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Friday, September 30, 2011

Jayant Agro Organics: Sept 29,2011 AGM report.

Attended the Jayant Agro Organics AGM in Mumbai today Sept 29,2011. The AGM was scheduled for 9:30am.There were quite a few people considering that Jayant has only 6000 odd shareholders.

Quite a few people were upset coming early in the morning during market trading hours to attend the AGM.

Around 5 shareholders got onto the podium to bring up their view points.
1st shareholder started out with a bang.. mincing no worlds and outright frank in his language A bit to sharp.. he acknowledged the good results of Jayant Agro Organics.. but pointed out concerns such as 
- lower dividend payouts.. payouts had increased by about 50 lakhs (over last year) while Jayant made about 10Cr additional net profit over last year.
- Advantages of paying out higher dividends was mentioned.
- Interesting points were put forward with suggestions to the management to approach Mutual funds flush with funds so that mutual funds also invest in Jayant increasing its stock price. Right now Mutual fund ownership is just 7200 shares.
- Concerns were raised about huge interest payments (22.78Cr)  and debt levels (230.36Cr)
- Concerns were also raised about Forward contracts of 253.9Cr
- Concerns were raised about funds loaned to subsidiaries and what rate of interest was paid.
- Concerns raised about "Ihsedu Specialities Limited" which has been doing "Trial production" for past 1 year?? with close to70Cr of assets

I am sure I have forgotten a few more but the gentleman practically covered every point that was there.

2nd shareholder also appreciated Jayant agro for its results and wished the chairman of Jayant Agro Mr Vithaldas Udeshi a speedy recovery. He was more pleasing in his speech and appreciated the fact that  Jayant Agro had provided us with an 18 yrs financial history and that we now also have a list of end products that use castor listed out clearly. He was appreciative of the management in the good progress made by Jayant to report 1000Cr turnover in such a short duration of its existence. More information was sought about "Sebacic acid" its uses and future growth of the company. Castor meal being sold as fertilizer and if there is any liability of taxes as fertilizers are taxed. Hybrid Castor Seeds business also needed some colour..

The other shareholders also brought up similar points .. question of dividends.. bonus .. Ihsedu Specialities Chemicals status.. more info about how castor seeds price changes impact Jayant +ve co-relation or negative corelation. Question was raised about how many kg of castor seeds are required to produce 1kg of castor oil
What was Jayant Agro's share in the Castor market in India. what would be the impact to topline when the sebacic acid plant of 8000MT goes onstream. What do the year end numbers look like? since 6 months are already passed for 2012

Management answers:
I must state the management was a little out of sync with shareholder demands. The floor management for the AGM was tardy at the best. Most of the answers from the management was done by Vikram.V Udeshi  (CFO)..
Debt was short term debt taken primarily for working capital related activities. Since the volume of business was increasing substantially the working capital requirements and hence interest payments would increase in the future also. Since long term Debt/Equity was around 0.40 the debt equity of 1.4 or so should not be of concern as its primarily working capital related.

Forward contracts worth 253.90Cr was for hedging and not "Naked open ended contracts" these are for protecting the exchange fluctuations and represented 10-15% of total business. Future contracts was not speculative in nature..

Management said there was an increase in dividend payment and going forward there will be gradual increases in dividend payouts.. It has to balance between capital expenditures and payouts to shareholders.. The management said they would be most happy to announce higher dividend payouts as they would be the largest beneficiaries..  Management will first take care of capital expenditure and then as the capacity stabilizes they will look at dividend distribution and bonuses..

About loans to Subsidiaries the management said that interest was being paid for the loans given to subsidiaries and interest was around 10-12% and mentioned in the books.

The accounts were not double counting the sales and internal consumption was not being considered.

About Ihsedu Specialities chemicals .. the JV partner Mitsui's stake has been bought and the continuous processing plant should be stabilized in 4 months time frame as some equipment delivery was expected before continuous production can be started..

With Regards to topline impact of 8000MT Sebacic acid plant the management said it would add around 200Cr to topline.

With Regards to Ihsedu Agro Chem .. Its a subsidiary which is concentrating on backward integration of seed crushing and castor oil and its derivatives.. The management has no plans to merge Ihsedu Agro chem with Jayant Agro.

Seed requirement for 1 kg of Castor oil is 2.2 to 2.4 kg. I personally feel thats solvent extraction process based but cold pressed Castor oil would have a oil to seed ratio of 30%.

Jayant is the largest player for castor in India but the management would not like to make a statement.

Food served was: Veg sandwich, Paneer Sandwich, Vada, dahi-vada (kind off), idli, gulab jamun, sambar, tea cofee.

I felt the underlying tone of the shareholders was bullish. There were heavy weight (Senior) Gujju bhai investors .. yes the meeting could have been more well managed.. Next meeting room needs to be larger for sure. It has to be set closer to the beginning of the AGM season and not at the very end. Also preferably after trading hours.. and yes Pls higher dividend payouts!!

Pls Note: These are not recorded minutes and I donot guarantee that anything mentioned here is true or false. It is what I heard or interpreted or thought the management  and shareholders were saying.
Jayant Agro Blog Archives 

Wednesday, September 28, 2011

NHPC: National Hydro Power Corporation Limited

Sept 28,2011: NHPC: 11 Years Data Review

Company Website: Link
Annual Report: 

NHPC 11 Years Data Review.

