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“In India, companies may fall sick, but promoters rarely do!”

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June 2010

FIFA World Cup and me share a great Bond…in 2006 I won a 42 Inch Plasma TV in a World Cup related ‘Guess the Winner’ Contest !…hopeful for some Good Fortune in 2010 too!

I Love FIFA World Cups….for more reasons than one!

Distinctly remember the Family excitement during the FIFA World Cup 2006 in Germany…. A leading Mumbai Tabloid was running a Daily SMS Contest on guessing the Winner in the Day’s matches… I have this habit of reading Mumbai’s two afternoon tabloids while having my lunch… and so I was on one Monday afternoon in June 2006…. June 19, 2006…. That day Spain was to play Tunisia and the contest was to guess who would win…. To take Chances is my Profession !… and I love entering such contests where you don’t have to exercise and stretch your Brain Cells and which does not taunt your IQ Level… and so reflexively I had send a sms that Spain would beat Tunisia that day and promptly forgot all about it… even saw the match till half time when Tunisia was leading 1-0….. next day Tuesday Morning I receive a wake up call on my mobile at 7 am !

Caller : ” Hello is this 98201…..?’

Me  (Yet to wake up  fully) :”Huh ?”

Caller :”Congratulations ! You’ve just won a 42 Inch Plasma TV in yesterday’s Contest!…..can you come to our office at 11 am for a photo shoot?”

Me (Still Sleepy): ” Contest ? ! It’s a bit too early…. can you please call later”

My wife : “Who was it ?”

Me (yet to sink in): “Somebody saying I won a 42 inch Plasma TV in a contest I entered yesterday”

Wife : “What !… and you told him to call later !…. you did not even give him your name !”

Me (now forced to wake up) : “Must be a Joke”

Wife : “It’s not April the First and who would joke like this on a Tuesday morning!”

Anyway, it being a Tuesday, my wife and I vist the Siddhivinayak Temple in Prabhadevi in Mumbai and the Shrine of Infant Jesus and St Anthony at Worli…. It was past 9 am and we were driving towards the Temple when the Caller called again

” Sir, I had called you earlier this morning……”

To cut it short, despite down 0:1 at halftime, Spain had gone on to win the match against Tunisia 3:1 and this tabloid had pulled my mobile Number from over Eight lakh entries as the Lucky Winner !

How’s that for Luck and Probability !!!

As I was unable to go at 11 am for a photo shoot at their Parel Office, I send them my standard serious (wife thinks Glum ) face passport size colour photo by email… and I suppose all of you will say that a Wife is always right ! read more

BOC Flares up over 20% on announcement of Delisting….blogged on this possibility earlier in January 2010…bet comes good…Look out for more MNC’s taking this route

On June 15,2010,BOC announced that they had received a proposal from their majority shareholder for voluntary delisting at a price not less than Rs 225.29….The very next day BOC zoomed to a 52 Week High of Rs 314.90…It’s Rs 286 today

Check out their detailed announcement here

http://www.bseindia.com/xml-data/corpfiling/announcement/BOC_India_Ltd_150610.pdf

On January 19,2010 I had blogged on this very possibility despite Management having vehemently denied it in the 2009 AGM…Had told you’ll to take a bet on this at Rs 218….30% to 40% gains since January 2010 would have come about…Check out the details in this earlier blog below

What’s Bubbling in BOC ?…closed at Rs 218 but after recording a 52 week high of 227….Volumes are twice the two week average

Watch this Blog for a Hint of a few more MNC Companies with higher than 75% parent holding that may opt to delist rather than comply with the dictat of diluting holding to below 75% so as to ensure a minimum 25% Public Float….One is a Pharma Company…another is in IT… and one is an engineering leader

It’s a Hot Investment Theme to Invest in MNCs that are potential candidates for delisting  

Cheers !  

Kirloskar Oil Engines,now Kirloskar Industries resumes quoting today…closes at Rs 425…It’s now reduced to a Holding Company…so what’s the Real Value after the Demerger?

