India could allow commercial coal mining by foreign companies

Mr. Vikram Merchant, Manager India Representative office Rio Tinto Diamonds with Brand Ambassador Yaami Gautam at Nazraana Season Awards 2014

NEW DELHI, Oct 22  - India could allow commercial coal mining by foreign companies if they set up units in the country, opening the door for global giants like Rio Tinto to access the world's fifth-largest coal reserves, a source familiar with the matter said.

Prime Minister Narendra Modi's decision to open commercial coal mining to private players is a key step towards bringing order to the country's chaotic power industry and ending the chronic blackouts that impede its economic rise.

Nearly a quarter of a century after India embraced economic liberalisation, many businesses still rely on costly back-up generators for round-the-clock power and a third of its 1.2 billion people are still not connected to the grid.

As of now, only Indian power, steel and cement companies can mine coal for their own consumption. Commercial mining is dominated by state-owned Coal India Ltd.

But the government now plans to allow companies like Rio Tinto India to mine coal commercially after it completes the auction of 74 coalfields for the exclusive consumption of Indian companies' power, cement and steel plants, said the source, who did not want to be identified as he is not authorised to speak to the media.

In a 27-page executive order posted on the Coal Ministry's website on Wednesday, the government said any firm incorporated in India may be allowed to mine coal for their own consumption or sale, ending a 42-year-old ban. The document did not make any direct reference to allowing foreign firms.

Rio Tinto India Managing Director Nik Senapati declined to comment.

Other foreign players that may show interest in India are BHP Billiton and U.S. firm Peabody.

A Coal India official said it would be natural for the government to allow deep-pocketed foreign companies to mine coal, given the need to invest heavily and quickly raise output.

MODI'S REFORMS

Opening up the industry would ultimately boost production of a raw material that generates three-fifths of India's power supply, and it will pile pressure on Coal India to produce more.

"This is a first step but a very important one," said Manish Aggarwal, head of KPMG's energy and natural resources practice in India.

"What the government is really saying is that we will focus on domestic coal and on renewables to meet our energy needs... India needs the latest technology, the latest equipment and international expertise if it is to raise coal production."

As chief minister of Gujarat state before becoming prime minister, Modi prided himself on supplying uninterrupted electricity, and repeating that feat at a national level is one of his priorities.

It will not be an easy task.

India sits on the world's fifth-largest reserves, and yet Coal India, which has enjoyed a monopoly on commercial mining, has consistently failed to meet the rising demand of an economy that has grown rapidly since the reforms of the 1990s.

Instead, wretched inefficiency has turned India into the world's third-largest importer of coal.

Last month, the Supreme Court cancelled more than 200 coal block licences it ruled were allocated illegally in a case that has become emblematic of the dysfunctional nature of the industry.

The government will re-auction the coalfields to private firms within four months. For the first time, revenue from the concessions will be paid to the states where the blocks are located, creating an incentive to speed up project approvals.

"Modi wants to include incentives ... by giving the opportunity to coal-rich states to earn royalties," said a retired bureaucrat who helped Modi tackle power shortages in Gujarat.

NEXT STEPS

Boosting the supply of energy is only half the problem, industry experts say, and Modi is expected to now push individual states to reform the rickety distribution model.

India's installed energy generation - more than half of it powered by coal - has risen 20 percent in the last three years, and the peak power deficit fell to 5.1 percent in June from 9 percent in 2012, according to government data.

But cash-strapped distributors, their tariffs capped and facing rampant power theft, have invested little in new transmission lines. This has meant that, for all the extra power generated, not enough is delivered to consumers.

"This is not a complete solution... Fixing the transmission and distribution side is equally critical," said Aggarwal. (Additional reporting by Tommy Wilkes; Editing by Douglas Busvine and Ryan Woo).

Courtesy: The Reuters

PE investors bullish on organised jewellery chains

[Editor: Gitanjali Gems Ltd was already recommended around Rs.63, but those who are not holding the scrip can buy it at the CMP of Rs.58.15, for a target of Rs.71-72, in the short term. Recently, there were some media reports that, Imports of cut and polished diamonds trebled in August, 2014 on concerns on export markets. Traders are importing more for local sales if export demand doesn't match up. Meanwhile, the Diamond ornaments has become costlier by at least five per cent this festive season, on Indian diamantaires’ decision to pass on the rise in prices of rough diamonds (‘roughs’ in trade parlance) to consumers. Gold sales in India during the festivals of Diwali and Dhanteras celebrated this week rose by about a fifth, a senior official at the country's biggest gold trade group said on Friday]

On October 20, US private equity (PE) major Warburg Pincus announced its Rs 1,200-crore investment in Kerala-based Kalyan Jewellers for an undisclosed stake. This transaction lifted eyebrows, because the PE firm had reported a considerable loss in the same space in its previous investment.

Warburg competed with its peers Temasek, Apax Partners, Blackstone, Bain Capital and TPG Capital to pick up a stake in Kalyan Jewellers. Experts say these investors' interest point to the potential of branded retail jewellery chains in the country.

The domestic gems and jewellery sector had a market size of Rs 2.51 lakh crore in 2013, with the potential to touch Rs 5-5.3 lakh crore by 2018, according to a Ficci-AT Kearney report. Gold jewellery accounts for 30 per cent of this market.

About 80 per cent of the jewellery market consists of local and regional players. Such players, too, have been growing at 8-10 per cent over the past five years, according to industry experts. The domestic retail jewellery segment has seen a consistent year-on-year growth of 15-20 per cent and the sector will continue to expand at 20 per cent in the next few years, experts point out. It is this growth that has attracted PE firms.

Another factor attracting PE majors to the sector has been the gradual shift in jewellery retailing from the traditional way of retailing to the modern, organised way of marketing - both online and offline.