CMP: 23.65
Market Cap: 29,029.75Cr
Dividend yield 2.54%

Advantages of Hydro Power:
- A renewable source of energy - saves scarce fuel reserves.
- Non-polluting and hence environment friendly.
- Long life - The first hydro project completed in 1897 is still in operation at Darjeeling is still in operation.
- Cost of generation, operation and maintenance is lower than the other sources of energy.
- Ability to start and stop quickly and instantaneous load acceptance/rejection makes it suitable to meet peak demand and for enhancing system reliability and stability.
- Has higher efficiency (over 90%) compared to thermal (35%) and gas (around 50%). (I did not know that!)
- Cost of generation is free from inflationary effects after the initial installation.
- Storage based hydro schemes often provide attendant benefits of irrigation, flood control, drinking water supply, navigation, recreation, tourism, pisciculture (breeding, hatching, and rearing of fish under controlled conditions) etc.
- Being located in remote regions leads to development of interior backward areas (education, medical, road communication, telecommunication etc.)

Lets look at the 11 yrs data which is available.

As we can see:
1. 11 years of continious increase in dividend payouts
2. Reserves have also been growing regularly.
3. Sale price per unit has also been increasing.

Equity dilution has also taken place and units of power generation is also increasing steadily. 
Rate of Equity dilution as compared to increase in Dividends is pretty low. Also going forward  don't see future equity dilutions as Debt is lower so capacity expansion can be done by adding new debt. 

Conclusion: NHPC is quoting below the IPO Price.. also current dividend yield is 2.54% and considering its track record of consistent increase in dividends we can expect long term shareholders to get higher % dividend yields. The stock price will also respond positively to higher dividends. Energy prices are sure to increase so sale prices will also increase. NHPC is the largest player in Hydro Power sector and we can expect it to get a larger share of new Hydro power projects based on experience and size.  Its a good safe compounder with almost assured increase in dividend payouts in the future. A no-brainer stock to buy.

Friday, September 23, 2011

Is the Markets ready for a 15 Trillion Dollar Liquidity Pump.

Mr Bernanke has just started "Operation Twist" and the world is in financial crisis. Well here is a different "Twisted" view about what's really happening. Just look at the table below.

1. The first table is FED data H.3 "Aggregate Reserves of Depository Institutions and the Monetary Base"
All the Data is in Millions of USD (US Dollars) Seasonaly Adjusted, Break Adjusted.

2. The FED is looking at the Monetary Base and reporting it.
- In Jan 2007 (2007-01) the monetary base was $813 Billion
- In the peak of financial crisis Oct 2008 (2008-10) the monetary base was $1,129Billion (1.12Trillion)
- 26 months later in Jan 2010 (2010-01) the monetary base was expanded to $1,987Billion  (1.987 Trillion)
- In August 2011 the monetary base has expanded to $2,658 Billion (2.658 Trillion)

On the first look we can clearly see the FED has increased the monetary base by 235.42% (Oct 2008 to August 2011) in the past 35 months but the ground reality is that there has not been any comparable increase in economic activity.. We conclude .. US is in depression.

3. Lets look at "Reserves of Depository Institutions Required" column. A more common term used to describe "Reserves of Depository Institutions Required" is "Cash Reserve Ratio" or CRR.

As per Investopedia:
The portion (expressed as a percent) of depositors' balances banks must have on hand as cash. This is a requirement determined by the country's central bank, which in the U.S. is the Federal Reserve. The reserve ratio affects the money supply in a country. This is also referred to as the "cash reserve ratio" (CRR).

For example, if the reserve ratio in the U.S. is determined by the Fed to be 11%, this means all banks must have 11% of their depositers' money on reserve in the bank. So, if a bank has deposits of $1 billion, it is required to have $110 million on reserve. 

US CRR rate is 10% and lets look at the column titled "Reserves of Depository Institutions Required"
2008-10 (Oct 2008) Reserve Required: $48.366 Billion.
2011-08 (August 2011) Reserve Required: $83.843 Billion.

- The banks in US had deposits of $483.66 Billion in Oct 2008 (10% is $48.36 Billion)
- August 2011 the Deposits in US banking system has increased to $838.43 Billion (10% is $83.843Billion)

Reserve Required has increased by 173.35% but compared to 235.42% increase in Monetary base deposit growth is 62.06% lower. This would mean there is an increase in savings but definitely its lower than the increase in monetary base so if its a Vanilla Savings account your money would have lost value as the monetary base has increased at a higher rate.

4. This is the column titled: "Reserves of Depository Institutions non borrowed"  This column indicates the reserves held by Banks with the FED and its their "own money" "NON Borrowed (from FED)".
Before 2008 The FED paid Zero interest on the "Reserves of depository Institutions"  and from 2008 FED has started paying interest of 0.25% (25 basis points) on the "Reserves of Depository Institutions"

  a. in Jan 2007 (2007-01)
Reserves of Depository Institutions Non borrowed: $41.672 Billion
Reserves of Depository Institutions Required: $41.338 Billion
The numbers were matching .. so the banks maintained a reserve level with the FED just equal to the minimum required levels. (as there was no interest payments of 0.25% )

  b. In Oct 2008 (2008-10) just as the financial crisis imploded.
Reserves of Depository Institutions Total: $315.522 Billion
Reserves of Depository Institutions Non borrowed: -ve $332.798 Billion
Reserves of Depository Institutions Required: $48.366Billion
Monetary Base: $1,129.938 Billion ($1.129 Trillion)

The banks were really facing a liquidity crisis.. and also a crisis of confidence. 
-Reserves were higher ($315.522 Billion) than Minimum Required levels of $48.366 Billion (which indicates a crisis of confidence)
-All of the reserves was borrowed money (from the FED) which indicates a liquidity crisis.

  c. In Aug 2011 (2011-08) what is really happening.
- Reserves of Depository Institutions Non Borrowed: $1,655.535 Billion ($1.65 Trillion)
- Reserves of Depository Institutions Required: $83.843 Billion
- Monetary Base: $2,658.972 Billion ($2.658Trillion)

