"When one knows Thee, then alien there is none, no door is shut..
Oh, grant me my prayer that I may never loose touch of the One in the play of the many"
Mumbai, Jan 24 (IANS) The Reserve Bank of India (RBI) Tuesday suggested that the government deregulate the price of diesel fully to help contain aggregate demand and the trade deficit that has widened to $133.3 billion in the first nine month of the current financial year.
"Particularly as the food subsidy bill is expected to rise, it will be prudent to fully deregulate diesel prices to contain both aggregate demand and trade deficit," the central bank said in the third quarter review of its monetary policy for 2011-12.
Diesel is heavily subsidized by the government. Oil marketing companies incurred under-recovery of Rs.12.95 on sale of each liter of diesel in the first fortnight of January, according to data provided by the ministry of petroleum and natural gas.
Oil marketing companies suffered under-recovery of Rs.37,719 cr. on sale of diesel in the first half of the current financial year, which is more than half of the total Rs.64,900 cr. of under-recovery on all the petroleum products.
The RBI said heavy subsidies on petroleum products have led to widening in fiscal deficit.
"Revision in domestic administered prices will add to inflationary pressures, although such revisions are necessary to maintain the balance between supply and demand," the RBI said.
The RBI pointed out that the fiscal deficit of the government has remained at an elevated level since 2008-09.
"If the increase in government borrowing already announced is an indication, the gross fiscal deficit for 2011-12 will overshoot the budget estimate substantially," it said.
As per the budgetary estimates, the government targets to bring down fiscal deficit to 4.6 percent of the gross domestic product for the fiscal ending Mar 31, 2012.
"At the current juncture when there is a need to boost private investment, the increase in fiscal deficit could potentially crowd out credit to the private sector. Moreover, slippage in the fiscal deficit has been adding to inflationary pressures and it continues to be a risk for inflation," the RBI said.
Next in line is LPG.(only 4 cylinders at discounted prices rest at 700-800 per cylinder) Watch out for your energy consumption pattern.. Buy Jayant and Tata Communications if you have not yet entered.
Jayant Agro Organics has reported its Q3 December 2011 results.. Jayant has 4 subsidiary companies..
- Ihsedu Agrochem Pvt. Ltd.
- Ihsedu Speciality Chemicals Pvt. Ltd.
- Ihsedu Coreagri Services Pvt. Ltd.
- Ihsedu Itoh Green Chemicals Marketing Pvt. Ltd.
Ihsedu Agrochem Pvt Ltd is a non listed materially significant subsidiary of Jayant Agro Organics. Ihsedu networth and sales make up more than 20% of Jayant Agro Organics consolidated networth and net sales..
Similarly Ihsedu Speciality Chemicals Pvt Ltd is a non listed materially significant subsidiary of Jayant Agro Organics as Ihsedu Speciality Chemicals Pvt limited "networth" is more than 20% of consolidated networth of Jayant Agro Organics.
For year ending March 2011.
Standalone profits for Jayant Agro was: 17.21Cr
Consoldiated profits for Jayant agro was: 24.57Cr
Considering the facts that Jayant has 2 subsidiaries which are materially significant its always adviseable to look at the consoldiated numbers.. So lets look at the latest consoldiated numbers..
1. On a Year-on-Year basis the numbers are great..
- Volume driven performance..
- Costs have increased decreasing margins
- Taxes paid at 32% of PBT is good.
These numbers are great ..specially if you consider the fact that March 2011 (24.57cr) net profits were 97.14% higher than March 2010 (12.46cr) net profits.So this increase is over a higher base..
Jayant Agro Organics with a profit of 25.11cr has exceeded last year's profits within 9 months of this financial year.
Sales are doing great lets look at the margins..
