China

Even as FDI growth in China continued to grow Services at 15% and manufacturing at less than 5% , its inland provinces will soon get to be the majority FDI destination with the Eastern seaboard share falling below 50% this year.

This year despite teh statistics from the E&Y report the erstwhile no. 4 sector with 33 infra FDI projects is likely to become a major recipient of FDI in value terms thru dedicated Infra Funds incl the ADB-HSBC - IIFCL one 

India no. 4 FDI Destination : E&Y

In India however, 146 Tech projects outbid the no. 2 industry in rEtail and consumer as the single biggest contributor to FDI. For some strange reason India's middle class/ consumer for the E&Y team stays stuck at the 2001 figure of 250 million even as it discuesses the Top 5 FDI destinations as those favored by Indian IT 

The top five FDI destinations in India are Bangalore, Mumbai, Chennai, New Delhi and Pune. They attract 43 per cent of the investment projects, 34 per cent of the jobs created and 26 per cent of the value of FDI in India.(BS report)

Auto and Healthcare were also pointed out as key destinations in the E&Y survey released by india head Rajeev Memani

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PTC India ( Power Trading Corp) had meagre sale s of INR 13.35 bln this quarter from 17.7 bln last December while prfts were almost notional at INR 0.095 bln compared to a 0.38 bln score in the year ago quarter

IDBI grew NPAs to 2.9% gross a 20% increase over the last quarter  as it scored a 10% downtick in profits to INR 4.54 bln froma year ago. NII was also lower by more than 10% at INR 10.6 bln 

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Though the deficit was almost respectible at $12 bln, Imports rose to more than $40 bln to take the 9 month score to $350 bln for FY2012. Thus the Exports would be more than $27 bln for the month a hefty 20% rise on November's $22.3 bln and again above the required $25 bln per month mark to reach $300 bln in Exports by March 2012. The revenue deficit is likely to end above $150 bln by a few billion dollars. 

December trade would have included higher Oil purchase component, the deficit for November being $ 8bln. 

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PNB grew Gross NPAs , with Net NPAs rising from 0.84% to 1.12% losing momentum with NII growing 10% and NIMs down a fraction to 3.84%

ICICI Bank however grew NII to INR 27.1 bln and Profits to INR 17 bln in the December Quarter. The profits were 20% higher from December 2010. ICICI Bank NII grew at 17% and Net Npas fell to 0.3% , provisions a further smaller 3.6 bln The compoany's loan book is now at INR 2.31 tln or $46.3 bln

The bank's 18 international operations still make 50% of the book and mortgages only 35%. Retail deposits are only 65% of the deposits and the loan book will grow at 18% incl the March quarter for FY2012

September's Profits were a bigger INR 19.92 bln. September provisions were INR 3.2 bln CAR remains above 18% and 13% (Tier I by Basel 1.5 calc) as per RBI directives for 8% CAR reqts. September NII was INR 25 bln and the current is a 8% QOQ growth

The bank plans to cement its growht with recovery in retail growth and the clampdown on corporate lending effectively continues. CRE is less than 4% of the Company's loan book. The bank's $100 bln balance sheet is the second largest int he country behind public sector SBI

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India's own Marketing Wars may not reach the IPL in this case as botht he Hindu and the barter driven Times of India could stay away from expensive IPL truf wars even as they open a slugfest for each others readers in Chennai

stay ahead of the Times stirkes a chord as today's Times generation stays snug in malls and theaters without a clue, eh?

Wake up to The Times of India

Stay ahead of the Times

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Starbucks went ahead with its earlier planned 50:50 JV vehicle with Tata Global Beverages to open the chain in India. The first store come sup in August 2012. The global coffee chain is apparently not confident about replicating its 1000 store China success in India without a local Partner. Tata Global has knowledge from running an earlier upmaret coffee chain with Baristas it sold back to/as Lavazza later.

With the 50:50 JV option the investment of INR $4.83 bln or $100mln bypasses the local sourcing clauses which led Ikea to change plans about entering the lucrative India market earlier this month. Luxury retail with LVMHa and global automakers like Audi BMW apart from Volkswagen and Ford continue to pursue their India investment interests having grown a definitive share of market in Luxury and small car ranges.

Cafe Coffee Day would be eager for the competition as also Dominos franchise owner Jubilanft Foods which is rolling out the Dunkin' Donuts franchise stores this year as well. McDonalds and Yum Foods/ Pizza Hut&KFC continue to strike daily success even as Dominos increases per store per person spend to INR 500 in 2011 or $25 in Mac PPP terms. Both Yum foods (from Pepsi) and Dominos roll into smaller towns in 2012 to keep growth growing at above 50% rates in a market where 30% annual revenue and profit growth is considered outstanding / mark of a successful business model

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Even though Ramesh Sobti's Indusind bank may be a bit early with its new market positioning on the Direct connect platform, its ad campaign "Kabaddi ki kya zaroorat hai" is likely to impress a few prospective customers and even industry thought leaders with a direct call to your Relationship Banker replacing all the mobile, internet and telecalling customer service modes that are so flailing around in terms of delivering any value to the banks' service blueprints.

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Even though Ramesh Sobti's Indusind bank may be a bit early with its new market positioning on the Direct connect platform, its ad campaign "Kabaddi ki kya zaroorat hai" is likely to impress a few prospective customers and even industry thought leaders with a direct call to your Relationship Banker replacing all the mobile, internet and telecalling customer service modes that are so flailing around in terms of delivering any value to the banks' service blueprints.

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The two foreign brokerages working on the mandate to sell Temasek's 3.5% or $600 mln stake for INR 30 bln, have to find buyers acceptable to ICICI Banka nd meeting Temasek's terms for the sale. Otherwise Temasek could have used block/bulk deals on the exchange itself to transfer the stake by now to multiple buyers or apparently Temasek is not in a hurry to sell for India's second  line of investments have drawn up a virtual blank for the Sovereign fund esp int he banking sector as new banks are far away. 

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Is it just a coincidence that Sanctions continue to score at Rs 440 bln and disbursements at less than INR 180 bln for REC LTD for instance? I think the gap is ever widening andf th e orderbook for infracos has lost relevance, again the peculiar India context making it a matter of corporate governance

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REC's revenues grew to INR 27 bln or $520mln in the current Q3 again building a 25% topline growth in rupee terms as a rupee lender, it will not face much losses from ECb/FCCB having finely priced QIPs as it reported a INR7.7 bln for the quarter or $ 154 mln

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A lot more of the pizzazz has come back into Indian expert speak as commentators build on the value multiples in the Capital Marrkets. Now that the indices have journeyed into skyscraper Monday - Wednesday, one would wonder why investors bother with an India portfolio at all, as very few got in at 4700 and very few will now get out at 5100 , that the indices if ever will come down for further buying below 4700.

India's premium also means it identifies the data series for inflation as too much scattered data on primary inflation and fuel inflation thus we now have to work with CCEA's monthly week1 release of WPI alone.  

Luckily, the banks and infrastructure companies are back even if you count out the redundancies of 1200 at HSBC, 100 at Citi and a few at BNP. Trade Finance should be good for those considering hiring in their banks. Esp as Trade and Finance growth CAGR is likely too remain in the 20s despite the statistics and the infrastructure pad ups. 

