IFCI LTD: READY TO PERK UP

The Explosive Chart of IFCI Ltd

IFCI Ltd during the FY11, accelerated its operations  and re-established its presence in the financial market by enlarging  and retaining high value customer base.  The business model adopted by IFCI has been guided by maximization of return on investment, while maintaining  emphasis on due diligence, as well as appropriate risk mitigants.  High  yielding short term lending, backed by strong and easily enforceable  security of highly rated companies, formed the key strengths helping  the Company to expand its asset base without any Non Performing Assets  (NPAs). It will continue to explore possibilities for new  business in the short and medium term with the aim of establishing a  niche market for itself in financial products like loans against liquid  securities, working capital gap, pre-operative expenses, acquisition, financing and participation in QIPs and IPOs.
The Government of India has developed an ambitious plan for  infrastructure investment, involving both public and private sector. Developing roads, ports, power generation and transmission infrastructure forms an integral part of the plan.  Furthermore, there  is an increased focus on evaluating new sectors in Indian  infrastructure and developing an infrastructure advisory division for providing holistic solutions to existing and potential clients. In  keeping with the dynamics of the sector, the Company's Project  Development Group (PDG) has scouted for the best investment opportunities in the Indian infrastructure space. The group proposes to  make further investments in infrastructure while nurturing projects in  its portfolio. 

While adding to its existing portfolio of investments in  roads, thermal power and hydro power generation, the group has forayed into power transmission, solar power generation and wind energy  generation through its investments during FY 2010-11 and is looking  forward to investing in the logistic sector.
The Company has also strengthened the Treasury team by creating a dedicated Research Desk for making better and more informed investment decisions with the aim of maximizing profits in all treasury operations. The Treasury Department has been equipped with necessary tools and technology to meet the challenges in the rapidly changing environment. 

It has also initiated operations in new segments viz. Collateralized Borrowing & Lending Obligation (CBLO) and Overnight Interest Swaps (OIS) to manage liquidity risk. So, any fall in the interest rate could be positive for the company.
The Company, after strengthening the activities of its Corporate Advisory Group, has diversified in areas of high value segments of financial consultancy. As a result, currently, IFCI provides the entire gamut of financial advisory services to clients across different sectors of the economy.
IFCI has been able to create a space for itself in the niche bid advisory segment, where only a handful of global consultants have the expertise to provide consultancy services for competitive tariff based power projects, Ultra Mega Power Projects (UMPP), City Gas Distribution (CGD), Gas Pipeline Projects etc. During the current FY 2011-12, the thrust would be to get more Transaction Advisory assignments in the infrastructure sector, which will provide the impetus to further expand the footprints of IFCI in advisory business.
IFCI is the nodal agency for channelizing the Sugar Development Fund (SDF) Loans of the Government of India. The Company, besides financial appraisal for SDF loans, disinvestment and monitoring, is exploring new avenues to increase fee based income by providing consultancy to sugar industry in almost every area, which includes restructuring, syndication and getting technical and financial partners; both to private and co-operative sector and preparing schemes for sugar factories to avail assistance from SDF for cane development activities.  During the year 2010-11, fee based income from financial  appraisals for SDF assistance, was higher by about 49% vis-a-vis  previous year, as a result of continued efforts made in this direction.

The Company, consequent on its demonstrated success in NPA resolution, took the initiative for the acquisition of NPAs from Banks/other FIs  after complying with RBI guidelines on the subject.
The company acquired NPAs from Banks/other FIs, and earned attractive returns. The  Company proposes to acquire further NPAs from Banks/other FIs by way of  participating in public auction and/or through bilateral deals, to  ensure that the momentum of earning profit with a substantial return is  maintained. Innovative strategies are being adopted for the resolution  of NPAs including assets under the control of Official Liquidators and  companies before BIFR.

The Company has been continuously posting profits and is dividend paying. The capital adequacy ratio of the Company as on March 31, 2011, at 16.4% looks comfortable. The Company is poised to raise  resources in a big way to ensure accelerated growth in the years to come.

As per the study carried out by ''The Economic Times and Great Place to Work Institute'', on India's Best Companies to Work for-2011, the Company, for the second consecutive year, maintained its position as third best place to work for in the Financial Services Sector.
IFCI Ltd is keeping a close watch on the various developments in connection with the issue of new Banking Licenses and evaluating its strategy for foray into the Banking arena.
The Company, in order to provide the requisite fillip to more  effective management development in relation to significant and growing  sectors of the economy, established Management Development Institute  (MDI) in 1973 and another campus of MDI is now proposed to be set up at  Murshidabad, West Bengal for which the foundation stone was laid by the  Honourable Finance Minister of India on October 31, 2010. An MoU was  signed between MDI and the Company in this regard. MDI has now emerged  as one of the most prominent Business Schools of the country and as per  CNBC Survey for the year 2011, it ranked 5th among the top 10 business  institutes of the country. MDI is also in the process of acquiring land  in Bengaluru for setting up a third campus.
The Technical Consultancy Organizations (TCOs) promoted by the Company  provide a complete set of consultancy services in the areas of project  conceptualization and other related services, credit syndication,  preparation of various project specific agreements including credit  documents, restructuring of projects, valuation of assets, stock  audits, assessment studies on working capital, project monitoring consultancy, securitization services and secretarial assistance, in conducting training, entrepreneurship development programmes. 

IFCI is  the lead promoter Institution for MPCON, HIMCON, HARDICON and NITCON. 

