Mumbai Investor Meet - Nishit Vadhavkar

We had an interesting discussion on stock ideas this Sunday.

The consensus amongst the members was that stock picking has indeed become difficult in current times. The market has now become very stock specific which underscores the need for more interactions amongst members.

Vipul our analyst with Edelwiss met the management of Crisil and was convinced of its long term potential. He also is strongly bullish on Pantaloon Retail.

Sunder Rajan sir was bullish on two off beat scrips Tripex and Sukhjit Starch.

I made a presentation on GE Offshore reccomended by Vijay Sir. We tried to understand the working of the company and the high entry barriers made it a compelling buy at lower levels.

Siddarth continues to remain very bullish on KLG Systel having closely studied the company.

FMPs were considered to be an attractive option offering in excess of 10 pc returns for a short period.

Vipul also provided a list of conference calls numbers where individuals could pose questions to managements.

Private Lables would dominate 50 % of Indian Retail

Organised retail is on the threshold of a boom in India. But as companies line up to grab a bigger and bigger slice of the retail pie, another battle is likely to change the face of the industry — the one between the manufacturer brands and the retail chains’ private label brands, which are far from being just cheap generics. Worldwide experience shows that as retailers become more powerful, they have increasingly focused on their own brands at the expense of manufacturer brands.

Nirmalya Kumar, Professor of Marketing and Director of the Aditya Birla India Centre, London Business School, and co-author of Private Label Strategy, speaks to Govindkrishna Seshan on the new strategies for private labels that retailers are using and the challenges brand manufacturers face to develop an effective response. Kumar says private label brands, which occupy less than 5 per cent of the market in India now, are likely to corner 50 per cent of the market as the retail space opens up and matures.

He also says the following -

"Retailing in India is still very primitive. At the moment, private labels almost do not exist in the country. They are less than 5 per cent of the retail business and still have a long way to go. But Indian retail is extremely hot and it offers a proposition that can’t be seen anywhere else in the world. Only in China and India can retail chains have as many stores as they have in the US. In no other country can one imagine companies having 5,000-6,000 stores of their own.

Here’s a little calculation: in a few years, most retail chains will have close to 5,000 stores in India. A profit of, say, Rs 5 lakh a store a month would mean a profit of Rs 250 crore. Ten such companies would mean profits of Rs 2,500 crore with their combined turnover being more than Rs 25,000 crore.

In the next 20 years, the richest Indian or one of the top three richest people in India will surely be a retailer. Private labels will have a huge role to play in this. As much as 50 per cent of Indian retail will be occupied by private labels. The question is not whether this will happen, but when? If the government opens up retail, we would see it happen within the next 10 or 15 years.

ICICI banks on $320 bn Government infrastructural investment - Live Mint

ICICI Bank Ltd.’s plan for the biggest share sale by an Indian company may prompt investors to sell its stock on concern it could dilute earnings of the nation’s largest lender by market value.

The bank plans to raise Rs200 billion ($4.9 billion) by selling stock in India and American Depositary Shares in June, Chief Executive K.V. Kamath said on 28 April. Its equity will increase 20%. Mumbai-based ICICI raised Rs80 billion in 2005 to meet demand for loans from companies and consumers in the world’s fastest-growing major economy after China.

`It may dilute the earnings per share in the short run and one could see some short-term negative performance on the stock from the weight of the fresh issuance,’’ said Rajiv Anand, who manages $3 billion at Standard Chartered Mutual Fund in Mumbai and owns shares in ICICI Bank. Still, `it’s a clear indication of the growth that ICICI can see for India.’

Prime Minister Manmohan Singh in October doubled his budgeted spending on roads, airports and ports to $320 billion by 2012 to support growth in an economy that expanded an estimated 9.2 % in the year ended 31 March. The benchmark Sensitive Index gained 65 % in the past two years amid record profits at companies such as Reliance Industries Ltd., India’s biggest.

`Over the next three years, we will likely see a doubling of infrastructure and manufacturing capacity in the country,’’ Kamath said in an interview in Mumbai. `There is an investment pipeline that runs into half a trillion dollars’’ in infrastructure and manufacturing.

Rivals Tata Steel

ICICI Bank’s proposal rivals that of Tata Steel Ltd., the world’s sixth-largest maker of the metal, which said on 18 April that it will sell $2.4 billion of shares in India and overseas to fund its purchase of Corus Group Plc.

Companies in India borrowed about 28 % more in the year ended 31 March. ICICI Bank’s loans increased 34 % that year, after surging 60 % the previous year. Bank lending in India grew more than an average 35 % in the year ended March 2006, and a year earlier, according to central bank data.

The Reserve Bank of India (RBI) last week told banks to maintain loan growth of about 25 % in the year to 31March.

`Assuming a systemic growth of 25 %, this capital should be good for the next three years,’’ Kamath said. `We have to prepare ourselves for market opportunities and given the economic environment in the country and prospects for the country, we thought it appropriate to raise capital and shore ourselves up for the opportunities going ahead.’

Funding Needs

Indian banks will need atleast Rs500 billion this year to bolster capital as lending expands, India’s banking secretary Vinod Rai said on 19 April in New Delhi. State Bank of India (SBI), the country’s largest lender, which needs Rs100 billion of capital this year, has not made any decision to sell shares.

The 50-year old Mumbai-based ICICI Bank received bids for seven times the stock offered at its 2005 share sale to local and international investors, including 40 overseas funds. Merrill Lynch & Co., Morgan Stanley and Nomura International (Hong Kong) Ltd. arranged the previous sale.

The bank sold shares at 525 rupees apiece in December 2005. The stock, which has risen 4.9 % this year against the benchmark’s 0.9 % increase, dropped 30.4 rupees, or 3.2 %, to 933.65 on the Bombay Stock Exchange on April 27.

China, India

`We believe in India’s growth,’’ Kamath said. `If you look at China in context, the size of their banks and the size they have grown over the last few years, we need to take this kind of a step change to meet the opportunity.’

Industrial & Commercial Bank of China Ltd. boosted the size of the world’s biggest initial public offering to $22 billion after increasing its Shanghai share sale 15 % last year.

`If one looks at it from the perspective of the Chinese banks, and on a global perspective, a $5 billion sale is not very big,’’ said Anand of Standard Chartered Mutual Fund. `It should get taken quite comfortably.’

Anand said he will consider investing in the new ICICI Bank shares depending on their price.

The bank said that the money will also be used to conform to Reserve Bank of India (RBI) regulations that stipulate increased capitalization levels for consumer and other loans.

Nishit Vadhavkar's Analysis on GE Offshore

A new posting is available under Nishit Vadhavkar's Stock Analysis on GE Offshore.

This company belongs to the erstwhile GE Shipping Group handling Offshore business for Shipping Industry. It got listed separately last year and has been underperforming for sometime now.

Charter Rates having been on an uptrend, it also provides an impetus to the charter rate for the offshore rigs and vessels.

Do visit the presentation for more information.

