AYODHYA PROBLEM - DIFFERENT VIEWS

First we have to change our mind set.There is only one God. Whether it is a temple, mosque or church should not matter. Justice Liberhan has took seventeen years to tell what the country already knew. The Truth commission, as proposed by DNA editor, will consume another decade to tell us again, what we already know. The political parties are in no mood to find a lasting, permanent solution to the problem. The parties concerned should change their mind set, instead of looking into the omissions and drawbacks of what has already happened and finding fault with each other. The purpose of all religion is to know and love God and to show ethical and proper directions to life and living. The preaching in all religion does not differ in any way and all teach love as against hatredness. India being a country, which harbors a multitude of religious belief, the feeling of solidarity in diversity can be best showcased by building a center of worship for all religions.This would no doubt become a memorable monument for the whole world to appreciate and emulate. Its time the political differences are buried and India demonstrates to the world that we are a truly a secular nation in letter and spirit. The government should initiate talks in this regard involving all political parties.The Fourth estate has a greater role to play in educating the general public.

ABSURD AND MEANINGLESS

The views expressed in the article 'How the UPA robbed us of Rs 2,80,795cr'
(DNA 29-08-10) by R. Jagannathan is meaning less and absurd.

The amount refers to the loss made good to oil marketing companies by the government. The profitable ONGC, GAIL and OIL were asked to part with Rs 1,12, 592cr and the rest came from Oil Bonds. Calling these exercise as loot/robbery has no reasoning and without understanding of our complex economy. Consider this -India's 58.4% population is dependent on agriculture, as means of livelihood.However, this segment contributes 17% only to the GDP. It is an indication of resourcefulness of the population depending on it. Of the total 110crpopulation, 37% consists of BPL families. The middle class constitutes another42% (however, this is below the BPL as per international standard). Hence, the subsidies provided to loss making oil marketing companies can not be termed as loot, fraud, since these subsidies benefits nearly 80% of the country's poor and middle class population. What is the alternative? Allowing the petroleum products to be priced at the prevailing oil rates/market determined rates. The country is not yet ready. That will make life miserable for nearly 90%of the country's population. The author's views holds no water, as of today.

Secondly, regarding the DTC bill. There is no end to human wants/wishes.
Government needs money, particularly for rural development, health care,
infrastructure and education. Where do they get it, if the people who have
capacity to pay is let off. Those 'who have' should take care of the 'have not',
that is the true meaning of inclusive growth. I think the government is on the
right track in this regard.

TEN REASONS WHY ONE SHOULD NOT INVEST IN SKS MICRO FINANCE IPO

1. Unethical business: The Company is charging interest around 40% p.a. on money lent to the poor and down trodden.


2. Unsustainable business model: The business model will not sustain in the long -run.


3. No commitment from the promoters: SKS’s founder and chairman sold his shares to Tree Line Asia Master Fund (Singapore) Pte for $12.9 million in Feb. this year.


4. Look at the salary of top executives :

Suresh Gurumani - Managing Director of the Company. The total monthly salary is Rs. 12, 50,000. In addition to the above, Mr. Suresh Gurumani was paid onetime bonus of Rs. 10,000,000, in April 2009.

Dr. Vikram Akula - chairman Rs 70.00 lacs p.a. In addition, ESOP amounting to Rs10.97lacs, totaling Rs 1.79cr p.a.


5. Mohd. Yunus says - “I get very worried when investment funds come to microfinance,” said the founder of Bangladesh’s Grameen Bank, which pioneered the industry by giving small loans to rural women to start their own businesses. “I don’t want to excite businessmen that there is profit to be made here,”


6. The IPO will make the promoters, and other venture capitalists including some P/E funds that have stakes in these companies’ millionaires. The hapless borrowers continue to live in abject poverty.

7. Government /RBI will not be mute spectators to the exploitation.
They are bound to regulate the segment. This will make the business un- attractive.


8. Financial inclusion initiatives taken by the public sector banks will marginalize the micro finance business. Do not buy the theories put forth by the BRLMs to sell the issue.




9. The average cost of acquisition of shares by promoters is less than Rs50/-The Company has limited period of history and no dividend payment record.