IFCI Infrastructure Development Ltd (IIDL): IFCI Infrastructure Development Ltd (IIDL) had been promoted as a wholly owned subsidiary of the Company, as an instrument for unlocking  value from real estate held by IFCI by way of its office and  residential properties, acquiring valuable and strategic real estate in the process of recovery from NPAs of IFCI and availing new  opportunities in real estate development through development  authorities. Over the years, IIDL has expanded its asset base by  purchasing assets and intensifying development work on such assets at  various geographical locations in the country and made its presence  felt on a pan India basis. IIDL, with its implementation of projects like Service Apartment  Project at Delhi, Hotel Project at Lucknow, Financial City project at  Bengaluru and residential projects in NCR and Kochi, is one of the  growth engines in the development of real estates and infrastructure, to which impetus is given by Government of India. IIDL has also secured an important opportunity to participate in the  development of a food park approved by the Ministry of Food &  Processing Industries, Government of India during FY11. IIDL has also formed a Special Purpose Vehicle (SPV) named JANGIPUR BENGAL MEGA FOOD  PARK for the development of the food park. During the year 2010-11, there was a growth of 86% in the company''s assets base, which went up to Rs.640.05 crore as against Rs.344.04 crore at the end of previous year. The net profit increased by 7.98%, which was at Rs.4.33 crore during the year FY11 as against Rs.4.01 crore during the previous year. The gross income of the company was Rs.29.32 crore despite the generally slow recovery rate in the real estate sector during the FY11.
IFCI Venture Capital Funds Ltd (IVCF): IFCI Venture Capital Funds Ltd was set up by the Company in the year 1975 with a view to promoting entrepreneurship by providing risk capital mainly to first generation entrepreneurs/technocrats to help them setup business projects. Later on, IVCF started providing capital support to Small and Medium Enterprises (SMEs) towards initial capital and growth. Since inception, it has supported entrepreneurs by  providing start-up/growth capital for setting up more than 400 projects across India. IVCF closed three private equity/venture capital funds, launched in 2008, with aggregate corpus of Rs.512 crore on June 30, 2010. During the year 2010-11, the entity sanctioned an amount of Rs.395.14 crore and disbursed Rs.292.14 crore out of the aggregate corpus fund. IVCF registered a growth of 166% in Profit after Tax at Rs. 13.14 crore (Rs. 4.94 crore) in 2010-11 over previous year.
IFCI Financial Services Ltd (IFIN): IFIN is engaged in Stock Broking, Investment Banking, Mutual Fund Distribution and Advisory Services, Depository Participant Services and Insurance Products. IFIN continued to grow both organically and  inorganically.  The retail branches of IFIN at the end of the year (FY11) increased from 25 to 42. The size of operations has also increased considerably and reasonable growth was registered in the institutional  services. A growth of 26.89% was registered in company's income from  operations, (in FY11) at Rs.33.13 crore as compared to Rs.26.11 crore during previous year. During the year 2010-11, the authorized share capital of the company was raised from Rs.28.25 crore to Rs.50 crore.
IFCI Factors Ltd (IFL): IFCI Factors is one of the first members of Factors Chain International from India. It has pioneered the export factoring business in India and  is also providing domestic factoring services, through which it is steadily replacing the hitherto conventional modes of working capital finance in the banking space. IFL achieved a turnover of Rs.2,683 crore, funds in use of Rs.856 crore and net profit of Rs.20.1 crore, registering a growth of 131% in turnover, 183% in funds in use and 90% in net profit over the corresponding numbers of financial year 2009-10, whereby the year under review had been yet another significant year. IFL hopes to maintain the momentum in growth in future and aims to become one of the major players in the factoring industry in India in the next 3-5 years. The factoring business globally grew by 28% in the year 2010 at Rs.1648 billion as compared to Rs.1283 billion in previous year, though the Indian factoring volume grew only at 4% at Rs.2.75 billion (¤ 2.65 billion). With India's market share of 0.77% in Asia, there is vast scope for factoring business in India. However, it is going to be a continued challenge for factoring companies to raise appropriately priced funds to create quality domestic and export factoring assets and appropriately structure deals to de-risk business in the absence of supportive factoring legislations in India.  The proposed Factoring Bill, if passed, is expected to create a conducive environment for further development of the factoring industry in India.
MPCON Ltd: MPCON is providing consultancy services to small and medium enterprises, individual entrepreneurs, Government Departments and agencies, various state level institutions, commercial banks and other institutions in the States of Madhya Pradesh, Rajasthan and Chhattisgarh. The company is specialized in small business, training  and skill development. During the year 2010-11, the total income of MPCON grew by 19.18% at Rs. 8.61 crore. The project consultancy income  grew by 121% during the period and stood at Rs.2.86 crore which constituted 33.28% share in total income. Training programmes and others constituted 65.11% share and stood at Rs.5.60 crore (Rs. 5.14 crore). The profit after tax of MPCON grew by 80.14% in the  year 2010-11 and stood at Rs. 0.46 crore.
Industry Structure & Development: The industrial sectors in which the Company has major exposures and  which include power generation, service sector and other  infrastructure/logistics, have performed satisfactorily. Government of  India, under the ''National Action Plan for Climate Change'' (NAPCC) has identified measures that promote its development objectives, while yielding co-benefits for addressing climate change effectively. These developments translate into potential investment opportunities in roads, ports, renewable energy and the power sector at large. The prospects of other sectors in which the Company has major exposures, viz., iron and steel, petroleum refining, construction and real estate have improved with the upswing in economic activities. IFCI, being categorized as an NBFC-ND-SI (Non-Banking Financial Company-Non Deposit taking Systemically Important) by RBI, has to compete, in the area of project finance, with Banks and Financial/Investment Institutions. The Company, having embarked upon substantial asset creation in FY 2008-09, after a gap of 10 years, has been able to re-establish business relationships with several major industrial houses in the country by extending financial assistance.
The Company has endeavored to maximize returns, with the in-house experience in infrastructure projects, by investing by way of loans with a mix of equity, mezzanine and sub debt. During FY 2010-11, looking to the maturity profile of its existing liabilities, IFCI has sanctioned term loans of one to three years duration mainly to meet the short term fund requirements of companies with excellent track record, for general corporate purposes, investment in subsidiary company/(s), acquisition, subscription to rights issue, purchase of warrants, refinancing of high cost debt, pre-operative expenses for project implementation, etc. against adequate security.
Apart from fund based activity, the Company also ventured into non-fund based activities like advisory services, syndication, underwriting etc. In order to retain and enlarge the customer base, endeavours were made to develop such products which cater to the needs of corporate clients.
The Company, during the year, also ensured improvement in various other operational areas like Treasury and Investments and posted substantially higher level of revenue and profits.
The details of various developments are given here under:
Approvals and Disbursements: During the FY 2010-11, total fund based approvals were Rs.13,208.50  crore as against Rs.6,765.56 crore in the previous year registering a rise of 95.23%. Out of the above approvals, an amount of Rs.3,262.25  crore (24.69%) was by way of rupee term loans, Rs.3,111 crore (23.55%)  by way of corporate loans, Rs.945 crore (7.15%) by way of short term  loans and Rs. 1,460 crore (11.05%) by way of debenture. The amount  approved towards equity and other investments was Rs.4,430.25 crore  (33.54%). Total disbursements during FY 2010-11 amounted to Rs. 8,399.39 crore compared to Rs. 6,053.82 crore in the previous year registering a rise of  38.75%. Out of the said disbursement, Rs. 2,028.06 crore (24.14%) was by way of rupee term loans, Rs. 3,034.20 crore (36.12%) by way of corporate loans, Rs.1,150.45 crore (13.69%) by way of short term loans, Rs.110 crore (1.30%) by way of debenture and Rs. 2,076.68 crore (24.72%) by way of equity & other investments.
Treasury and Investment Operations: During the FY 2010-11, the Company earned an income of Rs.139 crore from fixed market operations. While the avenues of investment were broadened for earning higher return, safety and liquidity were the prime criteria behind all investment decisions. The Company was able to achieve returns at par with/higher than the market returns of top rated instruments with similar maturity. During the year FY11, operations in Collateralized Borrowing and Lending Obligation and Overnight Interest Swaps were also introduced.
In foreign currency operations, the Company managed its exposure in  foreign exchange reasonably well by taking appropriate forward covers. The foreign exchange position was nearly hedged throughout the year. The Company did not have any exotic derivatives exposure in equity/debt or foreign exchange market.
In equity operation, the Company continued with the strategy of selective disinvestment of slow moving/illiquid stocks and strengthening the portfolio through selective investment in frontline and mid cap stocks. While improving the quality of the portfolio, in FY 2010-11 the Company earned a profit of Rs. 325.39 crore from equity operations. Net investment portfolio of the Company as on March 31, 2011 stood at Rs.8,005.56 crore which is substantially higher than the net investment amount of Rs. 5,882.43 crore as on March 31, 2010.
The Company embarked on an ambitious drive of raising Rs.5,000 crore during FY 2009-10 by way of bond issuance and bank loans. Buoyed by the success in FY 2009-10, the Company set a higher target for FY 2010-11 and mobilised Rs.7,000 crore. The remarkable feat was achieved through successful nurturing of relationship developed by the Company with different market participants. The overwhelming response of investors to the maiden Infrastructure Bond issuance program of the Company demonstrates the goodwill and confidence enjoyed by the Company among investors.
Management of Non-Performing Assets: The Company continued to exploit aggressively all channels available to it to reduce its NPAs and was successful in doing so. This is evidenced by NPA recovery of more than Rs.338 crore surpassing the recovery budget, of which Rs.263 crore was by One Time Settlement (OTS) and Assignment and Rs.75 crore through Securitization and Reconstruction of Financial Assets & Enforcement of Security Interest Act (SARFAESI) and legal route. In future, the Company has to meet new challenges in resolving NPA  where it holds minority stake and action under SARFAESI is difficult due to non-receipt of consent from other secured creditors pursuant to  settlement with them by company. IFCI intends to resolve these NPAs by adopting DRT and High Court route among other recourse available to it.
Financial Performance:  The Company''s profit before tax of Rs.1,166 crore in the year, FY11,  is higher by 5% as compared to Rs.1,115 crore in the previous year  mainly on the strength of creation of fresh assets since April 2008.  Profit after tax of Rs.706 crore for the year has also shown a growth of 5% over previous year's profit after tax of Rs.671 crore.  Standard loans to borrowers which stood at Rs. 6,425 crore as at April 1,  2008 have shown CAGR of 35% and stand at Rs.15,942 crore as at March 31, 2011. The growth over the previous year's standard loans to borrowers of Rs.11,022 crore is 45%. Total assets have also increased to Rs.25,915 crore in the current year from Rs.19,589 crore in previous year registering a growth of 32%. Satisfactory levels have been maintained for key financial ratios viz. interest margin, capital adequacy ratio, debt-equity ratio, debt service coverage ratio, net worth, etc. Basic EPS increased to Rs.9.6 per share for the year FY11, vis-a-vis Rs. 9.1 per share for the previous year. Book Value (excluding Revaluation Reserve) also increased to Rs.51 per share as at March 31, 2011 from Rs. 42.7 per share as at March 31, 2010 (FV Rs. 10/-). For Q3FY12, the total income of the company came out to be Rs.680.4 Cr as against Rs.640.06 Cr in the same period previous year. The net profit of the company came out to be Rs.114.05 Cr in Q3FY12 as against Rs.152.92 Cr in the same period previous  year. The EPS of the company for 9MFY12 came out to be Rs.6.02. For the full year, FY12, the company is expected to come  up with an EPS of around Rs.9. Moreover, the Company's quality of assets continued to be excellent.  The ratio of net NPAs to net advances was as low as 0.97% as at March 31, 2011.
Opportunities, Threats and Future Outlook: IFCI Ltd is well poised to expand and diversify its operations and  performance in accordance with its business strategy. It will continue to explore possibilities for new business for short term and medium term with the aim of establishing a niche market for itself in products like short and medium term loans against liquid securities, take-out finance and debt swapping. In addition to the normal lending activities, the Company continues to concentrate on private equity participation, project development activities, non-fund based income from advisory services, syndication, underwriting of loans, acquisition of NPAs from other lenders and thrust on the activities of subsidiaries/associate companies.
IFCI, as an NBFC-ND-SI, has developed for itself niche products, covering the entire range of capital structure including debt, equity, equity related products, mezzanine instruments etc. of short, medium and long term duration.
The overall economic scenario in the country is expected to improve and inflationary pressure is likely to come down resulting in the lower cost of funds and improving profit margins. Also, owing to strong growth in the balance sheet without NPAs, it would continue to improve its top line and bottom line.