1. Margins on a Year-on-Year basis is down 108 basis points (ie. 1.08%) from 6.13% to 5.05%
most likely we might see margins drop to 2010 levels of 4.56% (unless the new derivatives business really increases the profit margins)
2. Depreciation as a percentage of sales is down.. while on absolute numbers it is still increasing..
3. Interest payments at 2% of sales is right on the dot to take advantage of the 2% interest subsidy scheme of govt of india for exporters. (so expect higher debt levels ..)
Strong topline growth .. is an indication of Jayant's growing position within the castor oil and derivatives business. Margins are stable at 5-6% PBDIT.. with the castor derivatives plant in place .. we should see higher margins..(Watch out for that)
Segmented results is not for the consolidated entity.. hence does not make sense to compare them.
Conclusion: Jayant Agro Organics is growing consistently.. profits are still very low with 2% net profit margins.. Derivatives plant's first full quarter of operations is going to be Jan-March 2012 and something to watch out for improvement in margins.. Pls note as per management derivatives will add around 200-250cr (annually) to the topline so donot expect sharp increase in topline based on new castor derivatives business. I would continue to hold Jayant stock for now due to improving business climate (peak oil, bio-renewables demand)
Advanced Cell Technology is now the only company in US to have an active FDA human clinical trial with Stem Cells...
If you see "Organ transplant" (heart, kidney, lungs..) the biggest problem is "Histocompatability" Histocompatability is nothing but .. when a new entity enters into the human body..(like a transplanted kidney) the human body has a defence mechanism which can detect the kidney as foreign body and attack it.
When an organ transplant is done ..the new organ introduced into the body is identified by the "defence mechanism" as a foreign body.. and attacks it.. causing the destruction of the new organ and leads to failure of the transplant and can be life threatening to the patient.. Histocompatability issues cause organ transplant process to include an additional step of "Donor Compatibility"
Now unlike heart, kidney transplant.. which all face "Histocompatability" issues .. there are "immunologically privileged" sites within our body where the body defence mechanism does not attack a foreign body.. "Eye, Brain and testes" ..
Stem Cells science had advanced to a level where complete body parts can be "manufactured" but stem cells technology still has to overcome histocompatability issues except for "Eye, Brain and testes" which are "immunologically privileged"
ACTC.OB (Advanced Cell Technology) is at present conducting FDA approved Clinical testing for Stargardt’s macular dystrophy and dry age-related macular degeneration (dry AMD) using retinal pigment epithelial (RPE) cells derived from human embryonic stem cells (hESCs).
ACTC is targetting the eye for stem cell related cure.. where there are no histocompatibility isues.. latest update state that additional patients are being enrolled (which means positive development for first few patients..)
So ACTC.OB is something where you need to have an investment.. because it has taken an immunologically priviledged area of the human body where histocompatability issues are not present..
Everybody has heard about "Eye Donation" but have you heard about eye transplant being done between related entities ( ie blood relations ..) In other organ transplants like kidney, heart, lungs etc.. transplants are done only after "Donor Compatability" (Related entities) due to histocompatibility.
Alert:
Now I invested in ACTC at 9 cents per share..when market cap was 56.48 million right now ACTC has a stock price of 0.15 Dollars ie 15 cents with a market cap of 245 million. So even though the market cap of ACTC has increased 433% since the time I have invested in ACTC my actual gains are just 66.66%
Stock dilution is very high and a cause of concern.. My personal advice is to buy at a price below 10 cents..
There are questions about dilution of equity.. right now ACTC is looking to increase the number of equity shares that ACTC can issue from 1.8 billion shares to 2.8 Billion shares. ( 1Billion additional shares) It seems all 90% of convertible notes and warrant holders have "AGREED" to convert their notes and warrants into equity and hence the company will have to issue 380 million shares and additional 240 million shares.. so total we could see a dilution of about 620 million additional shares..
Insiders like Dr Robert Lanza have inbuilt clause that additional shares will be issued when their holding drops below x% ..