StanC is hiring, Singapore and Dubai could probably open up to Indian hiring soon and the US gets rid of outsourcing bug we might even look at global companies getting more H1Bs for welcome immigration in other professions esp in Financial Services and other Travel/Transportation, Education and Healthcare, where we can compete with other diaspora from China and Mexico / LatAm as well for what is due to immigrants that make America's 47% science jobs and 24% of all jobs. 

The Bank Nifty is pulling out though, If you bought a few puts before Tuesday you would be good for a few millions in the bank too.  And youmay need to book your trades more frequently as it is giving you an opportunity to do that because it mulls new upmoves midway , like probably tomorrow Puts could lose value when Bank Nifty spikes again, before the big move down. 

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Post Modern India or whatever else you might want to name it, India has new institutions that you cannot forego now foreverwhatever be the origin of the food/ car/ industry/ and non profit effort.

1. Big cars with or without CSE's new 160k duty to penalise their driving on India's new roads, will eventually catch up in value sales with the small cars, esp in rural india with no tenacity in the urban mouse based alto and santro(i10) or Beat. Also, the SUV has to succeed before the hybrid

2. Half a dozen efforts on the UIDAI will not do. And I mean the six different agencies that ar epublishing biometric ids rather than agree to the NIDAI bill. Similar infighting over the DTC, GST s only likely to make the next governance layer antd the next set of reforms much more harder and the government much further from current "nearer ground" / open practices

3. India needs the welfare economy, and welfare institutions that guarantee employment or social favor will haev to perform wth the pizza huts in the cities

4. India's urban cuisine will continue to certify more global fast food decor and franchise from McDonalds and Au bon pain to KFC, Pizza hut and even the Cafe Coffee Day despite questionable finance, redoubtable governance and lack of foresight and vision, but based on strict process adherence and global franchise maps which s also a key difference why we are not China or McDonalds' that big market at the beginning. That also means entertainment spends on Malls, food courts and Multiplexes are the fastest growing and probably the largest salary expense head in a few years if we play a good urban housing infrastructure card

5. Indian Sports will continue to struggle without Infrastructure,. The recent influx of money could only create another Cricket institution in IPL and the other sports will continue to find bigger, better sponsors but not endearing institutions. The 2012 London Olympics unfortunately have other important issues forcing India's hand

6. India's Banking will reach the rural billions but not only thru technology and payment platforms. Thus the blueprint for Rural services led by banking nad finance has to include more push factors encouraged by planning blueprnts. Why don't ewe try a $3 bln contribution from the governemnt to a $100 bln global bank that will set up these service centers throughout , esp to make NMZ instruments and projects such ads the DMIC a reality and ntot just policy notes without FDI interest

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India's 63rd Republic Day with a mega parade in New Delhi is on. Here's wishing another year of a Great Indian Republic in all its majesty

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As usual, in the defensive batch of the last line of Indian markets, the company / midcap disappointed the markets bang in the middle of the bull run to underline its Capital market go to strategy! Her protestations of 28% growth in research services notwithstanding the market too it in disfavor like Axis and continued on even as Airtel and Hindustan Unilever, ITC wait for the bulls to subside.

Biocon’s nine-month revenues driven by growth in Branded Formulations, Emerging Markets and Research Services

Revenues at Rs 1,511 Crores; EBITDA at Rs 425 Crores; PAT at Rs 241 Crores

That's $300 mln in Topline, $85 mln EBITDA and $48mln in Profits 

We are not clear if periodic data is available on variability of Licensing Income which flatlined the earnings engine accordng to the management speak again

New research in Psriasis antibody research and INSUpen launch again does not reflect in material positive sales forecasts yet but the company's branded formulations grew 40% on the year in December Optimer is introducing a new CDI/CDAD drug in Europe on new licenses in Dec 2011 thru Asteller Pharma

Profit growth without licensing income at 30% should have been great for the comppany's prospects but it remains vary of the Capital Markets

The company subscribes to the 22% CAGR view on Indian Pharma in branded drugs to $55 bln by 2020

Apart from its new leadership efforts in Diabetology, it is already the new #3 in immunology and it is backing its Atorvastatin drug in Cardio (grown at 55%) Oncology is the second most strongest suit of the company aith BIOMAb and Ataraxene acceptance

 In comprehensive care and Nephrology, the company seems to be in the specialised drugs segment with niche brands at best

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Yes Bank was one of the few to outpace the Rupee without export earnings this quarter, with Banks generally choosing a 20% mark as high growth in the quarter. Yes Bank grew NII to an even $75 mln or INR 42.72 bln, a small request for favors to analysst believing inthe Indiabull story and even the midcap story some might say in this run. Though the growth was inked decades ago by the DNA the bank chose when it was founded out of Rabo Finance, its profitability is no flash in the pan as it has chosen at times in its clients, and at a few times in its expansion like the KPO plans it had to scale back. Non Interest Income is almost one third of the bank's total income at INR 21 bln

The Total Income grew to INR 64 bln even as the low CASA base grew witht he aid of unregulated interest rates at 100% growth in Savings (99.2%) Nine month profit is a consolidated INR 7.05 bln and the profit INR 2.55 bln for the quarter. CASA added 1.6% to the last quarter's ratio

Gross and Net NPAs remain negligible at 0.2% and 0.04% HDFC BAnk is also outside the NPA storm keeping Axis Bank and ICICI Bank hostage to the PSE banks systemidsation driven spike in visible and systemic NPA books

Yes Bank Tier I common is however barely adequate at 9.2% showing management expectations are not too rosy on the increase in credit despite the increase in Advances to INR 359 bln ahead of ING and Indusind with high CASA ratios. YES CASA stands at12.6% The CASA block is $1.2 bln now from $1 bln on last years dolla r fX benchmark (INR 40 at this blog)

Thus ROE is a high 23%. Yes chooses the QIP route to grow Tier I & II Capital which is together 16%+. EPS remains above 7 Loan loss cover 375% and Prov cover of 80% (PCR is now back to 56% reqt at RBI)

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Stride sold its Australasian units for a 20X REBITDA with the cash to be used for repaying non-redeeming FCCBs in June 2012 of $250 mln. Topline impact was played down by the management. Americas business in injectibles is profitable and globally injectibles is the focus. The company reports a Jan to December calendar. The total sales on the Indo china/Aussie business were $150 mln and the sale at $300 mln

(ETNow caught the managment speak on the sale)

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Jet's Q3 losses came at a low INR 1 bln as it saved up from asset sales of INR 1.7 bln and kep itself in operating profits. The jet order for 17 boeings will also help india's Capital goods indices this month

Jet Airways ordered 737-400s and 500s for its fleet, probably exchanging out older Jet lite planes though it was its fourth straight loss since September /December 2010 conditions worsened in fuel cost overheads, wiping out gains from Jet Konect saving plans and this being their first of many sale and lease backs adopted by the Industry at Indigo and Jet Airways

On sales of INR 3437 Crs in December 2010, the airline flew 13% higher year on year and expects to keep growing sales if hikes are passed by AAAI and if no further costs imposed by DGCA action, the airline will keep posting cash profits

According to mint, CAPA revealed a loss of $30 per passenger in domestic flights in India. Kingfisher and Spicejet may not be able to hold their bottomlines to a sane number as they allow losses to reflect their financial uncertainty, demanding policy action/handouts

Godrej Properties purchase of INR 1.06 bln from the BKC premises and FX gains of INR 1.76 bln also stopped out losses but the airline bucked expectations of INR 3.5 bln in losses

