Tuesday, June 29, 2010
Friday, June 25, 2010
Confidence Petroleum BSE Code: 526829 CMP: Rs. 7.5/-
The company manufactures cylinders and is engaged in LPG bottling and distribution. It has fully absorbed the LPG bottling technology at its plants spread across Udaipur and Pali in Rajasthan; Raigad and Patalganga in Maharashtra; Coimbatore in Tamil Nadu; Haridwar in Uttaranchal; Chindwara, Gwalior and Jabalpur in Madhya Pradesh.
A plant in Patalganga manufactures cylinders, and the Andhra Pradesh State Government allotted a 10-acre piece of land in 2008 within a Visakhapatnam special economic zone to establish a second CNG cylinder manufacturing plant.
Beta 1.39
Institutional Holding 0.83%
Current Dividend Yield 0%
Current P/E 8
Current Market Price Rs 7.5
Current Market Cap Rs 204 cr
Confidence Petroleum has emerged a key vendor for marketing operations of oil and gas players. Focussing on its key clientele the company is expanding its bouquet of offerings and is adding capacities. Considering the interesting opportunities lying ahead for this little known company, it appears attractive for the long-term investors.
Business:
Confidence Petroleum (CPL) is establishing itself as an all service provider for the marketing and distribution needs of Indian oil marketing companies. The company has scaled up its traditional businesses of LPG cylinders and LPG bottling and is investing heavily in auto LPG and natural gas distribution related businesses.
CPL has emerged India’s largest bottler of liquefied petroleum gas (LPG) operating out of 51 locations. These dispersed facilities offer greater flexibility and cost advantage to petroleum retailers in supplying LPG to domestic users spread across the country.
The company is also the largest LPG cylinder manufacturer with 6 facilities having an installed capacity of around 42 lakh cylinders per annum. Its 7.5 lakh unit per annum plant near Kandla in Gujarate is a 100% export oriented unit (EOU). The company has set up 50 auto LPG dispensing stations (ALDS) across various cities under the brand of GoGas.
The company has also entered the natural gas related businesses and recently commissioned a 3-lakh unit per annum cylinder manufacturing facility for compressed natural gas (CNG). It has also launched auto meter reading solutions for piped natural gas (PNG) sold to households by the city gas distributors (CGD).
Towards the end of year 2008, the company acquired two ethanol manufacturing units with a combined capacity of 1.5 lakh liters per day and one crude oil refining unit with 2 lakh liters per day capacity in Maharashtra. The company acquired these distressed assets for a low investment of around Rs 7.5 crore, which allows them the flexibility of operating only when profitable.
Growth drivers:
The company has recently commissioned CNG cylinder manufacturing plant in Vizag for exports market. It is currently setting up LPG and CNG cylinder manufacturing complex in Uttarakhand, which will commission operations by end of 2009. This new plant will enjoy 15-year exemption from sales and excise duties.
The company is carrying an order book of over 30 lakh LPG cylinders. It has significant growth plans in ALDS to scale up to 250 stations in next couple of years and has also won a turn-key contract for Indian Oil to set up 9 similar stations.
The company has tied up with Israel’s Energetech to introduce an innovative technology for automotive natural gas called ‘Adsorbed Natural Gas’ (ANG). This would enable it to store large quantity of natural gas under less pressure, enabling light-weight cylinders, which could be installed even on two-wheelers.
This being a new concept in India needs government approval and the company has received permission from the Chief Controller of Explosives to conduct tests. This technology, when commercialised, would enable it to transport natural gas from the marginal fields. The company also has plans to augment its offering to the petroleum companies by adding fuel-dispensing units for petroleum retailing and also move into setting up auto CNG stations.
Financials:
The current management has taken over the listed company with two LPG bottling plants, which was a sick unit, few years back and has turned it around. Hence, we do not have long financial history for the company.
Last year the company raised over Rs 100 crore through a GDR issue and share warrants. The company’s debt-to-equity ratio has been steadily coming down to 0.1 for the year ended March 2008. Post completion of its Uttarakhand plant, CPL would be carrying around Rs 30 crore of debt.
The company has approved a share buy-back of upto 5% of its equity from open market at a price less than Rs 20 per share. The company is currently in the process of amalgamating three of its subsidiaries with itself.
During FY 2010, the company is expected to derive meaningful benefit of its investments in Vizag and Uttarakhand plants as well as the acquisitions.
Most of the people reading this article, by now, must be aware of the of the illegal involvement of Ketan Parekh (He was involved in the scam related to Madhavpura Mercantile Co-operative Bank & amp; was banned by SEBI five-and-a-half-years ago) and the entities backed by him in unscrupulous trading activities in certain counters such as Cals Refineries, Confidence Petroleum, Bang Overseas, Temptation foods and Shree Precoated steels.
Securities and Exchange Board of India in the course of its routine market surveillance, received information regarding theexecution of synchronized deals in above mentioned scrips by entities namely, Maruti Securities Limited, Kundan Leasing and Finance Private limited,Chandra Financial Services Private Limited, Jay Investrade Private Limited and HSM Financial Services Private Limited. Also, SEBI's probe found that the two individuals — Harsh Shirish Maniar and Jay Shirish Maniar — were directors in three of the connected entities.
Now, Ketan Parekh's involvement is suspected as the PAN details of the two mentioned individuals revealed that their father, Shirish Shantilal Maniar, had been chargesheeted by the Central Bureau of Investigation (CBI) along with Ketan Parekh five years ago.
Devoid of economic rationale...The connected entities made off-market transactions amongst themselves. There were many instances where one connected client made off-market transfer to another connected client to enable the recipient to meet its market sale delivery obligations. Their transactions in securities amongst themselves appear to be devoid of economic rationale as they made substantial losses on account of their dealings in the scrips of Cals, SPSL and TFL. That they continued to execute such uneconomic transactions indicates that they possibly had alternative pay-offs outside the securities market and Ketan Prekh could be supporting them.
Confidence Petroleum Case...
It's a known fact that the connected clients carried out circular trading in the scrip of Confidence Petroleum as well and that has made many investors jittery and suspicious of the company. The stock also plunged by 5% in the day's trading after revelations of Ketan Parekh's involvement. The investors are very rightly concerned about their investments in this counter.
Let me put forward some points regarding the findings of SEBI :
#1. On December 28, 2006 Confidence petroleum had allotted around 2.1 Cr warrants to one of the connected entities i.e. Kundan Leasing and Finance Private limited (KLFPL). The warrants were converted to equity shares on June 13, 2007. The Lock-in Release date of the shares was on December 29, 2007. It is observed that KLFPL had dematerialized those shares and transferred the same through off-market transactions to various connected clients.
>>> Now, if the promoters had any intentions of manipulating the trade volume or rigging the stock price then they could have resorted to some other means & would not have issued warrants which had a lock-in release date of December 29, 2007 i.e full one year ahead. Why would a promoter ask an entity to manipulate the trading volumes in his company after 1 year?
#2. A thorough glance at the shareholding pattern of Temptation foods, Cals refinery and Confidence Petroleum clearly tells the difference. Temptation foods had just 18.19% as Promoters holding with 99.83% of their shares pledged, a case somewhat similar to Satyam. Also Venture Business Advisors private limited – the promoter group of Temptation foods limited was directly involved in off-market transactions with the connected entities, thus ensuring that promoters were a party to such fraudulent activities.
>>>Whereas in the case of Confidence Petroleum, the promoters have a sizeable holding of 45.52% with none of their shares pledged. Also in the last six months they have accumulated 26,81,231 shares from the open market with major purchasing done in the month of May when the price was hovering around 8-9 levels. That in itself should give a sense of satisfaction and should bolster the confidence of investors.
Trading in a counter by a group of entities take place on a daily basis in most of the counters and it's difficult for the promoters or others to know until authorized entities such as SEBI or Income tax department come out with such disclosures. So, one should not conclude that promoters are involved or a company is cheat.
It is blessing in disguise for those who wish to enter the scrip or want to invest more, because after such disclosures by SEBI, the stock price have come down to 7-8 levels, which otherwise may not have happened.
Off-late the company has performed really well with more than 50% jump in net profit for quarter ending Dec'09. Expect the company to register more than Rs 35 crore as net profit for FY 2009-10. This is substantial growth considering the fact that we are just out of recession. At present the company is available at very cheap valuations with a P/E multiple of just 8, while in the past it has traded at more than 20.
Thus, the case definitely provides a buying opportunity to all those who were sitting on fence waiting for the price to come down and also to those who wish to add more to their holding as the company has strong fundamentals and has huge opportunities ahead both internationally and domestically. The stock has all the merits to appreciate significantly on the basis of its performance and I thus suggest you to keep holding the same for next 3-4 years. But once must take position according to their own risk appetite and do their own research. It's your money invest it wisely; I am just suggesting it.
Nitin Khara- A born winner
Born into a middle-class Gujrathi family, he grew up to become one of the very successful first generation entrepreneurs. He grew up inculcating all the good values of being a good person, an honest citizen and an ambitious leader.
His growth path started with a small venture into stainless steel business with limited capital from his pocket in the year 1985. Within a span of 8 years he had gathered enough experience and courage to take over a LPG cylinder manufacturing unit in Mandeedip, in M.P. From here began the growth of a true businessman whose vision was great, who could take risks and who had the courage to trade on paths un-trodden.