The good part is all notes and warrant holders (90% ) have agreed to convert .. (which is an indication that they prefer stocks over bonds (interest bearing) and could indicate that soon ACTC will not need any more funding (as its going to report good news/data .. my take) hence this conversion by all notes and bond holders..
PN: ACTC is a 0 or 100 stock.. so invest keeping in mind this could be Zero tomorrow. (Though I doubt that will happen)
Lets review the short term call given:
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Recommendation Date: Dec 10,2011
Recommendation: Sell NIFTY 4700 PUT @ 68 on Monday Dec 12,2011. Buyback the PUT @ 2 on Dec 29,2011. Earn 12% return in one month.
Dec 29,2011 NIFTY-4700-PUT-Dec closed @ 53.85
Actual Result:
Profit: ((68-53.85)*50)-307.50 = 400
Returns: 400/25,000 = 1.6%
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Well so that's it folks.. as we can see.. expectations are different and reality is a lot different. We expected 12% return in reality we got 1.6% but lets dig a little deeper..
Here is the price movement of NIFTY-4700-PUT-Dec from Dec9,2011 till the date of expiry (Dec 29,2011)
As we can see NIFTY-4700-PUT-Dec has moved from lowest price of 10.05 (Dec 27,2011) to a high price of 180.55(Dec 19,2011) giving us opportunities (10.05) and also some scary moments (180.55)
Conclusion: On Dec 9,2011 NIFTY was @ 4866 and Dec 29,2011 NIFTY @ 4646 a drop of 4.5% but we still got to close the month with a profit of 1.6% .. Option "Selling" Its an opportunity to get higher returns but not without potential losses.. everyone has to take a call .. should I sell at 10 or wait for 2, should I book losses at 180 or sell 1 lot NIFTY-4500-PUT-Dec @ 50.50 (Recommended on Dec 16,2011)
This is not a one shoe fits all.. my current recommendation for NIFTY-JAN-4600-PUT @ 76.50 has been executed by "My own world...In my own Words" @ 87 which is at a great price.. So find your own battles.. (entry and exit points)
its recommended to take the final call yourself..
and
- Do not take bets which you cannot afford to loose..
- Always keep extra cash just in case you get margin calls
Another strategy is: Straddle from both sides..
- SELL NIFTY-JAN-4600-PUT @87 and
- SELL NIFTY-JAN-4900-CALL @ 40.40
Investment 50,000 you make (87+40.40) *50 -600(Transaction cost) = Rs 5770 i.e. 11.54% return.
This is only if NIFTY Closes between 4700 and 4900 by end of JAN 2012 Expiry ..your earnings will drop but your profits are protected till 127 points on either side i.e. you will not make losses till 4573 and 5027 in NIFTY..
(personally I would not recommend this as NIFTY @ 4646 is still closer to the bottom rather than at the top..)
This is next leg of recommendation for short term.. 12.5% till end of Jan 26,2012. in 29 days..
4600 PUT available at 76.5 can be sold at current levels.. buyback at 2 or less..
Return 76.5-2 =74.5 x 50 = 3725-600(transaction cost) =3125 on investment of 25,000
that is a return of 12.5% in 29 days..
NIFTY 4700 PUT will be a sell tomorrow (Dec 29,2011) at any price below 10 or wait for target buyback Rs 2/= HAPPY NEW YEAR PN: suggestion is only for one lot of NIFTY PUT. One can also select these options.. NIFTY-4600-PUT JAN @ 76.50 make 3125 on investment of 25,000 return 12.5% NIFTY -4500-PUT JAN @ 55 make 2050 on investment of 25,000 return 8.2%
Everybody is flummoxed by the strength of the US Dollar. Look at the facts.
Oct 2008 Monetary base for US was: 1.129 Trillion Dollars.
August 2011 Monetary base for US was: 2.658 Trillion Dollars
So ideally speaking with the excess dollars floating around in the market ..the value of dollar should fall. but we are seeing the rise of the dollar.. what's the reason?