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Banks might pull back on the liquidity window, Apparently RBI was not worried on the missuse of the additional liquidity  in the constrained liquidity conditions. India's CRR is now less than 6% at 5.5% and is likely to stay at the lower rates

FY12 GDP forecast cut to 7%. Inflation target of 7% likely to be met but fuel and imported inflation remains high

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SEBI Action

To contain IPO manipulations

Auction process to put merchant bankers on high alert at boutique banks

The Action

First Trading session to start with 45 min pre open for price discovery. The closing price from this session would be the opening price for regular trading in the morning session

Smaller IPOs i.e. all <250 Crs (or INR 2.5 bln), will on listing, trade in the Trade to Trade segment

Large IPOs with size > 250 Crs ( INR 2.5 bln) will trade within upper and lower limits of +/- 20% thru the circuit breaker deployed for 100 scrips for 10 days 

Smaller IPOs i.e. <250 Crs (INR 2.5 bln) will trade within upper and lower limits of +/- 5% thru the circuit breaker for 10 days

According to new rules this week, SEBI has limited listed IPOs to the Trade to Trade segment which will allow orders against delivery only, not allowing trading of scrips and limiting the IPO market , FIs probably in agreement with SEBI ina  fee less market dominated bby vanishing fly by night operators in its last stages throughout H2 2010 and all of 2011

Thence the pre open session for price discovery(further..we speculate..) has lesser meaning but yet it encourages more effective price discovery in the new market which can later consider IPOs hopefully for regular trading instead of T2T segment to be reserved for indiscriminate promoters with a bland due diligence from vanishing trading houses

All seven promoters' issues hotlisted with merchant bankers last month had issue sizes of <250 Crs and were prenalised variously for the act of price manipulation.

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Policy today is likely to disappoint market pressures on the central bank even for CRR even though Sajid Chinoy and Tushar Poddar from GS have been very clearin the coming forecast, the lack of forebearance and the incapabilities of global brands to withstand pressures and trusat institutions at this time see  an avoidance of private bank economists like ICICI Bank and HDFC Bank, policy likely without changes in interest rates, CRR and Liquidity regime though overextended (thru SLR collateral in MSF, blah..blah) 

:D

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Cyclical downturns in Textiles, Steel and Real Estate continue adding to asset quality concerns . Power and Infrastructure company concerns could continue and balance sheet rported asstes as per new PSE systemisation to 3.5% and Total NPAs coul d be as high as 10% as per Fitch. 

Going forward Fitch reports on better days in light of the growth returning to the economy and seets position would not worsen for the larger banks esp not in agricultural sector but others where stressed assets have already fructified.

Towards end of the year pick up in loan growth but hthis year ends at 15% loan growth Reports continue to heighten fears of 10% of Total assets being visibl ein PSE systemisation unlikely to impact larger banks outside Public sector management

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Image by leah the librarian via Flickr

Image via CrunchBase

After Amazon opened in Spain last year and a rumor of Lipkart getting into the supply business for Amazon hit the circuits last, the talk of their first local fulfilment center show that while the talk of interested shoppers with Amazon was a fact unsubstantiated by country sales break down, the wishes for a local Amazon store may no longer be lost in getting their IT software to recruit here in as It happened one night in 2006 

This warehouse is a critical piec eof the Amazon logistics chain promising delivery from US to far flung international destinations in as less as a week and probably includes ready shipping plans that can be tied into Amazon Prime sooner than later. If it really turns into an independent India based website with Indian product ranges and a couple of expat managers, it could be that much bigger for Amazon and a bite back for Apple which has horrendously latched on to super premium pricing for its hot iPad and iPhone lines in the country

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Bond yields have cut to less than 8.2% on the 2021 and 2022 10 year bonds and less than 8.5% on the 2032 20 year bond while markets are in a tizzy running commentary on RBI cutting rates ahead of the policy announcement tomorrow. However the bond markets per se have a lot of mature buyers who are pretty confident of no cut in rates and an early start will take yields down much faster from here tomorrow in pure volatility speak if the Guv'nor does change gears on his stated policy early. However our outlook with rating agencies being stable we have definitely grown into a bigger more liquid bond market esp with good returns for gilt investors in the last quarter. 

Yields should firm up at slightly higher after the policy announcement tomorrow either immediately or int he next one month before the MArch announcements of rate cuts hit the wires.

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The used car market in India has matured in the last two decades with ready company owned used car operations  from Hyundai, local franschised multi store (warehouse) operators like Classic Cars and even multi brand all purpose car repair chains from Carnation. 

The current story in the papers of course is the DNA money story on Diesel car demand landing an unusual bonanza for petrol models, as used car sellers are almost holding mass clearance sales int heir own way for their inventories of petrol models. Diesel models have hostorically enjoyed premiums to ensure basic availability and noww with Diesel car demand growing that premium has shot up enough for that neighbourhood 's tore' to give away petrol cars for cmore losses esp where he owns the inventory. Individual sellers will have to hold on to their crs longer to get the price they want for their favourite ride.

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Sanjay Kapoor's move from food forays to luxury chain Genesis has worked well from him. After the failed multi brand FDI proposal,  LVMH brands operate under a single brand luxury store model in India while Genesis operates Canali, Just Cavalli, Paul Smith and Jimmy Choo stores. The current round of funding had competition from Reliance and Parcos.

Genesis is already sitting on funding from new to the field L Capital which owns 25.5% of Sanjay Kapoor's luxury lifestyle investment. L Capital is also a LVMH venture in luxury PE with Arnault of France The new investment will be routed thru Sephora another Moet Hennessey Louis Vuitton subsidiary

Genesis Luxury Fashions will operate the new Sephora stores operating cosmetics under a multi brand portfolio of skin care, fashion, bath care, perfumes and hair care Groupe Arnault is LVMH owner Bernie Arnaulte's personal vehicle for funding and control over global luxury investments

Genesis brands Paul Smith and Jimmy Choo are still likely targets for Bernie Arnault for investments. It licenses Just Cavalli lines globally. Jimmy Choo PE Towerbrook put it up for sale thru Goldman Sachs and Morgan Stanley in early 2011

Sephora's multi brand selll model is duplicated by another Bernia Arnault operation in DFS which is bdding for a new airport project mall in India India's Luxury market was estimated at $280 mln and growing at 22% by AT Kearney in 2010

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Baytree's investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

Godrej is issuing 10% Preference shares to the Baytree arm of Temasek at a good $8.2 price or less than $6.30 if you consider Indian rupeee's expected levels of INR 65 to the Dollar $$)  The equity makes Temasek a 4.9% investor in GCPL, Godrej Consumer. The new Rupee 1.00 par value shares will help the company fund and stablise their acquisitions in hair dye maker Cosmetica in Chile and last year's acquisition of African hair care firm Darling.

Cosmetica for example cost GCPL a hefty INR 10.8 bln for its $36 mln turnover but will add INR 2 bln in profits every year after the acquisition is completed. African Darling is thru one phase of marger integration as per Adi Godrej and likely to complete integration by 2013. GCPL grew revenues at 36% from December 2010 profit growing faster to INR 1.67 bln for the entire company growin g12% volumes in the Indian business

  Adi Godrej's interview in today's DNA is available here 

The company has acquired domestic brands like Genteel and Swastik, haiir color Rapidol and accesories Kiny in South Africa as well as Tura in Nigeria and an insecticide company, Megasari in Indonesia

The company has made a comeback with its pure soaps in India, growing volumes in soaps at 18% in the latest quarter and Magasari's innovation will likely be introduced to compete with Good Knight in India. Godrej also likes to talk about its 1-2% R&SD spend and may want to grow the advertising on its brands in line its new mores , probably for its proefessional hair brands in which it has increased spends and M&A purchases.  