Hereafter it was more takeovers and acquisitions of cylinder manufacturing plants which he continued to do very confidently. Start of Bottling plant network :
Then came the Government’s hints that it may allow private companies to enter the field of domestic LPG marketing. Mr. Khara tapped the opportunity and “Gaspoint Petroleum (India) Ltd.” took birth in the year 1999. Under this banner, the company went on with opening of LPG bottling plants all over India. They were with the view of reaching out to the public as a whole.
The network of bottling plants increased steadily and now the company operates through its bottling plants in total 22 states all over India. The company caters to bottling requirements for all major Public Sector units including HPCL, BPCL, IOCL and also to private companies like Leader and Shell gas.
Manufacturing in big way:
The company acquired one after the other cylinder manufacturing units and became the largest cylinder manufacturer in the country.
* The acquisitions and takeovers can be summarized as below :
* Andhra Cylinders, Hyderabad in the year 1997.
* Maharashtra Cylinders Private Limited, Nagpur taken over in 1997.
* Karnool cylinders, Karnool, taken over in 1998.
* Sanuj Steels Private Limited, Khopoli taken over in 1999.
* Mercury Cylinders Pvt. Ltd., Mathura taken over in 2000.
* Devrasa Gas Chem Ltd.
Under his leadership the company revived the Khopoli plant to become Asia’s largest cylinder manufacturing plant.
The company is largest supplier of cylinders to major oil companies like HPCL, BPCL, IOCL and some other private companies like Reliance and Shell.
Formation of Confidence Group :
With his presence in all LPG related activities it was time to go national. He acquired a stock listed company with the name of “Devrasa Gas Chem” and renamed it as Confidence Petroleum India Ltd. Thus now his company was Bombay stock exchange listed. His phenomenal growth path continued herein as well and the shares of the company recorded a path breaking increase in prices in a short period of time. Once again Mr. Khara was in news, this time on National news channels as winner.
Confident as he is, he ventured into the Global securities market with a GDR listing. Again emerging as winner he not earned his company good share, but also an international acknowledgment.
Latest Ventures :
Visionary as he is, Mr. Khara is busy in some international tie ups that may give Indian LPG market a big technological boom. In view of the changing market scenario, where technology plays a vital role in any business, he is bringing the latest and the most modern one to India. The company’s latest venture is in the field of Auto LPG. In the initial phases, the company has plans to launch 150 Auto LPG Dispensing Stations (ALDS) all over India. The stations are specifically designed for maximum customer comfort and safety. The next phase includes setting up of Auto LPG Cylinder Manufacturing Units.
Global Businessman :
Mr. Khara’s vision has already seen the opportunity that lies in alternate sources of fuel to cater the ever increasing need of the society. He has ambitious plans for making the Natural Gas available in the country viable and usable to the society as a whole.
This includes some technological innovations to be brought in from other developed countries. He plans to make CNG & LPG as the parallel sources available under the banner of his company – Confidence Group of Compnaies.
One more sector he is venturing into is the Automatic Meter Reading technology. The system works on Radio Frequency and is one of its kind. The knowledge sharing agreements with an Israel company called Miltel are through and the products are being tested in India.
Socialite :
Mr. Nitin Khara is not only an accomplished businessman but also has a great presence in social and community activities. His leadership qualities come in play in taking him to the top in every activity that he undertook. Some of the chairs currently dawned by him are:
1. Director in Vardhman Urban Co-operative Bank Ltd.
2. Vice President – All India Parallel LPG Federation
3. Chairman – Mahavir International
4. Vice President – ‘Sankalp’ a social organization.
5. Trusty – Sakal Jain Foundation
6. Trusty – Shree Vardhman Sthanakwasi Jain Shrawak Sangh
7. Trusty – Vanrai – a social group
8. Executive Member – Jain Social Group
9. Trusty – Shree Gujrathi Samaj
10. Member – Vidarbha Industries Association (VIA)
11. Member – Nag Vidarbha Chamber
12. Member – Lions Club
Awards and Achievements :
This journey has given a lot of satisfaction and accolades to Mr. Khara in the form of various awards won by him. Some of the major awards are :
Presented with memento for Outstanding and meritorious contribution at the hands of then President of Lions Club in the year 1995-1996. Jay Maharashtra Smruti Chinha for outstanding achievements in the field of business at the hands of Sh. Vilasrao Deshmukh in the year 1999. Udyog Patra – by “Institute of Trade and Industrial Development” in the year 2002 at the hands of the then Labour minister Sh.Satyanarayan Jatiya during “16th Economic Development Conference”. Rashtriya Udyog Ratan Award by IOBRD.
Thus, the case definitely provides a buying opportunity to all those who were sitting on fence waiting for the price to come down and also to those who wish to add more to their holding as the company has strong fundamentals and has huge opportunities ahead both internationally and domestically. The stock has all the merits to appreciate significantly on the basis of its performance and I thus suggest you to keep holding the same for next 3-4 years. But once must take position according to their own risk appetite and do their own research. It's your money invest it wisely; I am just suggesting it.
Nitin Khara- A born winner
Born into a middle-class Gujrathi family, he grew up to become one of the very successful first generation entrepreneurs. He grew up inculcating all the good values of being a good person, an honest citizen and an ambitious leader.
His growth path started with a small venture into stainless steel business with limited capital from his pocket in the year 1985. Within a span of 8 years he had gathered enough experience and courage to take over a LPG cylinder manufacturing unit in Mandeedip, in M.P. From here began the growth of a true businessman whose vision was great, who could take risks and who had the courage to trade on paths un-trodden.
Hereafter it was more takeovers and acquisitions of cylinder manufacturing plants which he continued to do very confidently. Start of Bottling plant network :
Then came the Government’s hints that it may allow private companies to enter the field of domestic LPG marketing. Mr. Khara tapped the opportunity and “Gaspoint Petroleum (India) Ltd.” took birth in the year 1999. Under this banner, the company went on with opening of LPG bottling plants all over India. They were with the view of reaching out to the public as a whole.
The network of bottling plants increased steadily and now the company operates through its bottling plants in total 22 states all over India. The company caters to bottling requirements for all major Public Sector units including HPCL, BPCL, IOCL and also to private companies like Leader and Shell gas.
Manufacturing in big way:
The company acquired one after the other cylinder manufacturing units and became the largest cylinder manufacturer in the country.
* The acquisitions and takeovers can be summarized as below :
* Andhra Cylinders, Hyderabad in the year 1997.
* Maharashtra Cylinders Private Limited, Nagpur taken over in 1997.
* Karnool cylinders, Karnool, taken over in 1998.
* Sanuj Steels Private Limited, Khopoli taken over in 1999.
* Mercury Cylinders Pvt. Ltd., Mathura taken over in 2000.
* Devrasa Gas Chem Ltd.
Under his leadership the company revived the Khopoli plant to become Asia’s largest cylinder manufacturing plant.
The company is largest supplier of cylinders to major oil companies like HPCL, BPCL, IOCL and some other private companies like Reliance and Shell.
Formation of Confidence Group :
With his presence in all LPG related activities it was time to go national. He acquired a stock listed company with the name of “Devrasa Gas Chem” and renamed it as Confidence Petroleum India Ltd. Thus now his company was Bombay stock exchange listed. His phenomenal growth path continued herein as well and the shares of the company recorded a path breaking increase in prices in a short period of time. Once again Mr. Khara was in news, this time on National news channels as winner.
Confident as he is, he ventured into the Global securities market with a GDR listing. Again emerging as winner he not earned his company good share, but also an international acknowledgment.
Latest Ventures :
Visionary as he is, Mr. Khara is busy in some international tie ups that may give Indian LPG market a big technological boom. In view of the changing market scenario, where technology plays a vital role in any business, he is bringing the latest and the most modern one to India. The company’s latest venture is in the field of Auto LPG. In the initial phases, the company has plans to launch 150 Auto LPG Dispensing Stations (ALDS) all over India. The stations are specifically designed for maximum customer comfort and safety. The next phase includes setting up of Auto LPG Cylinder Manufacturing Units.
Global Businessman :
Mr. Khara’s vision has already seen the opportunity that lies in alternate sources of fuel to cater the ever increasing need of the society. He has ambitious plans for making the Natural Gas available in the country viable and usable to the society as a whole.
This includes some technological innovations to be brought in from other developed countries. He plans to make CNG & LPG as the parallel sources available under the banner of his company – Confidence Group of Compnaies.
One more sector he is venturing into is the Automatic Meter Reading technology. The system works on Radio Frequency and is one of its kind. The knowledge sharing agreements with an Israel company called Miltel are through and the products are being tested in India.
