Nearly Five Years ago on July 21,2008 I had covered Nirma refusing to honour their committment of an Open Offer to Shree Rama Multi-tech Shareholders and that the matter was before the Supreme Court

Nirma disallowed to withdraw offer for Shree Rama Multi-tech

Monday, July 21st, 2008

I have posted this Update on the above blog post but for easier access and viewing have repeated it as a new blogpost now

Latest Update Sunday,May 12,2013 

After years  finally Supreme Court upheld SAT and Nirma will have to make the Open Offer to Shree Rama Multi-tech Shareholders to pick up 20% Equity at Rs 18.60

http://www.business-standard.com/article/companies/sc-dismisses-nirma-plea-in-shree-rama-open-offer-113050900201_1.html

Shree Rama consequently hit 20% upper circuit at Rs 5.74 on Thursday,May 9,2013 and another 10% on Friday,May 10,2013 at Rs 7.56 to give a market cap of Rs 44 crs

Nirma of course has delisted at Rs 260 in March 2012

However Dont get too excited and expect Shree Ram Multi-Tech to rise to Rs 18+ as only 20% of the Equity of Rs 31.76 crs (FV Rs 5) is the Offer Burden and so all shares will not be accepted  and post offer scenario the Share Price may drop below par of Rs 5 again

Shree Rama Multi-tech boasts of top Clientele but continues to make Operating Losses though in FY 13 it has recorded a Profit of over Rs 8 crs for the 9mFY 13  because of  Exceptional Item that relates to a settlement with a lender of less than 1/3 the amount (see below)

The accumulated Loss remains huge and Networth remains negative at @ Rs 90 crs with Long term Borrowings yet above Rs 200 crs

The company has filed fresh scheme of compromise and arrangement u/s 391 of The Companies Act, 1956 vide petition no.401 of 2008 in Gujarat High Court and the same is pending before the Hon’ble High Court

During the first quarter ended June 30,2012 in FY 13 the company has entered into settlement with one of the lenders and principle amount of Loans and Borrowing of Rs 72.63 crs was settled for Rs 22.57 crs. The resultant gains were credited to the P & L A/c by Rs 24.39 crores and to Capital Reserves by Rs 25.66 crs as per the end use of the Loans

Will be interesting to see if Shree Rama Multi-tech can be reborn again after  Scheme of Compromise and Arrangement is passed by the Court and further settlements take place with lenders to bring down Debt significantly ~ After all the Company  did notch Sales of Rs 72 crs in FY 12 and Rs 64 crs for the 9m FY 13

NHPC @ Rs 18 ~ From Defensive to Default ? despite Dividend Declaration !

Fitch has just downgraded NHPC ~ The Long Term Issue Default Rating (IDR)  Outlook has been revised to Negative from Stable while Fx and Local Currency IDR rating has been reaffirmed at ‘BBB-’

Chart source : www.bseindia.com

NHPC ~ From Defensive to Default ?

I had rated NHPC as a Defensive Scrip  with a Long Term Potential to breakaway into a Higher Price Zone~ The Share Price Range has been fairly narrow over the year with 52 Week High and Low being Rs 26 and Rs 17 respectively ~ Clearly NHPC continues to struggle under Operating Restrictions and Limitations

86.36% of the Equity of Rs 1230o crs is held by the Government and in FY 12 it earned a net of Rs 2772  crs giving an EPS of Rs 2.25 ~ The Networth is Rs 26354 crs at March 31,2012 with Reserves at Rs 14054 crs giving a Book Value of over Rs 21 ~ Dividend of 7% has been declared for FY 12 ~ In FY 12 the Interest Expense was Rs 342 crs and Tax Paid was  Rs  745 crs

The Auditors have not qualified the Report but have made a reference to several issues as below

• Accounting of sales on provisional basis pending determination of tariff by CERC
• Capitalization of Corporate Office, Regional Office, Survey & Investigation and other general overhead expenses of construction projects and
• Referring the issue of capitalization of expenditure incurred for creation of assets (enabling assets) not within the control of the company, to Expert Advisory Committee of the Institute of Chartered Accountants of India (EAC of ICAI).

