dhirubhai Ambani-owned company, Reliance Communications Ltd (Rs.75.10) which is India's fourth largest mobile phone operator by subscribers, reported an 85% jump in net profit for Q3FY15, boosted by lower cost of financing debt and as more of its subscribers used the pricier data services.

It posted a net profit of Rs.201 crore for the October-December period. Revenue rose 1.2% on year to Rs.4,799 crore. The company's net finance cost fell to Rs.652 crore from Rs.749.3 crore a year back. In May, Reliance Communications raised Rs 6,000 crore from a share sale to institutional investors to reduce its debt and ready itself for the upcoming airwave auction. It used funds raised from the sale of shares to institutional players to repay loans earlier this financial year.

According to the Economic Times, 14 February, 2015: 

The telecom industry in India has benefited from reduced competition ever since the Honorable Supreme Court cancelled 122 licences in February 2012, which allowed operators to cut down on promotional offers such as free-call minutes and raise effective call rates. Additionally, a surge in the use of smartphones has pushed up the use of premium high-margin data services. These have helped most telcos improve their key parameters such as average revenue per user (ARPU) and average realisation per minute (ARPM). The carrier's data customer base grew 5.7% to 31.4 million, of which 16.7 million were on its 3G services. Total data traffic increased 16.2% on quarter and 83.3% on year, due to a rise in data subscribers and higher data usage per customer, the company said. Data services offered at a premium and add to the spending per customer, making them more lucrative for telecom companies.

Reliance Communications had net debt of Rs.36,330 crore ($5.9 billion) at the end of September, 30, 2014, down from Rs.40,220 crore three months earlier, according to a company filing. 

The company may also bid in a government auction of wireless spectrum next month, which is expected to raise as much as $15.6 billion from service providers and put at risk their efforts to reduce borrowing, ICRA Ltd said in January. All licenses held by the company in the most popular 900 megahertz frequency band are up for renewal, according to the local arm of Moody’s Investors Service. 

Recently, there were media reports that  Reliance Communications has awarded a contract for technology overhaul of its business process outsourcing centres to US communications systems major Avaya for an undisclosed sum. A person familiar with the matter, however, said the contract may mean an outflow of Rs.400-500 crore for Reliance Communications (RCom) over three months, followed by about 15% of that to service it over the next three years. Under the agreement, Avaya will modernise tools, processes and best practices resulting in operational efficiencies by managing cost through consolidation.

Another person familiar with the deal said the move was in anticipation of work from Reliance Industries' Jio Infocomm. Reliance Communications Ltd (RCom) has a deal with Mukesh Ambani-owned Jio, under which RCom will manage the call centre operations for Jio. The Jio agreement also said RCom would upgrade its technology and fibre for the purpose. At the moment, RCom uses its legacy IVR, or interactive voice response system. Technology today allows more efficient approaches to ensure fewer drops and call back options to maintain continuity of conversation.

Besides, according to The Financial Express, 10 February, 2015:

Facebook has tied up with Reliance Communications to offer free access to subscribers of Anil Ambani-led firm to the social networking site as well as about three-dozen general information websites. Besides accessing Facebook, RCom subscribers can also access 33 websites offering news and information on weather, jobs, government services, and health without incurring data charges.

According to the Deccan Herald, 17 February, 2015:

Reliance Communications Ltd, part of the Anil Ambani-led group, which is the global telecom sponsor of the ICC World Cup 2015, has partnered with Twitter to provide its customers with a platform to follow the global commentary as the world's 14 best cricketing nations compete for the tag of the champion team, with no data charges. Customers who do not have a Twitter account can also access cricket-related Tweets by logging on to www.rcom.co.in/cricket on their mobile phones throughout the duration of this global event -- from Feb 13 to March 31, 2015, a company statement said here Tuesday. 

According to the Reuters, 17 February, 2015: 

India's Reliance Industries  and seven other firms including top mobile phone operator Bharti Airtel  have applied to participate in next month's auction for mobile phone airwaves, several people directly involved in the process said.

All these makes Reliance Communications Ltd as one of the most happening stocks in the telecom sector.. The scrip should cross Rs.100, within the next six months. The investors are strongly suggested to buy the stock at the CMP of Rs.75.10, for a short term target of Rs.84-97. This could be another Pipavav Defense and Offshore Eng Ltd (Rs.69.10), which was recommended on September 28, 2014 at Rs.38.75; after which it made a 52-week high of Rs.74.40 on 12/02/2015.

RCom Advances 4% as Q3 Net Meets Expectations

February 16, 2015:  Shares of Reliance Communications surged as much as 4.2 per cent to Rs.75 after the company reported that its third quarter net profit came in at Rs 201 crore after the market hours on Friday.