The banks are flush with Cash and the banks are storing it with FED as Reserves. The Scenario has completely changed from Oct 2008 where the banks had no money and were borrowing from the FED. 
Now the banks have large amount of money and are not willing to lend and are holding it with the "FED as Reserves" 

I have done some calculations and it looks like this:

1. Money in the system:
Money in the system = Monetary Base - Reserves of Depository Institutions Non borrowed.
Jan 2007  (2007-01) Money in the system: $771.434 Billion
Oct 2008 (2008-10) Money in the system: $1,462.736 Billion (1.462 Trillion)
Aug 2011 (2011-08) Money in the system: $1,003.437 Billion ( 1.003 Trillion)

On Oct 2008 the banking system had cash deficit and had borrowed from the FED $332.798 Billion so Money in the system was more than the Monetary base of $1,129.938 Billion. Money in the system was $1,462.736 Billion

2. As we can see in Aug 2011  the Monetary base is 1,003.437 Billion which is less than what was in Oct 2008 ( $1462.736 Billion start of Financial turmoil)
So even after an expansion of 235.4% in monetary base  the actual "Money in the System" is less than what it was in Oct 2008. All the money has been deposited with the FED as "Reserves" by the big banks. So a recession scenario has been created by "Tight Liquidity" by reducing the actual "Money in the system"

Conclusion: The FED has done a lot of liquidity infusion into the system. unfortunately it has never reached the  financial system. The gatekeepers "The big banks" have deposited all of it about $1.57 Trillion dollars back with the FED as "Excess Reserve holdings" This money could have been deployed in the Bond market but that has also not been done at the expense of profits and also with the intention of curbing liquidity (I think) 

Since Cash Reserve Ratio is 10% so $1.57 Trillion in reserves would translate at M3 levels $15.7 Trillion.
What has happened is .. in the past 3 yrs the liquidity infusion by the FED and the banks keeping the liquidity out of the system by depositing it with the FED as reserves .. the control (flow of liquidity) has moved from the FED into the hands of banks. 

If and when this money enters the financial system..
- Dollar should get devalued.
- Inflation in US will rise.
- Exports should become cheaper for US Exporters.
- Gold in Dollar terms could rise further while in Indian Rupee terms.. Gold could be worth  much less.
- A lot of this excess cash will look for attractive destinations and Indian Stock market should "Break away from the developed markets" Also other BRIIC markets which are driven by internal consumption could see increased valuations.

The current strengthening of the US dollar is temporary in nature. It is advisable for American Investors to move out of dollar into other stock markets and buy into good stable companies. Indian Bond market with 10% interest rates is also very attractive..Export based companies in US should also do well. US also has large natural resources and these resource based companies would also do well.
Indian Investors should remain invested in Indian companies. Exporters need to worry about Dollar devaluation and its advisable to shift to non US Dollar denominated currencies for export or Indian Rupee. 

Keeping "Peak oil" in view it is advisable to invest in basic consumption oriented ideas and Hydro power companies (NHPC). Energy "Peak oil" will make everything expensive so large value one time expenses can be front loaded. It is advisable to buy NIFTY Call Options 1 year down the line if available at attractive valuations. Best Value buy stocks are: GAEL, Jayant Agro, NHPC and Tata Communications.

PN: these are my personal views/understanding about publicly available information. Please do your own deep dive before investing.

FED H3. Data (link)
FED H4.1 Factors affecting Reserve Balances (Link)

Wednesday, September 21, 2011

Jayant Agro: Castor Crop Survey 2010-2011 SEA

Solvent Extractors Association (SEA) has conducted a crop estimation survey with Nielson India conducting the survey on behalf of SEA.

- Total area under Castor crop in India year 2010-11 is 8.59 lakh hectares. It has increased by 14% as compared to previous year.
- Estimated Castor Seeds in India for the year 2010-2011 is 11.90 lakh tonnes. It has increased by 22% as compared to previous year.
- Average yield for 2010-11 is 1385 kg/hectare as against 1297 kg/hectare during the year 2009-10. Yield has increased by 7% as compared to previous year.

All India State-wise data.

As can be seen Gujarat is the 800 pound gorilla in the castor space.

Gujarat State Castor crop data
- Total area under Castor crop for 2010-11 is 4.83 hectares, an increase of 10% as compared to previous year.
- Estimated total production of castor seeds in Gujarat for the year 2010-11 is 8.60 lakh tonnes, an increase of 17% compared to previous year.
- Average yield for the year 2010-11 is 1781 kg/hectare as against 1683 kg/hectare during the year 2009-2010

Gujarat District wise castor crop information

As can be seen "Banaskantha" is the largest castor growing district in Gujarat and Jayant Agro Organics has bought the Gujarat Agro Industries corporation limited plant located in Palanpur Gujarat. Palanpur is a city located in Banaskantha district. Ihsedu Agro Chem Private limited is the subsidiary company which is running the plant in Banaskantha. 
Ihsedu AgroChem has increased its seed crushing capacity to 360,000 MT (Year 2010-210,000 MT) Ihsedu AgroChem for year ending March 2011 had sales of 279Cr and a net profit of 6.97Cr

Coincidentally Jayant Agro Organics March 2010 standalone profits was 7.84Cr..  so Ihsedu AgroChem is growing by leaps and bounds and is the primary subsidiary company  contributing to profits for Jayant Agro for the year 2010-11.

Conclusion: Most of the earnings growth that we have seen in Jayant Agro's consolidated profits is related to the successful backward integration through Ihsedu AgroChem. Having the seed crushing plant in the largest castor seed growing district in Gujarat has been a winning combination. 
Ihsedu Speciality Chemicals Pvt limited has not yet been able to stabilize its production problems. The promoters have acknowledged the problem. The plant which was being sourced from china but in technical consultation with Mitsui seems to be facing problems. As per my understanding "Sebacic Acid" production is being done in India in pvt held companies.. so its a complex product to produce but not an impossible product.
Jayant promoters also have a patent filing for efficient process of producing Sebacic acid (Link) .. so looks like more of an implementation issue. We need to better understand what exactly is the problem and steps being taken to overcome the problem.