Electricity generation is the principal business activity of the Company. Sales have been recognized as per tariff notified by Central Electricity Regulatory Commission (CERC). Tariff for the tariff period 2009-14 has since been fixed in respect of all the 12 Power Stations. However tariff of Teesta V Power Station is provisional pending approval of revised cost of the Project.

Out of the Initial Public Offering (IPO) proceeds of Rs. 6039 crs made during FY 10, sale proceeds of Rs. 2013 crs was paid to Ministry of Power, Govt. of India and Rs. 4026 crs was retained by company. Out of this Retained Amount Rs 2215 crs  has been utilised up to March 31, 2012 for re-coupment of capital expenditure already incurred from internal accruals on the projects specified for utilisation and  Rs. 1772  crs has been invested in bank deposits as per extant investment policy of the company and Rs. 39 crs  recouped for meeting IPO expenditure.

The IPO Pricing in 2009 was high at Rs 36 and I had opined in a blog post  that NHPC would be available @ Rs 25 after Listing ~ Check the Blogs Post Links below which feature NHPC in detail or passing reference ~ In Three Years NHPC @ Rs 18 has seen a 50% Erosion from IPO Pricing ~ The Risk is that it may fall yet further given the tough dues recoverability scenario ~ especially of incremental tariff and other recoverables now allowed with retrospective effect by CERC    

Clearly Fitch has seen the Recognition of Income before Actual Billing and the Capitalisation of Expenses as Red Alerts to possible trouble ahead for NHPC ~ NHPC  has demonstrated good Corporate Governance in informing the BSE and NSE of the lower Fitch Outlook though I’m sure they would have some arguments on this !

Interesting case ~ NHPC

Will it remain a fairly listless and range bound scrip in the Rs 17 to Rs 25 range or will it move to par value of Rs 10 if States Default or simply Refuse to pay when Billed the additional Tariff and other Recoveries from beneficiary states like Water Cess and Fx Rate Variation and Regional Load Despatch Centre Fees and Charges ?

NHPC  is on SCRIP WATCH now ! For me the Longer term Play envisioned has simply got more  Longer as Rumblings sound like potential Tumblings in the short and medium term !

If You’re holding NHPC,maybe you ought to consider a switch after taking the dividend of 70 paise in an effort to recover any loss rather than holding out for the Long Term ~ as that 3 years just got longer to atleast 5 years !   

Anyone interested in Shorting NHPC in the F & O !? ~ the Market Lot is 9000 shares and you may find some difficulty in finding depth in the Option Contracts where currently the Premium is @ 55 to 60 paise for a June Expiry at Strike Price Rs 17.50  ~ The Future is at Rs 18

Or you want to go Long ! ? Now that would be Courageous !

What do you smart blog readers think will be the NHPC Price Trend in 2012 and 2013 !? 

_____________________________________________________________________________

From IPO in August 2009 to date, NHPC has figured on my horizon and therefore blog posts several times ~ in detail or in reference ~…check out the Blog Post Trail  below

Your Equity Approach & Strategy will or should depend on whether you want to make money or don’t want to lose any !…NHPC or NTPC ?…or Delta?….New Listing L & T Finance is a safe bet for both objectives

Friday, August 12th, 2011

Hey Irani of darlingyehaiindia,I’m not missing….love this fall….lowers investment risk

Our markets were in denial mode all along 2011 till date,simply refusing to recognise the ominous signs emanating from the West….Sensex kept seducing between 18000 and 20000…..have been reiterating quite strongly for the last seven to eight months that our beloved Sensex has to retrace towards 16000 before marching ahead again

What is in store ahead ?….Strategies,Scrips?……Sensex or Nifty ? or core scrips like Larsen & Toubro or Coal India ? How about Reliance? or how about risking on potential multibaggers ?