Socialite :
Mr. Nitin Khara is not only an accomplished businessman but also has a great presence in social and community activities. His leadership qualities come in play in taking him to the top in every activity that he undertook. Some of the chairs currently dawned by him are:
1. Director in Vardhman Urban Co-operative Bank Ltd.
2. Vice President – All India Parallel LPG Federation
3. Chairman – Mahavir International
4. Vice President – ‘Sankalp’ a social organization.
5. Trusty – Sakal Jain Foundation
6. Trusty – Shree Vardhman Sthanakwasi Jain Shrawak Sangh
7. Trusty – Vanrai – a social group
8. Executive Member – Jain Social Group
9. Trusty – Shree Gujrathi Samaj
10. Member – Vidarbha Industries Association (VIA)
11. Member – Nag Vidarbha Chamber
12. Member – Lions Club
Awards and Achievements :
This journey has given a lot of satisfaction and accolades to Mr. Khara in the form of various awards won by him. Some of the major awards are :
Presented with memento for Outstanding and meritorious contribution at the hands of then President of Lions Club in the year 1995-1996. Jay Maharashtra Smruti Chinha for outstanding achievements in the field of business at the hands of Sh. Vilasrao Deshmukh in the year 1999. Udyog Patra – by “Institute of Trade and Industrial Development” in the year 2002 at the hands of the then Labour minister Sh.Satyanarayan Jatiya during “16th Economic Development Conference”. Rashtriya Udyog Ratan Award by IOBRD.
IKF Technologies Ltd. BSE Code: 532414 CMP: Rs.3.5-4/-
IKF Technologies Ltd. is a Public Limited company incorporated in the year of 2000 with the main objective of promoting IT, ITES, Telecom and Alternative Energy Resources across the Globe. Today it has emerged as one of the fastest growing company in IT and pioneering in the field of Bio Diesel. We will try to analyze if buying stocks of IKF could be good deal for invetsors in longer time frame duration. IKF Green Fuels Ltd formed as a subsidiary of IKF Technologies in 2005-06 started working in 2006 and has begun field operations in the current cropping season in 16 states in India.
IKF Green Fuels Ltd formed as a subsidiary of IKF Technologies in 2005-06 started working in 2006 and has begun field operations in the current cropping season in 16 states in India including Chattisgarh, West Bengal, Jharkhand, Orissa, Rajasthan, Karnataka, Madhya Pradesh, Tamil Nadu, Andhra Pradesh, Maharashtra, Gujarat, Manipur, Arunachal Pradesh, Assam, Meghalaya and Nagaland.
The parent company IKF Technologies has committed an investment of Rs 200 crore into IKF Green Fuels Ltd. Currently the company has 50,000 hectares of land under cultivation and has recently signed an MoU with the government of Madhya Pradeshwhere it would be investing Rs 30 crore in setting up a refinery. It is also seeking 2,000 hectares of wasteland for the cultivation of Jatropha in the state. The companyhas also signed an agreement with Indian Oil Corporation Ltd, R&D center, Faridabad for transferring of technology and providing technical assistance for conversion of Jatropha into biofuel.
A group of individuals bought a listed company in 2004 and turned it around. The software company they bought, has now expanded into telecom and even into the emerging bio-fuels business. Can we buy stocks of IKF to create wealth for us.
IKF Technologies is today a Rs 180-crore company and growing. In 2004-05, when the company was taken over by Pradeep Dutta and Sunil Kumar Goel, it had a share capital base of Rs 10 crore. Over the last two years, the company has invested in putting together infrastructure and technology, which has paid off. It grew its web development, software and BPO businesses internationally, to Australia and the UK.
Read: IKF plans Rs 400-cr GDR for biofuel biz
In 2006, it set up a 31-seat BPO for Tata Teleservices. “The initial couple of years went into restructuring and settling down in the core business,” says Pankaj Garg, director at IKF Technologies, which counts domestic telcos and banks among its clients. Though the promoters realise that they are late entrants in BPO outsourcing, they are looking at new markets.
IKF has now set up offices in Germany, Brazil, Dubai and Russia, and is hoping to see growth from these markets over the next two years. The idea of getting into telecom was there since 2006 but “since it was difficult to get a licence at that point in time, it never materialised”, says Garg. But it finally got a Category ‘A’ licence for Internet Service Provider (ISP) by the Department of Telecommunications (DoT) in January. Since then, it has been busy setting up its network. “We have already spent Rs 4-5 crore, and another Rs 8-9 crore will be spent in the future on developing the network,” informs Garg. As an initial foray in telecom, the company decided to get into VoIP services, a segment, which is not too crowded. That’s how IKF Tel came into being. The company is almost on the verge of launching its VoIP services for the retail market, having already launched the same for enterprise customers.
IKF has earmarked $2-3 million for its telecom business, of which, says Garg, $1 million has already been spent over the last one year. IKF expects revenues of Rs 100 crore from its telecom business in the next three years, growing both organically and inorganically. Taking its quest for emerging technologies forward, IKF is into bio-fuels too.
According to Vishal Rawat, President, IKF Green Fuels, "The company plans to invest Rs 2,200 crore by 2015 in both plantations and refineries to become a market leader in the field and is eyeing 15-20 percent of the market share of biodiesel by then." The company has joint ventures for Jatropha cultivation in several states. In Andhra Pradesh, it has tied up with Sigma Biofuels Hyderabad and SRECKO Indhan Ltd while in Gujarat it has a JV with Avani Vermi Compost and Biofuel, Ahmedabad.
Bio Diesel Sector - Future Prospects
How are you funding the plantations?
We have an agreement with HDFC bank for a credit line of Rs 20 crore on an all India basis for the farmers to undertake contract farming for IKF Green Fuels Ltd. We also have got a preliminary approval from Buldhana Urban Cooperative Credit Society (Maharashtra) for extending a credit line of Rs 50 crore for Jatropha cultivation. We are targeting 10,000 hectares in Maharashtra by the end of this year. We are also in advanced stages of talks with the Punjab National Bank and Cooperation Bank for a similar arrangement.
Are you looking at any acquisitions?
We are looking at acquiring a proprietorship concern in Rajasthan. It has around 10,000 hectares of existing plantation and an assured credit line of Rs 10 crore. The deal is almost finalized. We have also put up a proposal to Rajasthan fuel development authority for allotting 10,000 hectares which will take some time.
What is the progress made on R&D?
We already have 26 different varieties of Jatropha and we have collected the planting material from different sources. We are setting up a 200 hectares research farm in Ahamgaon in Maharashtra and looking at tie-ups with agricultural universities as well.
IKF Green Fuels Ltd formed as a subsidiary of IKF Technologies in 2005-06 started working in 2006 and has begun field operations in the current cropping season in 16 states in India including Chattisgarh, West Bengal, Jharkhand, Orissa, Rajasthan, Karnataka, Madhya Pradesh, Tamil Nadu, Andhra Pradesh, Maharashtra, Gujarat, Manipur, Arunachal Pradesh, Assam, Meghalaya and Nagaland.
The parent company IKF Technologies has committed an investment of Rs 200 crore into IKF Green Fuels Ltd. Currently the company has 50,000 hectares of land under cultivation and has recently signed an MoU with the government of Madhya Pradeshwhere it would be investing Rs 30 crore in setting up a refinery. It is also seeking 2,000 hectares of wasteland for the cultivation of Jatropha in the state. The companyhas also signed an agreement with Indian Oil Corporation Ltd, R&D center, Faridabad for transferring of technology and providing technical assistance for conversion of Jatropha into biofuel.
IKF Technologies is today a Rs 180-crore company and growing. In 2004-05, when the company was taken over by Pradeep Dutta and Sunil Kumar Goel, it had a share capital base of Rs 10 crore. Over the last two years, the company has invested in putting together infrastructure and technology, which has paid off. It grew its web development, software and BPO businesses internationally, to Australia and the UK.
Read: IKF plans Rs 400-cr GDR for biofuel biz
In 2006, it set up a 31-seat BPO for Tata Teleservices. “The initial couple of years went into restructuring and settling down in the core business,” says Pankaj Garg, director at IKF Technologies, which counts domestic telcos and banks among its clients. Though the promoters realise that they are late entrants in BPO outsourcing, they are looking at new markets.
IKF has now set up offices in Germany, Brazil, Dubai and Russia, and is hoping to see growth from these markets over the next two years. The idea of getting into telecom was there since 2006 but “since it was difficult to get a licence at that point in time, it never materialised”, says Garg. But it finally got a Category ‘A’ licence for Internet Service Provider (ISP) by the Department of Telecommunications (DoT) in January. Since then, it has been busy setting up its network. “We have already spent Rs 4-5 crore, and another Rs 8-9 crore will be spent in the future on developing the network,” informs Garg. As an initial foray in telecom, the company decided to get into VoIP services, a segment, which is not too crowded. That’s how IKF Tel came into being. The company is almost on the verge of launching its VoIP services for the retail market, having already launched the same for enterprise customers.
IKF has earmarked $2-3 million for its telecom business, of which, says Garg, $1 million has already been spent over the last one year. IKF expects revenues of Rs 100 crore from its telecom business in the next three years, growing both organically and inorganically. Taking its quest for emerging technologies forward, IKF is into bio-fuels too.
According to Vishal Rawat, President, IKF Green Fuels, "The company plans to invest Rs 2,200 crore by 2015 in both plantations and refineries to become a market leader in the field and is eyeing 15-20 percent of the market share of biodiesel by then." The company has joint ventures for Jatropha cultivation in several states. In Andhra Pradesh, it has tied up with Sigma Biofuels Hyderabad and SRECKO Indhan Ltd while in Gujarat it has a JV with Avani Vermi Compost and Biofuel, Ahmedabad.