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.  

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india's Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999. 

The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well. 

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Baytree's investment into Godrej consumer underlines the long pending second line of investments to be made by the Asian SWF in India and other growing economies of the region.

While Malaysian Khazanah has just changed its charter from a Energy rich SWF to a diversified fund and may be more interested in smaller/monopoly plays in smaller Indo China economies, Temasek continues to farm the big money in China, Singapore and India.  

Korea will probably make its own surplus SWF investments but still needs some inward interest from other SWF funds while india's Top 20 in the Private Sector have been a matter of considerable Interest for Temasek since 1999. 

The use of so many subsidiary vehicles for Temasek however incl Cedar , Baytree and directly as well as the bigger sibling in GIC is likely to make governance complex however for the coming generations of investment from Temasek as well. 

As more non staple entertainment products like Hollywood blockbusters have noted india's liberalised market offers extreme challenges for inflation sensitive products and upsizing/super sizing of SKUs and price realisations there on. In such conditions, Godrej's new structures are a tentative experiment and an early vote of confidence from Temasek must have been a long standing argument for the country managers and the Godrej management per se.

Neither Dabur nor Godrej are guaranteed any success, Airtel branded soaps and agarbattis may have a better chance even in africa ina few years as Proctor & Gamble with global brand recognition stays in consumer discretionary spends in its predominantly staples portfolio and remaining counted in super premium brands in their value Tide portfolios

L'Oreal's Body Shop chains and super premium men's range have a better chance fromt he sheer profitability of their 'slower' product lines in the luxury market as India' s penchant for super brands and luxury hotels translates into a supersized lifestyle premium "for those who can afford it" and thus its $1.4 bln JV with Lotus is a much more sizeable investment as Jawad Habib's and Bounce like salons grow into the mindset of the new salaried executive hungering for a sumptuous weekend fare outside just dining experiences and mall entertainment. 

Can't read these men, Can't read what us indians want women will probably welcome Oprah's OWN on indian territory as these second line of FDI investors from global organised consumer industries from retail and media to consumer aviation and luxury automobiles are much better positioned to make real efforts to break into the India n market, their first line having blamed everything fromt he unhygenic Mumbai to government babus yet not really having the policies to blame and having turned around villages with a few dollars of investment . 

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Consumer Staples have been in the less than 20% branded category and probably retail supply chains will take more of the branded yet wholesale share in biscuits, candy and soap in modern retail . However the growing consumption boom has always left the Hindustan Unilevers, The P&Gs and even the ITCs in the cold.

Despite category development and brands worth INR 750 mln in quarterly sales as also a gross $1 bln brand value in Consumer staples, ITC itself has seen a need to bleed in the sector and the growth of the unorganised sector is yet not capped keeping a 85% market share in all Foods and personal products as well as home care products for well over two decades that India set otut on the reform path. A critical bridge between Food security and Luxury spends on lifestyle foods at the top of the brand value chain, the unorganised sector , even importers from the middle east may not thrive but manage most of the volumes in the industry. 

The question of course comes fromt he happy developments for Dabur and Godrej, with forays in Africa underlining India's outward thrust, but the challenges that remain int he emerging markets and in India and China for branded or aspirational categories of atta, soap and dye are limited for indian brands, P&G and even the body Shop or L'Oreals of the world. The challenge may well serve them in 5 out of 40 such proucers and 5 out of 40 such product caategories, but India and China have time and again proved they are not in a hurry to go anywhere domestically, unlie cellphones for example, like dishes and Television which are a priority for most of india's domestic 220 mln household s and mby corollary more so in other underdeveloped markets. 

Governance structures and mandatory NGO participation with development aid in Africa may change it for Healthcare or Green farming categories but other infrastructure will fall prey to military / energy coups and cheap imported Chinese goods..just first thoughts for our foray into the dark continent outside and the unbranded continent within, which needs a Cadbury;'s name to sell some Oreos in the confectioanry sector a brand of $1 bln for us being the final pinnacle in most product lines in food, personal and home care as HUL has found in the last two decades. 

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Somehow ITC's profit growth to INR 17.01 bln inspired the market to invest in its stable model causing a sell of fnear the usual 210-215 mark even though results growth is on call

FMCG business grew 25% while overall sales grew 14% and Net Profits 22.5% Growth in Agri and Hotels remains weak from management expectations Cigarettes also grew at 25%. Hotels revenue is 5% at 311 crs and profits at a 34% margin at 101 crs (1.01 bln)

Net Sales for the 9 months are at INR 181.71 bln or ($3.6 bln) with FMCG sales at INR39.1 bln or $800 mln up 25% and Tobacco/Cigarettes at INR 90.74 bln or $1.80 bln up 15% only. Agri and Paper have grown to INR 60 bln in nine months or $1.2 bln

PBT margins on Capital in hotels is just 6% and Branded FMCG goods in the Foods, Apparel, accessories and stationery have not reached breakeven losing INR2.29 bln in nine months (PBT/Equity(Seg Capital) = -15%) Return on Agri in terms of Capital employed is higher at 30% and that on Paper business is a good 15%, leaving Cigarettes to be the mainstay of the company with a 20% return on Capital.

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As usual the new NPas of 687 cr or 6.87 bln would be marked to high growth in some ong term analysis with NIMS still 3.75% and gross NPAs still 1.10% 

CAR also seems okish and not too great at 11.78% Can't match the growth in NPAs to a PCR of 87.7%, harddly management attempt at efficiency, likely an anachronism. Write offs as expected never went near even 2-3% of net worth with a NPAT of 9.5 bln almost meeting expectations.

I am ready to short every fin stock at 5050. 

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Hero Moto Corp, HDFC Bank and Bajaj Auto all hit expectations right and made merry of the third quarter encompassing a giant Festival run for India from Dusshera, Diwali nad Id to end with Christmas and the new year celebrations.  

Quarter on Quarter comparisons showed up great daredevil performances by industry leaders even as food inflation, negative for the third week in succession, for the new year's week ended Jan 7 at -0.42% and Primary Articles at 2.47%, fuel still 14.45% and onions still down 75% on the same week last year. the 52 week average for the jan 7 week (nasdaq/rttnews.com) is 9.96% and this number considerably lower near the 7.41% number for December 2011 Fuel weightage is 31%, and non food articles at 20% weight scored a low 2%. Primary Articles were less than 0.5% for te weeek ended Dec 31 last week

The Nifty stayed above 5018 and you should be buying puts now, (check our choice FAO strategy) as the index may not climb further to 5100 from here without a plateau and thence the breakdown. The remaining optimism will remain on call from today's results however. 

IPL auctions come back in February, with the entire South African team and the choice speedsters including Peter Siddle and Mitchell Johnson on the block from down under. 

Back in financial results only 47% of the last two months results announcements were above par in the US incl Citi and JP Morgan below the line and headed for more pain in 2012.