Dr C K Narayan for Technicals and  me for Fundamentals have now teamed up to set up a spanking new co venture in the field of Capital Markets….advising,consulting and training on Equities and other assets on Fundamental,Technical and Contrarion Approaches

Attend this one day Saturday Workshop in Mumbai…..we are planning an Intensive One Day Practical Techo Funda Workshop,tentatively scheduled in Mumbai for Saturday,August 27,2011…it will be at our new Growth Avenues Knowledge Centre in Sion….can accomodate 25….if we exceed this number,we may be required to change the venue or provide a roll over option for similar workshops in September 2011 and beyond…Investment for this workshop is Rs 6500 + Service Tax per participant…a group of three or more can avail a 10% discount….If interested to sign up for the course you can call me on 98201 62597….and if you wish to hold one in your town or city and can muster up a group of 20 we can arrange one there too…the workshop will guide you specifically on strategies and scrips going forward  for Trading and Investing  & F & O Play

Here’s a recap,yet again (gave one earlier in June 2011) of the warning blogs….

Sensex is repenting for it’s sins now…rightly retreating…sub 18000 enroute to 16000 !…..providing nine links of my earlier Sensex Warning and Views Blogs of the past six months

Monday, June 20th, 2011

Sensex closes below 18000…on it’s way to 16000?…what should you do?

Monday, May 23rd, 2011

Sad our Sensex is not feeling any Aftershocks of Japan….

Wednesday, March 16th, 2011

Markets looking Ominous…..beware the Ides of March !…Sensex down 2% and from 18000 can seek sub 16000 levels in 2011

Tuesday, March 15th, 2011

At Current 18000 Levels our Sensex is like a Strapless Bra……..!

Monday, March 7th, 2011

Muted Expectations from the Union Budget….and the FM delivered on cue…..Sensex rally of 500 + Points had to reverse

Monday, February 28th, 2011

Indian Equities sliding on the Binary Scale…Interest Rates at 10% and Crude Oil at US $ 100 +

Thursday, February 24th, 2011

February makes me Shiver with every Blog I deliver…..Sensex continues South…now sub 18000

Tuesday, February 1st, 2011

Equities continue Reeling…seek Counselling as appropriate…Contrarion Opportunity may again be beckoning soon

Friday, January 28th, 2011

Markets Grumble and Rumble….and then Tumble !……what did you expect !

Friday, January 7th, 2011

Cheers !

Loved this Antonio guy’s throw on when he worked as a ‘quant’ for Goldman Sachs….you’ll love it too…check him out

http://adgrok.com/why-founding-a-three-person-startup-with-zero-revenue-is-better-than-working-for-goldman-sachs/

Loved these quips and quotes from Antonio…the guys wasting his time in any other field…he’s cut out for financial reporting and the literary world

” Giving sophisticated models and fast computers to traders is like giving handguns and tequila to teenage boys”

“quants were the eunuchs at the orgy”

“We bled but others died “

“World’s largest bookie “…an uncharitable reference to Goldman Sachs

“We work out of a cramped one-bedroom apartment, and have to time bathroom visits not to coincide. Some days, it looks like we’re going bust within the week. Some days, it looks we’re going to be the next Google.”

“You know what I regret most though, going from Goldman to this?…Not having made the switch earlier.”

Sensex is repenting for it’s sins now…rightly retreating…sub 18000 enroute to 16000 !…as I blog the Sensex is currently struggling to stay over 17500 after a High of 17925 and a Low of 17314

…the volatility is a killer….some see it as a trading opportunity….Fools and Monies are soon parted  !

Not going to say much on this again and again….just providing below nine links of my Sensex warning and views Blogs of the past six months…please do vist them again….have been reiterating for several months now that like 2010 was a tricky year for Equities,so will 2011 be…..so don’t be in any hurry to invest in the Sensex or Stocks…..lest you get handcuffed to them !…Cheers !

Sensex closes below 18000…on it’s way to 16000?…what should you do?