On the power front, there exists a huge demand-supply gap with an all India average energy shortfall of 7% and peak demand shortfall of 12%. There is over 90,000 MW of new generation capacity required in the next seven years with over 150,000 MW of hydro power yet to be tapped.
Additional 60,000 circuit km of transmission network is expected by 2012. Power generation and transmission will continue to be a potential sector for investment by the IFCI Ltd.
There is an annual growth of 12-15% projected for passenger traffic and a growth of 15-18% for cargo traffic.  Covering 66,590 km, highways/expressways constitute only 2% of all roads and carry 40% of the road traffic. This clearly indicates the scope for further development of highways. 
The Company shall leverage on its experience in bidding for attractive road projects across India. Growth in merchandise exports projected at over 13% p.a.  underlines  the need for large investments in port infrastructure. It is expected  that 95% of foreign trade by volume and 70% by value would be through  the maritime route. The New Foreign Trade Policy envisages doubling of India's share in global exports in next five years to USD 150 billion.
IFCI Ltd shall continue to aggressively pursue project development  activities in the infrastructure projects by way of participating in equity as promoter/co-promoter. This endeavour is expected to result in  ample opportunities in future where the Company can involve itself in appraisal, underwriting, syndication of debt/sub-debt, equity, etc. besides acting as the lenders'' agent. The said areas would improve the overall return by way of non-fund based income such as underwriting, syndication fee etc. The Company would continue its endeavour to establish/ re-establish relationship with corporate houses of repute and standing so as to exploit emerging business opportunities during the days to come.
IFCI Ltd with its present business model, does not envisage any major challenge in the short as-well-as medium term perspective. In the emerging scenario arising out of Government's move to modify regulatory requirements which is expected to provide the opportunity to different players to be more pro-active for economic development of the nation, the Company has geared up to find its "niche" area.
Risk Management Managing various types of risks is an inherent part of IFCI's business. Business and revenue growth have to be viewed in the context of the  risks implicit in the Company's business strategy. Recognizing this,  the Company has continued its endeavor to have in place a robust and integrated risk management system. The risk management strategy is  based on a clear understanding of various risks, a multiplicity of risk  assessment and measurement procedures and continuous monitoring. Forming part of the risk management architecture of the Company, the  Risk Management  Committee of Directors is overseeing all the risks viz. credit, market, liquidity and operational risks and any other risks, assumed by the Company. The Committee guides the development of policies, procedures and systems for managing risk at the organizational level.
The Audit Committee of Directors provides direction and monitors the  quality of the internal audit function and compliance with systems and  procedures. At the executive level, a Risk Management Committee of  Executives has been constituted to facilitate overseeing of various risks in a focused manner, supported by an independent risk management  function that looks after all aspects of enterprise-wide risk  management. The risk management function endeavors to anticipate vulnerabilities at the transaction level or the portfolio level, as  appropriate, through quantitative or qualitative assessment of inherent  risks. Appropriate structure, approved policies and procedures and  review processes are in place through which risk is managed. A
well-established, effective and independent internal control mechanism exists for supplementing the risk management systems to build risk consciousness and discipline into decision-making throughout the Company.
Being primarily a lending institution, credit risk is the most important for IFCI and therefore, the Company has put in place comprehensive credit risk management architecture. With appreciable augmentation of credit portfolio during the year FY11, systems and controls are in place, to mitigate credit risks including exposure limits for borrowers, borrower groups, industrial sectors, multi-tier credit appraisal system, risk-based monitoring system, committee system for considering proposals and detailed risk assessment of new proposals, which have been further strengthened commensurate with the volume of business activities. Emphasis is placed on both, evaluation and containment of risk for individual exposures and analysis of the portfolio behaviour. The loan policy and risk management policy of the Company is reviewed periodically keeping in view the changing economic and business environment. Periodic reviews of existing products and services are carried out with a view to continuously monitoring the risks and assisting in control management. Overall portfolio quality and high risk exposures are also monitored periodically.
The Company undertakes analysis of industries/sectors where the  exposure levels are sizable as also to evaluate and capitalize on  business opportunities in the prospective/ sunrise sectors.
As a part of loan review mechanism, credit audit of a majority of the  standard assets with exposure of Rs.50 crore and above, was taken up  during the year FY11, with the objective of detecting weaknesses, if any, in these exposures and initiating timely corrective action. The credit audit exercise also provides the top management with information on quality of credit administration including credit sanction process, risk evaluation and post-sanction follow-up. The Company continues to undertake reviews of large borrower accounts and related industries/sectors on a regular basis with the objective of  monitoring and managing the risk in the portfolio. In another initiative towards effectively monitoring the standard asset portfolio, rapid analysis of quarterly results of assisted concerns, with particular focus on assessing cash flows and debt servicing capacity as also detecting early warning signals, if any, were carried out during the year, FY11. Credit exposures are managed through target sectors/corporate/group identification, appropriate credit approval processes, post-disbursement monitoring and remedial management procedures.
In order to make the risk management system more robust as also a best  practice, the Company has initiated steps to adopt and make internal  credit risk rating models an integral part of the credit assessment  process. The use of these models is being disseminated at an  organizational level for measuring credit risk in new business  proposals and existing loan portfolios. The internal rating models, based on two-dimensional rating methodology, have the capacity to estimate probability of default (PD), loss given default (LGD) and expected loss (EL) in a specific loan asset. During the year FY11, the internal rating process has been streamlined for achieving faster turnaround time and accelerating credit delivery. From a  portfolio monitoring perspective, the internal rating along with the size of the exposure would determine the monitoring frequency applicable to the exposure in line with the policies approved by the Board. With a view to initiating the process of monitoring the loan  portfolio using these models, ratings of select standard cases were carried out during the year, FY11.
The market and liquidity risk is managed by the Asset & Liability Committee (ALCO) through analysis of structural liquidity gaps and interest rate sensitivity positions and deployment of surplus funds by Treasury besides approved limits and triggers for various types of deployment. The investment policy of the Company is reviewed periodically in the light of the prevalent market scenario. To manage the operational risks, there are adequate internal controls and systems in place aided and assisted by internal audit, remote back-up of data, disaster management policy and appropriate insurance.
Going forward, with the growth of business and augmentation of loan portfolio, risk management at IFCI would assume a larger and more complex role. The Company would continue to work on various initiatives which would not only help to develop a more robust risk management framework but also inculcate a strong culture for risk management and awareness in the Company. The steps taken would streamline the mechanism for effective overall institutional risk management at IFCI. 
Nominee Directors: Appointment of Nominee Directors on the Boards of assisted concerns has been a long and well established practice for Institutions and Banks with a view to monitoring the  performance of their borrower companies. The basic objective of such appointments is to help build up professional management and facilitate effective functioning of the Board of Directors as well as formulation of proper corporate policies and strategies to improve productive efficiency and promote long term growth of the assisted companies, keeping in view the overall interest of the shareholders and financial institutions. The feedback reports received from Nominee Directors act as a useful tool for credit monitoring. The system of Nominee Directors is functioning effectively in the Company.