Before the Warburg Pincus-Kalyan deal, SAIF Partners had invested $13.1 million in Kolkata-based jewellery firm Senco Gold, early this month. In September, Ratan Tata, chairman emeritus of Tata Sons, invested an undisclosed amount in BlueStone.com, which in March had received about $10 million from Kalaari Capital, Accel India and Saama Capital.

In 2013, Progruss Investments invested $24.82 million in Shree Ganesh Jewellery and in 2012, Brand Capital invested in Gitanjali Brands. Since 2012, Caratlane.com has raised about $20 million from Tiger Global. Earlier, Credit Suisse PE Asia had made a 74 per cent return on its investment in Shree Ganesh Jewellery by making a part-exit during its IPO in 2010. Gitanjali Gems also raised some PE funding.

A media report quoted Vani Kola, managing director of Kalaari Capital, one of the PE investors in BlueStone.com, an online jeweller, saying the branded jewellery has tremendous growth potential. Consumers will continue to look for great designs and trust in quality. PE players will be interested in online and offline jewellers. "I think there is tremendous opportunity for both," she said.

"This investment by Warburg Pincus reinforces the trust in the Kalyan brand name and will act as a fillip to the entire industry," says S Subramanian, managing director at Axis Capital, which acted as a financial adviser to Kalyan.

"Warburg Pincus' investment in Kalyan Jewellers is the largest private equity investment into the jewellery segment in India, and is an acknowledgment of the company's highly-talented team, its pioneering role within the industry, and its commitment to the highest levels of customer service. We are excited to partner with the team at Kalyan Jewellers as they continue to grow the business going forward," Warburg Pincus said in a statement.

Currently, organised jewellery retailers in India (national and regional) command about 20 per cent share of the Rs 2.5-lakh crore domestic gems and jewellery market, according to global consulting firm AT Kearney. Further, rating firm ICRA expects the domestic gold jewellery industry to record a robust growth of about 15 per cent over the medium- to long-term, aided by the growing penetration of the organised sector.

India's organised jewellery market accounts for a mere eight per cent of the total market worth $45 billion. Leading organised gold retailers include Titan, Kalyan Jewellers, Tribhovandas Bhimji Zaveri, PC Jeweller and Gitanjali Gems.

Courtesy: The Business Standard

JAYPEE SPORTS INTERNATIONAL LIMITED (JSIL)

Photo: Land of Krishna

Jaypee Sports International Limited (JSIL) was incorporated on 20th October, 2007. It was allotted around 1100 Ha. of land for development of Special Development Zone (SDZ) with sports as a core activity by Yamuna Expressway Industrial Development Authority (YEA). This area is inclusive of 100 Ha of land to be used for Abadi Development. Its core activities are Motor Race Track, suitable for Holding Formula One race and setting up a Cricket stadium of International Standard to accommodate above 1,00,000 spectators and others.

The Motor Race Track known as Buddh International Circuit (BIC) was completed well in time and JSIL successfully hosted the three Indian Grand Prix held in October, 2011, October, 2012 & October, 2013. The success of the event was acknowledged by winning of many awards and accolades.

JSIL is trying its best to generate revenue by placing Buddh International Circuit (BIC) as one stop destination for various games, launching promotional activities like motor cars, bikes and other products. JSIL has also made significant progress in development of non core area planned for group housing, plots, multi storey flats, commercial area, institutional area, roads, open space and other social activities.

Jaiprakash Associates Merger 

[Editor: Recently, there were media reports, that Aditya Birla group firm Ultratech Cement is believed to be looking at possible acquisition of Jaypee Group's three cement plants in Madhya Pradesh in a deal that couldbe worth about Rs.5,500-6,000 crore. Meanwile, the Economic Times reported on 21st October, 2014, that Eighty-eight infrastructure and industrial projects, involving investment of nearly Rs 3 lakh crore - which is more than the Centre's budgeted income tax collections for the current financial year - have become operational over the past few months. Therefore, the share of Jaiprakash Associates Ltd, which is now trading at around Rs.30.10, is one of the best scrips to be bought, as of  now]

New Delhi, October 24, 2014: Jaiprakash Associates' proposed merger of subsidiary Jaypee Sports International Ltd with itself has got approved from National Stock Exchange (NSE).

Jaypee Sports International Ltd (JPSIL) set up the motor race track Buddh International Circuit at Greater Noida in Uttar Pradesh. Formula One Grand Prix in 2011, 2012 and 2013 were held there.

At present, JPSIL is a wholly-owned subsidiary of the diversified Jaiprakash Associates group.

The amalgamation is aimed at having "greater synergies" between the two companies by consolidating the businesses.

The exchange conveyed in a communication to Jaiprakash Associates on October 8 that it has "no objection" to the deal. This would be valid for six months.

"The validity of this 'Observation Letter' shall be six months from October 8, 2014, within which the scheme shall be submitted to the High Court," the bourse said.

As per the draft scheme, the merger would result in focused management attention, improvement in operational efficiency and business prospects as well as on Jaiprakash Associates' profitability, among others.

All these factors are likely to improve the valuation of Jaiprakash Associates' shares and benefit the shareholders, it added.

According to the draft scheme, the interest of the secured and unsecured creditors would remain unaffected. Among others, JPSIL is setting up a cricket stadium in Uttar Pradesh. It became a public company in 2010.