Monday, May 23rd, 2011

Sad our Sensex is not feeling any Aftershocks of Japan….

Wednesday, March 16th, 2011

Markets looking Ominous…..beware the Ides of March !…Sensex down 2% and from 18000 can seek sub 16000 levels in 2011

Tuesday, March 15th, 2011

At Current 18000 Levels our Sensex is like a Strapless Bra……..!

Monday, March 7th, 2011

Muted Expectations from the Union Budget….and the FM delivered on cue…..Sensex rally of 500 + Points had to reverse

Monday, February 28th, 2011

Indian Equities sliding on the Binary Scale…Interest Rates at 10% and Crude Oil at US $ 100 +

Thursday, February 24th, 2011

Markets Grumble and Rumble….and then Tumble !……what did you expect !

Friday, January 7th, 2011

Paulo ‘The Alchemist’ Coelho fascinates me….”If you chase your dreams,your dreams will chase you”…Wow !

love visiting his blog…he’s embarking on a spiritual retreat from tomorrow for a few days and will have access to the internet for only 20 minutes everyday…uncanny coincidence !…because I too am doing the same later this week !

Caught my eye was this link on his blog  on Napoleon’s penis…what an Investment !…unique,exclusive and cannot be recreated or replicated !…Holding History,literally and figuratively, in your Hands !

http://paulocoelhoblog.com/2010/05/30/5-sec-read-napoleons-penis/comment-page-1/#comment-561486

Allegedly cut off in 1821 by Napoleon’s Doctor during the autopsy and not well preserved through the years,the Penis was purchased by a New Jersey Urologist in 1977 for US $ 3000…he kept it under his bed!…his daughter has now inherited this ‘relic’ and has been offered US $ 100000

‘Time’ magazine lists the Penis in the Top 10 List of Famous Stolen Body Parts …the List is as below

1. Maori Heads
2. Santa Claus’ Bones
3. Geronimo’s Skull
4. Anne Boleyn’s Heart
5. Benito Mussolini’s Brain
6. Napoleon’s Penis
7. Remains of Thomas Paine
8. St. Francis Xavier’s Toe
9. The Head of King Badu Bonsu II
10. The Purloined African

Read : http://www.time.com/time/specials/packages/article/0,28804,1988719_1988728_1988720,00.html

Just Imagine  a similar hypothetical Indian Top Ten List of Famous Departed Souls !…wonder whose body part would be a good investment !…or is this a sacrilegious thought !

I’ve categorised this blog under both ‘Investing Themes’ and ‘INVESTOR MISTAKES’ ….depends on whether you think it’s a sacrilegious investment or not !

Cheers !

Have a look at this link

Apologies to anyone I have left out above !….Oh ! I forgot the Imported Cheerleaders !

Cheers !

Was wondering should I also categorise this blog under ‘Entertainment’ or ‘Cricket’….Never Mind !..it’s under both!

This Sunday morning,I was ‘googling’ to see if the validity of the Scheme of Amalgamation of Sesa Industries with Sesa Goa was extended beyond October 31,2009…a host of sites came up on the search

I happened to click on one of them… www.multibaggerpennystocks.com …. imagine my surprise when I saw that their lead analyst in Noida had posted a blog on Sesa Goa on October 29,2009,two days after I had a similar blog to exit Sesa Goa and had ‘copy pasted’ from my blog !…This site runs several paid advisory plans on the net 

I’m flattered,but please do have the courtesy to give credit or mention the source,if you’re going to ‘Copy and Paste’ material which effectively means no change in the wording..remember, like you can access information on the net inside a second of searching,so can you be trapped !

Several times in the past I have been the victim of plagarism and have even received apologies from leading press and even top securities firms…The Internet is a great source of information at a click…but I hope this Lead Analyst will realise the folly of lifting ideas and material from others without crediting them…you have not even bothered to change the wording !…I hope your CEO too acknowledges this

I am assuming that this Lead Analyst will see this blog posting too as he have been viewing my blog…how else could he have lifted material from my Sesa Goa blog of October 27,2009!?…so I’m not emailing the CEO and him seperately 

If it’s any consolation to this Lead Analyst,you are on the right track when analysing and advising on Companies…because you are treading the Fundamental Path…However I’m not passing any judgement on your interpretation of data and your views,conclusion and advice formed from it…leave that to your clients and viewers to decide.

