Thursday, April 30, 2009

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Bharti and Alcatel to form JV

Sunil Mittal owned Bharti Airtel and Paris headquartered Alcatel are forming a joint venture with Alcatel owning 74% of the equity share and Bharti having 26%.Bharti C.E.O Manoj Kohli said that the joint venture will fulfill the country's dream of having 20 million broad band customers soon.The joint venture is worth 500 million dollars.
Alcatel-Lucent C.E.O Ben Vawaayen said that the joint venture will bring the two similar companies together.The J.V will have about 4000 employees with some guys from the outsourcing firm.According to Wall Street Journal's survey,Bharti is the most innovative Indian company.

Word Power

Try guessing the meanings of the following(All r's)

1.reek-
2.ratification-
3.rapacious-
4.redolent-
5.ramparts-
6.rampant-
7.raucous-
8.ravishing-
9.rebuke-

Tuesday, April 28, 2009

Sugar Millers in dilemma

with the sugarcane production in India lagging behind and demand increasing continuously it is disadvantage sugar milling companies in india. Sugar in India is an issue which holds the potential to be thorn in flesh of government. sugar in India is subsidized and as a result the Millers are forced to sell the sugar at artificially low prices whereas they have to give high prices to farmers for the sugarcane procurement. This is bound to affect the profitability of sugar millers in India. Also they can't hold stocks as stipulated by govt. of India fearing that hoarding of stocks could lead to ballooning of sugar prices.

Further more sugarcane prices are quite high due to demand from Jaggery producers who are getting almost 100 percent profits on sale to Liquor firms who use the molasses for processing of liquors. And in India an Indian man can't let go of his bottle as much as housewives will have to readjust their sugar budgets...

but what i think is that govt. must take a step forward and annul the subsidy on Sugar as it is not that much an essential commodity and also this would help in making people healthier as for sure consumption would reduce somewhat even though we all know that indians have sweet tooth.

please share your views on above article...

Blogging in syllabus!

It is very good to learn that schools in England have also included blogging in their syllabus along with exposing the kids to other social networking sites.Along with that the kids will also be made to use sites like wikipedia.Students are also likely to get grades based on the quality of blogs they make!!!All this can help children earn their own money at a very young age .This will instill in them qualities of entrepreneurship.
I feel that in the near future every kid will have atleast one blog.
But according to some parochial groups,there is no need to expose school-going kids to all this.According to them students will gradually become mouse-potatoes and will fritter their time in front of the screen in the name of doing their homework.
But I approve of such a step taken by the authorities,provided the students use their time effectively.I await the day when such assignments will be given in Indian schools.
All this is sure to make the coming generation tech savvy and smart.Blogging will be a good medium for kids to express their views .

Sunday, April 26, 2009

Some english for CAT freaks.

By now all of you will surely have started slogging for the coming exam in November.Just to make it a bit easier ,i have a nice plan !As you know that english is a major part of the exam,we can start developing our english together on this blog.We can start quizzing on tough words through comments and also share some good CAT questions with each other.But we must insure that we carry this out regularly in order to obtain maximum benefits.This sort of learning will prove to be interesting as from now on we will not have to slog with huge word lists which become really monotonous after some time.

***BEST OF LUCK***

Saturday, April 25, 2009

How to calculate the value of an index on a particular day??

We often say things like -"The SENSEX opened at 15000 points",though not in today's bear market!The question is-"How to calculate the value of Sensex,Nifty or any other index on a particular day"??
For this you need to know about market capitalization.Market capitalization is a factor which determines the vastness of a company.It is the product of the total number of shares which are out and the current share price of that company.
For eg RIL,had a market-cap of about Rs 200000 crore,which is a big amount.Basically it is that amount,which one will have to spend in order to purchase all the shares of a company.
After the market-cap,we have something called asthe index factor.The index factor remains constant at a particular time for each index.Like Sensex will have a different index factor than Nifty.

After you get the market cap of all the companies listed in a particular index,simply add them up.Divide that value by the index factor.Now you have the value of that index right in front of you!

Are the rate cuts really low?

With the FY 10, monetary policy being already announced by RBI governor D.Subbarao a few days ago all eyes are now on financial service players as to how they respond to the signals clearly given by Guv.

RBI has never been so quick to react to the situation and be proactive...but in past 7-8 months it has reacted in symphony with the situations and has reduced the key interest ratios by substantial margins viz. CRR,RR,RRR. As a consequence the onus now is on bankers to take the cues and reduce interest rates as also deposit rates and this is precisely what Mr. Subbarao clearly hinted at during the recent Monetary Police announcement.