RCom's net profit for quarter ended December 31, 2014 jumped 86 per cent to Rs.201 crore from Rs.108 crore during the same quarter previous year. Total income of the company rose 5.4 per cent annually to Rs.5,435 crore from Rs 5,157 crore.

Revenues from the non-voice segment grew 12 per cent and voice segment revenues jumped 4 per cent on year on year basis.

The results came in line with what the analysts had expected.

Meanwhile, the EBITDA margins saw a soft growth in the third quarter. Gurdeep Singh, CEO, consumer business at Reliance Communication told NDTV that, "EBITDA margins were stable at 33.8 per cent and it could have been higher but due to few one time expenses on global business and employee costs the EBITDA registered a soft growth." (Watch video)

Reliance Communication ended higher by 4.3 per cent at Rs.75.

Courtesy: NDTV Ltd 

AAP’s trigger on AK - 67

~~Fakhri H. Sabuwala

Mumbai, 16 February 2015: "AAP jaisa koi meri zindagi mein aaye’ tau.......bAAP ban jaaye"...ahaa bAAP ban jaaye. Pehle AAP, pehle AAP....... the PM kept on saying and in this Lucknowi, syndrome the BJP missed the bus, whereas the Congress did not even come to the terminus". 

"The results of the Delhi Assembly polls are one of its kind and has rewritten political history. Arvind Kejriwal’s swearing in ceremony as Chief Minister took place  on Valentine's day, 14th February, which incidentally is exactly the day he quit as the CM of Delhi last year.

In the last twelve months, much water has flowed down Jumna bridge. Not only has it witnessed the country's general elections won by the BJP on the plank of development but also the installation of a non-Congress government at the centre after long. This paved the way for the BJP with its regional partners to exploit the plank of development again in state elections. Modi had thus become an epitome of change. The policy paralysis of yester years was given a go by with the promise to do things differently. Narendra Modi’s new mantras to achieve growth like ‘Make in India’, ‘Digital India’ and ‘Swachch Bharat’ caught the imagination of the people and reverberated abroad too during the PM's visits abroad or during the visits of foreign dignitaries to India. While this fetched him ground coverage somewhere down the line it appeared that the PM was getting alienated from the real problems of the masses. 

As the talk became louder with lack of follow-up action, the public became wary of NaMo’s pronouncements quite like the Lok Sabha elections when he was referred as ‘Feku’ while Rahul was called Pappu’.

The BJP government found little support in the legislature forcing it to adopt the ordinance route like its predecessor. All this led to a disdain to the ‘aam aadmi’ who was yet to see any positive change in his life in the nine months since the voluble Narendra Modi took over creating big hopes. It was in the shadow of high pitch sloganeering that Arvind Kejriwal of AAP addressed the electorate and turned the tables on the invincible NaMo and dealt a deadly blow bagging 67 out of the 70 seats with comfortable leads and losing only three only by wafer thin margins.

The results were stunning. While they took away the wind from the sails of NaMo and BJP president, Amit Shah, it left the BJP in such a state of shock that the party leaders could hardly respond. 

The BJP suffered from the same disease that the complacent Congress had developed with its 60-year rule in Delhi. Arvind Kejriwal and the AAP have ushered a new dawn that should help reduce corruption and crony capitalism since they can never be eliminated.

P.N: Mr.Fakhri H Sabuwala is a Masters in Commerce from Mumbai University. He is a Stock Broker, Investment Analyst and associated with BSE since 1982.  He is an ex- lecturer in Commerce and a visiting faculty in various school of management and professional courses.

Market Mantra

Unitech Ltd (Rs.18.50), today moved up by more than 12% intra-day and touched Rs.19, after strong Q3FY15 numbers. It was mentioned in the last report that the shares of the company would gain positive momentum on Monday, following good quarterly numbers. The stock is now trading at Rs.18.50, up more than 11%.

Today's call: Buy Reliance Communications Ltd at Rs.75--76, for a short term target of Rs.82. The company came out with superb Q3FY15 numbers. A brokerage house has confirmed a BUY on Reliance Communications for a target of Rs.82-84.. 
The shares of Allied Digital Services Ltd tanked to Rs.21.40, intra-day today and is currently trading at Rs.22.75, down more than 11%. If you remember I had given a sell on the counter above Rs.30, based on some recent developments, asking all to book complete profits.
Pipavav Defense and Offshore Ltd today touched my 3rd target of Rs.72 and is currently trading at Rs.68.80. Earlier there were media reports that  Mahindra & Mahindra, one of India's largest diversified conglomerates, is set to purchase a majority stake in Pipavav Defence and Offshore Engineering (PDOE) for roughly Rs.3,000 crore at Rs.66 a share in a three-phase deal. Along with debt of around Rs.6,800 crore and fresh equity that will be issued, the deal is seen as having an enterprise value of Rs.12,000 crore, they said.