10. The Andhra Pradesh government has constituted district level ‘Task Force Committees’ (TFCs) to investigate the unethical practices of micro finance institutions in the state. The committees were constituted after the government received many complaints against the loan shark practices adopted by some leading MFI’s of the state.

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BHARAT BANDH: WHY CANNOT OPPOSITION RULED STATES REDUCE VAT.

The BJP and some other political parties have called for Bharat Bandh on 05-07-10 against price rise and for increase in prices of petroleum products. Assuming for the sake of argument, that Center's policies are flawed and the present UPA government is anti-poor. Among others, VAT constitute any where between 24 -33% of the petroleum product prices. VAT is a state subject and the respective state governments have the power and authority to slash the rate to zero level if they are so concerned about the common man,for whose sake the strike being called.
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HEGDE SUCCUMBED TO INTIMIDATION TACTICS

Most people are happy, that the lokayukta has withdrawn the resignation. However, his reputation and integrity has taken a beating. Was he not aware of his fatherly respect to Advani when he resigned? The whole world knows that the Reddy brothers are into illegal mining. He should have put removal of publicly known corrupt ministers as a pre condition for withdrawal. Why Advani simultaneously did not instruct the CM to drop Reddy brothers or expel from the party. I also have great respect for Mr. Advani, but when its come to fighting corruption he and his party is no better than the Congress. I do not think BJP government/any other government in the country is serious against fighting corruption. Generally, people enter politics to make money through corrupt practices, hence do not expect the politicians to fight against corruption. BJP government will make some cosmetic changes in the lokayukta set up and dilly-dolly the important issues on one reason or the other and after some time Hegde will resign again

SANTOSH HEGDE WITHDRAWS RESIGNATION

The lokayukta of Karnataka Justice Santosh Hegde has withdrawn his resignation after being persuaded by Sri L K Advani of the BJP. Hegde briefed the press in the presence of the CM BSY and BJP national president Mr. Nitin Gadkari among others, about his withdrawal.

LOKAYUKTHA RESIGNS

Justice Santosh Hegde, the Lokayuktha of Karnataka has resigned. Among others, Mr. Hegde has quoted non co-operation from the state government, including inaction against corrupt officials trapped by Lokayuktha and is protecting mining lobby.

IPO FROM AN INTANGIBLE ASSET COMPANY: FAT PIPE NETWORKS INDIA LIMITED.

The company earned a net profit after tax of Rs 399.37 lacs for the year 08-09, which was transferred to General Reserve. The balance at the end of the previous year in General Reserve was Rs 49.97 lacs. If you add, the profit transferred this year, to the figure it should be Rs 449.34 lacs. Simple arithmetic. However, as per the statement of accounts as furnished in the DRHP filed with SEBI, the figure is Rs 2103.04 lacs. For the difference, the corresponding entry shown in the balance sheet is Intangible assets.

Some of the comments made by the readers of First Choice IPO analysis are hereby reproduced.


DO NOT BUY!! Failure to report multiple litigation as well as challenges to its patents. Currently under federal investigation of its labor practices. Financials would not stand up to a US SEC audit, hence the reason to change from a U.S. company to an India company and run the IPO there. Numbers are misleading and inaccurate.
Dr.Raghula Bhaskar and Ms Sanchaita Datta are the promoters of the company. They take in excess of $400,000USD of income on a VC supported venture. They claim profit, but no listing of dividends to its investors. If you scrutinize some of the other ventures such as their India based programmers company BOX, you will find the company is listed as being based out of their home. Makes one wonder whether the VC's are even aware, they may have financed these other entities. This begs to question: Is this IPO merely a sham to pay back the VC is who by now must be impatient for a return.


Bottom Line: Fat Pipe years ago was at the right place at the right time. However, it has failed miserably to stay up with the ever-changing technology and marketplace. Other companies, new technologies, have sprung up bringing with them new technologies and innovation. Sorry Fat Pipe, you are OBSOLETE!!! Do you remember Iomega with the zip drive...? IOmmm who? A bet in Las Vegas would be a better risk.