Be Cool…but remember it’s not ‘Cool’ to ‘Copy and Paste’ unless you are quoting verbatim and attribute the source !…I assume as Lead Analyst,you’re getting paid for ’Leading’ and not ‘Following’ ! 

For Years ,Brand Valuation has been part of my sessions on Valuation of Equity at BSE and Other Forums….so it was with great Interest that I read the Economic Times Front Page atricle today on ‘Cos flash brands to raise cash’

Strapped for cash,Kingfisher Airlines has managed to Borrow from State Bank of India against it’s Brand of ‘Kingfisher Airlines’ which has been valued at Rs 1900 crs,that’s US $ 391 Million at an Exchange Rate of US $ =Rs 48.50 

Interestingly,Kingfisher Airlines has actually included this Brand Value as an Asset in it’s Balance Sheet…If it had not,then the Debt/Equity ratio would have computed higher….However,It’s probably because the Brand  is shown in the Balance Sheet,that PSU Bank,State Bank of India has been convinced to lend against this Asset

‘Kingfisher Airlines’ is a seperate registered Brand than ‘Kingfisher’ for Beer and Wines…Just a thought…if the Airlines defaults ,then the bank could opt to make the Brand it’s property…It would need to monetise this to recover dues…so it will have to sell the Brand !…to a Competitor Airline or a new Airline maybe !?…does the Borrowing Agreement categorically state that this Brand also include all the licenses and permissions  etc ?…what’s the hairline % taken by the Bank for this Asset value when lending?

Now Brand Value,like Intellectual Property Rights and Goodwill is an Intangible Asset.It normally is never reflected in the Accounts,because no real consideration has been paid for it…Thus this makes this Asset Class,riskier to lend against…It may be difficult to liquidate or realise monies for it in case of default

Being an Intangible,Brand Valuation is one of the most subjective and controversial areas in Valuation…Valuing Tangible Assets is a more objective exercise

Will Banks lend against Brand Value even if it is not reflected in the Books as an Asset !?

Clearly,Corporates appear to be running out of Tangible Assets to pledge or offer as Collateral and therefore borrow against…….They are resorting to prop up their  Brand Values for actual Funds leverage 

An interesting Valuation and IPO assignment I was involved in recently,threw up this demand from the Promoters when we were working to price the placement and the IPO…”Does not our Brand count for anything ?”…Of course it did…In fact it is one of India’s largest companies in it’s field and has been in existence for over a hundred years !….but potential buyers were reluctant to negotiate a higher valuation that included,both soft and  hard numbers

This is also the reason many IPOs are priced simply too high,perhaps to capture even Brand Value…Mahindra Holidays and Resorts at Rs 300 is a very recent example…Last year Reliance Power short circuited us at Rs 427.50…Now we have Adani Power coming out in the Rs 90-Rs 100 Band…and all the pre-issue orchestrated Hype of the Company,Investment Bankers,Brokers,Paid Advisors and the Media suck all of us into applying for the IPOs at vulgar and excessive and obscene premiums,when Market Times and Sentiments are bullish

I recollect three very interesting instances in the past of Brand Valuations

1. Prakash Chauhan of Parle actually sold only his Brands of ‘Thumbs Up’,'Limca’, and ‘Gold Spot’ for Millions of Dollars to Coca Cola when they re-entered India
2. Goenkas of Raptakos Brett,quietly transferred out Four Pharmaceutical Brands into their Private Company and within a year had sold one of them for as much amount as they had paid Raptakos for all four Brands
3. In the 1990s,Amitabh Bachhan had promoted Amitabh Bachhan Company Ltd (ABCL)…Kotaks,who were advising ABCL, had valued Amitabh for,I think, Rs 18 crs and reflected this in the Equity of ABCL,without any Monies really coming in…When ABCL faced bankruptcy,it showed this Intagible Asset which could not be realised for any tangible and immediate Monies at the time   