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In the next few hours Bajaj Auto's 20% growth will be compared to Hero Motocorp having already beaten its own profit expected with a 22% growth expanding margins to 21.3%

Hero had the largest volume gains in the latest quarter bringing market share bac to 40% even as erstwhile partner Honda caught up to a formidable #3 with a 200k per month sales

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Headline results at Gross NPAs up to INR 22.02 bln from below 20 bln last wuarter and a NIM of 4.1% with Gross NPAs down to 1.03% vs 1.11%

September 2011 had grown income to $1.6 bln by Indian GAAP or nearly INR 79.5 bln up 37% from September 2010 despite the bad credit conditions that actually meant INR 30 bln in NII and INR 12 bln in Other income ( Fee  and non interest income) at 4.1%. October saw a marginal pullback in credit figures as well NII growth should be closer to 20% as the bank has grown i\assets in the new quarter and NIM is good at 4.1%

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RBI announced it wanted to limit excessive salaries with only a half dozen bank CEOs incl Chanda Kochchar and 3 others at ICICI Bank actually drawing more than INR 10 mln or 1 crore. RBI suggested no monetary limit but wanted all senior management salaries to be shared with them before being signed

Deccan Herald also mentions the Guv;s package itself is a little over INR 1.5 million or 15% of a 1 crore mark drawn by ICICI managers like Ramkumar

Goldman Sachs salaries ahve ticked lower to a $367,000 average or INR 1.8-2.4 crores.

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Revenue was 5% lower than the $1 bln or INR 50.32 bln expected by the street profits lower at $160 mln (from expectations), losing INR 250 mln than the expectations, Derivatives losses were INR 670 mln. November Sales ahd fallen to lower benchmarks of 300k sales per month and the RE 60 launch in December not maintaining the growth it picked up in August 2011

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In a fancily aggressive workaround suggested in the DNA India rticle, NRI depositors can seemingly borrow from global banks near residence at rates between 2%-6% based on their location to deploy in NRE / NRO deposits back in India at 9-10% and return the capital.

Sounds a little risque, eh! ( risky is fine too, but I 'd still say risque, and pretty poor fun at that)  

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Stuart Davis and IIT Delhi alum Rajat Monga , CEO of Yes Bank ( the former is the India cEO of HSBC) came out strongly in financial headlines of the day expecting 25%oflastyears record remittances of $58 bln to India, adding to the now uniformly high NRE / NRO rates revised by HDFC Bank, ICICI, Yes and apparently HSBC too.

HSBC has a better network and walk in atmosphere also better in many global locations. However remittances are usually sourced from known cities in the USA and for Indian banks to count to their deposits from online channels may still not be more than 10% 

For banks like YES and HSBC, new to the NRI game ( or even domestic deposits for Yes, which is likely below Rs 1000 crores in CASA by March 2012 despite a higher rate and a good ramp up) creating traction for new deposits to their branch/bank will take more than a 0.25% premium over other banks but both may be facilitated by short term travellers also in control or influecing these deposits made from the USA currently

$15 bln added from NRI deposits would add a significant 2% to the overall bank deposit-assets (liabilities) in India

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Even as Rel Com suffers from a $ 6.5 bln debt overhang , even witht he rupee holding, the condition of the group is precarious esp on Reliance Capital as a NBFC funding the group also. Rel Capital got a reprieve yet with Nippon Life agreeing to another high valuation, this time the mutual fund at 6.4%AUM and investing INR13.5 bln for a share of the business 

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Warning: This quick analysis  deploys two quarters comparisons of new business to verify new conditions in the insurance businesses

Bajaj Finance has grown Sales/Total income q-0-q by 22%/20% and the company is paying a 40% higher tax, increasing profits by 40% , in line to close March at nearly double the March 2011 performance at over INR 6 bln. That would take full year sales to INR 20.2 bln or $400 mln

However, Bajaj Finance has a small capital base for its NBFC operations and EPS at 32.76 looks good for the coming investment parleys Full year EPS is 131. The low capital base is unlikely to turn into an argument with the regulator soon, company running at an exact 5:1 debt multiple till March 2011 the leased asset book must have grown with the growing sales from $1.6 bln in total assets (INR 72 bln leased assets at $1.4 bln) A likely figure is $2.4 bln in themarch 12 balance sheet unless the income expansion is from allowed rise in spread on current lease contracts. Nine month cons profit has grown 69% to INR 2.89 bln

Bajaj Finserv has two businesses Life and General of which General has grown profits to twice. Apparently Finserv also includes the consumer lending business and leasing reports a total sales of INR  bln for the quarter, of which LIC profits are more than half!! leaving Finserv the dominant looking family member while Bajaj Holdings and Bajaj Finance continue getting all the management attention. Finsv is adequately capitalised at 1400 crores or INR 14 bln for the three businesses

Bajaj Finserv consolidated profit has almost doubled for the nine months to INR 457 cr or up 89% while the comparison with the current quarter shows LIC growth shutting down again, still growing to INR 630 mln in shareholder profits. The company also discloses the higher general profit showing INR 2.2 Bln as surplus added to various LIC reserves incl the genral reserve

GIC premiums continue at a 1 bln higher clip in the 2nd and third quarters to 775 and 811 crores or 7.75 bln and 8.11 bln still underlining its small spread in distribution and market development required in the sector. Earned Premiums are even smaller at INR 5.41 bln but growing at the same clip. Combined ratios have come lower by 8-10% at 98.9% incl motor pool losses and loss ratios have improved to below 60% in the last two quarters The company is fighting IRDA for a charge of half of one quarters earned premiums at INR 3.29 bln as loss reserves on motor insurance

After the new provisions from the current motor pool closing, provisions may increase further as a charge on the GWP but pricing correction is correspondingly mandatory in the insurance business, which IRDA may like to postpone ( esp when lower provisions do not mean lower premium) GWPs have dropped 35% y-0-y to INR 16.75 bln in both quarters led by dropping of new business by half to INR 5 bln and renewal business has also dropped 15% and 30% in the last two quarters to INR 11 bln in the latest quarter (2q2012, 3q2012) LIC pool of investments has grown to INR 355.45 bln as of Dec 2011.

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The World Bank report on Global Eoconomic Prospects drove home a charge on "policy paralysis and uncertain regulatory reform prospects" released yesterday defines the new global growth benchmark to 2.5% counting the global recession where it places India's growth lower at 6.9% and staying low in 2012/13 Conservatism counts at this time and India's fate determine;s the region's fate to a great extent as South Asia has been expected to grow above 6% with Sri lanka, Pakistan and Bangladesh managing a above 4% growth and this reduction in India's groth potential from the crisis is bringing that target for 2012 to below 6%

The mint commentator on the story relied entirely on the infographic while the DNA India team put it "zimblee" in words

The World Bank report said that the weakening in activity reflects a significant moderation in domestic demand, led by a deceleration in investment activity that has faced headwinds of rising borrowing costs, high input prices, slowing global growth and heightened uncertainty.

"Delays and uncertainty surrounding the implementation of policy reforms have also hindered investment," it said.

Addressing a Ficci meeting, Finance Minister Pranab Mukherjee also conceded that the government could not push through some key policy reforms due to divergence of political opinion in Parliament.

 

To be fair, the mint commentator did report on India's challenges to growth in detail, but my interest in both cases was the interedpendency and whether India can indeed lead such apolitically volatile region at SAARC etc. 

The report hit the networks int he late evening bulletin

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Bharti Airtel's pride on its corporate governance example for the industry is being seriously challenged again and again with regulator face offs where the company continues to claim the moral high ground on intra region roaming, tarriffs being too low and more..The latest salvo is the IT department slapping a $300 mln tax demand on the company for hiding revenues and not paying taxes. ( INR 15.45 bln in back taxes) 

Nigerian government recently pulled up the Top 3 to ensure enough investments in the sector are made and Bharti Airtel is again with the policymakers int he move but seemingly for the first time wothout a voice like it had on home ground. 