On April 21,2010,Kirloskar Oil Engines Ltd (KOEL) was suspended from Trading to facilitate the Scheme of Demerger…It was last quoted at Rs 175 in April on FV Rs 2 share

The Company’s new name is Kirloskar Industries Ltd (KIL) from March 31,2010 and the demerger scheme is as below

  • The Business of Engines and Auto Components is transferred to the Resulting Company Kirloskar Engines India Ltd (KEIL)…KEIL has now been rechristened to new Kirloskar Oil Engines Ltd (new KOEL)
  • KIL(the earlier KOEL) retains the Properties,Investments,Bank balances,and Windmill business and Liabilities that do not relate to the Engines and Auto Components Business
  • The Equity Capital of KIL is now Rs 9.71 crs of FV Rs 10 after Reduction of Capital from Rs 39 crs to Rs 9.71 crs,that’s effectively from FV Rs 2 to FV Rs 0.50 and then consolidation of 20 Shares of Rs 0.50 into One New Share of FV Rs 10
  • Each Shareholder of earlier KOEL will also get shares of KEIL,now new KOEL, in the ratio of 3:4…that is,75 Shares of KEIL for every 100 shares of FV Rs 2 held earlier in earlier KOEL  
  • So effectively if one earlier held 100 Shares of earlier KOEL of FV Rs 2,they will now hold 5 New Shares of FV Rs 10 of KIL and 75 shares of KIL or new KOEL

KIL (earlier KOEL) resumed trading today and closed at Rs 425…It’s now merely a Holding Company of Investments in Group Companies……so what is it’s real Value?

I had a look at the latest figures at March 31,2010…It’s Equity is Rs 9.71 crs and Reserves are Rs 469 crs,giving a Networth of @ Rs 479 crs….that’s a Book value of Rs 493

However The Investments shown in the Books are Rs 471 crs at March 31,2009…of this Rs 175 crs are in Quoted Group Companies,Rs 50 crs in Liquid Mutual Funds and Rs 210 crs are in two unquoted Toyota Kirloskar Companies….it also held 62000 HDFC shares at negligible cost…..In late 2009,they had announced that the unquoted companies were being sold at Rs 250 crs lumpsump to Kirloskar Systems Ltd….So I’m assuming that current  investments would exclude Unquoted Group Ventures…but it would have Rs 250 crs in Cash reflected in the Books as of date …….furthermore as of today,June 24,2010,the quoted Investments show an incremental value of Rs 450 crs as below

Investment…..Cost in Rs Crs….Share Price……Value in Rs Crs….Incremental Value in Rs crs

  • Kirloskar Brothers…9…….261….288…279
  • Kirloskar Ferrous…163.5…35….231…67.5
  • Kirloskar Pneumatic…2….461…..6.3….4.3
  • Swaraj Engines….0.36….376……81.2….80.84
  • HDFC……0.08…..3000…..18.6……18.52

Therefore adjusting the Incremental worth of Rs 450 crs of quoted Investments on the Networth of KIL,the real networth of KIL would be Rs 929 crs…this gives a new book value of Rs 957…KIL closed at Rs 425 on BSE today with average at Rs 441 and a high of Rs 650…so the quote is at a 56% discount to Real Value….this is typical of Holding Companies…the Haircut is 30% to 60% of Real Value…as these are strategic Group Holdings and the gains are therefore merely notional and not expected to be realised in forseeable future

Now the Revenues in KIL will be from a small windmill activity and from Dividend, Interest and Capital Gains Income from it’s carried forward Investments and New Investments with the Proceeds of Rs 250 crs as above….Full Year Results should show Profits of over Rs 30 crs…that’s an EPS of over Rs 30

At Rs 425,KIL is not a bargain,atleast on Forward Earnings Multiples of over 14…Price should be in this range of Rs 400 to Rs 500….but keep an eye on what it does with the Rs 250 crs and also on the Share Prices of the Companies it has Invested in…especially Kirloskar Brothers read more

Two Rs 75 Scrips that yet look interesting…Sabero Organics & S Kumars Nationwide

Two Rs 75 Scrips….Both yet look fundamentally interesting,depsite their significant rise past two years……Crop Protection Chemicals,Sabero Organics & Textile Retailing, S Kumars Nationwide….clients have interests in both..have recommended them earlier too…they yet look good for further appreciation to Rs 100+ in the coming Year…consider for the Growth Segment of your Equity Portfolio…they may no longer be a constituent of the Multibaggers Segment with entry at these prices

Cheers !

Revisting end September 2008 Blog post “Ab Kya Kare?”….Fantastic Wealth Creation since then

I’m reproducing a blog I had posted nearly two years ago on September 27,2008 on what should be the Investment Strategy going forward….this was contrarion in the face of many experts at the time who were recommending selling at every rise…sentiment at the time was getting gloomier….Sensex had reacted from 21000 in January 2008 to 13000 levels at the time…I had said it will seek sub 10000 levels,which it did a month later in end October 2008…Strong advice was to buy at Distress Prices in  2008 for fantastic wealth creation by 2010….this is exactly what has happened

Ab Kya Kare ! ? Should You Buy,Hold or Sell ?