The reason is simple. the excess dollars is not in circulation in the market. The excess dollars are parked with the federal reserve as excess reserves.
how much of excess dollars are held in Federal Reserve:
Oct 2008: -ve 381 Billion Dollars
August 2011: 1.57 Trillion Dollars.
As of Dec 14,2011: 1.52 Trillion Dollars.
How much dollars are in circulaton in the market:
Oct 2008: 1.46Trillion
Aug 2011: 1.00Trillion
Dec 14,2011: 1.1Trillion
So actually the dollars in circulation in the market right now is 350Billion Dollars less than what it was on Oct 2008 and hence we are seeing this rise in Dollar strength.
from Jan1975 the banks have always held "minimum required" reserves with the fed
The question in our mind is why this sudden rise in "Excess" dollar deposits with the federal reserve?
Well the Federal Reserve bank changed the policy on Oct 6, 2008. That starting Oct 6,2008 the Federal reserve will start paying interest on reserves and excess reserves to the big banks.. (link) [Read carefully the original implementation date was somewhere in Oct 2011]
Surprisingly I just found that the stock market decline also started from Oct 2008.. (Link) coincidence??
Conclusion: The current strength of the dollar is cooked.. Cooked by the world famous chef "Fed". The stock market crash 2008 and subsequent market volatility is also driven by the withdrawl of "Credit" from the system. keep a close watch on FED action.. live within your means.. banks are going to feel the brunt of credit squeeze ..
PN: these are my personal views about publicly available information. I could be wrong in understanding the information.. Please do your own deep dive before making any investment decision.
Well the year is coming to an end and here is a chance to make 12% return in 1 month in NIFTY Options.
Strategy:
Sell NIFTY 4700 PUT One lot.
Current Market Price: 68
Investment: 25,000
Buyback on Dec 29,2011.or before NIFTY 4700 PUT at Rs 2 or less.
================
NIFTY has not fallen below 4700 till Nov 3,2009 (chart below)
Current price of NIFTY 4700 PUT is 68.15
Sell One lot "NIFTY 29Dec 20114700 PUT" at 68.15 and buy back at Rs 1-2 on Dec 29,2011
Price difference: 68.15-2 = 66.15
1 lot: 50 units so Profit: 66.15x50 = 3307.50
you need to have 25,000 in your option trading account to sell one lot.
Considering 307.50 as transaction cost Net Profit: 3000/=
Investment is: 25,000
Profit Percentage: 3000/25,000 = 12%
investment time period: 18 days..
---------------------------------- Caution: If nifty Falls below 4700 additional margin will be required. If NIFTY closes below 4640 or below on Dec 29,2011 you will be making losses. hypothetically if NIFTY closes at 4600 your estimated loss will be around 40-50 per share ie 50*50 = 2500
If nifty closses at any price above 4700 you will stand to gain Rs3000/= on an investment of 25,000
Other trading strategies are: - Sell NIFTY 4600PUT Dec292011 at 44.90 and make a profit of approximately 2000 on an investment of 25,000 ie 8 % in 1 month - Sell NIFTY 4500PUT Dec 29,2011 at 29 and make a profit of approximately 1150 on an investment of 25,000 ie 4.6% in one month.
Please note this is free advice.. I donot stand to profit from your trading in this options.. This is an advice for selling only ONE LOT (50) trading in more than one lot is not suggested. Please do your own deep dive before investing.
A Smart Mini-Grid (SMG) is an intelligent electricity distribution network, operating at or below 11 KV, where the energy demand is effectively and intelligently managed by diverse range of Distributed Energy Resources (DERs) such as solar PV, micro-hydro power plants, wind turbines, biomass, small conventional generators such as diesel gensets etc. in combination with each other through smart control techniques.