Tata Tea Growing Up AGAIN.....KKP Investor

Tata Tea has a similar profile to Tata Steel that we talked about last week. How, you say? Well, the Tata's have figured out that grabbing market share throughout the globe is what is going to have a huge impact on each of it's kingdoms over the long term. If you are also a visionary thinker as the Tatas have been, then you will also agree that buying Eight O'Clock coffee, Tetley, JEMCO and Good Earth will be impactful to the top and bottom line of TataTea. Then you get to Glaceau where Tata's have been doing tremendous marketing, but in the end, it is going to help net margins. Now Coca Cola and Tata Tea are working together to decide what to do with the partial ownership that Tat has of the vitaminized water bottler, Glaceau.

Once upon a time, we used to be water drinkers with each of our meals - no exceptions. The Western world used to drink Coke or Pepsi and that was the 'in' thing to do. Today, on a global level it has become a real fad (fashion) to be walking around with bottled water instead of Bull or Coke or 7-Up or Mountain Dew or even Coffee for that matter, or for that matter to order bottled water at a restaurant, or be served only bottled water at your 'working-lunch-session' (you can tell I'm in constantly in sales meetings!). Chai is another big hit for non-Asian folks. Asians do not go for it at Starbucks since it costs $3.98 per medium cup of Tea (and Coffee is $2!). It is this fad that is Tata Tea does not want to give up with Glaceau, or for that matter by staying 'national only', and it is very likely that we will get some new developments from the Coca Cola <> Tata Tea discusions that are currently on-going.

Let's look at the chart of Tata Tea (not attached here).....It was riding high at around Rs 1000 before the big acquisition. It took a hit all the way down from Rs 1000 to Rs 550 (in the Feb/Mar low). All due to the weight of all the debt and dilution of acquisitions. The chart is forming a great pattern seen typically in a stock that is about to bottom, and start moving up (higher high and higher lows). Volume during updays has not been in a 'blow out' category, but it not 'in the groove' as yet. Early buyers should consider buying this fundamentally solid company with 1/3rd position at this time and additional positions later. Tata Tea seems to have a 'zinger' (catalyst) in place now. Basically, folks, Dalal Street memory is starting to fade about why it was a bad idea to hold Tata Tea (in last 3-6 months), we are getting renewed buying that will start breaking resistance levels (1st one already broken). All this time the Promoter, FI and MF holdings have been pretty well intact, but now this Global Brand is about to start showing it colors.

The stock currently trades at 9.9x FY08E earnings estimates. Its strong operating performance partly offset interest concerns in the upcoming nine months. It should continue to exhibit strong revenue growth over the next two years. Also, it will utilize the proceeds from the recent issue of shares to repay debt and, thereby, reduce the decretive impact of interest on earnings. The stock is well on it's way to a price target of Rs1000.

Good luck ya'al......

KKP_Investor


ps: I am a long long term holder of Tata Tea

Is Tata Steel following performance of Mittal Steel (KKP Investor)

Steel companies have been on an acquisition binge around the world. There are companies in North America, Europe and Asia that are buying to get bigger to demand a larger percent of the global demand. Global demand for steel? Imagine that for a moment. Steel is a highly dense material that takes a lot to produce, and then your globalize it, it does not take an simple email package to email that material out. In the mid-80's steel city was Pittsburgh, the primary provider of steel to make the GM, Ford and Chrysler cars, who had a combined 50%+ market share of the world. Now it has gone global. It takes a lot of logistics, ships and loading zone to take it from A to B. But, yet, we are today in the mania of Buy-Outs and M&A's. Tata's decision to buy-out Corus seemed awefully ambitious, esp. in light of the fact that they kept bumping up their prices to gain % of votes to have the merger approved. Well, now there are doubts of funding this huge deal....But wait, we have an answer for that too - Let's get those funds from the market.

The Tata's who were clearly incapable of funding this deal alone, have decided to fund this mega-deal through a combination of domestic rights, preference shares and overseas equity. They are going for an almost 50% equity dilution, which should raise over Rs 15,000 crore. Starting with a 1:5 rights issue at a price of Rs 300 a share, it would finance the Corus acquisition to the extent of almost Rs 3700 crore.

There is a lot of bearishness surrounding this dilution that is about to happen. That is rightfully so. Even after announcing this dilution, the press releases from the company is eluding to the factor that EPS will not be affected due to these additional shares today, or when the preferential shares are converted over to common stocks.

Only time will tell how this is going to work out, but, if we take the example of Mittal Steel and what has happened to it, we should be totally inclined to pick up any and all shares during the current sell-off or if you own the shares now, then get the most number of rights issues that you can. Of course, you got to have staying power during the sell-off, or to buy the rights issues, and then wait for a year or so when the short term memory of Dalal Street will once again kick in and it will start to look forward to the market share that it has gained, the additional margin points that it has gained with the Corus absorption, and finally, the bullishness back into the Indian and Chinese markets. Check out http://finance.yahoo.com/q/bc?s=MT&amp;t=5y&l=on&z=m&q=l&c= on yahoo to see how Mittal has performed.

You are now getting my general direction of this article-----> Bullishness on Tata Steel basing the pattern on a similar large purchase, dilution, and market share gain by our own Senior Mittal and his son. As of this writing, Tata Steel opened at Rs 464 and closed at Rs 544.

www.relianceretail.com to go live...

Reliance Retail is readying itself to take the online route as it unfurls major plans for its e-commerce business. According to sources, the Mukesh Ambani-owned retail venture, has already set up a separate team to kick-start an online retail channel to go alongside its physical stores. There are plans to set up depots at various locations which will serve as a delivery point once the orders are placed through the internet.

Industry observers say that increasingly, retail bigwigs will strengthen their online presence as they witness real estate pressures and growth in broadband penetration in the country. When contacted, an RIL spokesperson declined to comment. Sources confirming the plan, however, told ET, “In the next 2-3 years, a significant 5-6% of Reliance Retail’s overall revenues will be generated through the e-commerce network.” The company will gradually use the e-commerce platform to link its front-end retail with the back end logistics.

“The e-commerce business will thrive on a two-pronged strategy, B2B as well as B2C. It will also help the company strengthen its logistics network,” a source said. Industry experts say that with the organised retail pie getting bigger, e-commerce will become an important part of business strategies. “e-commerce will become a significant part of the overall format mix for retailers.

For Reliance Retail it makes a lot of sense to introduce an e-commerce arm as they have the advantage of physical stores already being present. Having physical delivery stores always add to the convenience and success of the online business model for retailers,” says Arvind Singhal, chairman of Technopak Advisors.

Reliance Retail is also looking at having co-branded credit cards and consumer financing schemes, which will enable the company to further strengthen its e-commerce venture. For the same, it has roped in the head of credit card at American Express. Internationally, all the retail giants including Tesco, Wal-Mart and Best Buy have a huge online presence.

Monsoon to be below normal this year says IMD

The country’s monsoon may be weaker than normal this year, according to India's Meteorological Department.The rain is expected to be 95% of the long-term average, said P.S. Goel, Secretary at the Ministry of Earth Sciences in New Delhi today.

Earlier, a report quoting B.N. Goswami, director of Indian Institute of Tropical Meteorology, said the rains would be more than normal.

Property prices in Hyderabad set to fall...

Hyderabad may now be the country's second largest city. But the city's big growth could actually mean property prices falling, reports CNBC-TV18.