Resources:  The Company continued the initiative of increased levels of resource mobilization programme undertaken during the year 2009-10.  During the year 2010-11, an amount of Rs.7,000 crore was mobilized  mainly by way of rupee bank facilities and private placement of bonds  at competitive rates.

Last year in September, there were media reports that the Indian non-banking finance company (NBFC) IFCI Ltd is eminently eligible to get  the proposed new banking license from the Reserve Bank of India (RBI) given the firm financial strength of the company. "I have mentioned many times earlier that we believe banking was our destiny... Right now, in terms of our financial strength, our ability to manage new businesses, we find ourselves internally to be capable of taking up banking as a viable business option," Chief Executive Officer and Managing Director, Mr.Atul Kumar Rai told a business channel in September, 2011. For more on this, CLICK HERE.
Conclusion: Thus looking from all angles the investors can buy the scrip at the current price of Rs.42.20, for a target of Rs.75 in the next 6 months time frame; which gives an appreciation of around 75% over the CMP. However, if it is able to garner a banking license then the scrip move above Rs.100, in the coming days. Therefore use, every dips to buy the scrip and accumulate. I have been advocating a buy on the scrip since the price of Rs.25.

Market Mantra: Nifty is looking bullish at 5255

The markets witnessed heavy selling in the late  hours of trade yesterday and the Nifty closed with a huge loss of 150 points. A flat opening was followed by a range bound move till noon. However, sudden selling emerged during second half dragging  down Nifty to a low of 5205 within two hours of trade.
Market is getting extremely volatile. A day of rise is followed by another day of fall and vice versa. Inability to cross 5400 and a fall below 5250 is a sign of weakness. Now, Nifty is finding support at 5150-5170 level. Market is giving wild movements.

I think the markets would close above 5250, in the Green as the Nifty (now at 5255) has turned bullish once again. 
The UPA government appeared to have staved off a fresh crisis on Thursday after the national auditor played down suggestions of a Rs 10.7-lakh crore revenue loss to the exchequer due to faulty allocation of coal mining blocks. A leaked draft report of the Comptroller and Auditor General (CAG) alleged that by not auctioning mines allotted to private and state-run firms, the government may have engendered revenue losses of truly epic proportions dwarfing all previous scams. But the Prime Minister's Office sprang into action immediately and released a letter from the auditor saying the information was half-baked and misleading. The contents of the draft, which covered allocation of coal blocks between 2004 and 2009, were reported by the leading newspaper in its Thursday edition. The story ignited an uproar in Parliament and hurt market sentiment. The newspapers should therefore exert extreme caution before publishing these kinds of market sensitive news, which has no strong foundation. I think off late the Times of India Group is becoming more sensational. 

Foreign institutional investors (FIIs) bought shares worth a net Rs.246.56 crore on Thursday, 22 March 2012, as per provisional data from the stock exchanges. FIIs have made substantial purchases of Indian stocks recently. Their inflow totaled Rs.7296.02 crore in ten trading sessions from 9 to 22 March 2012, as per provisional data from the stock exchanges.
Domestically, the incident in the parliament where the ruling government was made a dummy in terms of Railways fare hike shows evils of coalition politics and which is continually paralyzing the UPA government,  spooking our markets from time to time. In such circumstances, the investors/traders are suggested to stress more on short term play.
PLEASE FOCUS ON THE CONSTRUCTION AND BANKING COUNTERS.
Stocks to watch out for in today’s trading session are:
• (+VE) AVIATION: The civil aviation ministry has allowed Indian carriers to increase utilisation of foreign bilateral rights to 40% from April.
• (+VE) HINDUSTAN ZINC: Vedanta Group has offered 170 bln rupees to buy the government's balance stake in the company and Bharat Aluminium Co.
• (-VE) ABAN OFFSHORE: Holders of preference shares have agreed to extend redemption date by three years and increase coupon to 10%. I have seen some brokerages giving a sell on it.
In the morning the following call was already given to the Paid Service members: 

(i) Buy Jai Corp at Rs.92-93, T--Rs.97--99, SL --Rs.89.

(ii) You can accumulate IFCI Ltd above Rs.42, T--Rs.45, SL--Rs.39. The banking stocks are expected to do well in the coming days, so take positions.
(iii) Intra-day, buy Dish TV Ltd at Rs.56-57, T--Rs.59-62, SL--Rs.55. This is a brokerage call given today.
I think you got the news that Kohinoor Broadcasting Corporation Ltd is getting listed in the NSE shortly. Also, the channels have started, which are available in cable so bad days are over---only that we need to wait till the company comes out positive on the balance sheet.

Market Mantra:

Buy Indian Overseas Bank at Rs.98-99, T--Rs.105, SL--Rs.96.4.For Q3FY12, the total income of the company came out to be Rs.5015.33 Cr as against Rs.3452.86 Cr in the same period previous  year. The PBT of the company for Q3FY12 came out to be Rs.822.36 Cr as against Rs.804.12 Cr in the same period previous year.