Courtesy: NDTV Profit

Winning Strokes: Think Different

Photo: The Economic Times

Yesterday, J P Power Ventures Ltd recommended around Rs.12.05--12.28, touched Rs.12.77 intra-day. The Indian government on 20th October, 2014, announced that it will auction 74 coal-mining licenses to private companies in the next three to four months after the Supreme Court last month canceled 214 coal licenses issued to private and public companies since 1993. The move came after the government freed diesel from price controls and increased natural-gas tariffs over the weekend to curb subsidies and cut the fiscal deficit. Moreover, the coal block auctions will reduce uncertainty regarding power generation companies that depend on the dry fuel--this augurs well for the shares of J P Power Ltd. 
Tata Steel Ltd which was recommended around Rs.450, some days back, yesterday touched Rs.461.90 intra-day. The company is scheduled to come up with Q2FY15 results on November 1, 2014.
My recommended Country Club (I) Ltd, at around Rs.7, yesterday made a new 52-week high as the scrip touched Rs.16.90. Congratulations to those who bought the scrip on my recommendation made money yesterday. 
A couple of days back J P Associates Ltd was recommended around Rs.29.70, for a short term target of Rs.35-37. The scrip yesterday touched Rs.30.45, before closing at Rs.30.10. A sharp cut in diesel price on Saturday, 18 October 2014, is expected to bring down freight rates which in turn could reduce consumer price inflation. Lower consumer price inflation (CPI) could  provide room for Reserve Bank of India (RBI) to cut interest rates. This might  in turn, bring cheers in the Realty, Construction, Banking and Auto shares. In between, there were media reports on September, 26, 2014 that, Jaiprakash Power Ventures (JPVL) had stroked a new deal to sell, three of its power assets to JSW Energy. JPVL signed a binding memorandum of understanding (MoU) with Sajjan Jindal controlled JSW Energy to sell three of its operating power plants with an aggregate capacity of 1,891 MW. The three power plants are Baspa II plant having 300 MW capacity, Karcham Wangtoo plant with 1,091 MW capacity and Bina thermal plant with 500 MW capacity. Jaiprakash Group has been trying to sell its assets to pay off its huge debt. Jaipraksh Group has a total debt of around Rs.60,000 crore on its books, which represents a debt to equity ratio of 6.8 times. It means against every one rupee of equity it has Rs.6.8 of debt. Its annual interest cost is 1.1 times its EBIDTA. However, the book value of the shares of J P Associates Ltd is Rs.56.69 and the company has a market cap of only Rs.7,321.70 Cr, which is almost half its FY14 earnings of Rs.13,327.02 crores. This gives much room for the appreciation of the share price, from the CMP of Rs.30.10.
Resurgere Mines and Minerals Ltd, yesterday hit another buyer freeze in the opening trade, at Rs.1.64. The scrip has a good future ahead--the investors need to have patience, to generate superb returns from the share.. 
The Reserve Bank of India (RBI) is scheduled to undertake its fifth bi-monthly monetary policy review on 2nd December 2014. The annual rate of inflation based on the combined consumer price indices (CPI) for urban and rural India eased to 6.46% in September 2014, from 7.73% in August 2014. Meanwhile, the Nifty_Spot, closed at 8,014.55 yesterday, which gives fresh ammunition to the bulls. The rally is  now expected to get more fierce in the coming days, till 8000 holds on the downside on a closing basis 

MARKET MANTRA

Today's call: Buy J P Associates Ltd at the CMP of Rs.29.70, for a target of Rs.35. The company is looking at the possibilities to reduce its huge debts. It seems the scrip has formed a bottom of sorts around Rs.29. 

A couple of days ago, a call was given on Tata Steel Ltd at Rs.450, today the scrip touched Rs.462.60, intra-day. The target for the scrip given to the Paid Members is Rs.480.
Resurgere Mines and Minerals Ltd, hit another upper circuits on the opening trade. The Resurgere Mines & Minerals Ltd (Rs.1.57), in 2011 decided to acquire an iron ore mine, at Satarda in Sindhudurg district of Maharashtra, having area of 96 acre. The Fe content in the ore body ranged from 54% to 60%. The estimated total reserve is 47.59 million tonne.But even after almost 3-yeas of UPA RULE under Dr.M M Singh and around 5 months of NDA Rule under Narendra Modi, the company is yet to get approval, for the same. In the process, not only the promoters and its employees, but lakhs of shareholders have suffered, as the price of scrip plummeted from above Rs.250 to the CMP of Rs.1.57 (...and much below this earlier). Is it the fault of the company or of the government in power...? Even the present Narendra Modi government's performance till date is unsatisfactory. 
Yesterday, the PAID GROUP members, were asked to hold on to their Nifty LONG POSITIONS. Today, the BULLISH view will even get stronger if the Nifty closes either above 8000 mark or near it. The breakdown of Nifty below 7800 proved to be short lived and the close above 7900, again brought the BULLS into action. It appears that the corrective phase is near to an end.

MARKET MANTRA

Nifty's bounce back to 7900 again, after a brief correction is a sign of strength. The breakdown below 7800 proved to be short lived. The Nifty has currently broken its immediate resistance at 3925 and is now trading at 7934, which tells volumes of the commencement of a pre-Diwali rally. What should the traders do at this time? Join the PAID SERVICE to get regular updates on the markets. 

My call on Jindal Saw Ltd yesterday touched its first target of Rs.82, as the scrip cross Rs.83, intra-day. The Paid Members were suggested to book profits yesterday. 

Yesterday's strongly recommended call J P Power Ltd is doing well, as the scrip is up more than 2 percent intra-day and is  now trading at Rs.12.25. The scrip is expected to touch Rs.17-18, very soon and hence this is a must buy scrip for every investor. 

Mumbai CCTV project attracts two bids

[Editor: Who will get this lucrative project (worth Rs.1,000 crore), in Mumbai is a big question. What about Allied Digital Services Ltd? Is it still in the loop or has withdrawn from the same? Allied Digital Services Ltd, is implementing a similar project (installation of CCTV Cameras) in Pune (Poona), Maharashtra. To get answers to such questions, you can either join the Paid Service or you can trade through my recommended brokerage house/s]

Photo: DNA India

MUMBAI, Sep 25, 2014: After three false starts, there are two new offers from technology majors to set up over 6,000 CCTV cameras across the city.