Though the absolute interest rates have been reduced by the bankers in range of 75 bps to 2 bps by few players(notably the PSU majors like SBI,PNB). But most of private sectors have been reluctant to prune down the rates.
But if one goes by Actual interest rate figures (Interest rates - Inflation) then the interest rates are still on higher side.The bankers argue by saying that the cost of money is still high and they have to maintain their NIM's(Net interest Margins).Another argument is that those people who have taken Fixed deposits will continue earning same interest rates till expiry but the loan takers will have to pay less everytime the interest rates and PLR's are reduced by banks.So while they have to keep paying same interest rates to the lenders they will be able to earn less interest from borrowers.

Also seeing the environment and what has happened in past year or so has made bankers cautious in extending the credit to people.Though India has been relatively insulated from the lending crisis but still if NPA's rise then again the bankers would be taken by sticks as no body knows who might go bust the next day. Even biggest of corporates have openly admitted of the tight credit situation.

Though the situation is expected to improve with all the rate cuts playing their way through the economy in coming days.
What do you think?? Are we moving towards ZIRP regime???

Fundas of Dividend!!!

Dividend,It is just like a "BANDAGE" when markets are bleeding red.

Thats how i see a dividend cheque of a company which has consistent yields and dividend policy.What better than a cheque when everything is going down.It is at this very moment one feels the importance of Dividend paying stocks in Portfolio.

Dividend is a share of profit which company distributes among its share holders. It is done to reward the shareholders for their investments, good will and also to keep shareholders intact. Sometimes special dividends are given like Silver jubilee, extraordinary performance etc.

Dividend yield is obtained by dividing the value of dividend received, in rupees by the Current Market price of the stock.
In India the picture of giving dividends has not been too encouraging as compared to counterparts in emerging economies like China, Hong kong and developed economies like US.There is hardly any NIFTY company which has a dividend yield of around 5%.Tata Motors is one of the good dividend paying companies in Nifty( 4%), HCL Tech., Ambuja Cements etc.
In midcaps the name include Varun shipping , HCL infosystems, BRPL, vijaya Bank, Wockhardt, Castrol, Syndicate Bank.

But one should not only buy dividend paying stocks just because they pay dividends, as sometimes in tough conditions it becomes impossible for a company which does not have sound fundamentals to keep distributing Dividend cheques year after year.So investment decisions should be based on a mix of company performance, profits, dividends, nature of business, sector etc.

An article i read in ET provided the statistical side of benefits of Dividend which can take care of retirement life in a respectable manner::
The portfolio comprised of around 20 stocks across diversified sectors like defensives, cyclical stock with proven track record of past 10 years in paying dividends with equal weightage to each stock.
The calculations have been done from 2002-2003 bear markets when dividend yields improved due to falling Stock prices.( denominator reduces) so it is better to invest in bear markets.
Rupees 30000 invested in 1994 would have given 4300 Rupees till 2008.
But if you have invested since 2002( prior to 03 bear market) the dividend by 2008 would have been around 15000 !See it is almost 3 times the previous case.This has happened as Dividend receipts have jumped in past years .In fact it is even more than capital appreciation in few cases.

For the portfolio selected the dividend CAGR was around 21%.I would say NOT BAD!

But now lets see what happens if the dividends are reinvested for 20 years in a deposit like PPF ( 8% p.a)-
The scale of investment we are taking here is Rupees 200000( 2 lacs). It seems big but what comes out would be even bigger!

Suppose the dividend receipts continue to grow at same rate of 21%, in the first year the payout if around 7000,the yield works out to be around 3.5%,But over 20 years at same rate of growth it works out to be Rupees 3.2 lacs.

But wait,be prepared for the dividend magic along with PPF.

Over 20 years at PPF's rate of 8% investment this net investment of Dividends reinvested in PPF works out to be Rupees 25 Lacs.Whopping 25 lacs in fact!!!
Seeing this figure could make one even forget that this is the Dividend income and it is over and above the capital returns.

This is all for investment benifits,other benefits like TAX FREE INCOME ( both PPF and dividends)are also other lagniappe's.


So this is the time to take note of good dividend paying stocks, see the history and start planning.Equities should not be looked down upon only as trader instruments.

Thursday, April 23, 2009

Young entrepreneurs to lead the change!