IFCI LTD: BUY WITHOUT FAIL

CMP: Rs.42

IFCI Infrastructure Development Ltd (IIDL) had been promoted as a  wholly owned subsidiary of IFCI Ltd, as an instrument for unlocking  value from real estate held by IFCI by way of its office and  residential properties, acquiring valuable and strategic real estate in  the process of recovery from NPAs of IFCI and availing new  opportunities in real estate development through development  authorities. Over the years, IIDL has expanded its asset base by  purchasing assets and intensifying development work on such assets at  various geographical locations in the country and made its presence  felt on a pan India basis.
IIDL, with its implementation of projects like Service Apartment  Project at Delhi, Hotel Project at Lucknow, Financial City project at  Bengaluru and residential projects in NCR and Kochi, is one of the  growth engines in the development of real estates and infrastructure, to which impetus is given by Government of India.
IIDL has also secured an important opportunity to participate in the  development of a food park approved by the Ministry of Food &  Processing Industries, Government of India during the year. IIDL has formed a Special Purpose Vehicle (SPV) named JANGIPUR BENGAL MEGA FOOD  PARK for the development of the food park. During the year 2010-11, there was a growth of 86% in the company's assets base, which went up to Rs.640.05 crore as against Rs.344.04 crore at the end of previous year. The net profit increased by 7.98%, which was at Rs. 4.33 crore in FY11as against Rs. 4.01 crore during the previous year. The gross income of the company in FY11 was Rs.29.32 crore despite the generally slow recovery rate in the real estate sector during the year under review.

IFCI Ltd: A must buy at Rs.41-42

The government had established IFCI in 1948, to cater to the long-term finance needs of the industrial sector.  There were reports in media, that the Indian non-banking finance company IFCI Ltd is all set to garner around Rs.1 billion (Rs.100 Cr) via tax saving infrastructure bonds to finance infra projects. As per the offer document, the issue comprises Rs.1 billion plus unspecified green shoe option.

Moreover, in order to protect the financial health Public Sector Banks (PSBs) and financial institutions, the Government (in Budget 2012-13) has also proposed to provide a sum of Rs.15,888 crore for capitalisation of PSBs, Regional Rural Banks (RRBs) and other financial institutions including NABARD. Also, the Government is also considering a possibility of a creating a financial holding company to raise resources to meet the capital requirements of PSBs under examination. Besides, in order to make the banking payment structure at par with global standards, a comprehensive action plan has been prepared for implementation in 2012-13. 

In addition to this, the Government in Budget, 2012-13, has also focused on Infrastructure and industrial development: Recognizing the fact that adequate infrastructure is a major constraint on our growth; the Government has followed a strategy to increase investment in infrastructure through Public Private Partnerships (PPPs). During the 12th Five Year Plan investment in infrastructure is expected to go up to Rs.50 lakh crore with half of this, expected to be from private sector. Since Viability Gap Funding (VGF) is important instrument to attract PPP, this year budget 2012 has proposed to make irrigation (including dams, channels and embankments), terminal markets, common infrastructure in agriculture markets, soil testing laboratories and capital investment in fertiliser sector eligible for VGF under this scheme. Oil and Gas/LNG storage facilities and oil and gas pipelines, fixed network for telecommunication and telecommunication towers will also be made eligible sectors for VGF. 

For the present year tax-free bonds worth Rs.30,000 crore were announced for financing infrastructure projects. This limit is now proposed to be doubled in Budget 2012 to Rs.60,000 crore in the fiscal year 2012-13 (by including Rs.10, 000 crore for NHAI, Rs.10,000 crore for IRFC, Rs.10,000 crore for IIFCL, Rs.5,000 crore for HUDCO, Rs.5,000 crore for National Housing Bank, Rs.5,000 crore for SIDBI, Rs.5,000 crore for ports and Rs.10,000 crore for power sector). Similarly, for rural infrastructure development a proposal has also been made for enhancing the allocation under Rural Infrastructure Development Fund (RIDF) from Rs.5,000 at present to to Rs.20,000 crore.

With the doubling of the financing limit for financing infrastructure projects, the markets might witness a host of tax-free bond issues to be launched in the next fiscal. IFCI Ltd has already issued one and the money would be used to finance infra-project. 

Therefore, buy IFCI Ltd at Rs.41-42, T--Rs.65, SL--Rs.39.  This target is for the medium term. Once the RBI starts to cut interest rates, which is probably from the middle of next months, the banking counters would literally shoot. Therefore, taking positions in this space, before it runs ahead of  you.

Note: You can join my brokerage house, if you have a portfolio size of Rs.2 (two) lakhs. You would be guided in every step and for one year, the Paid Service would be free; if you are joining after 31st March, 2012. If you join before, 31st March, 2012, then you get two year subscription to the Paid Service free. Moreover, if you want your investments to get double benefits from margin trading (not the more riskier ones like F & O), then this is the opportunity. If you want both: (i) margin trading and (ii) your trading to be handled by my team, on the condition of profit sharing arrangement, then you can also go for that--Minimum Fund size should be of Rs.2 lakhs (instead of Rs. 5 lakhs if you do not have an account with my brokerage house). Join the schemes, before the quota gets filled up and enjoy!! For the details you can mail me at: suman2005s@rediffmail.com/sumanm2007s@gmail.com.

Market Mantra: The Nifty Should Rebound from 5220

The markets as expected, are trading under pressure below 5400, since sometime. A disappointing budget added fuel to the fire...

Yesterday, a positive start soon turned into negative and sustained selling dragged down Nifty to a low of 5238. It made an intraday high of 5340 and finally closed at 5257 with a net loss of 61 odd points. Inability to sustain above 5500 and profit booking is dragging it down to close below 5400 is a cause of concern. Market which was witnessing volatile moves due to multiple economic events plugged together has started a south ward journey. Now Nifty is finding next major support around 5150-5170--5250--5220 ranges which I do not think will break today. However, the Nifty has to close above 5285, to give some hope for the bulls.  I think the markets is expected to rebound from the support of 5220-5250, as is seen from the morning trends. Please do not play in these kinds of markets without putting appropriate stop losses.
RESISTANCES: 5280 & 5300
SUPPORTS: 5250-5220 & 5180.
US markets closed flat to positive cheered by news of Dividend by Apple Inc. Bond yield dropped sharply as economist favoured that US macro indicators will continue to strengthen.

Domestically I feel that Budget hangover which gripped the markets  on the issue of big bang reforms has its upside capped. Also, the deficit situation looms large and subsidies are likely to hit central government in the long run if oil prices in retail outlets is not adjusted to global crude prices. Having said that: this is is expected to fade away in the coming days, as the investors will now focus basically on the quarterly earnings and the next move by the RBI. The investors can start buying slowly as the market again attempts to close above 5400 (Keep your stop loss ready). 

The Nifty is now trading at 5240 and I hope it would close in the GREEN today above 5285 which remains the PIVOT POINT.

Today's call for the Paid Service members: Buy Voltas Ltd at Rs.121, T--Rs.126, SL--Rs.117.  The budget provisions are slightly positive to neutral for the company, as excise duty hike by two per cent will be passed on to consumers. However, increase in service tax from 10 per cent to 12 per cent will straight away affect the end consumer, right from lower middle class to upper class of the society. Also, removal of customs duty on LCD and LED panels and mobile phones parts, and the five year extension for weighted deduction of 200 per cent on R&D expenditure for in-house facilities are welcoming decisions is positive for the consumer good sector as a whole. Moreover, the benefits announced for key sectors like infrastructure, agriculture and education are bound to improve the overall economic scenario and this is expected to influence the consumer goods industry, positively.
Voltas is one of the world's premier engineering solutions providers and project specialists. Founded in India in 1954, Voltas Limited offers engineering solutions for a wide spectrum of industries in areas such as heating, ventilation and air conditioning, refrigeration,  elctro-mechanical projects, textile machinery, mining and construction equipment, materials handling equipment, water management & treatment, cold chain solutions, building management systems, and indoor air quality. 
Premium Members were give a buy on IFCI Ltd at Rs.41.70--42, T--Rs.45, SL--Rs.39. This is BTST.