Bio Diesel Sector - Future Prospects
"We aim to have 15-20 percent share of the biodiesel market by 2015,"
-Vishal Rawat, President, IKF Green Fuels
Exerpts of interview with Vishal Rawat printed in BioSpectrum magazine.
How many refineries do you have? Any plans for expansion?
The company has a refinery at Udaipur with a capacity to process 3,000 liters of biodiesel per day for trial and demonstration purposes. We are looking at the expansion of that refinery as well as setting up of more refineries in Vidharbha, Gujarat and Meghalaya. The capacity would be dependent on the captive area.
When do you expect to start commercial production?
We expect to start it by 2011. We expect full-fledged commercial production to start by 2015-16 since by then we would have a fully-developed refining capacity and plantations. We expect the size of the industry to be close to Rs 80,000-l00,000 crore by 2017.
-Vishal Rawat, President, IKF Green Fuels
Exerpts of interview with Vishal Rawat printed in BioSpectrum magazine.
How many refineries do you have? Any plans for expansion?
The company has a refinery at Udaipur with a capacity to process 3,000 liters of biodiesel per day for trial and demonstration purposes. We are looking at the expansion of that refinery as well as setting up of more refineries in Vidharbha, Gujarat and Meghalaya. The capacity would be dependent on the captive area.
When do you expect to start commercial production?
We expect to start it by 2011. We expect full-fledged commercial production to start by 2015-16 since by then we would have a fully-developed refining capacity and plantations. We expect the size of the industry to be close to Rs 80,000-l00,000 crore by 2017.
How are you funding the plantations?
We have an agreement with HDFC bank for a credit line of Rs 20 crore on an all India basis for the farmers to undertake contract farming for IKF Green Fuels Ltd. We also have got a preliminary approval from Buldhana Urban Cooperative Credit Society (Maharashtra) for extending a credit line of Rs 50 crore for Jatropha cultivation. We are targeting 10,000 hectares in Maharashtra by the end of this year. We are also in advanced stages of talks with the Punjab National Bank and Cooperation Bank for a similar arrangement.
Are you looking at any acquisitions?
We are looking at acquiring a proprietorship concern in Rajasthan. It has around 10,000 hectares of existing plantation and an assured credit line of Rs 10 crore. The deal is almost finalized. We have also put up a proposal to Rajasthan fuel development authority for allotting 10,000 hectares which will take some time.
What is the progress made on R&D?
We already have 26 different varieties of Jatropha and we have collected the planting material from different sources. We are setting up a 200 hectares research farm in Ahamgaon in Maharashtra and looking at tie-ups with agricultural universities as well.
“The chairman of the company, Dr RP Singh, who is a former scientist at the Indian Agriculture Research Institute, led us into this field,” says Vishal Rawat, president bio-diesel at IKF Green Fuel. IKF Green Fuel is also planning to get into ethanol, solar and wind energy in the near future. For bio-diesel, though, it has signed an MoU with the government of Madhya Pradesh through which it is seeking 200 hectares of wasteland for jatropha cultivation and will also be setting up an oil extraction plant with an investment of Rs 30 crore.
It also engages in contract farming on private wasteland. “We have one refinery already at Udaipur, which can produce 3,000 litres a day but at the moment, it is being used for trial runs. We expect commercial production to start by 2010-11,” says Rawat. Commercial bio-diesel production would need a steady flow of jatropha seeds. To this effect, IKF has 10,000 hectares of jatropha under cultivation, both on leased and owned land. “By 2008-end, we hope to reach the 30,000-40,000 hectares mark,” says Rawat. Meanwhile, research is on for better seeds with agricultural universities and other institutions.
The company has been granted permission by the government of India for a GDR issue to raise Rs 500 crore. About Rs 200 crore are already been allocated for IKF Green Fuel, indicating the company’s commitment to the growing sector. It is also exploring JVs in Brazil and South Africa for plantation and extraction there. “We want to be the leader in the bio-fuels market by 2015,” says Rawat.
IKF Tech plans to grow jatropha in Africa-------
IKF Technologies, the country's first corporate jatropha refiner, has formally approached African Governments — Swaziland, Mozambique and South Africa — for permission to cultivate the plant. Armed with detailed project reports, the company has also applied for an area of 50,000 acres of wasteland in each of these countries for organised jatropha farming. Mr Mukesh Kumar Goel, a director of the company, told Business Line that official responses, however, were awaited. According to the company's estimates, the cost of acquiring the land (total 1.5 lakh acres), nursing the plants till the first fruition after 18 months, and setting up crushing facilities would be Rs 3,000 crore. In a phased manner If permissions were obtained, the purchases or acquisition of land through lease and taking up the plantation projects would be done in a phased manner over a long period of time. IKF has sought to own the land in Africa, and prefers not go in for contract farming, Mr Goel explained.
In India, it has opted for the contract-farming model in Rajasthan, where its existing refinery is located, in an area of 5,000 hectares. In Meghalaya, however, IKF cultivates on its own land.Its refinery was commissioned in March this year. Currently, it is procuring jatropha seeds from the open market since it began farming the plants in Meghalaya roughly 12 months ago.Though the first flush of seeds takes 18 months, jatropha harvests are available twice a year in the period after maturing. One hectare can accommodate roughly 2,500 plants.
The yield per tree in one harvest, according to thumb rule, is around 3.5 kg and from one kg of seeds, a little over 300 ml of bio-diesel can be had.The company has a one-year renewable technology agreement with Indian Oil Technologies Ltd, a subsidiary of Indian Oil Corporation, for perfecting mixing grade bio-diesel.
Refinery in Gujarat :
It has proposed to set up another refinery in Gujarat with a capacity of 1 lakh tonnes per annum at a cost of Rs 50 crore.
It has also sought permission for contract farming of jatropha in Gujarat and Chhattisgarh.
In Rajasthan, it has a refinery running with a capacity to produce 3,000 litres a day.
As a Market Analyst, I am strongly recommending to buy stock at CMP of around INR 3-4. It's future prospects are bright.
It also engages in contract farming on private wasteland. “We have one refinery already at Udaipur, which can produce 3,000 litres a day but at the moment, it is being used for trial runs. We expect commercial production to start by 2010-11,” says Rawat. Commercial bio-diesel production would need a steady flow of jatropha seeds. To this effect, IKF has 10,000 hectares of jatropha under cultivation, both on leased and owned land. “By 2008-end, we hope to reach the 30,000-40,000 hectares mark,” says Rawat. Meanwhile, research is on for better seeds with agricultural universities and other institutions.
The company has been granted permission by the government of India for a GDR issue to raise Rs 500 crore. About Rs 200 crore are already been allocated for IKF Green Fuel, indicating the company’s commitment to the growing sector. It is also exploring JVs in Brazil and South Africa for plantation and extraction there. “We want to be the leader in the bio-fuels market by 2015,” says Rawat.
IKF Tech plans to grow jatropha in Africa-------
IKF Technologies, the country's first corporate jatropha refiner, has formally approached African Governments — Swaziland, Mozambique and South Africa — for permission to cultivate the plant. Armed with detailed project reports, the company has also applied for an area of 50,000 acres of wasteland in each of these countries for organised jatropha farming. Mr Mukesh Kumar Goel, a director of the company, told Business Line that official responses, however, were awaited. According to the company's estimates, the cost of acquiring the land (total 1.5 lakh acres), nursing the plants till the first fruition after 18 months, and setting up crushing facilities would be Rs 3,000 crore. In a phased manner If permissions were obtained, the purchases or acquisition of land through lease and taking up the plantation projects would be done in a phased manner over a long period of time. IKF has sought to own the land in Africa, and prefers not go in for contract farming, Mr Goel explained.
In India, it has opted for the contract-farming model in Rajasthan, where its existing refinery is located, in an area of 5,000 hectares. In Meghalaya, however, IKF cultivates on its own land.Its refinery was commissioned in March this year. Currently, it is procuring jatropha seeds from the open market since it began farming the plants in Meghalaya roughly 12 months ago.Though the first flush of seeds takes 18 months, jatropha harvests are available twice a year in the period after maturing. One hectare can accommodate roughly 2,500 plants.
The yield per tree in one harvest, according to thumb rule, is around 3.5 kg and from one kg of seeds, a little over 300 ml of bio-diesel can be had.The company has a one-year renewable technology agreement with Indian Oil Technologies Ltd, a subsidiary of Indian Oil Corporation, for perfecting mixing grade bio-diesel.
Refinery in Gujarat :
It has proposed to set up another refinery in Gujarat with a capacity of 1 lakh tonnes per annum at a cost of Rs 50 crore.
It has also sought permission for contract farming of jatropha in Gujarat and Chhattisgarh.
In Rajasthan, it has a refinery running with a capacity to produce 3,000 litres a day.
As a Market Analyst, I am strongly recommending to buy stock at CMP of around INR 3-4. It's future prospects are bright.
Stock price could touch arround INR 50+ in 2012 and may be 200 in future but buy at your own risk. Do your own analysis and take a call. I would say one can take bet on this counter depending upon their risk appetite.
Thursday, June 24, 2010
Cals Refinery BSE Code: 526652
Cals Refineries is one stock in my small cap stock list and making rounds nowadays in circle of people who buy penny stocks.