The third challenge is even more different as the larger organisation gets too unwieldy for a single identity, with Nokia that losst one third of its India market share still Brand #1 and even Samsung at #4 does not seem to be within screaming distance of brand Airtel! what's wrong?

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India has finally decided to revert to the tariff rich 80s for relevance of systemic controls on imports as the fisc crept up without much on the oil front . Most global economies are for better or for worse, not even playing with existing surpluses as imports fall faster than exports after Europe as a market shut off. India remianed a hot imports destination adding to the 17% decline in the rupee with imports growing 38% in DEcember. 

the new 6% duty on sliver more than doubles the existing slab tarriff at current prices while gold is also doubled to a $1 per gm in 2% Customs and 1.5% excise. 

The list includes a new 2% duty on polished diamonds. This will likely stop a little bit of the pressure on our revenue deficit but I would not have minded emergency curbs with a slight negative impact on the Export economy in this case, and brought back the Rupee to parity.

The Mac PPP Index put the $1.60 burger on par with the US meal at $4.20 ata  arate of Rs 20 to the Dollar

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India has finally decided to revert to the tariff rich 80s for relevance of systemic controls on imports as the fisc crept up without much on the oil front . Most global economies are for better or for worse, not even playing with existing surpluses as imports fall faster than exports after Europe as a market shut off. India remianed a hot imports destination adding to the 17% decline in the rupee with imports growing 38% in DEcember. 

the new 6% duty on sliver more than doubles the existing slab tarriff at current prices while gold is also doubled to a $1 per gm in 2% Customs and 1.5% excise. 

The list includes a new 2% duty on polished diamonds. This will likely stop a little bit of the pressure on our revenue deficit but I would not have minded emergency curbs with a slight negative impact on the Export economy in this case, and brought back the Rupee to parity.

The Mac PPP Index put the $1.60 burger on par with the US meal at $4.20 ata  arate of Rs 20 to the Dollar

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Now that GEs of the world are no longer interested in owning the Indian Airlines :) one can hope to find buyers for Air India and King fisher and Go Air even as the paper for 49% FDI is prepared by the new Minister to put up for the Cabinet's approval. 

We still need an institution to facilitate sale and lease back. and encouragement for maintenance businesses of the airline(s)

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The oldest trick of postponement, a letter from the government has still been kep t in play in a return to tradition as SBI gets $1.6 bln for the first round to make a 8% Basel 2 Capital mark on the FY2012 balance sheet. 

Of course the markets are bullish even as they try to correct for the rest of the rally to nearly 5k and now ready to return ships to the 4700 mark for another take off

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At the top of the range, now would be a good time to try a out of the money put for Nifty 47 or Bank Nifty 88 without much risk. Fund it with the last call over today tomorrow, Soo.. buy 5000 calls (1X), 4700 puts ( or sell 4700 calls -3X-5X )  or buy 9200 calls on bank nifty an d buy the 88 puts in the ratio for funding the other and exit the bought calls/ long positions this week

Of course if you want  a strangle instead, that could also work for the next 2-3 days, a straddle higly risky and expensive as ATMs tend to be in the Indian market. Or as the ET NOW guy said, pick one long stoc and one short ..(thats the long and short of it)

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While other states still do not have projects on the ground after INR 3 Tln worth of MOUs each, Gujarat even going to the elections, AP also managed to sing INR 3 Tln worth of Projects in the Energy space itself at the Partnership Summit currently in Hyderabad. The pacts include a 3Gw plan for Wind Energy signed with Suzlon for supply of turbines.

Each MW of electricity requires a 50 acres approximately, esp for the suzlon S9 turbines targeted that produce 2MW and 15 Wind Turbine typicaly needs 1000 acres. requiring nearly 100,000 acres for the project to be operationalised if indian yields are factored in.

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There is a decidedly frigid flavour to IT segment results. While consulting led Infy reported 49 new clients, the ones growing profits 42% year on year and still very much in the also ran category with an improved EBITDA margin of 17%, reported considerable Fortune 500 attrition, and only 2 new $100 mln clients. Finally though for HCL tech it is better that they concentrate on exiting portfolio and try to get to a respectable EBITDA for the company, even at the cost of selling some portfolio business. TCS will report likely 5 or more $500 mln clients and can actually talk of share of outsourcing at the customer. It would be interesting to see if TCS can take on the new no. 2 CTS

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While the bank's income growth is hard to beat in the category, even SIB has the same quantumm of NII, though ING scores on Total Income to INR 493.5 Crores, Capital adequacy Ratio for Tier I a hardly adequate 10.99% from Basel 1 regime one fears esp with loan assets a small INR 26k crores or $5 bln and investments at less than half that at INR 11k crores, with a CASA of 32%, higher rates on FDs and CDS matched by low savings bank rates. Growth in income and profits (117 crs or $22.5 mln ) are much more respectable at 44% and brought about by reduction of Cost Income ratio to 57%

Bad debts are comparable to top tier banks at 0.33% Net NPAs. The queezing of branch staff and resources after a bing on setting up new branches with no change in savings tiers has left it with a back in the chair, nothing much approach to banking..and the bank remains a good candidate for cap appreciation yet unless promoters on both sides can commit to growing the capital at the bank, we would be looking at not just CASA stagnation but that in the assets, which should at least reach a 1 Tln figure to be respectable ($18-20 bln) to back its large real estate investments in Bangalore itself.

Meanwhile we did find a few wholesome gaps in the MOS report on the Banking sector, expecting INR 15000 crores in bad debts from ICICI Bank and a similar amount from Axis Bank in write offs an impossible to manage feat. ICICI Bank's INR 2.35 tln book with only INR 55k in mortgages and INR 10k crores in Autoloans makes it unlikely even if bad debt was to reach 2-3% of assets or 4% of its net worth.

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Jet airways is expected to post a INR 3.25 bln loss for the December quarter , Spicejet INR 1 bln even as Jet Airways continued further expanding its fleet. Jet was recently pulled up by DGCA for canceling flights and grounding more aircraft than safely allowed, whenever low flight loads were indicated. 

The 17 Boeing 73-800 aircraft from the old fleet are considerably more cost effective for Indian operations apparently even as Emirates and Etihad invested in a larger fleet of modern dreamliners from Boeing in November. the 17 aircraft would likely have cost Jet Airways more than $1 bln 

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Indian IT contracts except at Infy and TCS were never the largest shares of outsourcing rlelationship in the IT Services market and having enjoyed 4-5 yearso of success growing share of outsourcing at the top , have now landed hard on their nose with larger relationshipps being destroyed by smaller fragmented share at most signings. 

A clear example of a banking and financial services customer, with seeming commitment to outsourcing, both Deutsche Bank and Citi employ questionable division of labor by enforcin gof contract and without, to divide work to their partners to ry and ensure the one best served for the customer bank unit e.g. derivatives is quickly balanced by a rival provider. DB sold its outsourcing ready IT unit to HCL Tech then ramped its service relationships with TCS by awardin gthe latter a large outsourcing relationship. Even such cases are going to become rare and thse customers retain pride of place among outsourcers as new customers are more than satisfied with the offshore presence of a IBM or a n Accenture, both increasingly losing their share of $200 MM per annum consulting accounts replaced by offshore delivery heavy accounts and at the expense of probable market share gains of Indian IT from earlier.