The Municipal Corporation of Hyderabad is now 450 sq km larger, second only to the National Capital Region (NCR). The additional areas will have all infrastructure and basic amenities that the center of the city enjoys. The project will require a total investment of Rs 28,000 crore from the government. Officials said the new supply would cause prices of residential property in the city to fall

Jayesh Canjan, Vice-Chairman of Huda said, “Property developers will be able to open up many more areas for residential purposes and the availability of housing in terms of supply will go up and because of that the prices will come down."

Hyderabad has seen an increase of % over the last two years because of the large gap between demand and supply of residential property. Real estate consultants expect the fresh land supply coupled with rising interest rates to lead to a 15% correction in property prices

Besides this, the Hyderabad urban development jurisdiction has been increased from 2,000 to 6,000 sq km and the authority is doubling its expenditure to Rs 2,000 crore a year to develop the area.

“We will announce a number of projects like new townships, as well as specialised area developments like medical tourism areas, eco tourism, health city, pharma city and so on," Canjan said.

Over the last year, the local Government has been accused of driving up real estate prices in the city unnaturally through highly priced land auctions with a huge amount of land set to hit the market all that could change, leaving consumers happy.

Mcnally Bharat Engineering

Mehraboon Irani of Darashaw & Company is of the view that Mcnally Bharat Engineering is a very safe bet at present level.

Irani told CNBC-TV18, "McNally Bharat is a company, which is an expert in a way in providing turnkey solutions and has provided over 250 plants on a turnkey basis. It had a very good growth of 41% in the last three years but what we are confident of McNally Bharat doing is we are seeing it achieve exponential growth over the next 4-5 years, a big beneficiary of infrastructure growth."

He further added, "As far as the earnings go we are looking at the company showing an EPS of around 7.2 in the current year 2006-07 and results should be coming sometime in the next week but what is interesting is the orders in hand which is of Rs 1300 crore which should get executed over the next 12-18 months. 2007-08 we are looking at a topline of Rs 775 crore and a bottomline of Rs 49 crore."

"Assuming that there is going to be no further dilution of equity we are looking at an EPS of around Rs 19. Rs 19 even if we consider conservative multiple of just 15 this should be quoting at over and around Rs 325-330. For the present level that provides a great opportunity in the market in which we are seeing a lot of volatility off late, so big beneficiary of what is going to happen to this company in terms of the order execution over the next 12-18 months. McNally Bharat is a very safe bet at the present level with atleast 100% appreciation possible over the next 12-18 months."

Wal-Mart selling a feel-good image

The Beast of Bentonville has finally broken its silence. CEO designate for India Raj Jain on Thursday attempted to set the record straight on a host of controversies surrounding the Wal-Mart-Bharti alliance announced late last year.

In an e-mail to ET, Mr Jain asserted that his company aims at establishing a relationship with the Indian small business community by partnering them and helping them lower costs and increase profits.

He also traced Wal-Mart’s “strong history’’ with India, stating that the company sources goods worth over $600 million directly from suppliers in India. In a bid to appease critics, he also held out the carrot of increasing direct sourcing from the region.

After months of silence, his e-mail comes at a time when the Bharti-Wal-Mart joint venture is expected to be announced finally. But more importantly, it comes on the eve of anti-Wal-Mart activist Wade Rathke’s India visit, which ET reported on April 14. Mr Rathke, chief organiser of the Association of Community Organisations for Reform Now, is famous in the US for spoiling Wal-Mart’s party. He is known to have mobilised public opinion against the retail behemoth in South Korea and Germany, the two markets from where Wal-Mart subsequently withdrew, said a source.

Mr Jain said there have been a number of media reports about Wal-Mart that do not reflect the facts, and “for this very reason I thought I should proactively send you certain information about Wal-Mart”. First on Mr Jain’s list is clearing the anti-mom-and-pop-store image the retail giant has acquired, especially in view of the protests in India following the announcement of the Bharti-Wal-Mart JV.

He has clarified that the JV for wholesale cash-and-carry business will sell quality goods to retailers, including small store owners. Not only that, the venture’s wholesale supply chain would link farmers and small manufacturers, thus minimising wastage of fresh foods and vegetables and helping control inflation, Mr Jain says in his e-mail. He also clarified that the front-end retail venture would be a separate wholly-owned and managed Bharti venture.

Infamous for its labour policies? No way. The missive would have everyone know that Wal-Mart is the largest employer in the US and its jobs are “sought-after because of the investment we make in our associates and opportunities we provide them”. In fact, Wal-Mart’s average hourly wages in the US are more than double the federal minimum wage.

China's Q1 GDP: Too hot for comfort

Is there such a thing as too much of a good thing, well if the reaction to China's latest GDP figures is anything to go by, it surely is. But there are major fears of the dragon over heating.The bustle on China's streets reflects the boom in its economy with its people spending more, but it might be growing too fast and that's the fear of the government.

China's GDP in the first quarter of this year grew faster than expected at 11.1 per cent supported by consumption growth at 3.3 per cent against its Central Bank's target of 3 per cent.The county's trade surplus doubled to $46 billion taking the foreign currency reserves to all time highs.

Meanwhile inflation also touched is at two-year highs.

Worried central bank

While the Dragon is racing too fast beating all the expectations for its own good Central Bank is worried. And when China comes out of a binge the entire world gets a hangover.

With fears of overheating engulfing China's markets that government might clamp down by raising the interest rates China's market indices tanked nearly 5 per cent creating global fears.

Hong Kong's Hang Seng and Singapore's Strait Times lost 2.3, 3.2 per cent while Jakarta closed down by 2.1 per cent.

Markets are afraid that raising interest rates could threaten China's weak banking system or by letting the Yuan appreciate would hurt export growth.But everyone around the world is hoping that the dragon's landing is a soft one and not a thud that shakes all other markets.

Govt says BHEL can’t deliver, to invite global tenders for project

Stating that Bharat Heavy Electricals Limited would not be able to deliver in time, the West Bengal government has decided to invite global tenders for a project to enhance power output by 2012.

Power minister Mrinal Banerjee said the commissioning of the Santaldih Thermal Power Project, slated for March 2007, is already behind schedule because of delay in manufacture of the main plant package by BHEL. He said the government would not like to have a similar experience again.

Banerjee was talking to Newsline during a conference organised by the Indian Electrical and Electronic Equipment Manufacturers’ Association here.

However, BHEL Director (Power) K Ravi Kumar said although the company has an order book bulging with projects, it is still capable of executing projects in time. “The country has adopted an aggressive time frame for capacity addition but there are infrastructure lacunae to match such schedules,” he said.

“At most, delays caused by BHEL extend to three to four months. But lack of proper ports, roads and other infrastructure must also be taken into account for such delays,” he said.
Kumar said BHEL would apply for the project if global tenders are floated.

In 2006-07, BHEL had orders worth Rs 50,000 crore, of which Rs 28,000 crore was the power sector’s share. Out of this, West Bengal government’s orders alone are worth Rs 5,300 crore.

As part of the 10th Five Year Plan, West Bengal was supposed to add 2,670 MW to its output of power from thermal plants. Though the plan ended this March, the state is to start enhancing power generation from around July.

