BUSINESS ECONOMICS - FORTNIGHTLY MAGAZINE

Dear readers,

The ipo analysis on Texmo Pipes and Products Limited by the same author has appeared in the above magazine in Feb 16-28 issue.




Thanks for your support and encouragement.

IPO ANALYSIS

TO VIEW THE IPO ANALYSIS OF ;

1. UNITED BANK OF INDIA

2. NMDC LIMITED

3. LODHA DEVELOPES LIMITED

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PERFORMANCE OF RECENT IPOS

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ABSENCE OF ‘WALL’, MADE ALL THE DIFFERENCE

The South African team scored an easy winnings win over India in Nagpur test. Having won the toss, the SA captain, rightly decided to bat first. Zaheer Khan struck early to send both the openers cheaply. The all weather specialist, Jacques Kallis and emerging player with right kind of test temperament Hamish Amla,upset the Dhoni’s calculation of winding up of SA’s innings early. Hamish went on to score unbeaten match winning double century, while Kallis scored a superb 173 runs. SA scored a formidable score of 558 runs before declaring the innings. India failed to reply strongly. Barring Sewag’s century and Badrinath’s half century the India’s response was poor. Dale Styen, speed and swing master did the maximum damage to India by claiming seven wickets. Indians were all out for 233 runs in the first innings and were unable to avoid the follow-on. The SA task become easy, since the Great Wall of India (Rahul Dravid) was not playing in the test because of injuries. Rahul Dravid, definitely would have stretched the India’s first innings, thus avoiding the follow-on. Then it would have been a different story. Though, Sachin scored a century in the second innings, the other batsmen failed to score. Unexpected support came from tail enders - W Saha, Harbajan and Zaheer, all scoring thirty odd runs. We need consistent performance from our bowlers, if we want to defeat SA. One only hopes they deliver something better in Kolkata test. Good luck to Team India.

A STEP IN THE RIGHT DIRECTION

The recent decision of RBI, not allowing the real estate loans, one more restructuring, is a step in the right direction. After collapse of Lehman Brothers in 2008, banks were permitted to restructure the real estate loans until 31-03-09. The real estate companies instead of reducing the prices held on to properties at high prices and earned substantial profits, when the economic activity picked up after June 2009. There are sectors still under pressure like textile, leather and handicraft, particularly SMEs in this sectors who deserve more incentives and stimulation. According to Assocham report - there is no bubble-like situation in real estate sector. It is the greed for more profit by real estate developers that is keeping the sector in temporary liquidity crunch. There is no reason to treat them at par with the farmers or the micro and small enterprises or even the large-scale industries, which are growth drivers of economy. The RBI decision, will force the developers to reduce their land/real estate holdings in order to clear/reduce bank loans/exposure, in time, to keep the credit ratings in tact. This will also helps the real estate prices to stabilize at realistic level.

INNOVATION, NATURE, WILL PROVIDE THE SOLUTION

The views expressed by Swaminathan S Anklesaria Aiyar on future oil price movements is highly exaggerated – ‘Start preparing for oil at $ 200 a barrel’ (TOI 07-02-10). The prices of all commodities in developing economies tend to raise for obvious reasons, including petroleum products. The movement of international oil prices are influenced by many factors, the prime mover apart from demand, is speculation. In 2008, oil was quoting at $ 147/barrel. If you factor average inflation in to that, in 2010, the price should have been around $ 165/barrel. The experts, at that time, predicted oil would touch $ 200/barrel in a year time. However, in 2010 it is quoting around $70/barrel, inspite of emerging economies recording robust GDP growth during 2008-2010. Comparing the decontrol of steel with that of oil products is not appropriate. Steel is not a product used by every one 24/hrs a day, like petrol, diesel, kerosene and coking gas. We are a country with huge poor and middle class families. Decontrol of petroleum products will hurt them very hard. Under-recoveries are a problem, which the government should tackle in different way without increasing the burden on the middle class, poor and other oppressed sections of the society. The energy crunch should be addressed by encouraging renewable sources of energy like solar and wind energy. Innovation, technological break and/or nature will provide the solution to the problem of energy crunch. Who imagined, five decades ago, that Information Technology and Internet would revolutionize the world as it is today? There is no need to press the panic button unnecessarily.

ENOUGH IS ENOUGH

Chetan Bhagat’s views on Indo-Pak relationship –‘Let’s not confuse peace with love’ (TOI 07-02-10) are well intended and interesting. However, our good neighbour is not interested in establishing permanent peace with us for the reason best known to them. There is something wrong with the mindset of their leaders – both military and political. The epicenter of international terrorism is Pak. The perpetrators of 26/11 and host of international criminals are sheltered and protected by the establishment there. Recently, Vir Sanghvi had written a thought provoking and excellent article in Hindustan Times – ‘There is a method to their madness’ clearly explaining the sequent of events in their madness. Our Prime Minister having tried his level best with different leaders in Pak, has finally made the statement not long ago –‘I donot know whom to talk in Pakistan’. Leaders in Pak talk in different tones, change their stance according to their convenience and there is no consistency in their stand on issues. What kind of peace initiative one can expect from such leaders. Peace has been given enough chances, now it is time to show our might.

AMAR SINGH DAYS ARE OVER

Vir Sanhgvi got it wrong again on Amar Singh. (Do not write Amar off yet, he will be back HT 10-01-10). Firstly, Amar Singh is either a mass or a class or a charismatic leader like Indira Gandhi to make a spectacular come back, in Indian politics. His influence is restricted to some pockets, in Uttar Pradesh. The days winning the election solely on the support of caste, religion, which was the trump card of Yadav trios, are over. The recent election results in UP and other states are a clear indication in this regard. The young, educated, informed and matured voters of our country cannot be taken for a ride, as were done in the earlier periods. Rahul Gandhi’s down to earth approach is doing wonders for the Congress in UP as well as in other states. He knows how to connect himself with young urban voters. Come 2014 parliament election, these regional parties and leaders will become irrelevant in Indian politics.

PAK WILL QUIT ONE DAY

The rate at which the guns and the suicide bombers are out in the streets of PAK, will soon get the coveted title - as failed state - number one in the world. The monoester the Establishment created to wage proxy war against India is fighting against the establishment itself. The day is not far off, PAK will not able to defend its own land and the thought of annexing J and K will be out of their brain. The Kashmiris surely would not want have any kind of relationship with the country ridden with innumerable problems. The USA will reduce its massive financial assistance to PAK in the coming years. That will make PAK bleed. It will turn to other countries for help, including India. One day it will say we have no issue with India on J and K. That will happen in the near future.

PERFECT IDIOTS

The producer, director and the lead actor of the recently released film 3 - IDIOTS, behaved in a manner befitting the film’s title at the press conference organized for the promotion of the film. When a journalist remarked whether the script is 70% based on the novel, the producer lost his cool and shouted at the journalist like an idiot. The question is not 70 percent or 5 percent derived from the novel. It is about giving due credit to the author. The producer should have gracefully accepted the mistake and made necessary correction to give credit in the beginning, prominently, along with other credits. While making a film based on the novel, story line has to be changed keeping in mind the audience preferences and the box-office. The fact remains that the film script is based on the novel and the author is entitled to the credit. It appears, because of the box-office success of the film the trios were talking in a different tone. However, much to the disliking of the producer, Chetan Bhagat, through this controversy got more credit and publicity.