MindTree's first INR 5 bln quarter ( if it maintains 5-6% QOQ growth will probably signal just that. Its recent headwinds apart, both MindTree and Happiest minds again tackle the same fragiule IT delivery ecosystems 10 years ago in Java to now the cloud and IMS where server farms in Brazil and the relative unlikelihood to move beyond level I Service helpdesk limit growth in the large data center accounts dotting the US and Europe landscape. Admittedly, the world outside these two continents is growing but the IT deliveery is already concentrated out of these two continents and the new architecture usually slimmer and without that much of an outsourcing leg as the legacy systems or the larger bans and consultants who again are not looking for growing any fresh relationships.

The number of relationships allowing a MindTree more than even 5% of their outsourcing ofr to KPIT for that matter is unlikely to be more than none to one % of the client/prospect/suspect universe out there. Consulting led growth wth local hiring has probably a 5% probability of bettering these chances. Whither Indian IT then? Nether. , the existing legacy business of INR 750 bln unlikely to go anywhere for the next decade or two and with the rupoee steadily losing value, an incentive for standing still in dollar terms as quality vendors like india's Top 5 and Cognizant pass on the depreciation gains oto customers. 

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India's Fis inched higher to instability and pressure ont he rupee, the December data showing up reduced oil buying for a $12.5 bln deficit. Exports ares trong at $25 bln after double counting revisionsdropped the April to November data by $10 bln downwards. The exports were expected to give India a tough time according to downbeat market commentators. The Fiscal Deficit this year will be a run of 1-1.2% on the budgeted 4.6% while the current dficit based on the 3.2% trade deficit of $144 bln - $160 bln, higher than 2.4%

India's 2011 Economic Survey comes a day before the budget, which is now slated for March 12

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India's Fis inched higher to instability and pressure ont he rupee, the December data showing up reduced oil buying for a $12.5 bln deficit. Exports ares trong at $25 bln after double counting revisionsdropped the April to November data by $10 bln downwards. The exports were expected to give India a tough time according to downbeat market commentators. The Fiscal Deficit this year will be a run of 1-1.2% on the budgeted 4.6% while the current dficit based on the 3.2% trade deficit of $144 bln - $160 bln, higher than 2.4%

India's 2011 Economic Survey comes a day before the budget, which is now slated for March 12

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India's Fis inched higher to instability and pressure ont he rupee, the December data showing up reduced oil buying for a $12.5 bln deficit. Exports ares trong at $25 bln after double counting revisionsdropped the April to November data by $10 bln downwards. The exports were expected to give India a tough time according to downbeat market commentators. The Fiscal Deficit this year will be a run of 1-1.2% on the budgeted 4.6% while the current dficit based on the 3.2% trade deficit of $144 bln - $160 bln, higher than 2.4%

India's 2011 Economic Survey comes a day before the budget, which is now slated for March 12

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Those who got into Gilt funds nd direct investments nearest 9% would have made good money on their corporate/individual investments as the yield ticked lower to 8.16% after the inflation data was announced.

However rate cuts are unlikely to happen and any furthe moves below may well be negated after the policy report. In normaal conditions yiuelds could track lower byut i feel the decline in yields has been stee[p and FI investments should now advocate aggressive treasuries to move out of Gilts to Corp bonds/Floaters actuively managing duration for the inverted yield curve

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Only fuels showed the tough plateau expected from higher dollar trending against the Rupee even as Primary articles basket inflation at 3% contributed to a monthly figure of 7.47%. However, JP Morgan outed the next risk to watch even as RBI continues to be on watch due to the falling rupee and the coming uptrend in commodities

Manufactured products trended lower to 7.41% from a 7.7% November data but input prices are expected to lead this to a tough plateau once it finds the base values. Inflation will remain above 7% and Economists are likely to make merry on the murkier waters ahead while RBI waits for the right moment to cut rates . Our predictions hope for a better evaluation of the base factor on the manufactured components incl durables and auto even as new Boeing orders eep IIP Capital goods numbers healthy

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Another of ADA reliance group's new industry plays that started off strong on business but weak on Capital, gets a second infusion just in time as Debt is recast after dividing the company into exhibition and movie media services.

Though the capital infusion is higly late and not short of brinsmanship, it gives the loss making business new lease like its radio and outdoor subsidiary reliance broadcast, which is well on its way to good profits with the new CBS foray. The difference in the businesses of each of the subsidiaries make it impossible to be run like a GE. 

The company made sales of INR 1.5 bln in the September quarter as last year same quarter but doubled losses to INR0.92 bln. The company will get PE stakes, probably angling for Reliance broadcast shares as per business outlook and a rights offer together gathering INR 10 bln 

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Qualified Foreign investors are defined as having completed prescribed KYC norms and can invest directly up to 10% in any company according to latest allowances by india's securities regulator even as each individual investor cannot hold more than 5%

As usual the regulations are just technical gates opened, while investor interest has to be built up around the KYC norms required for registration. Other basic regulation that applies is unlikely to be in the way of investment ease for such QFIs as they have to poperate thru a single overseas bank account with FATF rule countries' banks signatories to "MMOU of IOSCO" Another thorn in the flesh of the QFIs thence is to get an Indian PAN card without which agencies are not expected to allow the Securities/DP account transactions 

The 10% list will be managed thrua 8% cutoff list published to Securities Account managers. Exchanges are also expected to amend listing agreements/ maintain equity shareholidng lists incorporating the new class of investors and holdings

Though not demand led, the change in regulation atleast makes it possible to talk about indian investments outside of a special class of investments as it is more and more like dealing with a specific exchange than setting up elaborate labyrinth of accounts, brokers and fund managers thru a ban. However, as most India investment banks will have single window desks to enable Foreign investors to the jurisdiction, this may yet not compete with foreign investors pulled to gepgraphies or jurisdictions where each Dollar of investment counts for more celebration/direct impact to the investee

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A little bit of a turnaround in secular opinions regarding india, probably showing a little more attention to detail is always good to find ou thte depth of your convictions Pretty Tedious and objectionable as a way of verifying. I still believe India and china are going to be back soone rthan the others, and it does not have to mean the entire FY13 is wiped clean. I doubt if the US will enter  a recession as per Jim Walker because there are no real linkages any more between the US and Europe, to cause that damage. EXcept the use of credit per force by US consumers, which is anti thetic per se to the situation in Europe

Joseph Stiglitz hit the nail on the head when he praised the Food Security Act. Well done India. More importantly Well done to RBI for not bothering to keel over to interventionist stances for the heck of it. We have to make do ith less, China can last afew secular debits on its FX reserves maybe ( unliely, China will let it go down when it gives it so much strength and strategic meaning in a war for a global currency hegemony)

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The Top 20 PSEs themselves hold quite a cash surplus which the government may "requisition as dividend" now that the sun has gone down on options for buyback and crossholdings resisted by the PSEs in question. A cash dividend would be harder to refuse the owners in a bind from the deficit but may not be easy to come through. The cash surplus estimated on B-UTV is INR 1.77 tln incl Neyvelli, MOIL, SAIL, Coal India, ONGC ...ONGC would be paying its 50% share in energy subsidies at nearly INR 475 bln

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Thomas Cook World wide got into a big hole