While BHEL has been responsible for supplying the 250 MW main plant package for the Santaldih project, Itochu of Japan has done it for the Bakreswar plant and a Chinese firm for the Sagardihi project.

Although BHEL’s orders for 2006-07 were worth Rs 50,000 crore, orders worth Rs 55,000 crore were still lying pending at the end of the year.

SEBI fiat: Fixed maturity plans, liquid, floating funds may have to act fast

The recent SEBI circular on exposure to short term bank deposits by mutual funds will require the asset management industry to rationalise its investments in such deposits, a measure that not all concerned can take immediately.

While there are no definite indications as to how much is exactly at stake, it is believed that liquid funds, floating rate funds and fixed maturity plans will be immediately impacted by the move initiated by the regulator.

At the heart of the matter is SEBI's definition of `short term' for parking of funds, `short term' will relate to a period not more than 91 days. Such a period, notes Mr A.P. Kurian, Chairman of Association of Mutual Funds in India, may be a bit short for a section of the industry, especially players, which are into longer term deposits.

Reliance open offer for TV Today

Reliance Capital is making an open offer for 20 per cent equity in TV Today, the company that runs a clutch of TV channels including Aaj Tak, Headlines Today and Tez.

The Reliance Anil Dhirubhai Ambani group (R-ADAG) company has offered to buy the shares at Rs 130.50 (approximately Rs 150 crore in all), a 7 per cent discount on today's market price of Rs 140.20

Reliance Capital has already increased it stake in the TV company from 12 to 15 per cent through secondary market operations. Under Securities and Exchange Board of India guidelines, any party that buys more than 15 per cent in a company has to make an open offer.

Confirming the development, an R-ADAG spokesperson said, "We see this as an investment and it would not affect the management or control of the company."

However, Anil Mehra, director, TV Today, said, "We have not heard that Reliance Capital has increased its stake from about 12 per cent to 15 per cent, so we cannot comment. They should make their intent clear. If it's only an investment, we have no problems." Living Media, which also owns the India Today group of publications, controls 55.69 per cent of the TV company.

TV Today has a market capitalisation of only Rs 812.87 crore, against Rs 3,729.94 crore for TV18 (which runs CNBC) and Rs 2,037 crore for NDTV. Reliance Capital has equity in a clutch of media and entertainment entities which include TV18, NDTV, GBN, Zee Telefilms and even the Deccan Chronicle.

It made its big entry in the entertainment sector by acquiring a majority stake in Adlabs, which makes films, and has a bevy of multiplexes across the country.

It also recently picked up a majority equity stake in Synergy Communications, a TV production house which makes the popular game show Kaun Banega Crorepati 3.

Telecom user base swells to 189.92 mn in Q3

Boom time for the communications continued non-stop with India adding 20.08 million wireless subscribers in the quarter ended December 2006, taking the gross telecom subscriber base to 189.92 million.

Ironically the growth has also brought in less average revenues for the operators with tariffs touching low levels.

The all India blended ARPU (Average Revenue Per User) per month for GSM services has declined by 6.2 per cent from Rs 337 in the previous quarter to Rs 316 in the December quarter.

The wireless market grew at 15.5 per cent in the quarter ending December 2006 by adding 20.08 million subscribers.

The gross subscriber base of the wire-line and wireless services together reached 189.92 million in the quarter ending December, 2006 from 170.02 million as on September 2006, showing an increase of 11.70 per cent, said the TRAI's quarterly performance indicator.

Internet subscribers base reached 85.47 lakhs in the quarter by registering a growth of 5.9 per cent and broadband subscriber base reached 20.19 lakhs in the quarter by registering a growth of 11.12 per cent.

Calper wants and gets more from India

The government may still have reservations over allowing pension funds in stock markets, but retirement savings worth a billion dollars of more than one million Americans have already been invested in Indian equities and this is likely to rise further this year.

California Public Employees’ Retirement System (Calpers), the largest pension fund in the US, has recognised India as one of the best performers among all the emerging markets in its investment policy report for 2007, approved by its board on Monday. Currently, Calpers has investments of about $1 billion in over 55 Indian stocks, which represents a whopping over 260% return since the purchase of these stocks.

Market experts feel Calpers would be looking to expand its exposure to Indian stock market, as it has given impressive returns ever since the world’s second-largest pension fund with assets worth around $240 billion began investing here in 2004. India has remained on Calpers’ permissible list of emerging markets for investments since its entry in 2004.

For 2007, Calpers board has decided it might invest in 20 emerging markets including Argentina, Brazil, India, Israel, Malaysia, South Korea, Taiwan, Thailand and Turkey. The decision was based on a report from its consultant Wilshire Associates, which reviewed country and financial market factors such as political stability, transparency and labour practices of 27 emerging markets, Calpers said in a statement.

According to the report, India and the Philippines made the biggest improvement in 2006, while a total of 10 markets improved their scores, two (Hungary and Poland) moved down the ranks and 15 kept their scores unchanged during the year.

Calpers, however, would not be permitted public equity investments in China, Colombia, Egypt, Pakistan, Russia, Venezuela, and Sri Lanka.

The pension fund, which provides retirement and health benefits to about 1.5 million state and local public employees and their families, had about $5.2 billion invested in emerging markets as of December 31, 2006.

While announcing its annual report last year, it had disclosed investments in 55 Indian companies at a book value of about $277 million, whose market value stood at over $353 million on June 30, 2006 itself.

It had recorded a total return of about 12% on its investments during the one-year period ended June 30, while marking the third straight year of double-digit returns.

The cumulative current market value of these investments today stand close to $860 million, while the fund has further expanded its investment portfolio since the end of its last accounting year, which ends in June. Indian companies in Calpers’ portfolio include blue-chips like Reliance Industries, Tata Steel, TCS, Tata Motors, SBI, Satyam, Reliance Energy, Reliance Communications, Maruti, Ranbaxy, M&M, Infosys, L&T, IPCL, ICICI Bank, HLL, HDFC Bank, Bharti Airtel, Bajaj Auto, Cipla and Dr Reddy’s Labs.

Other Indian companies where it has invested are ABB, Allahabad Bank, Arvind Mills, Asian Paints, Aventis Pharma, Bajaj Hindusthan, Bharat Forge, Biocon, Cadila, Gail, Gujarat Ambuja, HCL Tech, PNB and Sun Pharma.

Infosys a Safe bet for next 1 year - Nishit Vadhavkar

The Infosys results have been declared and the annual ritual of the next year guidance also has been given.

The guidance for the next year has been pegged at rs 82-83.

Infosys always beats its own guidance by a long margin. Taking a minimum 1 year view of the stock, at this time next year, a price target of Rs 3000 looks very realistic. That is assuming Infosys gives Fy09 guidance at 20 pc.

20 pc guidance for next year should not be too difficult for a company like Infosys which has moved into Consulting, its china operations have broken even.

Infosys may not be hot stock it once was, but as long as it continues delivering steady numbers, it should occupy a a sizeable chunk of one's portfolio.

I flex yesterday touched Rs 2360, a far cry from the open ofer price of Rs 2100. As I mentioned earlier, I flex is like opening a fixed deposit, there is virtually no down side.