India gold prices surge on jewellery demand

MUMBAI, Saturday, February 14, 2015:  Gold prices in top consumer India swung to a premium to the global benchmark this week, compared with discounts late last month, as jewellery demand picked up, dealers said.

Indian gold prices were at a premium of $2-$3 an ounce over the international benchmark and are expected to remain in the same range in the short term, according to trade sources.

Prices were at a discount of up to $16 an ounce last month, due to weak demand and sufficient supply in the market.

'Wedding demand has started picking up at lower prices,' said Narendra Singh, owner of Kiran Jewellers in Jaipur.

'Presently supply is smooth and gold is available as per the requirement but imports may increase in the coming months on increased demand,' he said.

India overtook China as the top gold consumer last year as jewellery demand jumped to a record high, World Gold Council data showed this week.

Gold is a popular gift at weddings in India, and is also bought for auspicious occasions.

Sustained strong demand in the top consumer could support gold prices, currently trading just above five-week lows.

Strong purchases in China ahead of the Lunar New Year holiday next week could also underpin prices, though traders warned that sales were still lower compared to last year.

'Sales of jewellery and small gold bars are good but demand is probably slightly lower than last year's levels,' said a trader at one of the importing banks in China.

Chinese consumers have recently been quite cautious in gold purchases, following record buying in 2013, when prices had slid sharply by 28 per cent. A cautious price outlook and an anti-graft drive have kept some buyers away.

Premiums on the Shanghai Gold Exchange were steady at $3 to $4 an ounce this week. This compares to premiums of about $10 and above ahead of the 2013 new year holiday, which fell on January 31 last year.

'Short-covering may lift gold for the time-being, but post Chinese New Year, we could see gold taking a tumble again,' said Howie Lee, analyst at Phillip Futures. The firm expects gold to test $1,200 an ounce by the end of the first quarter.

Courtesy: Gulf Daily News

Rohit Ferro Tech Ltd: Q3FY15 Result  Update

Rohit Ferro Tech Ltd (Rs.8.40), a smaller player in the ferro alloy and stainless steel segment, reported a Net Loss of  Rs.67.94 crore in the quarter ended December 2014 as against net loss of Rs.56.83 crore during the previous quarter ended December 2013. Sales however, rose 3.28% to Rs.521.98 crore in the quarter ended December 2014 as against Rs.505.39 crore during the previous quarter ended December 2013.

But, if we compare Q3FY15 and Q2FY15 results (or sequentially), we will notice some improvement in the topline and bottomlines, proving that turnaround is on the anvil. 

The total income of the company in Q3FY15, came out to be Rs.526.58 Cr as against Rs.524.06 Cr in Q2FY15--showing slight improvement in the topline when compared sequentially.

Moreover, the total expenses came down to Rs.542.11 Cr in Q3FY15 as against Rs.597.61 Cr in Q2FY15 and 555.76 Cr in Q3FY14.

The net loss of the company before Other Income, Finance Cost and Exceptional Items came down drastically to Rs.15.53 Cr in Q3FY15 as against Rs.73.55 Cr in Q2FY15 and 43.05 Cr in Q3FY14.


The net loss of the company for Q3FY15 came down to Rs.67.94 Cr as against Rs.86.35 Cr in Q3FY14 and 120.06 Cr in Q2FY15, proving once again that it is a turnaround case and  is likely to give good returns over a period. 

Rohit Ferro Tech Ltd has a 274,000-tonne capacity to produce ferro alloys used in stainless steel making. In the coming Budget: 2015-16 any tinkering of import duty structure will likely to benefit the company, because of its forward integration, which includes 100,000-tonne stainless steel capacity. 

The net loss of the company increased a bit in Q3FY15, because as a matter of prudence the company did  not recognize the deferred tax assets for the quarter under review. 

The board of directors of the company in its meeting held on December 29, 2014 has approved the proposal to sale, transfer or otherwise dispose off the manufacturing unit of the company located in Jajpur, Odisha as going concern by way of slump sale or otherwise subject to the approval of the shareholders that has been sought by way of postal ballot dated January 10, 2015.

Besides, the company is in the process of setting up an additional Sub Merged Arc Furnace of 33 MVA and a Captive Power Plant at its Jajpur Unit. The management expected to complete the same by March 31,2015.

Pursuant to CDR package, the company has received unsecured loans amounting to Rs.70.31 Cr from companies as promoter's contribution, to be converted into equity by March 31, 2015, at such price as will be  determine in accordance with the SEBI regulations. 

This makes, this a strong case for Buy at the CMP of Rs.8.40, for a medium term target of Rs.12-14.