Now S&P's and Moody's gives a spank on the back of the government

The two agencies cautioned that India's budget for the fiscal year ending March 31, 2013, weakens the government's credit profile, citing concerns over a clear roadmap or specific policies to address fiscal constraints. After the current Finance Minster took office, the situation only turned worst. But he is still clinging to the post like a leech on the back of a buffalo. Simply hiding behind the facade of coalition politics or obfuscating the real issue giving the blame to the global economics at the fall of a hat does not hold good; when the interest of its 100 cr mass is concerned.

The question is, if any of the allies are working against the people's desire then the government must come out clean, instead of harping the same tune again and again, mentioning its inability to convince the coalition partners.

Look at the US economy and compare it with ours--while our leaders systematically destroyed a vibrant economy gifted from the NDA, the Obama administration, actually revived a chequered economy left by the Bush administration. This is the difference between our leaders and US leaders. While our leaders failed to close the terrorist camps in the Pakistan, the US troops came from another continent and gunned down Osama Bin Laden. While we could not hit back in equal strength after 26/11, the US troops destroyed the hateful Taliban regime in Afghanistan, coming from such a long distance--this is US and this is India.

Most of our ruling parties fail to tell the truth in the fear of losing elections. Moreover, the parties like the INC, the TMC (of Ms. Mamta Banerjee), the Communists, etc, come to power mainly showing the minorities, carrot in front of the cart.

The votes for the development hardly takes precedence, the communal politics is the main plank of some of these political parties or else the Muslims would not have voted en mass to the Congress and its allies in the last election pushing the country to this stage; where we could not find a good reform oriented Finance Minister among the 100 cr strong Indian population. Really a disgrace!!

While P Chidambaram siphoned off Rs.60, 000 Cr in the name of helping the farmers, the present one is a novice in the space in which he is a minister. A person who has got specialization, in History, Political Science and Law is running the show of a Finance Minister. It is really a matter of great shame and the result is all confused state of affairs---sometimes it is a case of hilarious clauses to bring  in the new participants in the equity market and sometimes it is dangerous talks of over-riding the judiciary in the matter of penalizing some entities retrospectively. Can we plough a field using cats or dogs, instead of bullocks or tractors?

If the elections are held mainly based on minority appeasement and caste equations, then we should not complain when these kinds of 3rd rated finance ministers, spoils the apple-cart of growth. But the theory gets repeated again and again. In the last elections in Uttar Pradesh, where SP, won  the majority,  Muslim & Yadavs were the game makers. So the caste and ugly communal politics goes on and on....!!

Therefore, we ourselves are responsible for bringing in these kinds of unholy conglomeration who are responsible for our troubles. If Mayabati was an example of the naked show of caste politics, then Congress (INC), TMC, the Communists and Samajbadi Party, etc are the appendages of minority appeasements. These parties make minorities, football in the game of politics.

I also do not understand one thing: when the Muslims see that their fate is not improved by these kinds of governments then why do they vote for the same? A section of Muslims think that by electing only their people, would their situation improve, which is not correct. A good person can come from any community; neither all Muslims are Abul Kalam Azad nor are they all supporters of Osama Bin Laden. In the same neither is all the Hindus Sri Ramakrishna, nor are all like Suresh Kalmadis or Raja.

If we sow a mango tree will it bear jack-fruits?Therefore, it is imperative that while voting we take a little care to vote the development, instead of going in for caste and communal lines.

When the growth is coming down, when the capital market participants are becoming bankrupts, when those working in brokerage houses are either not getting salaries for months or are getting delayed salaries, when in the infrastructure sector, project after project are getting stalled due to lack of funds, when the banks are finding hard to push the loans, when the young entrepreneurs are finding troublesome to carry on the business due to shortage of working capital, when the next door aunty is worried about the employment of his ward, when industrialists are talking about the fall in sales, etc. this government is sadistically trying to beat inflation to death, as if it is the only thing which needs to be addressed at this point of time. In a growing economy, there would be some inflation, but it would be foolish to curtail the growth to some abnormal levels, just to make a section of Indians happy. The government could not highlight the fact that FDI in retail in any case does not mean closing down of all the mom and pop "kirana" shops. When we have gaping fiscal deficit, the government is talking of food security bill.Wow!!

A psychopath RBI team lead by an economist by default, Dr.Subbarao and another economist gone blind, Dr.Subir Gokarn, are in fact running the show, in absence of a Finance Minister. What we have today in the form of finance minister is a joker who is playing economic circus to conjure up, TV audience.

Therefore, as long as this joker does not relinquish the stage, the real show cannot begin. It is unfortunate, that the joker is occupying the stage by force, even as the show tickets are not getting sold.  Therefore, the time has come for the Muslims and Christians to join hands of the Hindus and vote in good government/s or vote out the government/s who play pranks with the Indian economy--after all it is our country, and we have every right to keep the flies away from contaminating the ointment.

Poverty ratio is the highest for Muslims, at 33.9%, in urban areas
The Rabble-rousers claiming to represent the Muslim Community should now answer...!!

NEW DELHI: Planning Commission today further reduced poverty line to Rs 28.65 per capita daily consumption in cities and Rs 22.42 in rural areas, scaling down India's poverty ratio to 29.8 per cent in 2009-10, the estimates which are likely to raise the hackles of civil society.
An individual above a monthly consumption of Rs 859.6 in urban and Rs 672.8 in rural areas is not considered poor, as per the controversial formula.
Furthermore, the Plan panel has kept the poverty threshold even lower than it submitted to the Supreme Court last year, which created an outcry among the civil society.
The Plan panel had said in its affidavit before the apex court that the "poverty line at June 2011 price level can be placed provisionally at Rs 965 (32 per day) per capita per month in urban areas and Rs 781 (26 per day) in rural areas".
The civil society had questioned this definition stating it was very low.
As per estimates released today, the number of poor in India has declined to 34.47 crore in 2009-10 from 40.72 crore in 2004-05 estimated on the basis of controversial Tendulkar Committee methodology.
The methodology recommended by the Committee includes spending on health and education, besides the calorie intake.
Among religious groups, Sikhs have lowest poverty ratio in rural areas at 11.9 per cent, whereas in urban areas, Christians have the lowest proportion of poor at 12.9 per cent. Poverty ratio is the highest for Muslims, at 33.9 per cent, in urban areas.
Further, poverty in rural areas declined at a faster pace than in urban cities between 2004-05 and 2009-10.

News Body:The Times of India

The Finance Minister and the UPA Government headed by M M Singh loses all Sanity

In its zeal to make everyone a tax evader, an imperious UPA government has made a ridiculous amendment to the Income Tax law with retrospective effect

The Union Budget for the year 2012-13, presented by Dr.Pranab Mukherjee on Friday was generally void of any major reforms. However, there has been one major change to the income tax law, which found no mention in the finance minister’s speech. The government has tweaked an important section of the law, which relates to “Income deemed to accrue or arise in India.” The “retrospective amendment” to Section 9 of the Income Tax Act, will come to effect from this year. This means any entity which has adhered faithfully and legally to the law prior to the amendment will now have to pay taxes and other royalties, no matter what.
According to the Finance Bill 2012, the government has made the following changes to the Section 9 of the Income Tax Act, which will be effective from 1 June, 1976;
1)    it is hereby clarified that the transfer of all or any rights in respect of any right, property or information includes and has always included transfer of all or any right for use or right to use a computer software (including granting of a licence) irrespective of the medium through which such right is transferred.
2)    it is hereby clarified that the royalty includes and has always included consideration in respect of any right, property or information, whether or not—
a)    the possession or control of such right, property or information is with the payer;
b)    such right, property or information is used directly by the payer;
c)    the location of such right, property or information is in India.
3)    it is hereby clarified that the expression ‘process’ includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret.
What are the implications of this? According to Ameet Patel, tax expert who spoke at Moneylife Foundation’s seminar on the Union Budget, “This is very relevant for foreign software companies, who sell their software in India. Also, the definition has been widened to include transmission of satellites. So, all foreign media and broadcasting companies which are allowing their satellites to be used for viewing various TV channels into your homes and offices are going to be affected.” 