Solvent Extractor's Association Report for castor production (Link)
National Multi-commodity Exchange of India Limited Castor Study (Link)
Karvy Castor Seed Report (Link)
Jayant Agro Blog Archives (Link)

Tuesday, September 13, 2011

Cost of Credit Vs Creation of Credit: Sell GOLD

I was going through some of the financial news and this is a very interesting discussion .. I would say its an  "Insight" by Mr Bill Gross of PIMCO.. A MUST Must See..

Here is what I understand.
There is "Cost of Credit" and "Creation of Credit" 

Cost of credit: is basically the rate of interest you pay when you take out a loan.

Creation of Credit: If you deposit Rs 100 in the banking system.. the bank can due to "fraction reserve lending rules" create a loan of Rs1000 with your Rs 100 deposit. thus "creating credit". But if you remove Rs 100 from the banking system you reduce the available credit in the banking system by Rs1000/= effectively "destroying credit creation" 

What Mr. Bill Gross said in Financial Times: 
 Helicopter Ben Risks destroying credit creation by flooring maturities out to two years then, and perhaps longer as a result of maturity extension policies envisioned in a forthcoming operation twist later this month, the Fed may in effect lower the cost of capital.
Monetary policy at the Zero interest rate bound introduces a new dynamic that may conflict or even reverse standard logic that lower interest rates across the sovereign yield curve are stimulative to economic growth 

My understanding is that Mr Bill Gross is saying that "Zero Interest rate binding" which is supposed to stimulate economic growth by lowering the cost of capital .. but "Zero Interest rate binding"  will cause a lot of the money to be pulled out of the banking system thus stop the "Creation of credit Cycle" which will result in actually stalling the economic growth cycle.

The example Mr Bill Gross gives is: 
The FED has done a conditional "freezing" of 2 yrs treasury rates at 0.25% So by taking a 90% cash position and 10% in 30yrs treasury bonds we can get a 2 yrs yield of 0.50%. This conditional "freezing" of 2 yrs treasury rates has resulted in 90% of cash remaining out of the banking system.. causing a "Destruction of Credit creation"   Ideally we should have 100% in 2 yrs treasury to achieve the same.. and the money stays in circulation.

This explanation is Mind Blowing!! Revelation I must confess.!!

Mr Bill Gross delves further and states.. The banks instead of rotating the money in the banking system have parked all their funds with FED as "reserves" which is paying then a 0.25% return reducing "Credit" in the banking system.

Investment in "Gold" is taking the money out of circulation from banks causing "Destruction of Credit" As per my understanding Pvt holdings of Gold in India is "18,000 Tonnes "Largest reserves in the world. Its high time we be smart and reduce investment in this asset class (when the prices are high..) cause we are going to see a fall in price of gold. 

Conclusion: I would say if you have been investing in GOLD start lightening up. every time GOLD goes up "SELL" and invest in a productive asset. For me that would be "GAEL, Jayant, NHPC and Tata Communications" (Recommended Best Buys) News like this does not just flow.. its an indication that its time to switch from non productive assets such as gold into productive assets.. There is a SBI 9.5% 2026 bond where one can invest the cash if you are looking for fixed income. GAEL has 35Cr invested in the same bonds.

Monday, September 12, 2011

EU Debt, Balance of Payment out of control??

There is a lot of market volatility with regards to "Greek debt" markets are swinging wild. lets look at the real numbers. here is the EU Balance of Payment numbers as reported by European Central Bank.

1. The Balance of Payment for EU27 states is -ve 1.4% of GDP which is very very manageable number.
2. If we look at the "Balance of Trade in Services" there is a positive number of 22.9 Billion and quite stable.

Total balance of payment of -ve 43.2 Billion for Q2,2011 is  only   
-ve1.4% of GDP of EU27 nations. The EU nations are also competitive in services export.

India has a Balance of Payment at -ve7.5% of GDP.. last year's numbers for India was -ve8.6% of GDP. As you can clearly see its once again one of those "Action news" with no real basis for much concern. 

Take your pick of the investments that have fallen. This will pass without any real impact as its a lot of fluff.

Sunday, September 11, 2011

Jayant Agro: March 2011 Annual Report Result Review.

Jayant Agro Organics published its Annual Report for year ending March 2011 on Sept 8,2011. Due to green initiatives by the Govt. Electronic copies of the annual report are being provided. An electronic copy i.e. pdf version of the document is available in company website (link).

The presentation has improved with coloured pages to highlight the must read sections. The Chairman's message to shareholders gives us a brief overview of Jayant's achievements and major milestones. It also provides us a perspective about the long term value creation by Jayant agro.
- Jayant Agro was started in 1993 with sales of 13.07Cr and in 2011 Jayant agro sales were 1175.26Cr a sales growth of 8992% in 18 years.
- Jayant Agro's  networth increased from 3Cr to 116.65Cr a growth of 3888.33% in 18 years.
- Cumulative dividend payout has been 42.16Cr (including dividend tax) in EPS terms dividend worth Rs 103.31 per share has been distributed (based on Original share of Rs10)

Another important milestone was the separation from the parent company in 2002. From my personal understanding of Jayant Agro's history. Parent Company was "Jayant Oil and Derivatives" which was started in partnership. The partnership between  "Kapadia's and Udeshi's"   family fell through and we had 2 separate companies "Jayant Agro Organics" and "Jayant Oil and Derivatives" now renamed as "BIOTOR Industries Limited" (Pvt. Company)

The list of end user products where Castor oil and its derivatives are used is listed. 