"L&T and Trimax have submitted bids and their technical evaluation is done," a home department official said. "Once the report of the technical scrutiny committee arrives, the financial bid will be opened by the high-powered committee led by chief secretary Swadheen Kshatriya."

IIT-Bombay professors are part of the technical scrutiny committee.

Previous tendering attempts had got stuck, with the last one in November stumbling because companies expressed difficulty in meeting the bid document conditions.

The official said the government had now made its revenue model more liberal.

Courtesy: The Times of India

PM Narendra Modi Launches Major Labour Reform Schemes: Top 10 Developments

[Editor: Narendra Modi says, "Shramev Jayate (labour triumphs) has the same power as Satyamev Jayate (truth triumphs) does for the development of our nation."Labour problems, "he said, must be seen through the eyes of the shramik (worker) not industrialists." So, are we talking of Narendra Modi suddenly becoming a COMMUNIST? Or he is totally confused, in this case too, like in many earlier instances? A person who is only interested in winning elections and getting votes by hook and crook, is bound to make this kind of one-sided comment. Meanwhile, FIIs have turned BEARISH on the Indian markets---today, i.e. on 16-Oct-2014, they were net sellers to the tune of Rs.1128.37 Cr. In fact the policies of Narendra Modi has been a total flop show, till now. After a series of overseas tours that took him to Japan and the U.S., he was was seen working overtime to canvass for his party in the states due for election. The question is: how would he get any work done for the country from his office in New Delhi?]

NEW DELHI, October 16, 2014:  Prime Minister Narendra Modi has unveiled long-awaited labour reforms, emphasising that "ease of business is essential to the success of 'Make in India,' his government's mega plan to turn India into a manufacturing hub.

• The measures announced today simplify employment rules and smooth the way for people to move social security funds when they change jobs. They also provide for an improved pension and minimum salary grade.
• The PM said, "Shramev Jayate (labour triumphs) has the same power as Satyamev Jayate (truth triumphs) does for the development of our nation." Labour problems, "he said, must be seen through the eyes of the shramik (worker) not industrialists."
• Archaic labour laws have strictly regulated hiring and firing, while an onerous "Inspector raj' or rule of inspectors has deluged employers with paperwork, discouraging them from expanding and taking on new staff.
• "Fifty types of departments chase them, 50 types of forms have to be filled in. The world has changed," Mr Modi said, adding that companies would now only need to fill a single form online.  A new website, managed by the labour ministry, will allow companies to fill forms online and raise their grievances.
• The change would chiefly benefit firms that employ just a few employees, he said. In 2009, 84 percent of India's manufacturing workers were employed by firms with fewer than 50 workers, research by the Asian Development Bank shows.
• Mr Modi also promised easier movement of accounts in the Provident Fund scheme by using a universal account number. The payroll-funded programme has 80 million members.
• Because transfers are so difficult, more than Rs. 27,000 crores ($4.4 billion) lie idle in such accounts. "I need to return this money to the poor," the prime minister said. "The world asks, 'What is Modi's vision?' They will see it in this effort," he said.
• Inspection of businesses will be made more transparent, with a computer lottery being used to pick the enterprises to be inspected and officials required to upload a report within 72 hours, PM Modi said. Right now, units for inspection are selected locally, without any objective criteria, allowing inspectors to harass unit owners and even exploit them in cases of violation of rules.
• The World Bank says India has one of the world's most rigid labour markets, but fears of a trade union backlash and partisan politics have deterred successive governments from reform measures. Business leaders have high hopes that Mr Modi, an advocate of smaller government and private enterprise, will change that.
• Industry body ASSOCHAM said it complimented the "government for initiating the labour law reforms as it will create a conducive environment for growth of trade and Industry and bring transparency in social security benefits to help workers."

Courtesy: NDTV Ltd

Infrastructure bars India’s growth path

[Editor: Narendra Modi is an over-inflated balloon, waiting to burst at any time. If it was not for Rahul Gandhi (...someone said his speech comes in POGO Channel) and the RSS (or say in short, "Sangh Parivar"), demagogues like Narendra Modi, would have NEVER reached Delhi. India should have a new Prime Minister and a Finance Minister, as both of them are totally flop till now. However as long as sycophants and blind fans are there, he could be assured of victory in elections] 

Whenever Air India cancels its flight to Delhi from Kullu Manali in the foothills of the Himalayas – as it often does – it leaves passengers facing a 600km journey over monsoon-damaged but unrepaired roads, which takes 14 hours. There are many conspiracy theories as to why Air India cancels the flight so often – and why a successful air taxi service from Chandigarh, halfway between the two points, failed to get its licence renewed. Most of these theories cite a blend of corruption and incompetence.

Many in India had hoped that the election of a new prime minister might bring about some rapid improvements in infrastructure investment – to the benefit of business that rely on it. But, less than five months after Narendra Modi’s stunning victory at the polls, hope is being tempered by harsh realities on the pockmarked ground. Already the stock market euphoria has faded into three straight weeks of market losses.

This year was supposed to be one in which fixed investment in the country began to rise again, after a virtually flat 2013. However, the investment climate remains inhospitable and the cost of capital way too high despite the exhortations from the prime minister’s office. Investment growth in the third quarter was up a mere 0.4 per cent while, in September, capital goods output fell 18 per cent, month-on-month, according to JPMorgan.

KKR, which has a big stake in Dalmia Cement (Bharat), is feeling the effects – or, rather, the lack of them. It reports no improvement in orders. And what is true for cement is true for steel and other industries that should be harbingers of a commitment to large-scale investment.