Background
Cals Refineries Limited was incorporated on the 25th of July, 1984 as a private limited company. On 22nd September, 1992 the company was converted into a public limited company and is now listed on the Bombay Stock Exchange (BSE) under the Scrip Code 526652.
With the energy sector playing a pivotal role in global economies, the company aims to actively participate in it's growth in India as well as in international markets.
Cals Refineries Limited, in the first phase of a mega project, is establishing a 4.8 MMTPA (100,000 BPD) refinery at Haldia, India.
Comparison with existing refineries in India
* Reliance Industries (33 million tonne)
* Essar Oil (7.5 million tonne)
* Reliance Petroleum setting up 29 million tonne
* MRPL (10.5 million tonnes)
* Chennai Petroleum (9.5 million tonnes)
* Bongaigaon Refinery (2 million tonnes)
Management of CALS Refineries
Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. Mr. M. S. Ramachandran has over 38 years of experience in the Oil and Gas industry. He was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. He helped the government to implement various policies that would attract private players into the Oil & Gas sector.
At I.O.C., he redirected the organization around key business lines with greatercommercial focus and market facing capabilities. During his tenure, Mr. Ramachandran increased sales growth from USD 25 Billion to USD 34 Billion, which increased the net profit of company from USD 0.65 Billion to USD 1.2 Billion, raising the company’s Fortune ranking from 223 to 189.
Crude Oil supply
Cals Refineries Ltd has signed a deal with oil major BP for up to 5 million tonnes of crude a year for a refinery. So the supply of crude is already guarenteed.
Upstream Integration
Spice Energy, the parent company of CALS has another subsidiary, Spice Exploration, which has operations in Africa and Indonesia from where crude could be made available.
Signed with customers for finished products
Cals Refineries has signed a deal with oil major BP to buy up to 100,000 bpd crude for its refinery. As per the deal, 60,000 bpd is confirmed, the balance of 40,000 is optional.
Additionally, Cals Refineries Ltd has signed a memorandum of understanding (MoU) with Bharat Petroleum Corporation (BPCL) for petro products off-take from CALS. The MoU has been signed in order to off-take the part of petroleum products by BPCL from CALS in its first phase which is a 100,000 BPSD crude oil refinery after accounting for the products committed to British Petroleum (BP) and the entire petro products from CALS in the second phase of expansion which is another 100,000 BPSD refinery at Haldia, West Bengal.
Some calculations and stock price estimation
CAPACITY OF REFINERY = 4.8 MMTPA (Million Metric Tonnes Per Annum)= 100000 Barrels Per Day (Approximately) = 36500000 Barrels Per Annum
Gross Refining Margin (GRM) Per Barrel is 10$ = 500Rs Approx.
Approx. Annual Profit = 36500000 * 500 RS = 1825 Crores
EPS at above nis. = 1824/794 = 2.3 **794 crores is total Equity of CALS Refineries
Average P/E ratio of Indian Refining Sector would 15
Share Price = 15 *2.3 = 34.50 Rs.
So if everything goes as per calculation in phase 1 and company manages to produce as estimated, around Rs. 30 - 40 could be the stock price range.
They have plans of capacity expansion for second and third phase as well. I am not sure about the numbers.
CMP of the stock: 0.25-0.30 Rs.
Background
Cals Refineries Limited was incorporated on the 25th of July, 1984 as a private limited company. On 22nd September, 1992 the company was converted into a public limited company and is now listed on the Bombay Stock Exchange (BSE) under the Scrip Code 526652.
With the energy sector playing a pivotal role in global economies, the company aims to actively participate in it's growth in India as well as in international markets.
Cals Refineries Limited, in the first phase of a mega project, is establishing a 4.8 MMTPA (100,000 BPD) refinery at Haldia, India.
Comparison with existing refineries in India
* Reliance Industries (33 million tonne)
* Essar Oil (7.5 million tonne)
* Reliance Petroleum setting up 29 million tonne
* MRPL (10.5 million tonnes)
* Chennai Petroleum (9.5 million tonnes)
* Bongaigaon Refinery (2 million tonnes)
Management of CALS Refineries
Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. Mr. M. S. Ramachandran has over 38 years of experience in the Oil and Gas industry. He was Chairman of Indian Oil Corporation (I.O.C.), India’s largest Oil & Gas company. He helped the government to implement various policies that would attract private players into the Oil & Gas sector.
At I.O.C., he redirected the organization around key business lines with greatercommercial focus and market facing capabilities. During his tenure, Mr. Ramachandran increased sales growth from USD 25 Billion to USD 34 Billion, which increased the net profit of company from USD 0.65 Billion to USD 1.2 Billion, raising the company’s Fortune ranking from 223 to 189.
Crude Oil supply
Cals Refineries Ltd has signed a deal with oil major BP for up to 5 million tonnes of crude a year for a refinery. So the supply of crude is already guarenteed.
Upstream Integration
Spice Energy, the parent company of CALS has another subsidiary, Spice Exploration, which has operations in Africa and Indonesia from where crude could be made available.
Signed with customers for finished products
Cals Refineries has signed a deal with oil major BP to buy up to 100,000 bpd crude for its refinery. As per the deal, 60,000 bpd is confirmed, the balance of 40,000 is optional.
Additionally, Cals Refineries Ltd has signed a memorandum of understanding (MoU) with Bharat Petroleum Corporation (BPCL) for petro products off-take from CALS. The MoU has been signed in order to off-take the part of petroleum products by BPCL from CALS in its first phase which is a 100,000 BPSD crude oil refinery after accounting for the products committed to British Petroleum (BP) and the entire petro products from CALS in the second phase of expansion which is another 100,000 BPSD refinery at Haldia, West Bengal.
Some calculations and stock price estimation
CAPACITY OF REFINERY = 4.8 MMTPA (Million Metric Tonnes Per Annum)= 100000 Barrels Per Day (Approximately) = 36500000 Barrels Per Annum
Gross Refining Margin (GRM) Per Barrel is 10$ = 500Rs Approx.
Approx. Annual Profit = 36500000 * 500 RS = 1825 Crores
EPS at above nis. = 1824/794 = 2.3 **794 crores is total Equity of CALS Refineries
Average P/E ratio of Indian Refining Sector would 15
Share Price = 15 *2.3 = 34.50 Rs.
So if everything goes as per calculation in phase 1 and company manages to produce as estimated, around Rs. 30 - 40 could be the stock price range.
They have plans of capacity expansion for second and third phase as well. I am not sure about the numbers.
CMP of the stock: 0.25-0.30 Rs.
Downside Support @ 0.10-0.15 paise.
If you are investing in stock markets and not in Bank FD's/bonds/Kisan Vikas Patra, you have the appetite to take risks in your investments. ;)
So you decide how much money you can loose comfortably by investing in penny stockand invest that amount in CALS Refineries. !@##@$%^%&^%$#@ this must have been your immediate reaction after reading this statement but this is what my true opinion is!
A negative note to make
Cals refineries promoters hold only 0.11 percent share in this company and Shares held by Custodians and against which Depository Receipts have been issued 83.98 percent (custodian name is The Bank of Newyork Mellon DR) so public share holding is 99.89 percent and there are a huge equity capital of cals refineries.
Total 7,931,300,000 shares of Cals refineries held by general public.
As I have read in Business Standard news article, promoters do hold a big chunk of equity (almost >70%) which is held by custodians for issue of depository receipts at the moment.
I am not recommending you to buy stocks to invest in CALS refineries but I am asking you to take a bet in this counter. If it goes well, you would gain a lot, if you loose, never mind.
Few of the penny stocks that made such magic are:
ABAN OFFSHORE - 6.00 Rs to 5393 Rs
KS OILS - 0.50 paise to 142 Rs
MERCATOR LINES - 0.40 paise to 184 Rs.
COUNTRY CLUB- 0.42 paise to 222 Rs
PANTALOONS RETAIL- 2.23 Rs to 875
JAI CORPORATION- 16 Rs to 1079 Rs
Update:-
CALS REFINERIES, which is topping Volumes in Bombay Stock Exchange, is one of the most talked in penny stock segment. I have seen in many forums and even brokers are recommending their client as a Multibagger stock just based on the humongous plans made by the company. It’s from unlisted Spice Energy group, which has its presence in Exploration, Mining and Refining sectors. Promoters acquired listed NBFC and planned to set up crude refinery. Equity floated to 794 Cr through GDR issue. Before giving any opinion on this stock lets first dig up into details of plans made by the company.
Cals Refineries plans to Implement a 20000 Cr, 4.8MMTPA refinery project at Haldia (East coast, West Bengal) by June 2011 in Phase I for which it will be shipping existing plants from Germany/Canada/US to India and adding more secondary processing units. Cals will be implementing another 4.8 MMTPA (100,000 BPD) by July 2012 taking the total capacity to 9.6 MMTPA (200,000 BPD) by July 2012.Lower capital cost/bbl and faster implementation than Greenfield project is management’s reasoning for a second-hand refinery. Company has also planned for phase III as of now I wont go deep into it. The refinery project would involve moving basic crude distillation units (CDU) from a Petro Canada plant and a refinery in Kansas, USA, moving secondary processing units from Bayernoil Ingolstadt refinery (Germany) and adding new Propylene and Benzene units .The refinery being brought from Germany is under operations from late 60's and units from PetroCanada and Kansas (US) are under operations from 70’s, these refinery will be dismantle and than transported through ship and assembled at Haldia. The refinery will be relocated by Ventech Corp USA, which has done similar relocation projects, Looking at the Management of Cals having vast experience & expertise, Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.) having over 38 years of experience in the Oil and Gas industry. Ramesh Bhosale is Chief Financial Officer, Independent Non-Executive Director of Cals Refineries Ltd. He has over 25 years of experience in the field of Costing, Finance, Accounts, MIS, Merger & Acquisition and Project Finance. Cals has some more achivement on its name like Crude oil supply contract with BP (World’s Second petroleum Company) & Sign MOU for 1000 acres land, already allotted 400 acres.