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AIR CRASH AT MANGALORE

Mangalore-bound Air India Express plane from Dubai overshot the runway at Bajpe Airport in Mangalore this morning, killing at least 160 passengers. The injured were taken to hospitals.
The Boeing-737, manned by an expat pilot reportedly landed 2000 feet from touchdown point. Nearly 25 ambulances and firefighters reached the spot to help rescue operations. Rescue operations at the site are almost over and chances of survivors are remote.

PAK TAKES NO ACTION

The epicenter of international terrorism is Pakistan. India has been repeatedly educating the whole world about the terrorists activities carried out by banned international organizations with the tacit support of the Establishment. The recent statement by Hillary Clinton, US Secretary of state, that some people in the government are aware of the whereabouts of elusive Osama Bin Laden, confirms that the successive political leadership in Pak is misleading the world. In spite of knowing the activities of banned out-fits, Pak takes no action against them. The Pak is also accused of diverting the funds provided by the ‘big brother’ to fight terrorism, to fund terrorists. The failed Times Square bombing is a wake up call for the U S to take stern steps against Pak.

IPO INVESTING- KNOW YOUR MERCHANT BANKER

The IPOs which are quoting below the issue price and

the BRLMs associated with the issues that are listed

from 01-01-10 and until date, are furnished below.

NAME OF ISSUER	ISSUE PRICE	CURRENT PRICE - AS ON 03-05-10.	MERCHANT BANKERS/BRLM
SYNCOM	RS 75	RS64	Chartered Capital
VASCON	RS 165	RS 153	Kotak Mahindra, Enam Securities
EMMBI	RS 45	RS18	Keynote
DB REALTY	RS 468	RS 436	Enam Securities, Kotak Mahindra
HATHWAY	RS 240	RS 209	Morgan Stanley, UBS Securities, Kotak Mahindra
TEXMO PIPES	RS 90	RS 62	Almondz Global
PRADIP OVERSEAS	RS 110	RS 87	ANAND RATHI
SHREE GANESH JEWELLER	RS 260	135	Axis Bank Ltd. ICICI Securities Ltd. Avendus Capital
GOENKA DIAMONDS	RS 135	101	SBI CAPS
INTRASOFT	RS 145	130	Collins Stewart, Anand Rathi

CASTE BASED CENSUS

The Center has agreed to caste – based census as pressurized by the Yadav trio. The UPA has wafer thin majority in LS, RJD and SP who have twenty-five MPs, are extending outside support to the government. Their support is necessary to pass nuclear liability bill for which, there is strong opposition from the BJP and the Left parties. However, the Yadav trios are ignoring the writing on the wall, which is very clear. The next election either at the state or center will be fought on the issue of development, providing basic amenities in the rural area – like education, housing, health, infrastructure and reforms, among others. The days winning elections only based on caste, religion/region is over. The young, educated and informed voters, who constitute more than 70% of the total electorate, is definitely not going to exercise their franchise based on caste considerations. The Yadavs have to adopt themselves to the changed political dynamics. Otherwise, they are, probably serving their last tenure in the Lok Sabha.

The new census should be used for the statistical purposes and for monitoring the various programme and policies of the government and the political parties should stop using the same for vote bank politics.

IPOS - KNOW YOUR BRLMS

THE PERFORMANCE OF IPOS AND BRLMS ASSOCIATED WITH THE ISSUE ARE LISTED IN THE SITE FIRSTCHOICEIPOANALYSIS.COM

SHAME MINISTER, BJP

Politics is the last resort of a scoundrel. You cannot be honest and remain in politics. Politicians are thick skinned. They are above the law of the land. How true it is. The on going in the Karnataka politics, is mirror reflection of what politicians are made of. The minister is involved in sex scandal. Resigns over night. Why should one resign from the coveted post of ministership for a wild allegation? What is more shocking is the top level leaders of the BJP, including the CM, defending the minister shamelessly. The party, which promised ‘Ram Raj’, is administering Ravan Raj. There are ministers in BSY’s cabinet with sex scandal, corruption charges,cheating cases, involved in land grabbing and illegal mining and so on. Mr. Gadkari, please do something before it is too late.