C Mahendra Exports Ltd: Q3FY15, Results Update

C Mahendra Exports Ltd, a renowned and trusted diamantaire and jewelry company with a wide spread around the world came out with not so encouraging topline but slightly improved bottomline, speaking sequentially in the December, 2014 quarter. The net sales of the company declined 89.80% to Rs.40.57 crore in the quarter ended December 2014 as against Rs.397.92 crore during the previous quarter ended December 2013. The company reported a net loss of Rs 14.52 crore in the quarter ended December 2014, as against net profit of Rs.1.00 crore during the previous quarter ended December 2013. 

However, if we look at the results, from other angle (when we compare the Q3FY15 and Q2FY15 results), we will see a marginal improvement in the bottomline of the company. 

The net sales of the company for Q3FY15 came out to be Rs.41.01 Cr as against Rs.119.15 Cr in Q2FY15. However, corresponding to the lesser sales volume in Q3FY15, there was also a steep fall in the net expensenses to Rs.45.83 Cr as compared to Rs.122.74 Cr in Q2FY15. 

This has made a great difference, when we look at Net loos from operations before other income, finance costs and exceptional items in Q3FY15, which is at Rs.4.75 Cr as against Rs.3.62 Cr in Q2FY15.  

Moreover, even though the other income component fell to Rs.24.10 lakhs in Q3FY15 from Rs.28.12 Cr in Q2FY15, the net loss for Q3FY15 came as Rs.14.52 Cr as against Rs.20.01 Cr. This is because, of a steep decline in the Finance cost to Rs.10.01 Cr in Q3FY15 from Rs.44.70 Cr. 

This is probably because the loans to the company have been classified as NPA by banks and some of them have stooped charging interest (since the amount turning NPA). In such circumstance, the company could be looking for an OTS, with banks. 

Therefore, the non-risk taking short term traders can exit the scrip and shift to UCO Bank (Rs.70.45). However, for long term risk taking investors, there is not much downside left in the scrip; as it has already reacted to the negative December, 2014 quarter results and is trading near its 52-week low price. They can hold with a SL of Rs.11.70.

Firstsource Solutions Ltd: Q3FY15 Results as per expectations

[Editor: FSL Ltd (Rs.30.10) has come up with flat set of numbers for the Q3FY15, according to the expectations. The stock which touched Rs.33, after my recommendation, can therefore, trade sideways for some more days, before showing a clear direction. In such circumstances, the short term investors/traders are suggested to shift either to UCO Bank Ltd (Rs.71.20) or Unitech Ltd (Rs.16.70). However, the long term investors can hold the scrip with a SL of Rs.26]

Firstsource Solutions Ltd came out with flat set of numbers both for the top and bottomlines for Q3FY15. Firstsource Solutions Ltd has announced the following results for the quarter ended December 31, 2014:

The Audited Standalone results for the Quarter ended December 31, 2014

The Company has posted a net profit of Rs.458.82 million for the quarter ended December 31, 2014 as compared to Rs.362.83 million for the quarter ended December 31, 2013. Total Income has decreased marginally from Rs.2409.19 million for the quarter ended December 31, 2013 to Rs.2404.75 million for the quarter ended December 31, 2014.

The Consolidated Results are as follows:

The Audited Consolidated results for the Quarter ended December 31, 2014

The Group has posted a profit after taxes and minority interest Rs.575.13 million for the quarter ended December 31, 2014 as compared to Rs. 483.10 million for the quarter ended December 31, 2013. Total Income has decreased from Rs. 8000.06 million for the quarter ended December 31, 2013 to Rs. 7534.95 million for the quarter ended December 31, 2014.

Gitanjali Gems Ltd: Results Update

CMP: Rs.52.45

[Editor: Gitanjali Gems Ltd was recommended at around Rs.47, based on some source based information, last week. The company has meanwhile, come up with superb Q3FY15 results, as per expectations. The stock has already reacted positively as it touched Rs.54.40, intra-day. There are more upsides left in this counter. After such results, we can look forward for positive results from C Mahendra Exports Ltd (Rs.12.91). 
Also, those who do not like this blog, can run after operator driven counters like NTC Industries Ltd (Rs.69.10), MIC Electronics Ltd (Rs.9.28), Global Vectra Helicorp Ltd (Rs.45.60), etc. I had given a SELL on Global Vectra Ltd when it was was around Rs.72.35, and said it might go below Rs.30. The stock is a very good sell even now at Rs.45.60. 
Moreover, when electronics industry is facing stiff competition both in the domestic and international market or when the tobacco sector, is burdened with even ever increasing taxes (and a decline in smoking trends), some markemen are spinning rosy stories, and throwing them to gullible investors....
On the flip side these "Drunken Investors" send me 100 of mails/messages, every week, advising me as how I should play the winning stories.......Okay you can go with those WINNING STORIES, if you think they are not injurious to your finanial health......Really what to say...!!!!!!!!!!!!!!]