A document which is worth mentioning is Jayant Agro's 18 years financial figures. which indicates a consistent dividend payment policy. The company also did give out a bonus .. but the timing looks like its related to the separation effort between the owners.

Capital Expenditure:
Lets look at the Consolidated Capital Expenditure of Jayant Agro and its subsidiaries

1. In past 5 years 2007-2011 Jayant Agro and its subsidiaries have spent 83.34Cr that's an average of:  16.67Cr every year.
2. The maximum amount of money has been spent in expanding "Castor Oil" capacity. I would say backward integration to secure seed crushing and solvent extraction capacity.
3. The major derivatives capacity expansion project was the year 2010 "Sebacic Acid" plant which has incurred capital expenditure equal to 50% of all derivatives capacity expenditure for the past 5 years.

Things of concern are: Ihsedu Speciality Chemicals Pvt. Limited has still not stabilized its production process. The "high value add complex derivatives production system is still not into commercial production and as we are aware the JV partner Mitsui has been bought out by parent company ie.Jayant Agro  which could mean (My understanding) the problems are not that easy to fix and could take more time. This project status I think is the most important development for Jayant and something the shareholders should ask in forth coming AGM.

Positive outlook is the growing revenues of Jayant and its other (backward integration) subsidiary "Ihsedu Agrochem Pvt Limited"  Ihsedu Agrochem has reported March 2011 sales of 279.47Cr and PBT of 9.36Cr.
Jayant agro had bought Gujarat Agro Industries Corporation Limited Castor seed crushing plant in Banaskantha and established Ihsedu Agrochem Pvt. Limited to operate the same. Banaskantha is the largest castor growing district in Gujarat responsible for approximately 20% of Gujarat's castor seed production.

I was also looking at the castor oil exports data from India.

The numbers in "Red" are Jayant Agro Organics consolidated "Castor Oil" export numbers. As we can see Jayant is responsible for 25% or more of all Castor oil exports from India. Also almost 50% of Jayant Agro sales are related to castor oil derivatives. It would be safe to assume Jayant Agro's share in Castor oil and its Derivatives on an all India level is anywhere between 25-35%.

Conclusion: Jayant Agro Organics is trying to reach out to the shareholders with an annual report which is easier to read highlighting the important points so that investors have a better understanding of  Jayant Agro and castor oil in general. Fundamentally Jayant Agro has been increasing capacity both at the back-end (seed crushing and solvent extraction) as well as at the higher value added castor oil derivatives segment.  The recent increase in profitability looks like  is because of better control over its castor seed/oil processing capabilities. As we are well aware the sebacic acid derivative plant is still not fully functional and is a cause of concern. Any positive news about the sebacic acid plant entering into commercial production should improve Jayant Agro's fortune for the better.

Wednesday, September 07, 2011

The Great Indian "Bull" Market

The Ongole Bull is a majestic animal and is large with a heavy build. They are attentive and attractive with broad foreheads and no hollows in the temples. With black muzzles with wide nostrils, muscular wide jaws, large flaccid eyes and alert ears, they have horns that are short and stumpy. The neck is thick with large loose dewlaps. The hump is the most imposing part of the Ongole Bull. It is large, round and splendid. The animals have strong legs with black hooves that are squarely set under body.  Nose string is seldom used for Ongole bulls are docile.

The Ongole Bulls, found in a small region between the Gundlakamma and Alluru rivers in the Ongole and Kandukur talukas of Andhra Pradesh in an area no larger than about 100 square miles, are world famous stud bulls. 

Ongole bulls have gone as far as America, Holland, Malaysia, Brazil, Argentina, Columbia, Mexico, Paraguay, Indonesia, West Indies, Australia, Fiji, Mauritius, Indo china and Philippines. The Brahmana bull in America is an off-breed of the Ongole. An Island in Malaysia where there are many Ongoles is named as Ongole Island. The population of Ongole off-breed in Brazil is said to be around several millions.

Cattle populations worldwide (2009)

 The mascot of the 2002 Indian National Games was Veera, an Ongole Bull.

Ongole bulls are particularly conspicuous with respect to their biometry. They are heavily built weighing approx. 567.6 kgs at a height of 1.5 meters, with a body length of 1.6 meter and girth measuring 2 meters. The bulls look majestic, royal, attractive and alert. The Ongoles are fine, docile and suitable for heavy draught. Ongole cattle perform under varying environmental conditions due to their adaptability and are unique triple purpose cattle of the tropics that serve as draught, milk and meat animals. 

The Ongoles are with muscular body, short neck, and long limbs. The popular coat colour is white with dark grey markings on head, neck, and hump and black points on the knees and pasterns of both fore and hind limbs. The skin is medium thick. The head is long with a relatively flat forehead. The ears are moderately long and slightly drooping. Muzzle is well developed with fairly wide nostrils that are black in colour. The eyes are moderately large, elliptical in shape and bright. The legs are strong and clean, toes of the foreleg pointing straight forward, the curve of hock not too straight or too curved. The horns are short and stumpy, growing outwards and backwards and are thick at the base. The horn length (typical) of a good breed normally is below 3 inches (resembling Nandi). The hump of the bull is well developed, open and erect. Dewlap   and sheath are moderate to large sized. Tail is of moderate length and thickness with a black switch reaching about half way between the hocks and the ground. In fact the statue of Nandi is the image of a perfect Ongole bull, for example the large Nandi statue in Andhra Bhavan, New Delhi. Villagers in that region grade bulls based on standard features.

World wide the Ongole bull is better known by its American off-breed "The Brahman Bull"
Brahmani  it seems is the system of maintaining the pure bloodlines of the Ongole bull.