This integrated energy system comprises:
Variable loads which are connected to the distribution grid;
Diverse range of small, local generators based on distributed energy resources, for example, solar, wind energy, storage system; and
Control and power conditioning systems.
Benefits of Smart Mini-Grid
Foster demand side management & response;
Reduce power outages, increasing reliability, efficiency, and safety;
Reduce carbon footprint and minimize fossil fuel consumption
Provide customers autonomy to manage their electricity needs.
Energy is the key to economic development. In India alone, the demand is expected to grow at an annual rate of 6% in the next decade. Estimates by the Ministry of Power suggest that by 2011-12, India will need over 1,00,000MW of additional capacity installation to meet its power requirements. Few power stations of desired capacity can be installed in order to meet the demand. But power stations alone cannot meet the small dispersed loads in remote areas. Globally, the trend is towards managing existing energy resources and demand in an optimal and efficient manner. Over the years, smart grids have evolved for this purpose. Advanced sensing, communication, and control technologies are used in these smart grids not only for generation and transmission of power, but also distribution and utilization of electricity in an intelligent and effective manner.
This distributed generation-based power system/mini-grids can be installed and subsequently integrated to the conventional utility grid or used to provide electricity for localised loads only. It not only fosters effective inter-connection and utilization of multiple renewable energy resources, but also helps in advancing access to energy to the last mile in the most optimum manner by improving the efficiency of the overall system. Besides, it offers immense potential for improving energy access in both urban and rural areas.
TERI has designed, developed, and demonstrated the country's first-of-its-kind Smart Mini-Grid system. The objective is to optimally use smarter control of distributed energy sources combined with intelligent management of loads to improve the efficiency and reliability of the overall mini-grid system. The Smart Mini-Grid, built with the support of the Ministry of New and Renewable Energy (MNRE), was recently inaugurated at the TERI Retreat in Gual Pahari, Gurgaon.
A Smart Mini-Grid system is an application of digital technology which optimizes electrical power generation and delivery (see box). The system is based on the integration of multiple distributed energy resources (DERs) into the same grid. This system is also based on intelligent load and energy resource management. It is designed with local controllers for each of the distributed generation technologies as well as a central controller called intelligent dispatch controller (IDC) which communicates with the each local controller. Whereas the local controllers ensure maximum utilization of energy resources with permissible output power, the IDC performs complex system control functions and takes critical decisions such as automating the demand response, dynamically adding or removing DERs in a seamless manner (based on the existing demand) without affecting the grid stability.
A Smart Mini-Grid has greater resilience to loading as compared to the conventional grid system. It is marked by power flow through multiple routes, a feature common to the conventional grid system. However, unlike the conventional grid system, it is designed to avoid cascade tripping of network elements.
The system also has the capability to respond automatically to network problems and minimize network disruptions. It can anticipate and respond to system network problems and avoid or mitigate power outages, power quality problems, and service disruptions using real-time information from embedded sensors and automated controls. The grid is also equipped with a self healing system that enables it to rapidly detect, analyze, respond to power disturbances and restore power supply.
The TERI Smart Mini-Grid facility combines the following distributed generation resources--3.3 kWp wind generator, 1 kWp thin-film solar PV, 12.5 kW solar PV, 100 kWe biomass gasifier, 600 Ah, 48 V storage battery, and a diesel generator. The diesel generator has been added to the system to meet the intermittency of the renewable resources and hence ensure reliable power supply.
Such Smart Mini-Grid systems have great potential, not only in commercial and industrial complexes, but also in hospitals, shopping malls, apartments, residential complexes, educational institutions, remote un-electrified as well as electrified locations to ensure maximum flexibility, reliability, and safety with enhanced efficiency of the overall system.
Conclusion: SMART Grid system is nothing but a mini version of a conventional electricity distribution system the energy produced from different sources are consolidated and the most preferred source is used to provide the electricity. This technology will effectively make the conventional grid system less relevant as households can effectively sustain themselves outside the grid network with their own source of power.. Something to watch out for.