Now let look at the other side of it, there are some important facts that should be stressed on before making any position in this stock.
Due to economic meltdown, company has not able to achieve financial closure (FC) till now. Hence for the project to be completed on time look doubtful to me.
Shareholding pattern of Cals: - Interestingly, data available with BSE shows that Spice is the only promoter of CALS, controlling 0.11 per cent stake through a group outfit called SRM Exploration. But from the last two years the promoters of Spice Mr Sanjiv Malhotra, Mr Ravi Chilukuri (CEO) and Mr Gagan Rastogi and their families are claming to actually controlled as much as 75 per cent of the paid-up equity capital in Cals through GDR, but interestingly to note the shareholding pattern for the quarter ending Dec 2009 where GDR holding is reduced to only 61.16% from 83.98% in June 2009 quarter, whereas the total public share holding also increase from 15.91% to 38.73%. Number of shareholders also increased from 71,247 to 123,496 from june 2009 till now. However seeing the positive side is that Fund houses has made an entry.
India Max Investment Fund Ltd: 2.40%
Merrill Lynch Capital Markets Espana S.A. S.V.(spain): 1.27%.
GDR holdings are continuously reducing from the june 2009 qtr this creates a doubt.
Whereas looking at the work related activities at haldia only land filling is in progress and dismantling of refinery has not yet been started, Company is waiting for the Financial Closure and onces it is done than they will start the further process.
The thinning refining margin may pose further problems for the project, which suffers from an estimated cost disadvantage of $2 a barrel on crude oil transportation from the proposed port at Dhamra in Orissa to Haldia in West Bengal.
Cals is having a Market cap around 450 crore & fundamentals are nil as on date.
Whereas the revised circuit of 10% in Cals makes it a trader paradise.
Seeing all the aspect of the company as of now Cals is a very risky affair. But saying goes higher the risk; higher the return. So one can take risk within their comfortable zone.
If you are investing in stock markets and not in Bank FD's/bonds/Kisan Vikas Patra, you have the appetite to take risks in your investments. ;)
So you decide how much money you can loose comfortably by investing in penny stockand invest that amount in CALS Refineries. !@##@$%^%&^%$#@ this must have been your immediate reaction after reading this statement but this is what my true opinion is!
A negative note to make
Cals refineries promoters hold only 0.11 percent share in this company and Shares held by Custodians and against which Depository Receipts have been issued 83.98 percent (custodian name is The Bank of Newyork Mellon DR) so public share holding is 99.89 percent and there are a huge equity capital of cals refineries.
Total 7,931,300,000 shares of Cals refineries held by general public.
As I have read in Business Standard news article, promoters do hold a big chunk of equity (almost >70%) which is held by custodians for issue of depository receipts at the moment.
I am not recommending you to buy stocks to invest in CALS refineries but I am asking you to take a bet in this counter. If it goes well, you would gain a lot, if you loose, never mind.
Few of the penny stocks that made such magic are:
ABAN OFFSHORE - 6.00 Rs to 5393 Rs
KS OILS - 0.50 paise to 142 Rs
MERCATOR LINES - 0.40 paise to 184 Rs.
COUNTRY CLUB- 0.42 paise to 222 Rs
PANTALOONS RETAIL- 2.23 Rs to 875
JAI CORPORATION- 16 Rs to 1079 Rs
Update:-
CALS REFINERIES, which is topping Volumes in Bombay Stock Exchange, is one of the most talked in penny stock segment. I have seen in many forums and even brokers are recommending their client as a Multibagger stock just based on the humongous plans made by the company. It’s from unlisted Spice Energy group, which has its presence in Exploration, Mining and Refining sectors. Promoters acquired listed NBFC and planned to set up crude refinery. Equity floated to 794 Cr through GDR issue. Before giving any opinion on this stock lets first dig up into details of plans made by the company.
Cals Refineries plans to Implement a 20000 Cr, 4.8MMTPA refinery project at Haldia (East coast, West Bengal) by June 2011 in Phase I for which it will be shipping existing plants from Germany/Canada/US to India and adding more secondary processing units. Cals will be implementing another 4.8 MMTPA (100,000 BPD) by July 2012 taking the total capacity to 9.6 MMTPA (200,000 BPD) by July 2012.Lower capital cost/bbl and faster implementation than Greenfield project is management’s reasoning for a second-hand refinery. Company has also planned for phase III as of now I wont go deep into it. The refinery project would involve moving basic crude distillation units (CDU) from a Petro Canada plant and a refinery in Kansas, USA, moving secondary processing units from Bayernoil Ingolstadt refinery (Germany) and adding new Propylene and Benzene units .The refinery being brought from Germany is under operations from late 60's and units from PetroCanada and Kansas (US) are under operations from 70’s, these refinery will be dismantle and than transported through ship and assembled at Haldia. The refinery will be relocated by Ventech Corp USA, which has done similar relocation projects, Looking at the Management of Cals having vast experience & expertise, Chairman of Cals Refineries, Mr. M.S. Ramachandran, was Chairman of Indian Oil Corporation (I.O.C.) having over 38 years of experience in the Oil and Gas industry. Ramesh Bhosale is Chief Financial Officer, Independent Non-Executive Director of Cals Refineries Ltd. He has over 25 years of experience in the field of Costing, Finance, Accounts, MIS, Merger & Acquisition and Project Finance. Cals has some more achivement on its name like Crude oil supply contract with BP (World’s Second petroleum Company) & Sign MOU for 1000 acres land, already allotted 400 acres.
Now let look at the other side of it, there are some important facts that should be stressed on before making any position in this stock.
Due to economic meltdown, company has not able to achieve financial closure (FC) till now. Hence for the project to be completed on time look doubtful to me.
Shareholding pattern of Cals: - Interestingly, data available with BSE shows that Spice is the only promoter of CALS, controlling 0.11 per cent stake through a group outfit called SRM Exploration. But from the last two years the promoters of Spice Mr Sanjiv Malhotra, Mr Ravi Chilukuri (CEO) and Mr Gagan Rastogi and their families are claming to actually controlled as much as 75 per cent of the paid-up equity capital in Cals through GDR, but interestingly to note the shareholding pattern for the quarter ending Dec 2009 where GDR holding is reduced to only 61.16% from 83.98% in June 2009 quarter, whereas the total public share holding also increase from 15.91% to 38.73%. Number of shareholders also increased from 71,247 to 123,496 from june 2009 till now. However seeing the positive side is that Fund houses has made an entry.
India Max Investment Fund Ltd: 2.40%
Merrill Lynch Capital Markets Espana S.A. S.V.(spain): 1.27%.
GDR holdings are continuously reducing from the june 2009 qtr this creates a doubt.
Whereas looking at the work related activities at haldia only land filling is in progress and dismantling of refinery has not yet been started, Company is waiting for the Financial Closure and onces it is done than they will start the further process.
The thinning refining margin may pose further problems for the project, which suffers from an estimated cost disadvantage of $2 a barrel on crude oil transportation from the proposed port at Dhamra in Orissa to Haldia in West Bengal.
Cals is having a Market cap around 450 crore & fundamentals are nil as on date.
Whereas the revised circuit of 10% in Cals makes it a trader paradise.
Seeing all the aspect of the company as of now Cals is a very risky affair. But saying goes higher the risk; higher the return. So one can take risk within their comfortable zone.