The Brahmani System:
A stud bull is selected through rigorous procedures by a group of village experts and is dedicated to the temple of the village deity. Sometimes the purchase cost of the bull is born by a rich family of the village in memory of their elders. Once the bull is dedicated to the temple, the bull is the property of   the village and is set free. The bull is not prevented if it enters into a crop field, is allowed to feed and it leaves on it’s own. The bull sired the village herd free of cost. This custom was prevalent throughout Ongole breeding tract. Thus the brahmani custom helped selective breeding because of which maintenance of pure blood lines of Ongoles became possible.

Percentage of Cattle projected as Brahman or Brahman influenced cattle: (2011) 

Australia: Cattle Population: 28 million, Brahman influenced: 51%
Brazil: Cattle Population: 200 million, Brahman influenced: 1% (Very strange low number)
Columbia Cattle Population: 23 million, Brahman influenced: 75%
Ecuador Cattle Population: 5 million, Brahman influenced: 80%
Mexico Cattle Population: 23 million, Brahman influenced: +50%
Namibia Cattle Population: 2 million, Brahman influenced: +70%
Philippines Cattle Population: 3 million, Brahman influenced: 95%
South Africa Cattle Population: 15 million, Brahman influenced: 60%
USA Cattle Population: 110 million, Brahman influenced: 30%

Pls note only Australia, Brazil, Columbia, Eucador, Mexico, Namibia, Philippines, South Africa and USA participated in this survey and 23% of the cattle was projected as Brahman influenced cattle. Brazil numbers seem to be suspect (1%) as Brazil is one of the largest importer of Indian breeds and also one of the largest exporter of "Brahman" bulls to the world.

From Outlook Article (Outlook article Link)

Andhra’s Ongole bulls are prized as they are said to be resistant to mad cow disease
Concerns abound about illegal acquisition of genetic material. Recently, a middleman paid Rs 35 lakh for a bull. Healthy bulls sell for crores in Brazil.
Great demand also for Gir and Kankrej species of cattle from Gujarat for their high milk yield

Satyajit Khachar, a cattle-breeder from Jasdan in Gujarat who specialises in the Gir variety, says that every 10-15 years the Brazilians “need infusion of fresh blood from the parent country to retain vigour”. With Brazilian partners, he runs Brazil India Ltd that has exported 200 embryos of the Gir breed in the last two years. Khachar claims he has the necessary clearances from the state/central animal husbandry departments. The long-term plan is to recreate the Gir breed, known for its high milk yield, there. “I expect more than a million USD (over Rs 4.5 crore) for a good Gir bull in Brazil,” 

Conclusion: The Great Indian "Bull" Market it seems is well known in cattle rearing circles. Indian exports are more than just IT resources. Bio diversity is one of the greatest assets. For instance raw onions contain more antioxidants than Red wine but its something that is never marketed maybe because the largest exporters of onion are China and India.

Reference Links

Saturday, September 03, 2011

Jayant Agro Organics: Bio Plasticisers Surge in demand

Solvin is a 75% Solvay and 25% BASF owned PVC resin manufacturer. Plasticisers  and Phthalates are additives used to increase flexibility of PVC.

 In europe low molecular weight Phthalates are subject to restrictions by EU Legislation. low molecular weight phthalates are classified as "Substances of Very High Concern" (SVHC)

Manufacturer or importer must provide information to the recipient. As a minimum, recipients – meaning anyone in the supply chain from distributors and retailers to professional end-users - need to be told that the article contains one or more of the substances. Further down the supply chain, retailers also have an obligation to provide the same information to consumers, but only if a consumer requests it. A retailer has 45 days to provide the information.

The basic purpose of these test, it seems... is to verify the ability of Solvin resins to work with these new "bio-based plasticisers" The surprising fact is that "Jayant Agro organics also has submitted 100% castor based plasticiser "Di-Caprylsebacate" DOS/DCS.  I have extracted only 15 slides.. the original document was 31 slide document (link to original document

here are the slides which I though could summarize the whole thing

(REACH) Registration, Evaluation, and  Authorisation of CHemicals (Info link)
REACH Timelines for plasticiser (link)
Candidate List of Substances of Very High Concern (SVHC) for authorization (Link)

Biotor promoters seem to be having a good lunch.. though the company will be in doldrums (Link)

Conclusions: I really dont know what benefit Jayant gets since DCS/DOS is widely produced in China (as per my google searches.. ) yes these EU guidelines will increase the demand for DCS and other bio-based plasticisers. Jayant is somewhat uniquely placed as India is the largest producer of Castor in the world. 

Father Forgets: W. Livingston Larned

W. Livingston Larned
condensed as in "Readers Digest"

Listen, son: I am saying this as you lie asleep, one little paw crumpled under your cheek and the blond curls stickily wet on your damp forehead. I have stolen into your room alone. Just a few minutes ago, as I sat reading my paper in the library, a stifling wave of remorse swept over me. Guiltily I came to your bedside.

There are the things I was thinking, son: I had been cross to you. I scolded you as you were dressing for school because you gave your face merely a dab with a towel. I took you to task for not cleaning your shoes. I called out angrily when you threw some of your things on the floor.

At breakfast I found fault, too. You spilled things. You gulped down your food. You put your elbows on the table. You spread butter too thick on your bread. And as you started off to play and I made for my train, you turned and waved a hand and called, "Goodbye, Daddy!" and I frowned, and said in reply, "Hold your shoulders back!"

Then it began all over again in the late afternoon. As I came up the road I spied you, down on your knees, playing marbles. There were holes in your stockings. I humiliated you before your boyfriends by marching you ahead of me to the house. Stockings were expensive-and if you had to buy them you would be more careful! Imagine that, son, from a father!