In last week of December when recommended to to convert major part of portfolio into I-Flex it was trading at Rs 1880. A gain of 25 pc risk free.

The easy days of the bull market are over now. It is a stock pickers market. Over the next 1 year, its time to be very cautious.

I am still bearish on the markets and would wait at sidelines with i flex and cash and wait for the UP election results to come through. 1 more CRR hike seems to be on the anvil.

RBI would be happy with Rupee Appreciation

Leaving the rupee appreciate makes me feel that RBI would be happy to leave it appreciate. This is mainly because of the fact that imports would be cheaper and India imports more than it exports. There are other goods like Gold and Crude Oil which would be cheaper and impact inflation to reduce it.

At the same time, exports would be impacted and the biggest losers would be IT Sector. IT majors like TCS have been bracing for a weakening dollar. TCS on Monday announced that it has obtained a $1-billion hedge at a price range of 43.5-44.00. However, small exporters who do not have opportunity to hedge will be worst hit.

On Monday, Rupee touched a near ten year high of 41.75 against US Dollar.

Sundeep Bhandari, regional head-global markets, South Asia, Standard Chartered Bank said: “The absence of sustained intervention from the Reserve Bank of India in the past few weeks has provided the market with the much-needed direction. The dollar will remain weaker in the near-term, while the UK pound and the euro are expected to start weakening against the greenback only in the medium term.”

Report says that within Asia, the rupee and the Chinese yuan are expected to outperform, while others such as the Singapore dollar, the Taiwan dollar and the Korean won may not be doing so as they are not dealing with large forex inflows.

Rupee below 42 mark vs Dollar

The rupee crossed the 42 mark against the dollar on Monday on the back of strong capital inflows even as Finance Minister P. Chidambaram said that the Indian currency was competitive despite the sharp appreciation this year.

The rupee rose by 1.4% to 41.9050 against the dollar as of the 5 p.m. close in Mumbai. The Indian currency rose as high as 41.85 today, the strongest since June 1998. On Friday, the rupee closed at 42.51/52 per dollar -- its strongest since April 6, 1999.

The partially-convertible currency is one of the top 10 gainers among the world's most-actively traded currencies this year, rising 5.4%, spurred partly by strong capital inflows and partly due to liquidity crunch.

Exporters continued to sell dollars, while importers stayed on the sidelines hoping for cheaper dollar/rupee rates. Meanwhile, the central bank was virtually absent in the foreign exchange market today.

Although importers may enter at the current levels a few of them will prefer to await for better rates. The Reserve Bank of India (RBI) may also intervene and absorb dollars, to curb the rapid rise in the rupee.

"The rupee appreciation is because of the large inflow of capital," Chidambaram said. "The rupee is still very competitive relative to other currencies."

5 Trillion Equity Market Is in India's Reach: Andy Mukherjee

The next few months will set the tone for the growth of Indian financial markets in years to come.

If India can make a successful beginning with the proposed modernization of its pension industry, the market value of domestic stocks may well exceed $5 trillion in 2020, higher than that of Japan's equities today.

That prediction is based on back-of-the-envelope calculations, taking into account the impact that old-age savings appear to have had on stock markets elsewhere in the world.

According to Helene Poirson, an economist at the International Monetary Fund, equity markets in the Group of Seven industrialized nations grew the equivalent of 40 percentage points of gross domestic product from 1980 to 1998, led by an increase in pension assets.

Chile, too, witnessed a similar strong correlation between retirement savings and market value.

There's no reason the script should play out any differently in India. The size of the retirement market as a ratio of GDP is only a 10th as big as in Singapore, Japan and Malaysia, and a quarter as large as in Hong Kong, according to HSBC Holdings Plc.

Assuming that India's $822 billion economy grows 8 percent a year with 5 percent inflation, a $5 trillion stock-market should be within India's reach in slightly more than a decade; as much as a fifth of it may be associated with larger flows of retirement funds into equities.

In July, India will take a small yet significant step in this direction.

Political Impasse

The task of ensuring old-age security for all federal government employees who joined after January 2004 will be handed over to three asset-management companies.

The managers will be able to invest 5 percent of the money in equities and 10 percent in equity-linked mutual funds, D. Swarup, chairman of India's Pension Fund Regulatory and Development Authority, said in New Delhi last week.

The political consensus for a fuller liberalization of the pension industry still eludes.

The legislation that will see all workers building nest eggs through 401(k)-type personal, portable accounts has been stuck in parliament for more than two years because of staunch opposition from trade unions and the government's Marxist backers. No one expects the impasse to end soon.

That's because the left-wing parties and unions want every civil servant to continue to receive a guaranteed pension equal to half of their last-drawn pay. Never mind that these ``defined- benefit'' plans have been shown to be veritable time bombs for fiscal sustainability.

By 2010, the annual budgetary outlay on government pensions in India will amount to 1.8 percent of GDP, or double what the government spends on health care.

Baby Step

So why should investors care about 500,000 ``new'' public servants migrating to an actively managed ``defined- contribution'' retirement plan from July?

That isn't exactly critical mass in a country where the government alone has 17 million employees and the workforce is 400-million strong.

Besides, to begin with, pension-fund managers will be selected from within the state-run financial industry. Limited competition raises the specter of high fund-management fees and diminished returns for retirees.

Yet, for all its timidity, it's a step in the right direction. Ajay Shah, a former consultant to the Indian Finance Ministry, says India should move to a partially deregulated pension management industry within the ambit of the existing regulatory framework, rather than wait for the passage of a compromised pension-fund bill.

Surging Demand

Surveys have pointed to strong demand in India for long-term retirement products.

Public servants who joined before 1984 have their guaranteed pensions. The hundreds of millions of workers toiling in the informal or unorganized economy have nothing at all.

Stuck in between are the 40 million employees working in the non-state formal economy whose mandatory savings go to the state- run Employment Provident Fund, a defined-contribution plan that shuns equity and invests most of its money in sedate ``special'' government securities. It's simply not a vehicle for providing meaningful, old-age security to anyone.

As income levels in India rise, people will increasingly look for investment options that marry present-day tax savings with serious long-term wealth creation. The urban affluent should be the logical target in expanding the scope of the new pension plan, which aims to offer -- to those who have the appetite for risk -- a maximum of 50 percent exposure to stocks.

Financial Markets

What will all this mean for Indian equities?

By the late 1990s, much of the regulatory work in improving the efficiency and integrity of the stock market in India was complete. Yet, ``it is only since 2003, when the GDP started growing at its current pace, that the large global investors became interested and poured money into it,'' says a new report by Standard & Poor's.

Growing overseas interest is only part of the equation. What's still missing from the Indian equity market, as UTI Mutual Fund's chief investment officer, A.K. Sridhar, told me late last year, is long-term domestic money. That's where retirement funds will play a big role.

The quest for old-age security has the power to deepen Indian equity markets. How the government goes about opening the industry in the next few months and years will be crucial.

Market Buzz from a newsletter

As the mid caps are in demand informed sources are picking up low priced scrips like:

Shyam Star Gem (BSE: 526365) Rs.36.80 and International Diamond Services (BSE: 530193. Rs.5.94)

Solix Technology (BSE: 501421) Rs.3.88, The volumes are very low but can improve with time.