Washington Mutual (WaMu) ,one of USA’s biggest Banks was forcibly taken over by the regulator,FDIC yesterday and sold off for US $ 1.9 Billion to J P Morgan even while the Chairman and CEO of the Bank was on a flight in Mid Air…The quick move was to prevent a collapse as Depositors had already began a run on WaMu and withdrawn over US $ 16 billion in the last ten days

As we move towards Panic,Capitulation and Despondency in Equities with the Scenario in USA turning scarier than ever a lot of friends,family, clients,associates and even my Pay and Park Attendant are asking me “Ab Kya Hoga ?…Ab Kya Kare ?”

This is what I strongly advise…..

We are surely moving towards Distress Prices on the Bombay Stock Exchange and the National Stock Exchange…With the continuing disturbing scenario unfolding scarily in USA,there is clearly more Pain ahead in India as Dalal Street gets Wall”ed in

Critical Valuation Basis remains on Assessing the  Sustainable Growth in Earnings…Here is the Problem….Clearly we are seeing a rapid deceleration in the Earnings Growth

The Sensex’ earnings grew by nearly 17% in the first Quarter ending June 30,2008 in the current FY 09 supported by a 33% yoy growth in Earnings in Capital Goods Companies and a near 30% growth in earnings in Telecom Companies and a strong 44% growth in Earnings in ONGC. However, the Sensex (excluding the oil companies) saw an earnings growth of only 12.5% yoy during the quarter…..the lowest in the last fifteen quarters…compare this with the peak 40% growth in the December 31,2006 third quarter of FY 07  

EBIDTA Margins contracted by 1.8 % and are expected to contract yet further.Metals and Pharma were the saving graces and saw some margin expansion

The Earnings Momentum  going forward will continue to be impacted by hardening Interest rates and double digit Inflation and an economy slowdown,notwithstanding the Minister of Finance yet assuring of 8% GDP Growth this year assuming strong domestic consumption and Investments read more

Fathers Day….fond and clear memories of Dad

…..Got up this morning conscious that it’s Fathers Day today

……Feel as if I’m sitting by the shore on Mumbai’s seafront and it’s raining and every wave that’s lapping me is one more fresh memory of my Dad and the times we had together…..Feel warm and whole and blessed

….began to actually pen these memories….they’ve run into five pages already !…many hilarious moments….many great character building events…many Life’s Lessons absorbing incidents…our annual Family Holidays together…..feeding the Fish in Coonoor….watching the sunrise over K2 from Tiger Tops …..How we got to stay in the famous ‘Simla House’…..On Elephants moving among grass as tall as the Elephants itself! to glimpse a group of three one horned rhinocerous at the Jaldapara Wildlife Sanctuary….Beer on the beach in exclusive Bar Nicobar…..how we got away ,when we were travelling to Kashmir with family friends and Uncle pulled the Train Alarm thinking it was the Flush ! …..simply too many to blog in one day…..maybe I’ll set up a seperate category for ‘Dad’ and reveal these great memories one at a time   

….but this I must say “Dad,they don’t make anybody like you anymore ”

…..His name was Aroon….Patriotically,and for lower salary and perks too, left Standard Vaccum early in the 1960s (rechristened to  Esso and now HPCL after nationalisation) to join the Government’s fledgling IndianOil….Lived for IndianOil, rose through it’s ranks,and retired in top management in the late 1980s….was rewarded with a HMT watch for 25 years of Glorious service and got Rs Three lakhs as Gratuity and Pension on retirment…..could never see Life beyond IndianOil and did not take up lucrative assignments from many overseas Oil Majors and Drilling Companies…..God fearing and High on Selflessness,Integrity,Loyalty,Reliability,Dependability,Self Dignity,Self Esteem and Self Respect but Low on Health…He had his first attack when 38,his second,ten years later at 48,his third,yet again ten years later at 58 and as if in rhythm of years passed away ten years later at 68,soon after his fourth in 1998

…… Missing You and your Silent yet Strong Physical Presence….yet sense your Guiding Presence and the blessings it brings and the protection it assures

……”Dad,you’re the pivot,support and centre ‘A’ and Aspiration in my Middle Name and  the strength around which your Son GAP is yet evolving  read more

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