Gitanjali Gems Ltd has announced the following results for the quarter ended December 31, 2014:

The Unaudited Standalone results for the Quarter ended December 31, 2014

The Company has posted a net profit Rs. 394.324 million for the quarter ended December 31, 2014 as compared to Rs. 23.199 million for the quarter ended December 31, 2013. Total Income has increased from Rs. 12645.477 million for the quarter ended December 31, 2013 to Rs. 18724.168 million for the quarter ended December 31, 2014.

The Consolidated Results are as follows: Superb

The Unaudited results for the Quarter ended December 31, 2014

The Group has posted a Net Profit/(Loss) after taxes, Minority Interest and Share of Profit/(loss) of Associate of Rs.960.167 million for the quarter ended December 31, 2014 as compared to Rs. 504.607 million for the quarter ended December 31, 2013. 

Total Income has increased from Rs. 27596.099 million for the quarter ended December 31, 2013 to Rs. 36046.905 million for the quarter ended December 31, 2014.

Unitech Ltd's Q3 net profit up 32% at Rs.43.33 crore 

[Editor: Untech Ltd (Rs.16.70) was recommended when the market was going strong (or before the "Arvind Kejriwal" storm blew-away the Kiran Bedi camp), based on some source based information. It  is seen that the company has done satisfactorily in Q3FY15, inspite of challenging environments. The scrip should react positively on Monday]

Photo: Noche Geek

NEW DELHI, 13 Feb, 2015: Realty firm Unitech today reported a 32% increase in consolidated net profit at Rs.43.33 crore for the quarter ended December 2014 due to lower operational expenses and interest outgo. 

Its net profit stood at Rs.32.82 crore in the year-ago period. 

Income from operations, however, declined to Rs.704.56 crore in the third quarter of this fiscal from Rs.731.67 crore in the corresponding period of the previous year, Unitech said in a statement.

Total expenditure fell to Rs.661 crore from Rs.716 crore during the period under review. 

Finance costs declined to Rs.7.33 crore from Rs.28.06 crore in the year-ago period. Unitech said it has a healthy balance sheet with a net debt to equity ratio of 0.57. Net debt as of December 31, 2014 was Rs.6,300.84 crore. 

Commenting on the results, Unitech MD Sanjay Chandra said: "Demand for residential space continues to be sluggish and it may take a few more quarters for the demand to revive. The company has been taking measures over the last few quarters to deal with this challenging environment and these have begun to bear fruit." 

For the nine months ended December 31, 2014, the total income and net profit stood at Rs.2,661.67 crore and Rs.34.20 crore, respectively. Unitech's shares today closed flat at Rs.16.70 crore on the BSE. 

Courtesy: The Economic Times

Unitech Ltd: Results Update

CMP: Rs.16.70

Unitech Ltd has announced the following results for the quarter ended December 31, 2014: 

(i) The Unaudited Standalone results for the Quarter ended December 31, 2014

The Company has posted a net loss of Rs.16.4 Cr for the quarter ended December 31, 2014 as compared to net profit of Rs.23.10 Cr for the quarter ended December 31, 2013. Total Income has decreased from Rs.532.77 Cr for the quarter ended December 31, 2013 to Rs. 331.24 Cr for the quarter ended December 31, 2014.

(ii) The Consolidated Results are as follows: Not at all bad....

The Unaudited Consolidated results for the Quarter ended December 31, 2014

The Group has posted a profit after taxes, minority interest and share of profit / (loss) of associates of Rs.43.34 Cr for the quarter ended December 31, 2014 as compared to Rs.32.83 Cr for the quarter ended December 31, 2013. 

Total Income has decreased marginally from Rs.793.60 Cr for the quarter ended December 31, 2013 to Rs.721.99 Cr for the quarter ended December 31, 2014.

Slide in oil prices to spur diamond demand in India: De Beers

[Editor: With a slump in the Indian gold jewellry market due to government's action, many jewelers have already started to revamp their diamond business, Gitanjali Gems Ltd (Rs.48.25) is one of them. I had earlier recommended  C Mahendra Exports Ltd (CMP: Rs.13.25, Book Value: Rs.99.18), which is one of the leading diamantaire and jewellery company with a wide spread around the world (China - Hong Kong; India – Mumbai; UAE - Dubai; Belgium - Antwerpen and U.S.A - New York] 

SURAT, Jan 29, 2015: De Beers, world's largest rough diamond mining company, is optimistic about an increase in demand for diamonds in India and US in 2015 following the downwardly trending oil prices. It expects the slide in oil prices to turbo charge the diamond consumer markets. 

At the recent reception to mark the first 12 months of sightholder sales in Gabarone in Botswana, chief executive officer of De Beers Group Philippe Mellier said, "The recent downtrend in oil prices is also expected to be an important factor in 2015. This should benefit the US economy, but also the emerging markets as the price changes have had the effect of transferring benefit from oil exporters to importers. India is expected to be among the bigger beneficiaries of this trend and its growth is forecast to increase to around 5.5 per cent in 2015." 