The march is on.. foreign multinationals are on the lookout for castor production sources and its derivatives. As demand for renewable sources of chemicals increases.. India is the largest producer of castor (70-75% of worldwide production) and China is 2nd largest producer of castor oil and its derivatives.
Jayant Agro is the largest castor seed processing company in India and producer of largest range of castor derivatives in the world (Blog link)
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Arkema continues to expand in specialty polyamides with the acquisition of Chinese companies Hipro Polymers and Casda Biomaterials
Arkema announces a project to acquire Chinese companies Hipro Polymers, a fast-expanding producer of biosourced polyamide 10.10, and Casda Biomaterials, world leader in sebacic acid, derived from castor oil and used in particular to manufacture this polyamide 10.10.
Both acquisitions are consistent with Arkema’s strategy to develop performance products, as well as the program presented by the Group in November 2010 to acquire around 1 billion euros of sales.
Both companies report aggregate sales estimated at $230 M for 2011, and employ 750 people on two sites in China.
The acquisition price is based on an enterprise value of $365 M for 100% of the capital of both companies, which are predominantly owned by a joint venture between privately owned Chinese specialty chemical company Feixiang Chemicals and Bain Capital, a global alternative asset manager with over US$60 billion under management.
We are happy to see the two companies to join the family of Arkema, global leader of renewable source based high performance polyamide, and believe that the business and product development of the two companies will be brought to a new high level », added Ji Li, President of Feixiang Chemicals.
By adding Hipro Polymers’ PA10.10 to its technical polymer portfolio, Arkema, the world’s only producer of polyamide 11 also derived from castor oil, would strengthen its world leading position in specialty biosourced polyamides (15 to 20% expected annual growth rate), becoming the only chemical manufacturer to offer a full range of long chain polyamides 10, 11 and 12. Arkema’s acknowledged reputation and application know-how in the end-markets of these various products should help speed up the development of Hipro Polymers, in particular in transportation (automotive, trucks), renewable energies, and electronics.
In anticipation of the rapid development expected over the next few years, Hipro Polymers’ modern and competitive industrial site, based in Zhangjiagang, 110 km from Shanghai, recently benefited from new investments to triple its production capacity.
With the acquisition of Casda Biomaterials, the world’s leading producer of sebacic acid, Arkema would benefit from sebacic acid integrated feedstock for the production of PA10.10, and, through this strategic raw material, would be able to supply diversified world markets such as lubricants, plasticizers and corrosion-inhibiting additives, as well as the fast-growing biosourced and biodegradable copolymer market.
The Casda Biomaterials facility is a competitive industrial base located in Hengshui, 250 km from Peking.
This project is subject to approval by the Chinese authorities, and the operation should be finalized in early 2012.
A global chemical company and France’s leading chemicals producer, Arkema is building the future of the chemical industry every day. Deploying a responsible, innovation-based approach, we produce state-of-the-art specialty chemicals that provide customers with practical solutions to such challenges as climate change, access to drinking water, the future of energy, fossil fuel preservation and the need for lighter materials. With operations in more than 40 countries, 15,700 employees and 9 research centers, Arkema generates annual revenue of €5.9 billion, and holds leadership positions in all its markets with a portfolio of internationally recognized brands. The world is our inspiration.
Digging deeper into Peak oil and future energy resources.. Shale gas report by United States Geological Survey (USGS) in Marcellus Assesment Unit (AU) is interesting information.
- First this is a report that was published by USGS in August 2011 .
- Reserves are always an estimation.. and it is a wide range (reporting only for Interior Marcelleus AU)
- Conservative Estimate: - 44,607 Billion Cubic Feet of Gas (BCFG)
- Realistic Estimate:- 81,374 BCFG
- Wild Guess Estimate:- 139,106 BCFG
The report also states that conservative estimate of Natural Gas liquids is: 1,497 Million Barrels of Natural Gas Liquids (MMBNGL)
.