Do you remember, later, when I was reading in the library, how you came in timidly, with a sort of hurt look in your eyes? When I glanced up over my paper, impatient at the interruption, you hesitated at the door. "What is it you want?" I snapped. You said nothing, but ran across in one tempestuous plunge, and threw your arms around my neck and kissed me, and your small arms tightened with an affection that God had set blooming in your heart and which even neglect could not wither. And then you were gone, pattering up the stairs.

Well, son, it was shortly afterwards that my paper slipped from my hands and a terrible sickening fear came over me. What has habit been doing to me? The habit of finding fault, of reprimanding-this was my reward to you for being a boy. It was not that I did not love you; it was that I expected too much of youth. I was measuring you by the yardstick of my own years. And there was so much that was good and fine and true in your character. The little heart of you was as big as the dawn itself over the wide hills. This was shown by your spontaneous impulse to rush in and kiss me good night.

Nothing else matters tonight, son. I have come to your bedside in the darkness, and I have knelt there, ashamed! It is feeble atonement; I know you would not understand these things if I told them to you during your waking hours. But tomorrow I will be a real daddy! I will chum with you, and suffer when you suffer, and laugh when you laugh. I will bite my tongue when impatient words come. I will keep saying as if it were a ritual: "He is nothing but a boy-a little boy!"

I am afraid I have visualised you as a man. Yet as I see you now, son, crumpled and weary in your cot, I see that you are still a baby. Yesterday you were in your mother's arms, your head on her shoulder. I have asked too much, too much, yet given too little of myself. Promise me, as I teach you to have the manners of a man, that you will remind me how to have the loving spirit of a child.

Thursday, September 01, 2011

10 largest oil fields in the world

This is a recent article from 24x7 wallstreet. I liked the info and decided to copy it. Here is the link to the original article (Link)

Figuring out how much oil is left in the world and where it is located seems more important than ever, especially considering the political instability in many of the oil-producing countries. 24/7 Wall St. used the most recent public information available to identify the largest oil fields in the world. Those who call for America to end its dependence on foreign oil would be relived to hear the U.S. actually has the world’s largest oil reserve, albeit in oil shale — oil that is in rock form. If prices go high enough, however, and the supply dries out, extracting that oil could become commercially viable.
There are more than 40,000 producing oil fields dotted around the globe, though most are relatively small. Just 100 to 125 giant or supergiant oil fields supply approximately 50% of the world’s oil. A giant oil field is one that contains more than 500 million barrels of recoverable oil. A supergiant fields holds more than 5 billion barrels of recoverable oil. 24/7 Wall St.’s ten largest oil fields in the world are all super giants.
Interestingly, the largest deposits ever found are not liquid oil at all. They are either an asphalt-like substance called tar or oil sands, or rocks called oil shale. The vast size of these “unconventional” resources is matched only by the vast complexity and cost involved in turning them into liquid petroleum.Finding new giant and supergiant oil fields brimming with cheap, easy-to-extract oil is surely a historical phenomenon, and the number of new discoveries — of any size — is dwindling. In addition, the largest recent finds are under miles of water and seabed, in some unconventional form or in some inhospitable, usually arctic, climate. The effort required to tap these fields will involve mountains of capital and years of work. No doubt, we need to be prepared to deal with a new reality where oil isn’t as cheap or abundant.

24/7 Wall St. looked at conventional oil fields, like those found in the Middle East, and unconventional oil fields, like oil shale found in the U.S., to come up with a comprehensive list of the largest oil deposits in the world.

These are 24/7 Wall St.’s ten largest oil deposit in the world:

10. Ferdows
> Country: Iran
> Est. Total Resource: 31 billion barrels
> Est. Remaining: 31 billion barrels
> Discovery Date: 2003

Iran’s Ferdows field is located about 50 miles offshore of the country’s Bushehr province. Together with two other fields in the group, Mound and Zagheh, the three are believed to hold 38.5 billion barrels of oil. Ferdows also contains trillions of cubic feet of natural gas, and Iran has signed an agreement with a Malaysian company to develop a natural gas liquefaction plant that could be in operation by 2014. U.S.-led sanctions against Iran have made it difficult for the country to develop its substantial oil reserves and its even more substantial natural gas reserves.
9. Carioca-Sugar Loaf
> Country: Brazil
> Est. Total Resource: 33 billion barrels
> Est. Remaining: 33 billion barrels
> Discovery Date: 2007

Carioca-Sugar Loaf is one of three supergiant discoveries in the Santos Basin offshore of Brazil. At an estimated reservoir size of 33 billion barrels, Carioca-Sugar Loaf is four to five times the size of the other two fields in the basin — Tupi and Jupiter — each of which is believed to hold 5-8 billion barrels of total resource. Brazil’s state-controlled oil company, Petrobras, recently announced that it would spend a staggering $225 billion to develop its Santos Basin reserves — and even that might not be enough. The reservoirs are located in water that is more than 5,000 feet deep and below 25,000 feet or more of sea floor. These figures represent a serious technological challenge. There is no firm data yet on how much of the oil in place could ultimately be recovered.

8. Cantarell> Country: Mexico
> Est. Total Resource: 35 billion barrels
> Est. Remaining: 4 billion barrels
> Discovery Date: 1976

Cantarell is the largest conventional oil field ever discovered in the western hemisphere. Some attribute the field’s formation to the same asteroid impact that is believed to have caused the extinction of the dinosaurs. Production from Cantarell has fallen dramatically since 2003, when production peaked at 2.1 million barrels/day. The field produced about 500,000 barrels/day at the end of 2010 and is expected to drop below 400,000 barrels/day at the end of this year. Like the number five field on our list, Burgan, Cantarell is not expected to be productive beyond the end of the decade.