The Indian diamond jewellery consumer market is pegged at $8 billion per annum and it is predicted to achieve the growth rate of 14 per cent per annum. 

Chairman of Gems and Jewellery Export Promotion Council ( GJEPC) Vipul Shah said, "The purchase power of Indian consumers has increased with prices of petrol, diesel, gas and other linked commodities coming down drastically. However, the diamond industry needs to capitalise on this trend to push their sales." 

He said jewellery manufacturers have come up with the jewellery designs in economical range suiting the taste and pockets of even the middle class consumers who can now purchase diamond jewellery in the range of Rs 5,000 to Rs 10,000. 

Recently, Tanishq collaborated with the jewellery designer Farah Khan and launched the FK&T jewellery articles. "We have launched a collection of jewellery pieces that are quite affordable and are in the range of Rs 1.5 lakh to Rs 5 lakh. The collection is a mix of diamonds and gem stones," said a Tanishq spokesperson. 

Courtesy: The Times of India 

Narendra Modi Government Measures to give a Boost to the Real Estate Sector

Tuesday, February 3, 2015: Bangalore: The real estate sector is spinning under slump has sought relief from urban development ministry in the upcoming budget. To include few reasons to cheer up for the realty sector by fulfilling the abiding demand, CREDAI (Confederation of Real Estate Developers Association of India) has sent a proposal to finance and urban development ministry to improve infrastructure status for real estate. Furthermore, few developers have personally written request letters to ministries to obtain exemptions from taxes and formalities to attain home loans.

It is evident that, Narendra Modi is introducing new forms to boost real estate sector and to be favorable for India’s economy. His vision towards the growth of India has already received a lot of backing and many companies of foreign countries are showing interest to start their operations and foreign investments. In Gujarat, Modi has confirmed what his approach can do for economic growth and revival.

Modi has promised on tax stability and reforms at top speed with positive regulatory framework and boost to infrastructure to help Indian Economy. To provide housing for all with all the facilities, NDA government intended to build over two crore houses across the country which includes slum dwellers.

Sahel Vice chairman Lotus Greens India Inc. says that; we were awaiting for the upcoming Union Budget as the positive moves taken by the government last year such as approval to REITS by SEBI would give High Net Worth individuals and cash strapped investors and other investors will create new avenues for realty developers. And we predict the attractive tax norms for REITS and other such investment trusts.

The decline in interest rates for home loans will fulfill the gap between demand and supply. The government move towards substantial and green developments will have a positive impact on real estate industry. Bringing down the overall construction cost will reduce the time for project completion, he added.

R K Arora, CMD, Supertech and vice-president, CREDAI (Western UP) said that; “Last budget had brought some relief to the realty market. The sector is reeling under droop and need abrupt step for its recovery. To meet the Narendra Modi’s ambitious plan, there is necessity to bestow special packages for low cost housing. Like before 2008, houses below one thousand sq. feet were exempted from income tax under 80IB but later the relief was removed. There is requirement of such steps to boost low cost housing and easy process to accelerate pace of development.”

Amit Gupta, MD, Orris Infrastructure said to Narendra Modi’s government that the rate of residential sales is high. However, for the boost of realty sector government should take some initiatives as the construction cost is raised by 40 percent in two years and the government taxes have also gone up significantly. This raise will eliminate the scope for reduced costs, in spite of a weak market.

The Finance Minister, Arun Jaitley said to provide the adequate housing by attaining the mission to provide housing for all by 2022, we planned to extend additional tax incentives on home loans which attracts the young professionals to own a home. This scheme covers small towns, cities and metros.

Courtesy: Silicon India

CHEAP LOANS

If  you are looking for loans at BARGAIN INTEREST RATES (6-11%, but conditions apply), from Private Financiers, then you can immediately contact me (till the fund remains) for more details at: sumanm2007s@gmail.com or suman2005s@rediffmail.com. 

You will have to pay a one time "Service Charge" of around 2-3% (conditions apply) on the loan amount; but since the interest rate would be LOW and you would get it processed at a lightening pace (Usual Time: 2-3 weeks), I feel it should not bother you. Also, the paper works are much less here....

Listed and unlisted companies (especially those who want to replace their high cost debts with cheap ones), can also approach me for project loans above Rs.2000 crore (Rs.20 billion plus).  

Hence, rush your applications today. Minimum Loan Amount is Rs.3 lakhs for personal loan and Rs.5 lakhs for other types of loans.

Indian industry body urges jewelry trade changes

~~By Paul Ploumis

Photo: Balan Die Works

January 15, 2015; The All India Gems and Jewellery Trade Federation (GJF) has forwarded its recommendations to the Union Finance Ministry ahead of the budget.