POWER HUNGRY BJP

BJP after withdrawing support to Shibu Soren’s government in Jarkhand, since his party JMM, did not support the cut motion moved by it and Left parties in the Loksabha, changed its stance within 24 hours and now has invited Soren’s son for talks. In the first instance, one does not understand what made the saffron party to extend support to Guruji. Shibu Soren is facing serious criminal and corruption charges. What kind of message the new president of BJP wants to convey to its cadre. Time and again, BJP has proved it is no better than the other political party is. And the tag ‘the party with a difference’ is no longer is associated with BJP. Capture power by whatever means is the motto. There are no principles, values.

FORTHCOMING IPO - NITESH ESTATES LIMITED

NAME OF THE COMPANY	NITESH ESTATES LIMITED
ISSUE OPEN/CLOSE	22-04-10/27-04-10
PROMOTERS	NITESH SHETTY AND ASSOCIATES
PRICE BAND	RS 61-69
BRLM	ICICI Securities Limited, Enam Securities Private Limited and Kotak Mahindra Capital Company.
OBJECTS	To acquire joint development rights, Repayment of loans
RISKS	HIGH RISK INVESTMENT
IPO GRADING	CRISIL -2
RECOMMENDATIONS	DEBT RIDDEN-WEAK FOUNDATION-AVOID

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IPO ANALYSIS-TALWALKARS BETTER VALUE FITNESS LIMITED AND NITESH ESTATES LIMITED

IPO ANALYSIS OF TALWALKARS BETTER VALUE FITNESS LIMITED AND NITESH ESTATES LIMITED NOW AVAILABLE ON FIRSTCHOICEIPOANALYSIS.COM

SJVNL IPO ANALYSIS

The in-depth analysis of the above ipo is available on FIRSTCHOICEIPOANALYSIS.COM

REVIEW OF IPO RECOMMENDATIONS - LATEST

1.PERSISTENT	RS 310	ABOVE OFFER PRICE	APPLY
2.PRADIP OVERSEAS	RS110	BELOW OFFER PRICE	AVOID
3.NMDC	RS 285	ABOVE OFFER PRICE	APPLY
4. TEXMO PIPES	RS 90	CURRENT PRICE- BELOW OFFER PRICE	AVOID
5.THANGAMAYIL	RS 75	ABOVE OFFER PRICE	APPLY

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IPO ANALYSIS: GOENKA DIAMOND AND JEWELS LIMITED – MAY NOT GLITTER IMMEDIATELY – AVOID.

NAME OF THE COMPANY	GOENKA DIAMOND AND JEWELS LIMITED
ISSUE OPEN/CLOSE	23-03-10 26-03-10
PROMOTERS	NAND LAL GOENKA AND ASSOCIATES
PRICE BAND	RS 135 -145
BRLM	SBI CAPITAL MARKETS LIMITED
OBJECTS	EXPANSION, WORKING CAPITAL
FINANCIALS	FY -09 --TI 451.29cr. NP 27.38cr. EPS 20.60
RISKS	NO EXPERIENCE IN RETAIL, FAMILY OWNED, HIGH WORKING CAPITAL
IPO GRADING	CARE GRADE -2
RECOMMENDATIONS	AVOID

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REVIEW OF IPO RECOMMENDATIONS

NAME OF THE COMPANY	ISSUE PRICE	INITIAL LISTING PRICE	FIRST CHOICE RECOMMENDATIONS
1. EURO MULTIVISION	RS 75	BELOW OFFER PRICE	AVOID
2. INDIA BULLS POWER	RS 45	BELOW OFFER PRICE	AVOID
3. DEN NET WORKS	RS 195	BELOW OFFER PRICE	AVOID
4. COX & KINGS	RS 330	ABOVE OFFER PRICE	APPLY
5. JSW ENERGY	RS 95	ABOVE OFFER PRICE	APPLY
6. GODREJ PROPERTIES	RS 490	ABOVE OFFER PRICE	APPLY
7. BIRLA SHLOKA	RS 50	BELOW OFFER PRICE	AVOID
8. INFINITE COMPUTERS	RS 165	ABOVE OFFER PRICE	APPLY
9. VASCON ENGINEERS	RS 165	BELOW OFFER PRICE	AVOID
10.HATHWAY CABLES	RS 240	BELOW OFFER PRICE	AVOID
11. REC	RS 203	ABOVE OFFER PRICE	APPLY
12. MAN INFRACONST.	RS 252	ABOVE OFFER PRICE	APPLY
13. UNITED BANK	RS 60	ABOVE OFFER PRICE	APPLY
14. DB REALTY	RS 468	BELOW OFFER PRICE	AVOID
15.EMMBI	RS 45	BELOW PRICE	AVOID

THE UGLY SIDE OF MICRO FINANCING – TIME FOR REGULATOR TO ACT TOUGH

Micro financing started as a social cause enterprise is turning out to be blood sucking organizations of the poorest of the poor and hapless sections of the society. More and more entrepreneurs and PE funds are eager to do business in this segment.