Marksans Pharma (NSE/BSE: 524404 Rs.66.65) It has fallen from a high of Rs.302 to 100 when it reported 50% less profit for Dec 06.In the recent market fall the shares fell very badly to Rs.58 and now the recovery has begun.

Noble Explochem (BSE: 506991. Rs.13.30). It has closed down its explosive division. It has huge surrounding land which was earlier needed as a protective device as the co was in explosives. Land in Nagpur is very lucrative.

Some thing to think over: Newly listed ICRA clocked a massive 3.07 crore shares together on BSE and NSE, That is almost 11.8 times the total shares offered through the public offer. Global rating agency, Moody’s, is the single-largest shareholder in ICRA. For April-December (9-month) 2007, ICRA reported a net profit of Rs 13.59 crore on revenue of Rs 49.54 crore. The equity capital of the company is Rs 10 crore and the face value per share is Rs 10. Currently the share looks fully valued .IFCI who has a huge stake in ICRA is a better choice’

Multiplex Stocks in News

PYRAMID SAI MIRA THEATERS: (NSE/BSE: 532791 Rs.331.65. Recent high Rs.487):

Target Rs.400. What is the latest Buzz in this counter that is moving it up?

PSTL’s strategy is to distribute digital films simultaneously in a large number of cinema halls. This will bring in maximum revenues for the company. Pyramid Saimira Theatre (PSTL) surged 10% to Rs 331.65, after the company announced RM 10 million investments plans to digitalize about 50 theatre screens in Malaysia. The company also announced that it would be producing its first Tamil film in Malaysia, which will be released internationally

SHREE ASHTAVINAYAKA CINE

(BSE: 532793 Rs.173.85.) As the chart indicates It has come down sharply from Rs. 383 that is the top it reached in Feb 07 to Rs.140 in March 07.The IPO was issued at Rs.160.):

Short term target Rs.250. The company is engaged in production of full-length films and has subsequently entered film distribution, its stronghold being the Mumbai territory, which also includes Gujarat, Western Maharashtra and Northern Karnataka. Territory. It has produced films like Golmal, Bhagam Bhag, Jaane Man, Phir Hera Pheri Etc. The co is about to announce its plans for a new film. Hence accumulation is going on.

Cinemax (NSE/BSE: 532807)
If the craze to chase the multiplexes continues the next best bet will be Cinemax. When the shares got listed it opened around a high of Rs.204. This share was running along with all the new listing which were enjoying huge following. Then came the inquiry into whether there is any rigging. Then came the fall that bought down Cinemax to a low of Rs.104 in March 07

After a long break a bull grip is now building up in Cinemax (NSE/BSE: 532807) It has started recovering from its low of its low of Rs.104 and has been on the move and touched Rs.133.55 on Friday. Current confidence for the operators to have come from the news below:

ICICI Prudential Life Insurance Company has mopped up additional shares of multiplex operator Cinemax India. It acquired 1.94 lakh shares of Cinemax through open market purchases on 28 March 2007. It now holds 14.31 lakh shares in Cinemax which is a 5.11% stake

Review on IFCI

SEVEN TO EIGHT FOREIGN INVESTORS INTERSTED IN TAKING 51% STAKE IN IFCI :( (NSE/BSE: 500106 .Rs.38)

Overseas funds and institutions, as well as domestic entities, are showing heightened buying interest in IFCI so as to come on board as a "strategic investor" in the term-lending institution.

The prospect of acquiring up to 51 per cent stake along with management rights in the company might be an important factor for the surge in interest, said sources privy to the mandate given by IFCI to the Advisor, Ernst & Young.

Last month, IFCI had appointed Ernst &Young to advise it on the induction of a strategic investor in the company. Although the expressions of interest (EoIs) are yet to be invited, six domestic and 7-8 foreign institutions and funds have already sounded out Ernst & Young that they are keen to participate in the EoI and information memorandum process.

To augment its resources, IFCI has, during calendar 2007, sold seven per cent stake in the NSE and eight per cent stake in ICRA in the recent public issue and holding the rest of the shares. With ICRA doing so well in the market IFCI which is one of the major share holders of ICRA will get a big boost to its value What is more exciting is on Friday there were strong rumours that IFCI plans to sell off its TCS holding as well. Consider IFCI a dark horse priced very low.

Commentary from a Newsletter

GLOBAL MARKETS ARE ON NEW HIGH OUR MARKETS AT THREE MONTHS LOW:

The Friday’s rise of 270 points after the earlier 300 points rise comes with the Infosys results and guidance. The curtain raiser for the Q4 results to follow seems exciting. When every one was crying wolf and unable to see any reason for the market to rise and predicting that the markets can only fall are now wondering what to say.

It was Albert Einstein who said that reality is the greatest illusion in this world. This is applicable to our market as well. This made him take interest in the Indian concept of Maya. When the RBI increased the rate of interest every analysts said that sectors like banking, auto and home loans, construction and real estate will get affected badly. Yes it was the truth at that time. All the shares belonging to these sectors declined very sharply. Then what happened? Many found these shares unusually low priced and attractive. Then buying bought up the whole lot of shares to back to their earlier levels. The moral is not to sell in panic on hearing bad news. RBI has hiked the interest only twice whereas in the USA the interest rates have been hiked over 14 times. That does not mean every thing is over in the USA.

WHAT ARE THE CURRENT BULLISH SIGNALS?

As mentioned earlier, the Indian markets have under performed the world markets. Most of the international markets hit their all time high in the last three months. BSE Sensex is at the bottom of three months low. When the markets have already gone down there are better chances for our markets recovering.

Also look at the factors responsible for bringing the markets down. Hike in the interest rates, some negative provisions in the budget, fear of market friendly Congress loosing the UP poll and run away inflation are some reasons that have kept the markets lower in India. This Friday for the first time the date on inflation announced show that the rate of inflation has come down for the first time below 6% to 5.74. RBI wants the inflation to stay around 5%. If this can be achieved further rise in interest may not happen.

For the last three to four sessions the FII have turned buyers. Their buying is at an average of Rs. 250 to 400 Cr against their normal placement of Rs.1000 Cr. a day. Any time expect the further allocation to follow and that can change the scenario. Whatever it is our markets still have strength and refuses to go below certain levels.

As the market has recovered some of its post budget loses there is a likelihood of another fall for some reason. Gather some strength to buy when the next fall comes. This is becoming the in thing in the market today.

Media industry turns hot job market

Media and entertainment industry is likely to offer maximum employment opportunities by 2013, says an official report.

According to a statistical report presented by the department of labour, media industry would experience an annual growth of 18 per cent and employment growth of 27 per cent followed by automobile 15.6 per cent and 20.8 per cent respectively.

Indian media, which grew at 20 percent in 2006, is held in high esteem in the world for its content and analytical ability. However, in order to sustain the credibility the industry has to shift its focus from quintessential reporting to something new so as to take a lead in the developing markets, say experts.

The study predicts about 760 million youth are likely to enter the job market by 2020. Other sectors like manufacturing and capital-intensive firms would have to contribute enormously to occupy the new entrants.