7. Kashagan
> Country: Kazakhstan
> Est. Total Resource: 38 billion barrels
> Est. Remaining: 7-9 billion barrels
> Discovery Date: 2000

Kashagan’s discovery in the northern Caspian Sea in 2000 was the largest new conventional field found since Prudhoe Bay in 1968. Development of Kashagan has been delayed by high costs and serious environmental concerns. The original budget called for development costs of $57 billion, but the figure was raised in 2007 to $136 billion because the technical challenges of extracting the oil are significant. First, the reservoir fluid contains a high concentration of a very corrosive compound. Not only does it destroy the equipment, but if allowed to escape, it could devastate the unique ecosystem of the area. Second, the field is located in relatively shallow waters that freeze in the winter. Third, reservoir pressures are very high, which combined with the high levels of toxic gas, creates an expensive safety issue. Production is expected to start in 2012, but this date could well be pushed out again.

6. Bolivar Coastal> Country: Venezuela
> Est. Total Resource: 44 billion barrels
> Est. Remaining: 14 billion barrels
> Discovery Date: 1917

The Bolivar Coastal field is really a complex of large and small reservoirs around the northern and eastern edges of Venezuela’s Lake Maracaibo. The largest reservoir is Tia Juana, where the total resource was originally put at 15 billion barrels. The entire Maracaibo Basin is thought to hold up to 44 billion recoverable barrels, of which about 30 billion have been extracted through 2006. Of the fields on this list, the Bolivar Coastal has been in production the longest.

5. Burgan> Country: Kuwait
> Est. Total Resource: 150 billion barrels
> Est. Remaining: 6-25 billion barrels
> Discovery Date: 1938

Burgan, Kuwait’s largest field, resembles the number four field on our list, Ghawar, in its massive size. But unlike Ghawar, it fails the longevity test. Production from Burgan has fallen since the 1991 Gulf War ended, when retreating Iraqi troops set fire to some 700 wells in the field and an estimated 600 million barrels of oil went up in smoke. The field has never recovered and officially entered depletion in late 2005. The fires, coupled with the feckless Kuwaiti government, likely will have the second largest conventional field ever found dry in the next decade or so. Accurate and independently verified numbers on Burgan are not available.

4. Ghawar
> Country: Saudi Arabia
> Est. Total Resource: 162 billion barrels
> Est. Remaining: 11-45 billion barrels
> Discovery Date: 1948

Ghawar is the undisputed heavyweight champion of conventional oil fields. Since beginning production in 1951, the field has given up an astounding 55 billion barrels or so, and still produces at around 5 million barrels/day. Production is enhanced by water-flooding, with about 7 million barrels of seawater pumped into the field every day to force the oil out. The Saudis believe that Ghawar can produce another 125 billion barrels, more than twice its total production after 60 years. There has been no independent verification of any Saudi field since the country fully nationalized its oil resources in 1975, and there is a lot of skepticism over the Saudis’ claims for Ghawar. Still, it could easily rank as the eighth wonder of the world.

>3. The Alberta Oil Sands> Country: Canada
> Est. Total Resource: 173 billion barrels
> Est. Remaining: 169 billion barrels
> Discovery Date: 1980

The Western Canada Sedimentary Basin covers about 540,000 square miles and contains a total of 173 billion barrels of resource in what are called oil sands. Unlike the shales in the American Piceance and Uinta Basins, the Canadian oil sands are already being mined and refined into conventional oil. There are more than 20 active projects in the province of Alberta, most located near Fort McHenry, site of the largest of the three oil sands deposits in the WCSB.

2. The Orinoco Belt> Country: Venezuela
> Est. Total Resource: 1.3 trillion barrels
> Est. Remaining: 530 billion barrels
> Discovery Date: 1930s

The Orinoco Belt in Venezuela is estimated to hold some 1.3 trillion barrels of oil in place, according to a recent survey by the U.S. Geological Survey. Venezuela now claims it has 297 billion barrels of total reserves, putting it ahead of Saudi Arabia, which is estimated to hold reserves of 265 billion barrels. The Orinoco Belt contains both a heavy sulfurous oil and deposits of tarry oil sands similar to the Canadian variety, though somewhat less viscous. It is nasty stuff, but there is lots of it. In fact, only a bit more than a third of the total is recoverable by today’s technology and economic requirements.

1. The Piceance & Uinta Basins
> Country: USA
> Est. Total Resource: 2.855 trillion barrels
> Est. Remaining: 2.855 trillion barrels
> Discovery Date: 1912

The Piceance and Uinta Basins in western Colorado and eastern Utah are estimated to hold oil shale in place of 1.525 trillion barrels and 1.32 trillion barrels, respectively. The catch is that the stuff is not really oil at all, but rock containing kerogen, a precursor to oil. In a few hundred million years the rock would be converted to flowing oil naturally, if it were left alone. These basins, along with another in southern Wyoming, were added to the U.S. Naval Petroleum and Oil Shale Preserves in 1912, although Native Americans had used the flammable rocks for centuries. The total area covered by the deposits is about 16,000 square miles, an area larger than the states of New Jersey and Connecticut combined. Whether the oil shales are ever developed depends largely on the price of crude and how much environmental impact people are willing endure.

Author: Paul Ausick
Link to original article Link
Conclusion: Well we already know that there is no oil left. the question is that the information is being "let out" to the public. Its now slowly entering the public domain .. which basically means the wheels have been set on motion. One must be very careful with his/her investments and how you want to protect/safeguard your family. We are living in interesting times "No doubt about that". Also with the Fed refusing to start the next Quantitative Easing "QEx" I personally feel the banks will have to start taking some risk and start lending the trillions of dollars that FED has pumped into their books by buying out "bad debt" A slight increase in interest rates and the FED bonds would be worth a lot less. We might in fact see a consistent rise in stock prices.