Micro-finance has been celebrated for bringing institutional credit to the poor who have no security or collateral to offer. The model’s success lies in extremely high loan recovery rates of 98 per cent or more. This is why micro-finance is now considered mainstream and is attracting private equity funding from all over the world. Founders of some of the MFIs who started as philanthropists are exiting at phenomenal profit and giving MFIs hitherto undreamed of valuations.
Micro finance is the provision of financial services to low income clients, including consumers and the self employed that traditionally lack access to banking and related services. It is a movement whose object is to create a platform, for as many poor and near poor as possible, to have permanent access to an appropriate range of high quality financial services, including savings, insurance and fund transfers, at an affordable cost. Those who promote micro-finance generally believe that such access will help poor people out of poverty. Micro-finance is one of the tools that can reduce the suffering of people by financial services that enable the poor to use the existing knowledge and experiences.

The interest rate applicable to loans given by the micro-credit organizations to Self Help Groups/member beneficiaries is deregulated. The advances to MFIs, by banks are classified as priority sector advances, the applicable interest rate is around 15%p.a. However, the MFIs are charging interest between 24% to 36% p.a. from the hapless borrowers. The Micro Finance Institutions, instead of providing credit at affordable interest rate, exploiting the situation and looking for a return on investments in excess of 30% p.a. Thus, there is a danger of micro finance not only being unable to remove poverty but end up as debt enlarging institutions.
Micro finance should not be viewed as a business venture where one can expect very high return on investments. RBI should put a cap on the interest to be charged on the end users, as most of their income goes for servicing the debt with no savings. This kind of situation is no better than the one the poor borrowers had experienced with the traditional moneylenders. They also defeat the very purpose of establishing the Micro Finance Institutions.

PUBLIC ISSUES – VALUATION THAT MATTERS, NOT MERCHANT BANKERS

The government, stung by the poor response to stake sale in NTPC, REC and NMDC has decided to review the performance of the investment bankers in the earlier issues managed by them, before it gives them the mandate. Under the new rules being considered, 70% Weightage for quality aspects and 30% for transaction fees. Currently, the merchant bankers are selected purely based on bids. Again, the thinking of the government on the above matters is off the track. Although the credibility and reputation of the merchant bankers are required, you cannot sell an issue on that alone. Pricing and valuation are very important.

UBS Securities, CITI group global, Edelweiss Capital, Kotak Mahindra Capital, Morgan Stanely, managed NMDC FPO. These private merchant bankers are reputed and have good track record in issue management. However, the FPO of NMDC got poor response and had to be bailed out by government controlled financial institutions. As compared to that, in the same week NMDC FPO opened for public, SBI capital Markets Limited, a public sector out fit, managed the public issue of DQ international which was over subscribed by 86 times. There was nothing wrong with the timing of NMDC issue. Then what went wrong? Definitely, there was some thing wrong with the pricing. NMDC FPO issue had all the plus points – operating margin is in excess of 75%, net profit margin of 51% and RNOW is around 40%. Zero Debt Company. Healthy dividend pay out record. The bonus component in the capital is 66.66%. However, the investor response to the issue was poor. In the FY 2010-11, government plans to mobilize Rs 40,000cr from disinvestment. The valuations of the issues have to be attractive to get good investor response. Government should think on this aspect instead of blaming the merchant bankers.

Other than preparing a quality offer document and giving sound investment advice, the strength and capability of all the merchant bankers, so far as attracting/inducing the investors for subscription for an issue, are the same. I don't think that there is any merchant banker in the country, who can sell an issue, only on his strength, irrespective of valuations and market conditions.