Now on Nov 14,2011 Task leader "Marcellus Shale Gas Resource Assessment" James L Coleman discussed about their report with US Senate committee. (link)
It seems the old estimate of Marcellus Shale reserve was 2 TCFNG and 0.01 BBNGL and latest numbers are 84 TCFNG and 3.4BBNGL
The only large sources of oil reserves are in Deep water and it seems its a difficult task setting up a base and getting the oil out. Its much more economical to extract shale gas "on land" than these "Deep water" oil reservoirs.
Reliance has significant stake in Marcellus Shale. So just don't count out Reliance Industries yet.. and maybe all this weakness in Reliance Stock is for a very very strong upmove in Reliance in the future..
Conclusion: "Contrarian Investing" is a good idea provided we have done some leg work.. Pls note I have no personal interest (investments) in Reliance Industries (all the more reason for Reliance Industries to rise faster ;-p) Donot Sell your reliance stock just yet or at 900 hold for long term.. People like BP buying into Reliance is not a flash in the pan its with much deeper knowledge than we can grasp.
The recent Kingfisher airline cancellation of flights and debt problem is in news. Govt it seems is looking to provide a revival package with debt recast etc..
1. Aviation Turbine Fuel (ATF) is cheaper than Petrol by Rs 11-14 per liter in Mumbai. (depending on the fuel supplier) Domestic flight Mumbai Prices (ATF): Rs 61.98 per liter (Indian Oil)
2. For international flights the (ATF) is still cheaper.. by Rs 25 per liter.
International Flight Mumbai Prices (ATF): Rs 48.7 per liter (Indian Oil)
3. Domestic Mumbai Petrol Prices: Rs73.81 per liter (Indian Oil)
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So its amazing that there are 10 airlines in India and they can influence the govt and get ATF fuel at a price cheaper by Rs 11-14 per liter of ATF fuel price.. while the whole country of 1.x Billion people pay more and cannot influence the Indian Govt enough to get a price parity to ATF fuel for Petrol??
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As per DGCA 396.31 lakh people traveled by Air from Jan to August 2011 ie. in 8 months.
- 49.53 lakh people per month .. which translates to
- 1.65 lakh people per day(30 days)...
there is one more change.. Source to Destination = 1, Destination to Source (back) = 2 since every time an individual travels its counted as a different passenger when actually its the same passenger travelling back..so actual number of unique people travelling is 1/2 ie
- Approximately 82,565 unique passengers per day.
So there are approximately 82,565 individual air passengers who benefit from the ATF fuel prices while there are a millions of people in India who use Petrol and loose out due to higher fuel prices every day!!.
Conclusion: I am not advocating an increase in ATF or decrease in Petrol prices.. The question is about availability of all relevant information before making a decision about bailing out pvt companies. Definitely Kingfisher airlines does not need to be bailed out. in fact kingfisher airline market share is 18.8% which means we are talking about 15,522 individual passengers being impacted on a daily basis. The airline industry has been privatized and many other pvt airlines have shut shop we need to allow for kingfisher to also learn to swim or sink. The industry can accommodate these fluctuations.
India should spend more time and energy in providing better public transportation with connectivity. Railway network needs to be strengthened to carry more percentage of traffic (goods and individuals)
Jayant Agro Organics reported its Quarterly earnings for quarter ending Sept 30, 2011 on Nov 9,2011.
Let us see how the company is progressing and try and get a better understanding of how the company is doing.
First a lot of earnings for Jayant agro are in the subsidiary company specially Ihsedu Agro Chem. Ihsedu Agro Chem is a castor seed processing company located in the largest castor growing district in the state of Gujarat.
Ihsedu Agro Chem was a Gujarat Govt company in castor seed crushing. The promoters of Jayant Agro organics bought the company from Gujarat Govt.. increased capacity and added additional processing capacity.