Mr Modi is right to aspire to expand the country’s manufacturing industry. Today, manufacturing as a percentage of Indian GDP is a mere 15 per cent – less than half what it is in China. Even in Indonesia, which has generally failed to move up the value-added chain, it is 24 per cent.

Unlike the rapidly ageing countries of East Asia, India does at least have a young population and low wages. In recent years, many of its people have also become more mobile, and able to migrate to major cities – especially Mumbai – from poorer states.

So, at first glance, India should be the biggest beneficiary of rising wages in China. But this does not seem to be the case, possibly for two reasons. One is the fact that the conditions that gave rise to the East Asian model of export-driven growth are radically different from those in India. But the other is that it may be too late for India to emulate that growth model, even if it wished to.

Both Japan and China kept the cost of capital artificially low to subsidise industry at the expense of consumption. India has been the antithesis of that model. Demand for cement and steel is depressed, capital goods production is falling – but sales of motor scooters and cars are holding up relatively well.

Perhaps most significantly, though, East Asia prioritised the infrastructure needed to make manufacturing possible.

When capital was cheap a few years ago, and the whole world had emerging market fever, India could have got its infrastructure act together – and cheaply. It failed to do so. Today, the roads are a disaster, but hardly the only disaster. Power remains in deficit for many states – including the mountain states where hydro power should be plentiful and cheap. Most infrastructure companies remain under pressure, their balance sheets overleveraged and the banks reluctant to extend more credit to them.

These companies are also operating in a world that is less benign. Global trade has been flat for some time, making exports more of a zero-sum game. If anything, there is too much manufacturing capacity, which is why the prices of manufactured goods are under downward pressure.

India has some competitive advantages, notably where there is a large component of engineering, say in manufacturing certain car parts. But the low wages of its workers aren’t enough to compensate for the high cost of capital, the low productivity, the impossible delays on the roads and at the airports, the lack of power, and the incalculable cost of corruption as many businesses shut down rather than pay off the bureaucrats and officials.

India is about to celebrate Diwali, the festival of light. But at the moment, as on the long drive from Kullu Manali to Delhi, the light remains disappointingly dim.

Courtesy: The Financial Express 

Market Mantra

Pipavav Defence and Offshore Eng Ltd is doing well today, with the stock almost hitting the Upper Circuits Intra-day. The scrip  touched a high of Rs.45.30 intra-day and is now trading at Rs.44.5. The momentum is very strong in the counter and I would not be surprised if the scrip hits another Buyer Freeze today also.
Gitanjali Gems Ltd have started to move up. Today it touched an intra-day high of Rs.62.95 and is now trading at Rs.62.30. We could see a rally in Gold based stocks before Deepawali. 
Etegra Ltd which was recommended to some of  my close friends, last week at around Rs.3.35, today high another buyer freeze at Rs.3.48, in the BSE. 

Today's call (to the Premium Groups): Buy J P Power Ventures Ltd at Rs.12.50, for a target of Rs.17. The scrip seems to have formed a base around Rs.12.10--12.40. Meanwhile, the Finance ministry officials will meet on Friday to explore ways to get stalled power projects back on track and to help prevent them from becoming non-performing assets for banks. Recently, there were also media report that, in its third attempt to strike a deal for its power assets, Jaypee Group inked a binding pact with Sajjan Jindal-led JSW Energy for selling three projects, including two hydel plants. The announcement came after Jaiprakash Power’s proposed sale of three hydro projects to Reliance Power had earlier fallen through. “JSW Energy Ltd (JSW) and Jaiprakash Power Ventures Ltd (JPVL), announced the signing of binding memorandum of understanding (MoU), for the 100 per cent acquisition by JSW of three operational plants of JPVL,” the companies had said in similarly-worded statements. The plants are — 300-MW Baspa-II Hydro Electric Plant, 1,091 MW Karcham Wangtoo Hydro Electric Plant and 500 MW Bina Thermal Power Plant, it added. 
The Indian Stock Markets are witnessing high volatility, near the crucial support of 7800--a rise above 8000 may trigger a fresh rally. Nifty is now trading at 7889, which is just above the immediate support of 7850. Share indices are trading in a cautious note ahead of Maharashtra elections, due tomorrow, i.e. 15th October, 2014. However, many analysts are not expecting too much downside from here, as data on India's consumer price index-based inflation hit a record low in September, 2014. Also, the much expected Deepawali Rally is on the cards. 

WINNING STROKES: THINK DIFFERENT

Pipavav Defence and Offshore Eng Ltd, a Nikhil Gandhi company hit the 3rd consecutive buyer freeze today. The stock was recommended around Rs.38.75, a few weeks back. The scrip after giving a break out is moving up continuously; today it closed above its 21D SMA and EMA. 

Gitanjali Gems Ltd was given a buy call today at Rs.61.90, after my sources confirmed of its bright future outlook. The company has taken a number of measures to revamp its operations. Besides, falling international gold prices and the subsequent correction in India, could give a surge in demand for the yellow metal. Some analysts expect, that gold prices this Diwali could hit 3 year low. In May 2014, RBI eased import restrictions on Gold. The central bank permitted private agencies and banks to provide gold loans to the sector. But, the government has not lowered the import duty which is at 10%. According to The Indian Express, October 12, 2014:

Much to the delight of jewellers, Indian consumers are making a scramble for gold in the build-up to Diwali on October 23 after a lacklustre festive season last year.

Sales of gold jewellery and coins in October so far have accelerated in the range of 15-25 per cent more than a year before, although it is still early to firm up a precise forecast of demand this Diwali and Dhanteras, considered auspicious for the precious metal purchases. “After months of slowdown, things are finally beginning to look up,” a spokesperson for Tanishq, the country’s largest jewellery chain, said. “All the purchases that people had postponed are finally being made,” he said, adding that lower gold rates in recent days had helped accelerate demand.