After all the hardwork done by our worn out politicians to make India into a corruption hub,now it is the turn of the educated young entrepreneurs to change the system and make India a much better place to live in.One such example is Sarath Babu,a slum kid who made it to IIM-A and started his own catering services.This 31 year bloke runs Rs 7-crore Food King in Chennai.Babu is now going to set his foot in the so called "gutter" of politics with the slogan"Let's change now".He is going to stand from the South Chennai constituency as an independent candidate to Lok Sabha.
Similarly Capt Gopinath is contesting from the Bangalore South constituency.According to him an entrepreneur can change the world in politics too.
Similarly Umendra Bharat an IIT Kanpur Graduate has filed his nomination from the Kanpur -4 contituency.
If such elite citizens get to govern us,then it may turn out to be a boon for the entire country.Now it is for us to wait and watch the coming of an Indian Osama ohh sorry....I meant Obama!!

New chairman for Coca Cola

(Kent and Isdell)

Muhtar Kent the chief executive of Coca Cola was elected as the new Chairman by the board of directors as the former chairman Neville Isdell retired following the companies annual meeting in Atlanta.Kent had also been the chief executive of Efes beverage group which is a major shareholder of Coca Cola Icecek.Under him the revenues of the company tripled and the market capitalisation increased by 250%.He became the CEO of Coca Cola on July 1,2008 after Neville Isdell became the chairman.

As always,expectations are high from Mr Kent and is speculated that CC goes to new heights with him as the boss.

Wednesday, April 22, 2009

Indian Hotels to aquire Sea Rock Hotels

IHCL seems to be in negotiations aquire Mumbai based Sea Rock Hotels for an estimated Rs 650-700 crore.The aquisition will take place from Delhi base Claridges group which had bought the hotel in 2005.The hotel had been closed since 1993 when it had been blown up by the Bombay blasts until Claridges decided to buy it out.As Sea Rock is just across the road from Taj Land's end,post deal an integrated complexis planned.The resulting site may be similar to Taj Mahal palace at the gate way of India.The hotel is said to posess about 400rooms.If the deal is successful Taj will have four properties in Mumbai.This is a very confident step by Taj as it is already involved in the renovation of the property damaged by the current blasts which took place in Mumbai.This step will also add another luxury site to Mumbai where swaths of foreigners are found at all times of the year.

Rains wash away TRPs in SA

The new venue for IPL this year does not look like an exciting one as niether the crowd nor the advertisers seem to enjoy the sport which is evident from the low scoring games and bashed up TRPs.The icing on the cake is "RAIN" which is also playing spoilt sport.SET max which had saved about 15% of its advertising inventory to sell at a premium at 30-40% profit later is now in an awkward situation.All this drives us to contemplate the fate of IPL if it had been played in India.Though elections and the terrorist attacks in a way daunted the authorities ,but cricket in India is always a hit especially when it is IPL season.On the contrary if a terror attack would have struck then India would not have visiting teams for a long time.I feel that the right venue for IPL is India else the season can be utilised to play some other form of the game.As the topic raised is very debatable ,i seek many comments from the blog readers.

Tuesday, April 21, 2009

Johnny Depp


Johnny Depp to star in Shantaram

Johnny Depp has evinced interest in working in the movie Shantaram based on the novel by Gregory David Roberts.The movie will be directed by Mira Nair and will be distributed by Warner Bros.The movie is about the life of a convict who escapes from an Australian jail and beciomes a slum dweller in Mumbai.The movie will have scenes from the Leopold Cafe which was blown up by hte blasts on 26th Nov,08.

Renault's India plans on hold

French automaker Renault has put its plans on hold to infuse its cars in the Indian market owing due to the global meltdown.The plant had been set up in Chennai.The company had stopped hiring for its production activities in Chennai.Though according to an indian employee the production plans will be defrozen according to the companie's wish without any delay.

Tata Motors Strikes again!!!

After the Nano,Tata Motors is coming up with its new brand of World Trucks.The trucks are expected to come out in the market in the month of June.The new variety of trucks will be costlier than the ordinary and will replace its 180-200 hp engines with the 200-500 engine range.The trucks will be designed by Tata Motors and its subsidiary Daewoo Commercial Motors.These superior quality trucks will be competition for other brands like Volvo and Mercedes.The companies tie up with Daewoo emboldened it to come up with its own variety of wold trucks.the trucks are expected to come out simultaneously in India as well as Korea.
The launch of this brand exemplifies the companies love for innovation and giving its consumers something new each time.Tata Motors with its easily affordable Nano is aleady expected to revolutionise the lives of millions who had never dreamt of a car in their lives.Similaly the new variety of trucks will prove to be a boon for many businesses which earlier depended on the stereotype Indian trucks,though unlike Nano this variety will be costlier than the rest.Though the exact price is not out(Tata policy!!) we can guess the price right here.

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