And yet another recent and very Interesting Brand Valuation showed that the World’s Top Three Brands are

1. Google………..US $ 101.4 Billion 
2. Microsoft…….US $ 77.3 Billion
3. Coca Cola…….US $ 68.5 Billion

And if you pitch Google’s latest Market Cap of US $ 135 Billion (It quotes at US $ 428) against it’s Brand Value,it gives you a Valuation parameter of 1.33….Incidentally,Apple,with a Market Cap of US $ 140 Billion, has just surpassed Google….Google quotes at a ttm 30 Earnings Multiple….Mahindra Holidays and Resorts recently priced it’s IPO at Rs 300 at 30 times FY 09 Earnings   

Kingfisher Airlines is quoted at Rs 50,giving a Market Cap of Rs 1296 crs…if you pitch this against the Brand Value of Rs 1900 crs,you’ll get a lower Valuation parameter of 0.68…Clearly the Market is skeptical of the Company’s and Sector’s Prospects and is ignoring the Brand Valuation in the Balance Sheet

And hey ! someone told me that www.gauravblog.com is valued at US $ 1292.1 !…I googled this to be true !

I’m amused

Come on Guys ! I need all of you out there to help me add the Unit ‘Million’ to the Valuation !

This Blog will then be worth US $ 1.292 Billion !…I can then leverage it like Kingfisher Airlines ! …or just sell it ! Wishful Thinking ! 

Cheers !

This is what I had blogged on October 27,2008

Some Pundits called Sensex of 12000 irrational…some saw irrationality at 10000…So what would they call 7500 ! ? …Begin to slide in now

We saw the Sensex again collapse to 8000 levels in March 2009 after reviving from October end 2008 lows…Then we had the Elections and the Budget and Sensex has crossed 15000 on good momentum….Just be cautious at these levels of 15500….It’s now at an 18 Multiple on FY 10 Sensex EPS…Market ,driven by Liquidity,is yet again living up to it’s reputation of displaying extremes…now it’s beginning to look like exuberance on future growth prospects and the feeling that the worst is behind us….Buoyed by encouraging Q1 FY 10 results so far,the Markets seem to have begun to run a trifle ahead of Fundamentals…that’s what I sense and how I feel….Expect Volatility…Be very Stock Selective  

And Kumar,you seem to be following me like a Watchdog !…I hope you don’t become a Bloodhound ! Yes,my above Blog on October 27,2008 had said look at these Prices,IFCI at Rs 15/16 and  Sicagen at Rs 4/5…You have queried on Sicagen as I don’t feature it in yesterday’s blog on portfolio performance….You must have picked it up from my October 27,2008 Blog ! To answer your query in your response to yesterday’s portfolio performance blog,No I am no longer recommending Sicagen…It’s at Rs 8 today…Anyway such scrips have limited portfolio exposures.For your other request to elborate on Damania Group,I suggest you use the search feature on my blog,typing out ‘Damania,Core Project,Damania Capital Market,Damania Airlines,Damania Pharma or Agritech Hatcheries’…you’ll get some sense of my animosity towards this Group

And Nitin…a paid Blog !?…Nah! would defeat the purpose of this Blog…but you could get in touch with me at gaurav@scriptechgroup.com or gaurav@scriptechindia.com and I’ll tell you how you can access our Investment Ideas when we make them…For that matter,anyone out there who is genuinely interested too, can do so…We need to know your Needs and Profile,before we can suggest which of our Personal Annual Advisory Plans would suit you.They begin at Rs 25000 a year and go up to Rs One lakh a year for Retail Investors and there is personal interaction with me,often proactive…We have yet to launch our cheaper Value Based Web Advisory Plans,but where there will be no personal interaction with me  

Cheers !