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.

FOR DETAILED ANALYSIS OF THE IPO LOG ON TO FIRSTCHOICEIPOANALYSIS.COM

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.