The industry body has urged the Finance Minister to bring down the gold import duty from 10% to 2%. According to GJF, the high import duty on gold has neither helped the trade nor the government. This has benefited only selected few. At the same time, smuggling has increased manifold ever since the imposition of hefty duty on gold imports. GJF urged the government to formulate comprehensive gold policy to make the country a global jewellery hub. GJF further stated that lowering of gold import duty would promote ‘Make In India’ initiative in the country’s gems and jewelery sector.

Secondly, GJF has asked the government to exclude jewellery from all bilateral or multi-lateral free trade agreements (FTAs). It noted that an earlier FTA with Thailand had caused significant damage to indigenous jewllery manufacturing industry in the country. The GJF urged the government not to encourage jewellery imports at cheaper rate.

According to GJF, the difference between import duty of raw material and finished jewelery must be maintained at minimum 10% (for gold) and 15% (for silver). The jewelery manufacturing sector must be revamped by introducing constant skill upgradation programmes. The government must incentivize technology imports to reduce manual labor in the jewellery manufacturing sector.

The industry body has also demanded re-introduction of metal gold loans (MGL) with a rate of interest at par with international rates. Other demands include removal of excise duty on fashion jewellery and scrapping of excise duty on precious metals. It also called for revision of rules for transportation from manufacturing units to airports.

Courtesy: Hard Assets 

Housing Development and Infrastructure Limited (HDIL):  Update

The scrip of HDIL was recommended last month in this blog around Rs.69-70 ranges. The stock made a 52-week  high of Rs.115.45 on 6 February, 2015.

Now, we can see the Financial Media, being flooded with recommendations from various sources. Meanwhile, some foreign funds have already taken stake in HDIL: .  

• Janus Investment fund on Feb. 5 bought 2.24 mln shares at 106.08 rupees/share, according to NSE data.
• GMO Emerging market fund on Jan. 28 bought 2.27 mln shares at 85.44 rupees/share - NSE.
• Platinum Asset Management on Jan. 15 bought 2.17 mln shares at 72.51 rupees/share raising its stake to 9.3 pct in the company from 8.8 pct earlier, according to Thomson Reuters data.
• Australia-based Platinum is the second largest shareholder in the company after promoters - BSE data.

Moreover, in a discussion with CNBC TV18, Kunal Bothra of LKP Securities said, he is of the view that HDIL may test Rs.140. Today (Sunday), recommendation came from a Gujarat based analyst, that the stock has formed a reverse HS-pattern on the Weekly Chart; giving a target of Rs.122 (cross over will create huge buying in this stock & take the stock to Rs.135---140 levels). 

However, I would suggest all of you to take the help of this rally, book complete profits this week around Rs.120-130 ranges (if it at all reaches there intra-day) and exit the counter for the short term. 

Banking Sector: Positive Developments

Photo: Financial Express

• Banks will soon have the power to convert loans into shares for taking over companies from truant borrowers while promoters who step in to turn around projects will have some breathing space. 
• Lenders will be allowed to hold as much as 30% equity in a company and insert a conversion clause in loan documents — a move that could make it easier for a banking consortium to not only force an existing management to fall in line but also bring about a management change.
• "Sebi and RBI are discussing the details of the conversion price. SEBI of course, is worried about the minority shareholders and RBI is interested in making sure banks do not convert at too high a price," said governor Raghuram Rajan. Asked whether banks can fund the acquisition of companies that are chronic and wilful defaulters, RBI told the media that the regulator is "not against acquisition funding." This is a great step as now management changes can be effected by banks. Recently, you must have seen that in case of Shree Ganesh Jewellery House (I) Ltd (SGJIL), the consortium of banks have decided to withdraw their support for restructuring the credit facilities under the current management. This raises speculation, that in future we might even see a change in management of SGJIL. 
• These measures might encourage promoters with deep pockets to take up projects that are stuck for want of money or clearances. Also, in projects that have been stalled due to "inadequacies of current promoters", a change in ownership and management may be required to revive the project. In this context, the new promoter will be given additional time and banks will refrain from downgrading and reclassifying the loan account. A revolutionary step indeed. 
• I have already said that the Indian Financial Media is giving a wrong explanation of the NPA of the banks. Or in other words, the media channels (especially those ever talkative anchors) and the print media is creating a fear psychosis among the investors regarding increase of the NPAs. Dr.Raghuram Rajan recently said: "I think we should not attribute stigma to an NPA (nonperforming asset). This is a misconception among producers and lenders. Producers think if their account is labelled 'NPA' they are at fault. It only means the account is not paying and there could very legitimate reasons (for that)... it could be because of policy inaction, legal inaction, changes in world prices etc.'' I  had earlier mentioned that with SARFAESI Act (The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) in place most of the NPAs can be required provided the banks took adequate measure while disbursing the loans. 
• Dr.Rajan said banks are even free to lend to accounts that are classified as NPA. While RBI has extended the accounting flexibility it had given banks for sale of NPAs, bankers say stress loan deals are unlikely to take off in a big way if rules for stress asset firms are not relaxed.