B F Utilities Ltd, which was recommended around Rs.129-130, today closed at  Rs.647.15, up 18.31%. Intra-day, it hit the Upper Circuits at Rs.656.40. The stock earlier hit an all time high of Rs.817.95, in between.

IVRCL Ltd as was expected did  not break Rs.16, on the downside--some inputs were sent to the PAID GROUPS yesterday. Now, with September CPI inflation declining to 6.46% and vegetable inflation falling to 8.59%, the scrips in the infrastructure/road construction sector, could stage a comeback. 

P Chidambaram advises against lifting curbs on gold imports

[Editor: Narendra Modi and some of his partners who made lot of noise during the UPA rule regarding import restrictions on GOLD are tamely following the UPA government's policies; after they assumed office, following a landslide victory in the last (2014) Lok Sabha Elections. This is called U-turn. The current NDA government under the leadership of Narendra Modi has become famous for such outlandish somersaults. Meanwhile, though the bullion trade has asked the Government to recognise a body of its representatives to discuss its issues--nothing much has happened in this front. “Currently, the Centre is discussing our issues with the jewellery body which has no understanding of our problems,” said Satish Bansal, Managing Director, MD Overseas Ltd. “The 80:20 scheme has forced bullion traders to turn exporters,” he said. According to Prithiviraj Kothari, Managing Director, Riddhi Siddhi Bullions, the Centre should replace the scheme with a quota or a licensing system like in China. In China, only nine banks and some People Bank of China-owned coin companies have the right to import and export gold. The bullion trade also wants the Customs duty cut gradually to 4 per cent. It has also urged the Centre to raise the gold brought by non-resident Indians to 5 kg. The restrictions are perceived to have increased, the instances of smuggling. But India's commerce minister, Nirmala Sitharaman says, "I cannot say that gold smuggling has increased because of hike in import duty. CAD has come down, but there is no thought to lower the import duty immediately".  It therefore, remains to be seen when we will start to see innovative policies from Narendra Modi and his team of "COPY-PASTE-MASTERS"]

Mumbai, Oct 12, 2014: Former finance minister P Chidambaram has advocated against lifting of curbs on gold imports, saying the benefits accruing from restrictions would far outweigh problems like spurt in smuggling.

"No. Not in my view," Chidambaram, who initiated these measures as the Finance Minister in the previous UPA regime in the face of a record high current account deficit (CAD), over the weekend when asked whether the time was ripe to withdraw the curbs.

The senior Congress leader was in the city to campaign in Maharashtra Assembly polls.

The CAD, which is the difference between inflow and outflow of foreign exchange, had touched an all-time high of $88.2 billion or 4.8 per cent of GDP in 2012-13.

The high current account deficit had led to the rupee plummeting to its all-time low of 68.80 in August last year.

On concerns like a spurt in smuggling activities, which had otherwise been checked after liberalisation, Chidambaram said the benefits of the gold import curbs are too big.

In wake of the high gold imports affecting current account deficit, the previous government had hiked the import duty on gold three times to 10 per cent and also compelled importers to export a sizeable part of the commodity under the 80:20 rule.

However, during this fiscal, there was some clarification in the 80:20 rule after a massive reduction in CAD.

According to some estimates, 200 tonnes of the precious metal will be imported into the country in the calendar year 2014.

There has been a jump in gold smuggling cases registered by enforcement agencies.

When asked if it is fair to artificially reduce CAD, Chidambaram said, "What else to do? There is no other way. I agree that CAD should be reduced by exports, but it won't happen overnight. Can we afford to spend $50 billion on gold imports? We cant afford it."

Chidambaram agreed that in the long-term, we should focus on pushing exports to reduce CAD but at the moment the country is left will little option.

Talking about international rating agency S&P's outlook upgrade on India, Chidambaram said that this was due to the handsome growth rate of 5.7 per cent in the first quarter.

Courtesy: IBN Live

Banks to Release Rs. 650 Crore to ABG Shipyard Soon Under CDR Deal

[Editor: This factor is likely to have a positive impact on its subsidiary company, Western India Shipyard Ltd (Rs.1.82) to shore up its bottomline]

September 10, 2014;Private sector shipbuilder ABG Shipyard, which is under a CDR, will receive Rs. 650 crore infusion from lenders by this month-end as part of the Rs. 10,000-crore debt recast deal worked out in March, a top company official has said.

The Surat-headquartered company is confident of successfully getting out of the corporate debt restructuring cell in two years, its executive director and chief financial officer Dhananjay Datar told reporters here late last evening.

The company has convinced the 22-bank consortium led by State Bank, which had two specific reservations, and has got sanction for release of the money, he said.

On the banks' demand for pledge of shares by promoters, Mr Datar said ABG has promised that promoters will be pledging their 68 per cent holding in the company by March 2015.

It can be noted that in late March, a group of 22 banks led by State Bank had cleared the recast of Rs. 10,000 crore in loans advanced to the troubled shipbuilder under the corporate debt restructuring (CDR) process, making it the second biggest loan recast in recent times.

Under CDR, around Rs. 2,500 crore worth of long-term loans and Rs. 7,000 crore of working capital loans were restructured with a two-year moratorium for interest payment.

Courtesy: NDTV Profit

WINNING STROKES: THINK DIFFERENT

Pipavav Defence and Offshore Engineering Company Limited hit the buyer freeze in the mid-afternoon trade. ICICI Bank has given a target of Rs.80, for the scrip in its August, 2014 report. 