Why has the government gone back in time is unclear but in one stroke, it has effectively empowered income tax officials to retrieve “missing income”. The officials will now be at liberty to target whichever software and media entity falls under the purview of the amendment.
The government has targeted software, information technology and media firms, by taxing them retrospectively. However, it is funny to note that most Indians did not have televisions or computers, much less cables or fibre optics in those days. In its zeal to discover missing income and unleash harassment of taxpayers, an imperious government has obviously lost all sense of proportions, time and place.

News Body, Courtesy: www.moneylife.com 

Dish TV Ltd: Bullish Formation

The Indian media and entertainment (M&E) sector has some reason to cheer from this year's Union Budget for 2012-13 as it was given some attention. For starters, with the opening up of the venture capital sector, the investments in the M&E sector will become attractive. Currently, VCs are allowed to invest only in nine specified sectors.
Secondly, the finance minister cheering the centenary year of the Indian film industry has put forth a proposal to exempt the industry from service tax on copyright on cinematographic films. With this move the exhibitors would be exempted from levy of service tax on payments made by them to distributors for exploitation of cinematographic rights. 

The stocks to watch out: Eros International,  Dish TV, Den Network, Hathway Cable, etc. 

However, the Budget did not address the issues of digitization, as the country shift from analog cable TV to digital.

Also, I think you know that: Kohinoor Broadcasting Corporation Ltd has applied for listing of its Equity Shares at National Stock Exchange, Mumbai and is awaiting the approval of the same.
The total value of the Investment translated in to INR in the wholly owned subsidiary M/s Kohinoor Broadcasting Corporation FZE, registered at Hamriyah Free Trade Zone, Sharjah – UAE amounted to INR 840.53 Million {US$ 18.83 Million} till the close of the financial year, FY11. During FY11, the Company has received back its investment to the tune of INR 63.53 Million {US$ 1.6 Million}.
In FY11, the company made fresh investments in M/s KBC Power Corporation Limited (Indian Subsidiary) to the tune of INR 3.68 Million and in M/s Tagore Theatres Private Limited (Entity over which Key Managerial persons are able to exercise significant influence) to the tune of INR 9.02 Million.

FROM BUSINESS OF CINEMA: Impact of Service Tax exemption on Indian Film Industry, Samira Pillai 17 March, 2012: Click Here:
MUMBAI: The Union Budget 2012 presented by Finance Minister Pranab Mukherjee has turned out to be quite lacklustre. But for Bollywood, there is some good news. Celebrating the centenary year of the Indian film industry, Mukherjee announced that the entertainment industry will be exempt from service tax. Exemption will be applicable to copyrights relating to recording of cinematographic films as well. Investments in the media and entertainment sector will become attractive for venture capitalists because of the opening up of the venture capital sector.
Chairman of Reliance Big Entertainment Amit Khanna says, “This was a media demand! We are happy that the entertainment industry will be exempted from service tax.”
The biggest points of concern for the industry had been levy of service tax and VAT on copyright acquired in content and levy of entertainment tax on film exhibition. Filmmaker Karan Johar, at the inaugural session of Federation of Indian Chambers of Commerce and Industry (FICCI) Frames, Mumbai had emphasised that the government needs to realise that the film industry actually works for the public. “Our base is becoming broader and we are also making social, economic and political changes by our cinema. So to recognize what we do is very critical”, he had said.
The film industry had planned a strike on 23 February this year to protest the 10.3% service levied by the government, but it was called off after a meeting between members of the film fraternity and Mukherjee, where they were suggested to wait for the budget announcement on 16 March.
So it looks like the fraternity’s concerns were heard and accounted for.
Vice President of Film Producer’s Guild Mukesh Bhatt has said “Exempting the film industry from the service tax is the best gift given by the finance minister. Had it been included, the entire industry would have been wiped out”.
In the long run, the government’s announcement will mean that there will be improved cash flows and overall finances of the film sector.  

Other Sources:

(i) Business Today

(ii) www.rediff.com

Trinamool Congress (TMC) & its leadership should explain to the Nation, how much damage they have done due to their anti-reform stance!!

[Mukul Roy is no match for the reformist and the US educated, Mr.Dinesh Trivedi. He is simply a greedy fellow-- Ms.Mamta Banerjee's, "Yes man".  Shame  upon the TMC and the Congress for allowing this kind of stupid thing to happen in this great country!! These Power Hungry fellows/parties have cut India's nose among the international crowd. Wait for more problems for the cash-strapped Indian Railways. If any accident occurs due to railway safety then these parties would be held responsible. The TMC probably thinks, that the electorate are all fools...and they are the only clever people on earth....Huh!!]. 
NEW DELHI: Ending days of stalemate with the Trinamool Congress leadership, Dinesh Trivedi on Sunday resigned as railway minister after speaking with party chief mamata Banerjee. TMC leader Mukul Roy to replace Trivedi as railway minister.
A source close to Trivedi said he forwarded his resignation to Prime Minister Manmohan Singh.
This follows a talk with Trinamool supremo and West Bengal chief minister Mamata Banerjee earlier Sunday.
Mamata Banerjee told reporters, "Dinesh Trivedi called in. He will resign tonight."
Said Trivedi, "She (Mamata Banerjee) spoke to me. The TMC wants me to resign. I told her I will abide by the party and resign."
Dinesh Trivedi had been insistent till now that he would not quit his post unless he got a written order from Mamata. He said on Sunday that the Railway Ministry could not be treated as somebody's property, although, he added that he had full regards for the Trinamool Congress supremo.
Mamata was reportedly upset with the railway minister over the train fare hikes announced in the Rail Budget. Trivedi had reportedly not consulted the Trinamool Congress over the budget, either.

Newsbody, Courtesy: The Economic Times

Great News for the Indian Markets

LUCKNOW: Uttar Pradesh chief minister Akhilesh Yadav on Sunday said the decision to join the UPA government at the Centre in the changed political scenario would be taken by Samajwadi Party (SP) supremo Mulayam Singh.
"Any decision to join or not to join the UPA government will be taken by 'netaji' (Mulayam Singh). He is going to Delhi and will decide on the SP stand regarding joining UPA", Yadav told reporters at Rajbhawan after oath ceremony.
He was asked to comment on the reported statement of Congress leader Digvijay Singh that SP could join the UPA government.
"The relation of SP with Congress will be decided by Mulayam. SP had given support to Congress-led UP but did not join the government earlier", Yadav added.
Senior SP leader and cabinet minister Azam Khan when asked on the issue, said, a party like SP does not take any political decision on statements issued in media. "We have not taken any cognisance of it (Dijvijay's statement)".
"Whether SP will join UPA or not will be a big decision and statements issued on this by Congress in media were not a good practice", he said.
"Congress should stop issuance of irresponsible statements in media on the issue", he added.
Asked about the party's response if Congress president Sonia Gandhi invites SP for joining UPA, Khan said that the decision could not be taken at media's behest.