Thomas Cook Worldwide decided to sell

The Indian subsidiary making profits well

Would not sell too fine, 

The bank was broken , advisor RBS

is also shutting down the business 

Outside Asia, it is a long winter, 

The sun got by with turkey from Sainsbury's 

and Thomas Cook worldwide does not get to keep

Profits of Thomas Cook india Limited,

if it wants to pay its loan in time

The loan amount has already reached GBP 900 mln or $1.35 bln and the Market Cap of TCIL a good RS 69.2 bln even at rates of Rs 30 per share which could be half its valuation but with a distress sale this valuation is unlikely ont he bill according to merchant bankers, putting Thomas Cook ?India on open sale and getting interest from Apax, Travelex, Cox and kings and Mercury as also Chinese HNA Travels. As the ET infographic says, 80 % of the India profitable branch being Forex, it could well be bought by a Forex business 

Without the distress sale this valuation could well have been at slight discount to its 2009 peak of around Rs 59 per share or INR 14 bln or GBP 180 mln   

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HDFC sank on results beat of RS 4472 Crs in Sales and 983 crs in profits a lower profit tab from investment book profits at 88 crs. Loan book grew 26%, Spreads 2.27% maintained from 2.28% , NIMs 4.37% 

Q3 Sales were also good at INR 13.72 bln or 1372 Crs

Income was up 40% year on year for the ttm balance sheet and profits also better by 20% 

Q# revenues were expected much higher at over $300 mln

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In a 'blow' to liberalisation as old as old wives tales from Delhi ki bhatti, RBI let out a warning from its bag as old hands from Foreign bank desks set out to build treasury positions in Rupee with out Import / Export obligations on behalf of compoany treasuries throughout the country. Right now it may be simpler derivatives, even forwards and cash to play on the weakness in the rupee as the finite returns have quite an attraction for corporate treasuries wilfully blocked from Money maret lending to banks or excessive ticketing in money market mutual funds. 

the citi scam of 2010 used such monies thru personal accounts of the bankers concerned in the Equity Capital Markets segment

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Food inflation wow remained -2.9% after a -3.36% last week, Primary Articles also read easy at 0.51% from 0.10% Fuel inflation was 14.45% from 14.6% last week TTK Prestige results look good with 39% sales growth (YOY), Investment positives from both announcements TTK and Infosys ( more real estate and training!) TTK prestige on the receiving side of rupee depreciation with domestic sales

HDFC will post good growth ( is it tommorrow?? ) safe in NIMs and the IIP growth came back to 6% clip on Transportation and Consumer durables and non durables climbing back from October lows Infy Q4 PAT was a great 23.72 bln

The infra stocks are back having had quite a rest in the fall to 4700. the indices back on a falling spree after banking reached its peak mid day at 8350 odd on the bank nifty, large 20 point premiums on the Nifty 50 futures, starting  a vacuous drop after Infy good results were shot to hell by a "We can't grow" guidance

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Money control Boardroom 

http://www.moneycontrol.com/news/results-boardroom/why-did-infosys-cut-its-fy12-dollar-guidance-_649657.html

The company is chasing 12 large deals and with double digit growth in Europe and Life Sciences & Healthcare, the company is looking closely to one more from the sector in Europe with Big Pharma poised to enter a bullish growht worldwide...

Nope, no traction, CTS is mowing them down. Stay clued! 

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A time to give revised IIP a chance

The IIP growth of 6% for the month (5.9%) over October's 5% contraction was not such a puzzle, esp manufacturing growth in 6.6% and durables remaining 11% during the festival month despite good October inventories (probably) that did not show up int he OCtober's pessimistic numbers. Probably more than another revision IIP needs careful seasonal adjustments to match up to frequent monthly and year on year comparisons which have both lost meaning

The pick up in Cap Goods and transportation sub sector is apparently from Boeing orders , as in the US scenario. And that wild swing from -25.5% to +4.6% in Capital Goods/infrstructure alone is enough to whittle one's reality check if one uses IIP. Mining again volatile at just 4.4%, and the infosys results will make an apprearaance here as a special treat for those still tracking the IT sector wilfully,

October IIP fwas revised to -4.7%, non durables and Electricity growth in November highly satisfactory at 11.2% and 14.6%, basic goods from 0% to 6.3%, intermediate goods to flat from -6%

A time for Infosys, past

The cut of growth estimates to 16% and a last clarion call from Infosys( before going down) for high quality revenues led by consulting as CTS shines up on the horizon wihtth low cost high volumes and TCS maintains the domestic lead

Infy wants growth from Europe (touche) and 5 large deals were signed in thwe quarter for $500 mln value, one in Europe. Margins are good for Infy and hedging for less than half the revenues at $877 mln. Sales were $1.8 bln , forecast for Q4 flat at the same $1.80 bln and expecting yoy growth to end at $7.05 bln revenues in March 2013

Also funnily, the management team just about managed to not sppeak about growth in banking and financial services but then the sector remains key, we believe also nearshoring is more key than you would believe in such a key Outsourcing insdustry thus Accenture outscoring Infy by 5:1 in coming bids and wins despite the "potential" for this industry,. Between CTS and Accenture's growth (outside India) Indian IT is up for recalibration or individually for Infy and HCL Tech

Posted via email from The India Investment Post

Both Automobiles and viation industry are strongly hit by the current banking slowdown but more so because of energy and fuel costs as well as staffing costs making profits unlikely for the latter. 

Both industries, however , remain the bright spot in India's fabric of the future, leading growth segments in production and services. The car industry makes money in this unlikely scernario by passing on price hikes , with concurrent big doscounts of upto 10% while airlines wherre discounts ar part and parcel of all ticketing platforms till the d ay of travel, money ois also made in the usual charter/laundry list of udealised safety requirements as the DGCA report.

While Jet's not running one third of its flights after announcing them because of poor occupancy, Indigo is reusing entire engines and forced to announce "premature engine removals" to keep its aircarft flight worthy. KFA reuses spares from grounded aircraft while it is avoiding paying salaries, both practices likely last resorts in a bind they only are responsible for. Spicejet int he meantime is yet to print or operationalise Flight operation manuals and thus does not spend much on quality assurance currently.

I'll give you a dime, if you find this chaos live during your business/ personal last rush/ economy flight except if you have paid large diiscounts on your ticket (then also, only for certain personalities) It is mostly int he service, f course both industries spending on talent and retention in various ways 

Posted via email from The India Investment Post

RBI stuck to its plan for India's monetary policy not bowing to FI market commentators and probably internal pulls as it refused to consider reserve requirements cuts like China in the period it waits out a bottoming of inflation expectations before considering interest rate cuts

The CRR is 6% currently except for CBLO, ACU (overseas USD holdings) , Offshore banking units NDTL and inter Bank liabilities where a 3% CRR is avered. The MSF lends to banks already including their SLR liabilities as allowed collateral at the upper limit of the rate corridor set by RBI, at 9-9.5%

RBI has already conducted OMOs to stabilise liquidity int he market and may be on the watch for unwanted liquidity influx from new QE in US/Europe and UK in that order

Market pressure on yields pushed them below 8.4% as the Electronic trading platforms traded thrice the daily average in the new year at INR 278 bln daily or INR27,800 cr daily, still avery low amount compared to inter bank trading volumes

Moody's rating upgrade to P-3 allows india some leeway in apportioning its Reserves again as short term liabilities for Corporates keep increasing

Posted via email from The India Investment Post