Nifty today tanked more than 100 points due to global cues and also as August IIP disappointed. Meanwhile, the FIIs have turned bearish, according to the Economic Times. Yesterday following was sent to the Premium Group members: The inability of the bulls to hold above 8000 mark attracted selling in market and  Nifty closed below 7900 for the first time (couple of days back), in the last two months period. This is a sign of weakness. I hope those Paid Members who shorted the Nifty yesterday made money today. As long as India does not have a good Prime Minister and  Finance Minister this would continue to happen. Narendra Modi, till now have proved to be utter failure. His government has been copying the policies of the UPA government--some of which they criticized during their time. Narenda Modi, should leave the centre and go to Gujarat once again. 

Western India Shipyard Ltd: A clear buy

CMP: Rs.1.91

Kindly observe who are holding positions in the  company and by what proportions. The scrip is expected to become Multi-bagger in the coming days, as the restructuring money from the ABG Shipyard Ltd is likely to flow in the company in the coming days. The next target is Rs.5.

Updates on some of my recommendations

1. Granules India Ltd, was recommended around Rs.110-112.50.

The scrip touched an all time high around Rs.940.55 on 22/09/2014 (on my birthday). 

2. Multi Commodity Exchange of India Ltd (MCX Ltd) was recommended around Rs.255-270. The scrip made a high of high of Rs.895, on 21/07/2014.

3. B F Utilities Ltd was recommended around Rs.129-130. The scrip made a high of Rs.817.95 on 22/07/2014.

4. Mannapuram Finance Ltd was recommended around Rs.15.50--17.70. The scrip made a high of Rs.31.60  on 19/09/2014.

5. Opto Circuits Ltd was recommended around Rs.25.50-26. The scrip made a high of Rs.44.50 on 22/05/2014.

6. HCC Ltd was recommended around Rs.12.70-12.80. The scrip made a  high of Rs.49 on  01/07/2014.

7. P C Jeweler Ltd was recommended below Rs.88. The scrip made a high of Rs.278 on 23/09/2014.

8. Sarda Energy and Minerals Ltd was recommended around Rs.107.60. The scrip made a high of Rs.402.60 on 21/08/2014.

9. A2Z Maintenance and Engineering Services Ltd was recommended around Rs.11.45. The scrip made a high of Rs.36.40 on 25/07/2014.

10. Prakash Industries Ltd was recommended around Rs.49-50. The scrip made a high of Rs.123 on 21/07/2014.

These are some of scrips which gave good returns to the investors over a period, apart from others like IVRCL Ltd, Entegra Ltd, SBTL, Gitanjali Gems Ltd, IRB Infrastructure Ltd, Ahmednagar Forgings Ltd, etc. 

Today, while Pipavav Defence Ltd (Rs.39.15) and Resurgere Mines and Minerals Ltd (Rs.1.65) hit the buyer freezes; Gitanjali Gems Ltd (Rs.63.15) also closed above some crucial levels. 

Pipavav Defence and Offshore Engineering Company last year announced a new order for offshore vessels from a European client. The order was worth Rs.595 crore with an option to supply two more specialised vessels valued at Rs.1200 crore. The global market for specialised offshore vessels stands at US$10 billion. The company, with its well diversified order book among the defence, commercial and offshore segments, intend to focus on the defence and offshore vessel segment. The defence segment holds around 50% of the order book followed by the commercial segment and offshore segment. New orders in the offshore segment coupled with repairs and maintenance orders augur well for the company as it reduces exposure to the commercial segment. Pipavav Defence and Offshore Engineering Company spanning over 861 acres of land with two dry docking facilities of 662 m x 65 m (Dry Dock-1) and 750 m x 60 m (Dry Dock-2 under construction) is one of the largest “modular” shipbuilding facilities in India. The shipyard is capable of accommodating 400,000 dwt capacity ships along with construction and repair of a wide range of vessels starting from coastal and naval vessels together with repair and fabrication of offshore platforms and rigs. It also has a dedicated offshore yard with 175 m x 16.89 m quay consisting of both launching and loading platform together with installation of bollard and mooring rings. 

Time for Govt to Relook at Gold Import Curbs

Photo: Jewel Origins

04th October 2014: Investment demand for gold in India has dropped by 67 per cent from a year earlier to 49.6 tonnes during the second quarter of 2014, according to the World Gold Council. At the same time there is a slide in global crude oil and gold prices, providing a reprieve on the current account deficit (CAD). This presents the government with an opportunity to ease the numerous gold import restrictions. 

It should seriously consider relaxing the 80:20 rule introduced last year to reduce gold imports, leading to an unwanted fallout—a spurt in gold smuggling. While raising the gold import duty in 2013 from four to 10 per cent the government had mandated that 20 per cent of the imported gold be exported. 

Allowing unhindered access to gold can help revive the `5 lakh crore gems and jewellery trade that employs 25 lakh workers. The resulting customs duty collections will provide a much-needed boost to central tax revenues.

With savers getting increasingly disenchanted with gold, this is also the ideal time for the government to double up its efforts to bring the idle gold, estimated at 25,000 tonnes, lying with Indian households, back into circulation through gold deposit schemes. A proactive approach to motivating those keeping huge hoards of gold in lockers can make a major impact at this stage if the schemes are attractive and well-directed. This is a time for imaginative schemes and for innovative solutions.

In the decade through 2013, when a series of economic crises rocked the global economy, gold miners seldom thought its prices would decline, as people typically tend to buy gold in times of uncertainty. But now, after gold fell sharply and equity markets rose of late, this view may be under intense scrutiny. An outperformance of assets like stocks and bonds over gold, globally, and prospects of a stronger dollar amid the US economic recovery have hit investment demand. Given the decline in prices hedging by producers could increase in coming days.