Sturdy Industries - BSE Code: 530611 CMP: 4.90/-
This is one of the gems in penny stock trading
and also a high growth stock in list of cheap penny stocks
As in all stock investments I have one research on this GEM
Total Sales in March 2009 quarter were Rs 20.08 Crores which have zoomed to Rs 145.18 Crores in March 2010 Quarter
Similarily net profit has zoomed from mere 14 lakhs to Rs 1.6 Crores
EPS For Last 2 Quarters is 2.4 Rs Which makes Annualized EPS at Rs 4,8
Sock is currently trading at Rs 4.90
Which makes PE value just Above 1.6 for high growth stock like this
Now lets see Price chart of last 1 Year
and also a high growth stock in list of cheap penny stocks
As in all stock investments I have one research on this GEM
Total Sales in March 2009 quarter were Rs 20.08 Crores which have zoomed to Rs 145.18 Crores in March 2010 Quarter
Similarily net profit has zoomed from mere 14 lakhs to Rs 1.6 Crores
EPS For Last 2 Quarters is 2.4 Rs Which makes Annualized EPS at Rs 4,8
Sock is currently trading at Rs 4.90
Which makes PE value just Above 1.6 for high growth stock like this
Now lets see Price chart of last 1 Year
This Stock was trading in Range of Rs 20 to Rs 45 when the Promoters decided to split the stock.That’s the reason its available so cheap now. Before stock trading or stock investing in This Penny stock (also known as penny trading ) lets know about this company
This Company is based in BADDI Parwaano Himachal Pradesh
M L Gupta is Chairman & Managing Director
It manufacture Plastic Products, A P Sheets and Alumimium Colour Coated Sheets/Coils
This Company was established in 1978
M L Gupta is Chairman & Managing Director
It manufacture Plastic Products, A P Sheets and Alumimium Colour Coated Sheets/Coils
This Company was established in 1978
Risk factors:
1.Company products include asbestos product and Many NGO are opposing their production
2.There is a court cases for Merger
Board of Directors of the Company at its meeting held on October 05, 2009, inter alia, has decided to move a petition to the Division Bench against the other of the Single Bench of Honble High Court of Simla in the matter of merger of Swan Storwel Pvt ltd
3.Most Serious one :Auditor of the Company. has resigned recently
1.Company products include asbestos product and Many NGO are opposing their production
2.There is a court cases for Merger
Board of Directors of the Company at its meeting held on October 05, 2009, inter alia, has decided to move a petition to the Division Bench against the other of the Single Bench of Honble High Court of Simla in the matter of merger of Swan Storwel Pvt ltd
3.Most Serious one :Auditor of the Company. has resigned recently
Still all the Risk Factorsare Built in price as price is severly undervalued. One can buy according their risk appetite.
Monday, June 14, 2010
Income Tax - Basics
The government of India imposes an income tax on taxable income of individuals, HUFs (Hindu Undivided Families), Companies, Firms, Co-operative societies, trusts, etc. Levy of tax on different people depends on his/her taxable income. In India levy of Income Tax is governed by the Indian Income Tax Act, 1961.
Generally people are not interested in understanding the complicated process & techniques of Tax calculation; they always like to have a short cut for everything. After understanding your requirements we have prepared this article to make you equipped to face the uncertainties in Tax related issues.
1. Who has to pay Income tax?
Any individual, corporate, firm, society or any judicial legal entity having income earned & received in India will be liable to pay Income tax to the Income tax Department of India.
2. Who is an assessee in Income Tax?
Assessee is a person by whom Income tax is payable under Income Tax Act, 1961 of India.
3. What is Assessment year in Income Tax?Let's say Financial Year is from 1st April-2010 to 31st March-2011, then Assessment year for Income Tax purpose is year 1st April 2011 to 31st March 2012). In this case Financial Year would be called previous year.
4. What is a PAN (Permanent Account Number)?The permanent account number is allotted by the assessing officer to any person for the purpose of identification. It's a Unique 10 digits number for e.g. KKJMN6994P.
5. Do I have to apply for a permanent account number (PAN)? How do I apply?If you fall under any of the below mentioned categories, you have to apply for PAN in Form 49A:
Generally people are not interested in understanding the complicated process & techniques of Tax calculation; they always like to have a short cut for everything. After understanding your requirements we have prepared this article to make you equipped to face the uncertainties in Tax related issues.
1. Who has to pay Income tax?
Any individual, corporate, firm, society or any judicial legal entity having income earned & received in India will be liable to pay Income tax to the Income tax Department of India.
2. Who is an assessee in Income Tax?
Assessee is a person by whom Income tax is payable under Income Tax Act, 1961 of India.
3. What is Assessment year in Income Tax?Let's say Financial Year is from 1st April-2010 to 31st March-2011, then Assessment year for Income Tax purpose is year 1st April 2011 to 31st March 2012). In this case Financial Year would be called previous year.
4. What is a PAN (Permanent Account Number)?The permanent account number is allotted by the assessing officer to any person for the purpose of identification. It's a Unique 10 digits number for e.g. KKJMN6994P.
5. Do I have to apply for a permanent account number (PAN)? How do I apply?If you fall under any of the below mentioned categories, you have to apply for PAN in Form 49A:
- If your total income in the previous year exceeds maximum amount not chargeable to tax. (i.e.; Rs.160000, 190000 & 240000 for general, ladies & senior citizens respectively.)
- If you are carrying any business or profession, whose total sales, turnover or gross receipts, are or is likely to exceed Rs 500,000.
- If you are assessable as charitable trust.
- Income tax return
- Any correspondence with Income Tax Authority
- Challans for payment of direct taxes
- Application for installation of a telephone connection (including a cellular telephone)
- Application for opening a bank account
- Application for opening DMAT account
- Documents pertaining to sale or purchase of a motor vehicle (other than two wheelers) & immovable property valued at Rs 500,000 or more
- Documents pertaining to a time deposit/fixed deposits exceeding Rs 50,000 with a bank
- Documents pertaining to deposits exceeding Rs 50,000 in any account with a Post-Office Savings Bank
- Documents pertaining to a contract of a value exceeding Rs 1 million (Rs 10 lakhs) for sale or purchase of securities (shares, debentures)
- At the time of purchase of Mutual fund units.
- Payment to hotels and restaurants against their bills for an amount exceeding Rs. 25,000 at any one time
- Who have agricultural income and are not in receipt of any other income
- NRIs
- Central Government, State Government and Consular Officers, in transactions where they are the payers.
6. What are the types of income chargeable to Income tax?
In India, as in many other countries, the charge of income tax and the scope of taxable income vary with residential status of the assessee.
There are three categories of taxable entities viz.
The law prescribes two alternative criterions to decide the residential status of an assessee. Both criterions relate to the physical presence of the taxpayer in India in the course of the previous year which would be the twelve months from April 1 to March 31.
A person is said to be "resident" in India in any previous year if he -
a) Is in India in that year for an aggregate period of 182 days or more; or
b) having within the four years preceding that year been in India for a period of 365 days or more, is in India in that year for an aggregate period of 60 days or more.
The above provisions are applicable to all individuals irrespective of their nationality. However, as a special concession for Indian citizens and foreign citizens of Indian origin, the period of 60 days referred to in Clause (b) above, will be extended to 182 days in two cases:
(i) Where an Indian citizen leaves India in any year for employment outside India; and
(ii) Where an Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India.
In the above context, an individual visiting India several times during the relevant "previous year" should note that judicial authorities in India have held that both the days of entry and exit are counted while calculating the number of days stay in India, irrespective of however short the time spent in India on those two days may be.
A "non-resident" is merely defined as a person who is not a "resident" i.e. one who does not satisfy either of the two prescribed tests of residence.
- Salary Income
- House Property Income
- Income from business or profession
- Income from sale of capital assets
- Other income
In India, as in many other countries, the charge of income tax and the scope of taxable income vary with residential status of the assessee.
There are three categories of taxable entities viz.
- Resident and ordinarily resident (ROR)
- Resident but not ordinary resident (RNOR)
- Non-residents (NR)
A person is said to be "resident" in India in any previous year if he -
a) Is in India in that year for an aggregate period of 182 days or more; or
b) having within the four years preceding that year been in India for a period of 365 days or more, is in India in that year for an aggregate period of 60 days or more.
The above provisions are applicable to all individuals irrespective of their nationality. However, as a special concession for Indian citizens and foreign citizens of Indian origin, the period of 60 days referred to in Clause (b) above, will be extended to 182 days in two cases:
(i) Where an Indian citizen leaves India in any year for employment outside India; and
(ii) Where an Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India.
A "non-resident" is merely defined as a person who is not a "resident" i.e. one who does not satisfy either of the two prescribed tests of residence.
An individual, who is defined as Resident in a given financial year is said to be "not ordinarily resident" in any previous year if he has been a non-resident in India 9 out of the 10 preceding previous years or he has during the 7 preceding previous years been in India for a period of, or periods amounting in all to, 729 days or less.
8. Is it compulsory to maintain books of accounts?
Yes, IF you are carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other notified profession. And Yes, IF you are carrying on business or profession (other than professions mentioned earlier) and IF the income from business or profession exceeds Rs.1,20,000/- or the total sales, turnover or gross receipts in the business or profession exceeds Rs. 10 lakhs in any one of the three years immediately preceding the previous year.
9. Is it compulsory to get the books audited?
(i) Every person carrying on business shall get his accounts audited if the total sales, turnover or gross receipts in business exceed Rs. 40 lakhs in the previous year.
(ii) Every person carrying on profession shall get his accounts audited if his gross receipts exceed Rs. 10 lakhs in the previous year.
Conditions | ROR | RNOR | NR |
| In India >= 182 days in FY | Yes | Yes | No |
| NR in India in 9 out of 10 preceding FYs | No | Yes | NA |
| In India for <=729 days in preceding 7 FYs | No | Yes | NA |
| In India >= 60 days in FY and >= 365 days in preceding 4 FYs | NA | NA | No |
| (FY = Current Financial Year) | |||
Yes, IF you are carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other notified profession. And Yes, IF you are carrying on business or profession (other than professions mentioned earlier) and IF the income from business or profession exceeds Rs.1,20,000/- or the total sales, turnover or gross receipts in the business or profession exceeds Rs. 10 lakhs in any one of the three years immediately preceding the previous year.
9. Is it compulsory to get the books audited?
(i) Every person carrying on business shall get his accounts audited if the total sales, turnover or gross receipts in business exceed Rs. 40 lakhs in the previous year.