The IT-ITES would have a 22 per cent annual industry growth with employment growth of 19 per cent. The retail services which provided maximum employment of 25.8 per cent during 1999-2000 would fall drastically to a mere eight per cent during 2006-2013.

Large Deal Pros and Cons in Indian IT Services Context

As the President of commercial and healthcare businesses at Satyam Computer Services, Ram Mynampati provides business leadership in market segments such as BFSI (banking, financial services and insurance) and healthcare. In addition, he provides executive leadership to Satyam's relationship with GE, Satyam's largest client. Mynampati is also responsible for the retail, transportation and US Government vertical business units. He also spearheads Satyam's emerging business in Canada. In a chat with eWorld, he talks about Satyam's core business:

What constitutes a large deal for Satyam Computer Services and what is it that you look for in a large deal? Are large deals likely to be margin-accretive?

The minimum size associated with a large deal is $50 million (Rs 225 crore). The size and period varies but what categorises it as a large deal is the guaranteed and sustained revenues associated with it. I don't think large deals can always be margin-accretive to start with.

They might be margin-neutral at times, but not be margin-dilutive. This implies that for a fixed period we are guaranteed a certain flow of revenue, which further means that the cost associated with having to sell is not there. Second, large deals provide us with the freedom to mix and match competencies, resources and locations to meet client expectations.

As long as we see the predictability of revenues and opportunity to manage margins selectively, large deals will be a good fit.

In today's scenario, deal sizes are really getting out of hand. When do you know that you are not being opportunistic or tactical in choosing deals?

We are only six months old when it comes to large deals and only 5 per cent of our revenues come from them. First of all, we need to master the art of delivery of a large deal. I can grow large deals by 50 per cent, as these are only one-time fixes. If I get a large five-year deal, that client is not going to give a second five-year deal immediately. It's a one-time effort. As long as volumes are there and we are able to manage at least a margin neutral scenario, percentages wouldn't worry us much.

What are the other levers that will work well for you in the coming quarters? Apart from cost optimisation, what are the other levers that can enhance your margins?

I believe that from a margin perspective, the total cost of delivery can be managed much more efficiently than we presently do. Our first endeavour is to bring down the total cost of delivery of projects. Optimising the resources deployed in a project is a very important lever as it brings down the total cost of delivery. We have to try cutting costs and that can mean moving to tier two cities or relocating from the US to India.

What proportion of your revenues will come from new service offerings, apart from enterprise solutions, in which you have been a traditional leader?

Engineering services outsourcing (ESO) and infrastructure management services (IMS) contribute about 15 per cent to our revenues. We are looking at scaling that up substantially in the next 2-3 quarters (by 2007-end). ESO, in particular, looks very potent, as we have already invested in some interesting competencies.

Which verticals do you think will drive the next wave of growth for Satyam?

While verticals such as banking, financial services and insurance and manufacturing will continue to do well, the pharmaceutical sector is surely something to watch out for. In addition, retail and consumer durables have a lot of scope. Moreover, you can expect above average kind of growth from energy and utilities.

What strategy do you follow when it comes to acquiring companies in overseas markets?

For Satyam, acquisitions need to be strategic and complementary, otherwise they don't mean much. Acquisitions should help us to bring multiple competencies to the existing domains. We would never acquire companies to create a new market. All our previous acquisitions and the ones that we will be making in future are going to extend our value chain and not create new service offerings. We will not acquire product companies or companies that operate in distant markets such as Chile or Brazil just to anchor into these markets.

Downgrades continue for Indian Market

The Indian stock market, which was not so long ago celebrated by investors as the best thing to have happened to the securities world, seems to have all of a sudden become anything but desirable. Contrary to the prevailing perception that economy remains fundamentally strong here and financial markets are more mature than those of other emerging nations, global financial giant Citigroup has ranked India as the second least attractive among all Asia-Pacific stock markets.

Joining the ranks with Citigroup, another leading global brokerage house Bear Stearns as well as a leading overseas fund house, Aberdeen Investment Trust, have labelled Indian stocks as "expensive." "After February's sharp fall (a 1,329-point plunge including three one-day falls of 300-500 points), market conditions in March remained choppy," Citigroup said in its latest Asia-Pacific radar screen report, which tracks market attractiveness across the region. While, Hong Kong, Singapore and Australia took the top three spots on the Asia-Pacific list, followed by Malaysia at the fourth position (down from second position), Citigroup said that India was among the bottom half of the ladder along with New Zealand, and Taiwan.

Even Thailand moved sharply up the ladder and secured a safe position ahead of India on the back of improved momentum and continuing low valuations. India was ranked ahead of New Zealand alone in the list. Investor interest helps drive the stock price and valuation higher, it continued to edge closer to unattractive quadrant, where investors start recognising that valuations are stretched and begin selling. Echoing the fears that foreign investors may not find Indian stocks a hot proposition any longer, a number of investment banking and brokerage firms like Bear Stearns have already begun cutting their outlook on India, due to "expensive" valuations as compared to the earnings prospects.

Analysts at Bear Stearns, which has just downgraded its rating on Indian market from "market weight" to "underweight", said in a research note, "diminished investor appetite and poor relative performance presumably reflects Indian stocks' over-owned status and high valuations." India's benchmark index, Sensex has fallen 3.2 per cent since the beginning of this fiscal, while Malaysia's Kuala Lumpur composite index has surged over 15 per cent and there has been over 5 per cent gain in the Morgan Stanley capital international Asia Pacific index, Bear Stearns' Michael Kurtz and Joey Lam Lam said.

Fidelity brings International investment expertise to India

Fidelity Fund Management is bringing its world renowned expertise in international investment to the Indian market. Investors will now have the opportunity to add an element of geographical diversification to their portfolios with a fund house that has a strong track record in investing globally.

The Fidelity International Opportunities Fund is Fidelity’s first international offering in India and other global products will be introduced once guidelines are issued under the recently announced $50,000 remittance scheme. This new fund is an open ended equity growth scheme that seeks to invest 65% in Indian equities and around 35% in international equities, with a focus on Asia, to generate long term capital appreciation.

GSM user base crosses six million mark for March 2007

The country's GSM-based mobile telephone operators added a record 6.1mn new subscribers in March, taking their total user base to 121.4mn, data released by the Cellular Operators' Association of India (COAI) shows.

At the end of February, total GSM customers stood at 115.3mn.

The March increase was the highest-ever monthly rise and was higher than the 4.9mn new user additions in February, the body representing the GSM service providers said in a statement released late on Wednesday.

Bharti Airtel added 1.7mn customers in March, taking its total to 37.14mn. BSNL added 1.98mn new users, taking its user base to 27.43mn. Hutchison Essar added 1.1mn new customers, taking its total to 26.44mn.

Idea Cellular added only 370,551 subscribers in March as against 568,051 mobile phone users added in February, boosting its user base to 14.01mn. MTNL added 167,992 mobile phone users to take its subscriber base at the end of March to 2.75mn.

Inflation falls below 6 %

Finally, there is some good news on inflation which should cheer up the Government and the Reserve Bank of India (RBI) ahead of the annual monetary and credit policy announcement on April 24.