Courtesy: The New Indian Express

Winning Strokes: Think Different

IVRCL Ltd, which was recommended in this blog some days back around Rs.15-15.50, reached the first target of Rs.17 (Intra-day, Rs.17.35) yesterday. According to the Business Standard, October 8, 2014: Indian companies and banks have some reasons to cheer. Stalled projects are finally showing signs of traction, with the Modi government taking steps to revive those projects which were stuck due to policy paralysis and land acquisition problems. Therefore, the time has come to take a more bullish view on Infastructure stocks like IVRCL Ltd, HCC Ltd (Rs.31.20), IRB Infrastructure Ltd (Rs.220.45), etc. 

Gitanjali Gems Ltd today rose to Rs.64.20, before closing at Rs.63, in the BSE. During the last few months the company has taken lot of steps to revamp its operations. But, one thing which needs to be highlighted here is that: Gitanjali Gems Ltd having a face value of Rs.10, Book value Rs.287.39 and market cap of Rs.618.16 Cr is trading only at Rs.63, while Rajesh Exports Ltd of face value, Rs.1 (Not Rs.10), Book Value of Rs.88 (only) has a CMP of Rs.128.50. Moreover, the cash flows in 2013-14,  in the case of Gitanjali Gems Ltd is (negative) Rs.2,966 crore, while in case of Rajesh Exports it is (negative) Rs.2,629 crore. Therefore, it is strange why the share of Gitanjali Gems Ltd is trading at such a low price! Moreover, the silver jewelry exports from India surged by 84.80% year-on-year to touch $234.82 million (Rs.1,430.08 crores) during the month of August this year, while its gold jewelry exports too rose by 10.44% year-on-year to $634.46 million (Rs 3,863.85 crores), in accordance with the latest data released by the Gems and Jewelry Export Promotion Council (GJEPC). With a strong dollar currently depressing the precious metals prices, M Partners Mining Analyst Derek Macpherson believes that fundamentals will kick in eventually and bring prices back up--the dollar has rallied, putting pressure on gold and all other commodities. He further said: "I think we could flirt below $1,200/ounce, but I don't think we'll see an extended period of significantly lower gold prices. We're getting very close to the marginal cost of production for most producers. If that situation lasts for an extended period, mines are likely to start shutting down, and it could swing back to being a supply-and-demand story". Thus while low price of the yellow metal could increase the volume of sales, a sudden spike in the gold price, could also perk up the bottomlines of Jewelry companies. 

Resurgere Mines and Minerals Ltd yesterday closed flat at Rs.1.64 in the BSE, even though the SENSEX tanked by more than 296.02 points. This shows that the scrip has probably formed a permanent bottom and is preparing to move up.  
GLOBAL VECTRA HELICORP LTD (Rs.72.35) was jacked up by some MUMBAI (Bombay) based operators by floating some ROSY STORIES. Now the stock is hitting LOWER CIRCUITS almost on a regular basis. In fact the stock has been on the downtrend since it hit the 52-week high of Rs.93.30 from its low of Rs.9--with a NEGATIVE BOOK VALUE of Rs.6.02, don't get surprised if it falls below Rs.30.

Indian gold demand strong ahead of Diwali as prices tumble – GOLD PHYSICALS 

Photo: Sify.com

[Editor: Meanwhile, the Gold prices fell below $1,200 an ounce for the first time this year on Friday as the dollar jumped after better-than expected US non-farm payroll data, which could bolster bets on a Federal Reserve rate hike in mid-2015 or even earlier. Now according to statistics, any fall in bullion prices generally leads to a sharp jump in retail sales. Normally, jewellery demand from foreign importers rises in case of a fall in bullion prices. Jewellery demand from domestic consumers, too, rises during the festive season, which is going on. I expect jewellers’ sales in local markets to rise during the coming Diwali and wedding season and foreign markets during Christmas, New Year and Mothers’ Day. With this view in mind, GITANJALI GEMS LTD was recommended to the PAID GROUPS, at Rs.63.50--65, for a short term target of Rs.72-73]
October 3, 2014: Sentiment in the Indian gold market appears to have strengthened ahead of the Hindu festival of Diwali, with premiums once-again gaining momentum as a result of cheaper gold prices.

Demand throughout Navratri, a 10-day religious festival during which Indians buy luxury items such as gold that began on September 25th, was strong based on cheaper gold prices in the rupee of around 26,600 rupees per ounce.

Indian premiums are around $11-15 per ounce over spot for 1kg bars, up from $7-11 previously, market participants told FastMarkets. Further increases are expected in the lead-up to Diwali, the Indian festival of lights – typically a very busy period for the local gold market.

“Demand for gold in India is really picking up at the moment – despite depreciations in the rupee this week, rupee gold prices look healthy amid a generally cheaper gold price,” Chirag Sheth of Metals Focus said. “However, it would be foolish to try to compare the situation with last year, as it is a completely different environment now.”

Rupee gold has followed international prices lower. Spot gold was last at $1,206.20/1.207.70 per ounce, down $7.20 on Thursday’s close – it looks susceptible to falling to a fresh low this year should blockbuster US jobs data pressure it lower.

Deviating from most global trends in the current economic climate, the rupee has held its ground against a surging dollar over the last three months, where most emerging economies are struggling, with market participants apparently actively looking to keep the rupee above 60 against the dollar.

Buying ahead of Diwali will begin now, Sheth added, which is likely to push premiums higher as Dussehra – the final festival day of Navratri and which takes place today this year – draws to a close.

In China, meanwhile, the pick-up in demand expected throughout the Chinese Golden Week holiday, which runs until October 7, has been relatively low compared with previous years, sources said. Premiums in Shanghai remain low at $2-4 over the London spot price, down from $3-5 a week ago, traders said.

In other locations, the Hong Kong rate is up fractionally at $1.20-1.60, Singapore was quoted at $1.20-1.50, down from as much as $2.50 last week, and Dubai still relatively unchanged around $1.

(Editing by Mark Shaw)

Courtesy:  The Bullion Desk