(ii) Every person carrying on profession shall get his accounts audited if his gross receipts exceed Rs. 10 lakhs in the previous year.
Sunday, June 13, 2010
The bigger and bigger picture: The developing world’s banks are flourishing
THERE is only one thing that is still small about banks in emerging economies: their bosses’ pay packets. The head of China’s ICBC, the world’s biggest bank by market value, received just under $134,000 in 2009, a couple of decimal places shy of his Western counterparts. On all other measures these firms are big enough to make a Wall Street banker reconsider his status in the universe. In terms of market value they now account for almost half the industry’s total worldwide, nearly twice as much as in 2005. That might reflect an excess of optimism, but emerging-market banks are big by other measures too. According to Tab Bowers, a consultant at McKinsey, they account for about a third of the industry’s global revenues, matching the emerging countries’ share of world GDP. By the most solid measures of all, profits, dividends and Tier-1 capital, listed banks domiciled in emerging markets now account for between 27% and 53% of the global industry (see chart 1). China is responsible for about half of this share. Big Western banks’ profits from developing countries add up to perhaps a quarter of the local firms’.
Despite their large size, most emerging-market banks are not household names in the West. Most rich-world investors are aware of China’s “big three” banks, at or near the top of the global rankings (see table 2), but know little about them. Aside from the Chinese banks, the global top 25 include a handful of big Russian and Brazilian firms, and lower down there is a long list of smaller banks that together add up to quite a lot. The average listed rich-country bank in the top 150 has a market value of about $36 billion, against $24 billion for emerging-market firms and just $15 billion if China is excluded. Many are state-controlled and most were handsomely profitable through the crisis and have good capital and funding profiles. Few have much business overseas.
League tables in banking are dangerous things. In 1990 all ten of the world’s largest banks by assets were either Japanese or French. Such things can change quickly. The big emerging-market banks should therefore view their rise with a mixture of pride and nervousness. China’s biggest banks are all still state-controlled.ICBC, spun out of the People’s Bank of China in 1984, is run by Jiang Jianqing, a career banker. It has been making a flurry of investments in Asia and Africa. China Construction Bank (CCB) has its roots in development banking. Its boss is Guo Shuqing, who ran China’s foreign-exchange fund before taking CCB public in 2005 in the first big bank flotation. Bank of China has a grand pedigree dating back to 1912. Traditionally China’s foreign-exchange and trade bank, it still has the largest presence abroad. Bank of Communications is the only Shanghai-based big firm, in which HSBC holds a 19% share.
Brazil’s two big private banks are widely admired. Itaú Unibanco was formed through a merger in 2008 which saw it overtake Bradesco by size. Both firms are battle-hardened survivors and have big insurance, credit-card and investment-banking operations. Listed but state-controlled, Banco do Brazil is the country’s biggest financial firm, with a fifth of total assets. It has increased its market share since 2007 and is looking abroad.
Russia’s banking system is fragmented, with only two giant firms, both state-controlled.Sberbank controls almost a third of the country’s deposits and has a mixed loan book. Its newish management is trying to cut costs and spruce up its business at home. VTB Bank started as a merchant bank but has gradually built up its branch presence. About a quarter of its profits now come from retail banking.
India’s banking system is small but growing fast. About three-quarters of the industry is in government hands, with the listed but state-controlled State Bank of India commanding about a quarter of the market. It has been revived under the watch of O.P. Bhatt, who became chairman in 2006. ICICI Bank, for a long time the pin-up of the private banks, paused for breath in 2009, rejigging its strategy to target industry as well as India’s burgeoning middle classes. Its veteran boss, K.V. Kamath, became chairman in 2009, with Chanda Kochhar taking over as chief executive. HDFC Bank is still a tiddler by assets but its market value has shot up, reflecting confidence in its domestic strategy and its combative chief executive, Aditya Puri.
Singapore, Turkey and South Korea also have banks with market values in the $20 billion range. But perhaps the most notable firm outside the BRIC group of countries is Standard Bank of South Africa, run by Jacko Maree since 1999. Almost a quarter of its profits come from outside its domestic market, mainly the rest of Africa. It got a big boost in 2007 when ICBC bought a 20% stake. A takeover, both parties say, is not on the cards, but Mr Maree’s business cards are now in both English and Chinese.
Just how big could such emerging-market banks get? Any self-respecting bank bull likes to whip out a chart comparing the ratio of bank loans with GDP in poor and rich countries. The poor countries generally have much lower ratios. The hope is that emerging-market banks will enjoy a double benefit. Not only will their economies grow fast but financial activity will become more intense, allowing banks to grow faster than GDP. Today quite a few banks in Asia, Africa and Latin America forecast that their loan books will rise by 20-30% annually over the next few years. Assuming that Western banks stagnate, that would mean China’s biggest bank would take about two years to reach the size of, say, JPMorgan Chase, measured by risk-adjusted assets. The biggest banks in Brazil, Russia and India will take seven to ten years.
The idea that banks are “GDP-plus” businesses has obvious pitfalls. In 2008 and 2009 the loan books of emerging-market banks outside China grew relatively slowly, at about 10%, although in China they expanded by about 30%, and the pace elsewhere will pick up this year. And if credit grows too quickly for too long the system tends to explode, as America and some other Western countries have found.
In central and eastern Europe too, where loans rose at twice the rate of nominal GDP between 2000 and 2007, they hit a brick wall in 2008 as overextended banks ran out of funding and bad debts mounted. In much poorer Nigeria, talked up in 2006 by Mayfair hedge-fund managers as the next great “frontier” banking market, credit as a share of GDP doubled in about three years to around 30%. With small branch networks and relatively few people in the formal economy, this was too much. About a third of the system by assets is now distressed. The lesson from the Asian crisis of the late 1990s is that systems generally shrink after a blow-up.
Credit relative to GDP, then, does not grow in a straight line, thanks to the economic cycle. But even in the longer term a rising trend is not inevitable. According to Credit Suisse, domestic credit to the private sector credit relative to the economy has been flat or falling between 2002 and 2008 in China, Mexico, Malaysia, Thailand and the Philippines. And even if borrowing levels are rising in the longer term, banks’ role in supplying that credit is not assured. In America much of the work of financing companies is done through capital markets. Emerging-market banks may face a similar trend. Except in Brazil, most of their business consists of loans to industry. Fast-growing local capital markets could take some of this away. If so, the biggest part of the banks’ balance-sheets would actually shrink relative to GDP.
Yet for all the caveats, emerging-market banks can count on vast untapped demand. McKinsey estimates that most people in Latin America, Asia and Africa lack access to formal banking services. Slowly the supply is catching up. Bradesco in Brazil has recently opened the world’s first floating bank branch (which sails down the Solimões River in Amazonas) and the first branch in Heliópolis, a big favela (slum) in São Paulo. State Bank of India has more than doubled its number of ATMs since March 2008 without seeing a decline in transactions per machine per day, currently about 300. Most banks are trying to reach the “unbanked”. This is partly a question of technology—for example, providing biometric identity cards for illiterate people without papers. It is also a question of organisation. Mr Kamath, the chairman of ICICI, India’s biggest private bank, is thinking about appointing an agent in each village who would be given the kit to link up with the bank’s system. Indian government schemes to guarantee work for rural workers for 100 days a year and to introduce identification cards for all could be a catalyst for the spread of such schemes. Like most bank executives, Mr Kamath accepts that these will not make the industry money “for quite some time” but reckons that “no bank can afford not to be there.” Mr Puri, the boss of rival HDFC Bank, says that on a “five-year horizon it can absolutely move the needle”.
But the real boon for many emerging-market banks has been the rise of a credit culture among the middle classes. Well-off people behave in a way their parents would find unimaginable, buying homes and cars not by saving up but by borrowing. The ratio of household borrowing to GDP points to this in all big developing countries (see chart 3). If the world economy rebalances so that surplus countries save less and consume more, mortgages and consumer loans will become the banks’ biggest source of profits.
Although competition may put pressure on emerging-market banks’ high margins, there are offsetting factors. People will shift their savings from deposits to investment products with better yields that banks can charge fees for. Low-cost technology too could boost profits. India’s banks say they have leapfrogged the expensive mainframe computers of their Western peers and expect a rapid move towards mobile-phone banking among the young. In China people do not use cheques but can get text-message confirmations when they have used their credit cards, reducing the risk of fraud. Noel Gordon, a consultant at Accenture, jokes that when Western banks were fiddling with rocket-science finance, emerging-market banks were innovating more productively by opening up entire new markets that will make sustainable profits.
Emerging-market companies also promise to give the banks lots of new business. This year there will be a boom in loans as they shrug off the downturn. In the longer term banks will have to adapt as local capital markets develop and businesses expand abroad. Most lenders are building up investment-banking skills and a presence overseas that will generate income as more local businesses turn to issuing bonds and shares for finance.
And even though all these opportunities still lie ahead, emerging-market banks have already taken a giant leap in size and profits in the past decade. They have also maintained adequate capital ratios and ample deposit funding. The combination of growth and strength would appear to give them enormous advantages, heralding a rebalancing of power in global finance. Yet are those rock-solid balance-sheets quite what they seem?
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