India's inflation, based on the Wholesale Price Index (WPI), tumbled to 5.74% in the week ended March 31 as against 6.39% in the previous week, the Commerce & Industry Ministry said on Friday.

The final headline inflation reading for FY07, which is subject to a revision, is slightly above the RBI's annual target range of 5-5.5%. What's also heartening is that inflation was much below the average expectations of around 5.8%.

The annual inflation rate was 3.98% during the corresponding week of the previous year.

In the past few months, the Government has unleashed a slew of monetary tightening steps and slashed import duties on a number of essential products to reign in spiraling prices. The latest data should take some pressure of the policy makers though there are doubts whether the inflation will remain under 6% for long.

Jet-Sahara Deal a Lose-Lose Deal by Nishit Vadhavkar

We have heard of a win-win deal but this should surely go down in Indian Aviation history as a lose-lose deal.

Lets look at it from Sahara point of view. Last yr they were pocketing around 2300 crores and were gonna live happily ever after. Now they get around 1400 crores, lot of heart ache, and had to run an airline which made losses for a year.

Jet claims 40 pc discount to the price offered last year. But they will have to bear some of Sahara's losses, interest lost on 1500 cr in escrow account, lawyers fees so actually they have to shelve out Rs 1950 crores.

For 1950 cr what are they getting?

Rights to fly to international routes which they already. 24 aircrafts which are on lease anyway and aircraft type is different from jet, one is boeing other is airbus. they get pilots who can easily fly away to their competitors as they did last year.

They do they get important parking slots in delhi and mumbai but thats not worth the price paid. From naresh goyal point of view, if the arbitration panel had voted against him, he would have to shelve out around 1000 crores and got nothing. by paying double at least he is getting something.

The people to gain are Kingfisher and Air Deccan, for them one rival less in the skies. Air Sahara was undercutting everyone in the business. Jet is unlikely to do the same. The gleeful reactions say it all.

Gopinath of Air Deccan says Jet buying Sahara is like marrying a girl because you have lived with her for a while. Vijay Mallya wishes all the best to jet with a loud guffaw. Air Deccan remains my top stock to buy and the current merger is just one bonus for it.

Wait for Deccan to come to rs 75 and pick up huge quantities. 3 years from now i expect it to quote at rs 500 nothing less.

What to expect from IT Service Leader - Infosys

The first off the pack was iGate which said that their operating profit increased four fold due to better operating margins management and because they could achieve a rate above their goal of 15 %.

iGATE reported a net profit of Rs 22.6 crore on revenue of Rs 210.1 crore for quarter-ended March 2007 compared with a net of Rs 4.7 crore on revenue of Rs 210.8 crore in the preceding December quarter.

As far as company specific outlook is concerned, Phaneesh Murthy said "We are concerned about the mortgage meltdown as our revenues from loan fulfilment process have been adversely impacted. We expect the sluggishness to continue in the first quarter". But at the same time he agreed that CIO's world over are increasingly looking at offshore considering the fact that it saves money for the CEO's. So, the demand is going to be robust but specific instances like Mortgage meltdown would impact profitability to some extent.

Now, going to Mastek, it was an erractic performance as usual for the company. Mastek could increase the component of US Billing this quarter and Mastek could increase the revenue due to new customer billing in UK and Asia.

Total income for the quarter rose to Rs 214.79 crore from Rs 179.47 crore for the quarter ended March 31, 2006, the company said in a communiqué to the BSE. The company, on a stand-alone basis, has posted a net profit of Rs 57.33 crore for the third quarter as against Rs 12.29 crore for the previous corresponding quarter. Total income increased to Rs 134.73 crore from Rs 102.26 crore.

There was a one time profit on sale of a JV with Deloitte Consulting. But otherwise, the result was nothing to boost about.

Now, what to expect from Infosys -

Two factors which weight heavily on the guidance to be given by Infosys are Rupee Appreciation and Taxation.

Other important factor which has been clarified by many top rung IT Service providers and also from Cognizant's guidance for Calendar Year 2007 (Congnizant reports from Jan to Dec every year), there is a feeling that Infosys would be able to increase the volume and compromise a bit on margin front.

This means that the revenue guidance would be robust but the profit guidance would be affected by the above factors and the demand supply glut of the IT Employees in India which would necessitate Infosys to provide a better hike this year.

Overall, I feel the guidance should look better than what everone is expecting. Infosys giving a revenue growth guidance of more than 35 % and profit growth of more than 30 % would be viewed as a good sign for the overall IT Sector.

Reliance Retail off vertical limits

Call it the Wal-Mart effect. In the first gear shift since its launch last year, Reliance Retail is overhauling its management structure and changing operational heads.

From an industry vertical structure, the company has decided to move towards a store format-based structure with effect from May 1 to expedite the rollout of its ambitious retail venture and make it more accountable with separate profit and loss accounts.

Senior operational and functional chiefs such as Raghu Pillai (head of store operations), Gunender Kapur (head of Reliance Fresh), Sanjeev Asthana (head of agri) and Bijay Sahoo (head of HR) are likely to be moved up to the newly-created central leadership team, which will supervise the retail activities of Reliance Retail.

A new set of operation heads will manage the various retail formats. Bhavdeep Singh will take over as head of Reliance Fresh from Mr Kapur while S Radhakrishna will head hypermarkets, likely to be named Reliance Hyper Marts. Ajay Baijal will head Reliance Digital, the consumer electronics and IT store. The heads of other speciality chains will be decided at the time of their launch.

Another critical function of the retail industry—human resources—is also changing hands with Uday Bhende taking over as head from Mr Sahoo.

All format heads will report directly to Reliance Industries chairman and managing director Mukesh Ambani, said a source.

Mr Singh has been hired recently from the US, where he was working in a retail chain while Mr Bhende has been roped in from Siemens. Mr Radhakrishna joined Reliance Retail from retail chain Spencer’s last year and Mr Baijal was poached from Reliance Communications as a replacement for Rajeev Karwal.

Reliance’s new structure is a clear departure from its earlier one, which was managed as verticals, each under a CEO, with the front-end divorced from the back-end. “The structure was centralised and the merchandise and sourcing teams were independent from the actual retail business. That may end now,’’ said a source.

Veteran Reliance watchers compare this considerable change in the management structure to a similar exercise undertaken by the then Mukesh Ambani-controlled Reliance Infocomm, after the failure of the Dhirubhai Ambani Pioneer scheme.

Despite repeated attempts, the Reliance Retail spokesperson could not be contacted. While some professionals in Reliance Retail’s central leadership team are likely to play an active role, there will be some who will get sidelined in the process. While it’s not clear as to what prompted the development, analysts say growing urgency to usher in effective supply-chain co-ordination could have triggered the move.

“With each vertical working across more than one format, the company may have foreseen the problems it would lead to as the retail venture rolls out nationally,” said a source close to Reliance Retail.

Some call it a “hit-and-trial” approach to arrive at the right combination so as to gear up for the mega competition when the likes of Wal-Mart and Tesco enter the market.

Reliance Fresh just opened its 111th outlet, and the first Reliance hypermarket is likely to be set up in Ahmedabad next month while the first digital store is likely to open in Delhi on April 19.