Source: Adopted from the Economic Times, February 4, 2015.

DO YOU KNOW?

In the recent credit policy of Reserve Bank of India (RBI), some revolutionary steps were announced to give bankers power over their defaulting borrowers. 

The RBI said that the loans given to stressed companies won't be marked as NPLs and they will be allowed two years of delay in the commencement of their projects provided a new management replaces the non performing old one. The RBI basically said that if the date of commencement of a stalled project is pushed back by two years because it is being taken over by a new promoter, then banks won't have to mark the loan as substandard. Under current rules if a project doesn't start on time, it has to be marked down as bad loan. 

This a great step in the right direction according to many bankers, as it might ease their jobs of finding new entities who could be interested in these stressed assets. 

Moreover, the RBI is also looking to waive pricing restrictions when banks convert loans given to stressed companies into equity.

All these makes the Indian Banking Sector (especially the PSU space), the most happening one. 

Falling oil price will benefit real estate sector in Asia: JLL report

Photo: News Talk 770

MUMBAI, JANUARY 19:  Plummeting oil prices will be largely beneficial to Asian real estate markets, according to global real estate consultancy JLL.

The large energy dependent economies of China, Japan, Korea and India will be net beneficiaries of lower oil prices and as the largest markets in Asia Pacific, this could reverberate throughout the region and provide downstream support to the developing economies.

Improved demand

Four out of the top five oil-importing nations are in the Asia Pacific and energy price decline supports industrial output, besides increasing demand in the retail sector as costs fall for consumers, the consultancy said. Nicholas Wilson, Senior Manager, Asia Pacific Capital Markets, JLL, said: “Both logistics and retail markets will benefit from improving household balance sheets, as energy costs absorb less consumer income.

“This should result in improving demand for discretionary goods and will support retail and e-commerce spending. Logistics markets will also benefit from falling transportation costs, a key component for the market. Real estate developers are also likely to see some benefit from falling prices as building materials and transport costs will ease upward pressure on construction outlay.”

Logistics sector

Nirav Kothary, Head – Industrial Services, JLL India, said lower energy prices definitely have a very positive impact on the logistics sector as it reduces transportation cost, which happens to be more that 35 per cent of total logistics cost in India.

Silver lining

World Bank Group’s Global Economic Prospects (GEP) report released on Tuesday said: “Amongst large middle-income countries that will benefit from lower oil prices is India, where growth is expected to accelerate to 6.4 per cent this year (from 5.6 per cent in 2014), rising to 7 percent in 2016-17.”

Kaushik Basu, Chief Economist and Senior Vice-President, World Bank, said: “Worryingly, the stalled recovery in some high-income economies and even some middle-income countries may be a symptom of deeper structural malaise.”

Courtesy: The Hindu Business Line 

DO YOU KNOW?

Last year in November there were media reports that Unitech Corporate Parks (UCP), the London listed Unitech group firm, had completed a deal to sell its stakes in six IT-SEZ projects in India to Canada's Brookfield Asset Management for £188.9 million (Rs.1785.50 Cr).

Unitech Ltd (Rs.16.85) currently has over 100 ongoing projects, totaling an area of 38.41 million sq ft. Its net debt stood at Rs.5,900 crore at the end of the first quarter of this fiscal. 

Last year in September, Unitech Ltd said it will sell non-core land parcels to reduce debt by 15-20% and improve cash-flows for faster execution of ongoing projects. UCP and Unitech were jointly developing five IT special economic zones (SEZs) and one IT Park in Gurgaon, Noida and Kolkata. In these six projects, UCP held 60% stake and Unitech 40%. That apart, Unitech had direct stake of about 13-14% in UCP.  

Unitech has a bank of 5,500 acres in Delhi-NCR, Chennai, Mohali, Kochi, Kolkata, Hyderabad and Bangalore. An earlier media report mentioned that the average cost of acquisition of the land was aground Rs.250 per square feet. This is one of the biggest strengths of the company. 

This move will significantly retire debt on the books of Unitech Ltd (Rs.16.85); but what is now needed is the revival of cash flow cycle. 

SO NOW TELL ME, WHAT IS THE NET DEBT OF UNITECH LTD? Any idea?

Meanwhile, India's benchmark bond yield ended down 2 basis points at 7.70 percent, as global oil prices remain low which would help keep domestic inflation lower. It means we might see, further cut in the Repo rates in the near future. 

In case interest rates fall further, the core real estate business of Unitech Ltd has the potential to grow better. Apart from land sale, the company also plans to monetise some commercial assets.

Moreover, Unitech Ltd has no economic interest in Unitech Wireless. Further, Unitech Ltd has no exposure whatsoever to the Telecom business.