News Body, Courtesy: The Times of India

Political Vendetta??

While Air India is constantly been a beneficiary of Tax Payers' Money, the cash-strapped Kingfisher Airlines of Dr.Vijay Mallya (Born and Educated in Calcutta/Kolkata) is left empty handed!! Is it because Dr.Mallya entered politics in 2000 as a member of the Janata Party, where Dr.Subramanium Swamy is the flag bearer??!!

Finance Minister Pranab Mukherjee on Friday proposed to pump in Rs.4,000 crore in equity into the ailing national carrier, Air India, in the next fiscal.
"Budgetary support of Rs.4,000 crore has been earmarked for equity infusion in Air India Limited," said the expenditure budget presented to the Lok Sabha for the financial year starting April 1, 2012.
In his last budget (2011-12), Mukherjee had allocated Rs.1,200 crore for the flag carrier.
The Airports Authority of India (AAI) has been allocated Rs.280 crore, out of which Rs 80.52 crore has been earmarked for airport development in the northeastern states.
The aviation regulator, the Directorate General of Civil Aviation (DGCA), has been allocated Rs.60 crore to pursue its plans.

Air India currently has a total debt of Rs.43,777 crore, including loans and dues to vendors like oil firms and airport operators.
A group of ministers (GoM) led by Mukherjee had approved the debt restructuring plan that allows the carrier to raise Rs.7,400 crore via bonds, backed by a sovereign guarantee.

News Body (except the headline), Courtesy: Business Today

Jai Balaji Industries Ltd: Gains from the Budget Proposals

The budget 2012-13 is positive for Jai Balaji Industries Ltd, as the company plans to set up 5 million tonne integrated Steel Plant, 3 million tonne Cement Plant and 1,215 MW Power Plant in Raghunathpur, in West Bengal. The company is expected to enhance its presence in Steel and Power business in the near future and hence this budget is important for them. The budget provides many windows of aid for the power sector, notably through duty-free imports of coal and LNG and easier funding---the company could opt for either or both. The company is already in the advanced stage of setting up of 0.35 million tons Coke Oven Plant along with waste heat recovery boiler of 80 TPH at its unit at Durgapur. The company's projects are laden with debts and it can pay off some debts with cheaper foreign loans (ECBs). The extension of tax breaks on new projects is another booster to its balance sheet. Tax exemption for mining equipment could also help the company as it is into captive mining of coal. It is to be noted that, a Joint Venture Company ‘Rohne Coal Company Private Limited’ was formed in 2008-09 with the Registrar of Companies, NCT of Delhi & Haryana, in which the company along with M/s JSW Steel Limited & M/s Bhushan Power & Steel Limited are venture partners. The said Joint Venture Company was formed in terms of allocation of Rohne-Coking Coal Block in the State of Jharkhand by Ministry of Coal, Government of India. It  has has 6.90% stake in the coal block. Moreover, Billet prices are expected to increase after the hike in excise duty from 10% to 12% in the Union Budget 2012-13. Now looking from all angles, it is found that the scrip could move towards Rs.62-65, in the next 2 months time frame.

The Union Budget: 2012-13

A script of confused commentaries & which could only aggravate the inflation concerns

~~Suman Mukhopadhyay

The Finance Minister Dr. Pranab Mukherjee presented a disappointing budget, for the FY13. In order to avoid controversies probably, he  has left most of the things untouched. There was hardly any reforms and the scribblings in the budget papers show it to be ordinary,  lacking vision and the necessary punch. It clearly shows that our current Finance Minister have been wrongly allotted this department, where his too much presence or sojourn could pose problems not only for the economy but also to the country as a whole. 

Also, the stamp of Coalition-politics was clearly visible in the budget document and which might make India lose its name as Investment destination. 

Rather than taking the opportunity of becoming a reformer, the Finance Minister played the roll of "Santa Claus", doling out gifts here and there, (though, not in Vodafone case) and sometimes medicines having no or very little efficacy (remember, incoherent thinking in the matters relating to the equity market reforms). 

FM, offering incentives to small investors to buy equities while effectively sounding the death knell to mutual funds is a stark reminder, that he and his team is out of sync with the realities of the market dynamics. The budget does not address the basic issue of reviving the sentiments of Indian Capital Markets, which is so essential for a growing economy like India. 

It is to be understood that after the current Finance Minister took office, the things only worsened, but still instead of relinquishing the post, he only wants to stick to it, like a leech on the back of a buffalo. Very interesting. Isn't it?

It is confusing because it has no clear direction as how to plug the fiscal deficit. Mere saying that fiscal deficit will reduce without spelling out a proper road-map does not hold good. It only shows how puerile the thinking of finance minister of a country can be!!

In this context the Economic Times writes,  "But this will require draconian price increases for petroleum products and urea, and it is far from clear if allies like Mamata will agree. So, the projected fiscal deficit of 5.1% looks as unconvincing as last year's projected 4.6%, which ended up at a dismal 5.9% of GDP".  

He also had an optimistic projection as far as the GDP growth is concerned for FY13, when he said, "The economy will grow by 7.6% next fiscal", though a far dwarfer value than last year’s 9% (India will end this year below 7%). 

Therefore, when some of the known India Inc Psychopaths like Uday Kotak says, "This is a realistic budget", I fail to the find the reels of reality here. But then Mr. Uday Kotak is  known to give these kinds of buffoonish comments though he holds a Post-graduate degree in Business Administration from Jamnalal Bajaj Institute of Management Studies of Mumbai University. These days, every Tom, Dick and Harry has an MBA degree....Huh!!

Now coming to the tax front, though there was marginal hike in the tax exemption slabs, but then at the same breadth an increase in the service tax to 12% (though the list of exemptions runs to the dozens), and also an increase in the duties on large cars to 24 per cent, will only remind us of inflation. 

However, some of the steps of the FM, which needs a little pat on the back are: 

(i) an increase of the basic duty on standard gold, to 4 per cent from 2 per cent, and on non-standard gold, to 10 per cent from 5 per cent, in order to suppress demand and close India’s gaping current account deficit is reformist step.

(ii) Proposals of giving some relief to Coal, Gas and Power companies could help the country shore up its energy deficit. 

(iii)  Allowing India’s ailing aviation sector to raise a total of $1bn, to help it shore up its earnings deficit is also seen as a step in the right direction

(iv) Opening up of the venture capital sector could make the investments in the Media and Entertainment (M & E) sector look attractive. Currently, VCs are allowed to invest only in nine specified sectors. Also, proposals to exempt the M & E  sector, from service tax on copyright on cinematographic films is also seen as a step to be appreciated. With this move the exhibitors would be exempted from levy of service tax on payments made by them to distributors for exploitation of cinematographic rights.

But then when there are genuine efforts to plug the inflation monster, by the RBI, the FM took steps which looks highly inflammatory.  This shows that there is a gap of communication between the FMO and the RBI, in the matters relating to fiscal consolidation. 

There was in fact a shopping list of spending proposals: $1 tr on infrastructure; 6,000 new schools; 8,800km in new highways; $17bn in funding for rural roads; programmes for lower castes, school meals and rural sanitation! 

But then in the cash tight economy, how that money will be sourced, allocated, spent or implemented, remained conveniently unsaid and unhinged. Besides, how such spending will help to close up the gaping hole of fiscal deficit without stoking in inflation fears is really confusing.  

Now there is proposal for food security bill too!! Santa Claus is coming to town and inflation is here to stay.