Castor Seed crushing capacity in the heart of castor growing district is a big advantage for Jayant Agro specially in castor oil and related business where availability of raw material plays an important part.
So in case of Jayant Agro we will be looking at the "consolidated results" of Jayant as there is a pretty big difference between Jayant Agro standalone result and Jayant Agro consolidated results.
Another unique issue is that Jayant reports 3 months, 6 months 9 months and 12 months consolidated results.
So Sept 30,2011 result includes the result of June 30,2011. Well lets see what do we have here..
Looking at the results for Year ending March 2010, March 2011 and 3 months ended June 30,2011 and 6 months ended Sept 30,2011 .. it looks like its business as usual with Jayant Agro.
- PBDIT Margins are consistent around 5%
- Depreciation is decreasing in a gradual fashion.
- Interest payments are steady and hovering just below 2% level.
- Taxes are also around 1%
- Net Profit is also pretty steady at 2%
So when we look at the margins the business is making steady income and everything is on autopilot.
On the sales front the company sales are increasing by leaps ..
Year end sales March 2011 is: 1171.99Cr
6 months sales Sept 30,2011 is: 969.44Cr
6 months sales Sept 30,2010 is: 587.09Cr
So on a year on year basis sales have jumped approximately 65% on a year-on-year basis. Infact in 6 months ending Sept 30,2011.. Jayant has already clocked sales equal to 82.7% of sales for year ending March 2011.. So looks like demand is growing by leaps and Jayant is well positioned to supply castor oil and its derivatives to the market.
Interest rates: Looking at the interest rates its amazing that Jayant's interest rates are keeping pace with 65% topline growth.. generally capital requirements are steady across quarters but in case of Jayant we see that capital requirements increase every quarter and culminate with largest capital requirements for the year end figures.. I also remember that in the AGM there were questions raised as to why the interest payments are rising and keeping pace with growth in topline. Management said its under control and its part of doing business.. and not something to be worried.
Well after some more digging it looks like interest payments are about 2.02% of raw material requirements..(steady for March 2010, March 2011 and now Sept 30,2011..) Interestingly there is a 2% interest rate discount for exporters by GOI .. Since India has high interest rates to keep inflation under check.. just so that exporters are not at a disadvantage exporters are provided with 2% interest rate discount.. Well putting all the pieces together .. looks like Jayant Agro's interest rates are going to keep pace with topline growth. so don't worry about it!! (wink wink)
Interestingly net profit margins are also 2% .. Now that is a question I certainly don't have an answer for.
Conclusion: Jayant Agro is favourably placed with a flood of demand for bio based products. Castor oil and its derivatives because of their unique properties already had a steady demand.. now with this increased awareness for bio-renewable inputs .. Jayant Agro is front and center of a demand tsunami.. We can expect Jayant to report steady profits and also expect higher dividend payouts.
Ihsedu Speciality chemicals the next generation castor oil derivatives subsidiary has not yet started commercial production. If and when it starts it will improve the margins of Jayant Agro. Also a sebacic acid plant with 8000MT capacity is considering only 1 shift.. but max capacity could be 3 shifts so we could see 24,000 MT as actual production for sebacic acid and that would translated to some really interesting numbers..
(I think I am running way ahead of reality.. considering that the plant has not yet started commercial production :--) )
There is a lot of discussion about fuel price hikes..
Society of Indian Automobile Manufacturers (SIAM) had their 51st annual convention on Sept 7,2011.
"Reinventing Mobility: Vision 2020"
In the end of 19th century electric cars outsold all other types of cars
- Electric cars had less vibrations, no foul smell, roads were limited and electric car range of 18 miles was sufficient.
- Gasoline/Internal Combustion Engine (ICE) cars had manual cranking to startup, vibration, noise and foul smell.
By mid 1920 better road network and limited range of electric cars was a big negative. Gasoline cars with electric starter and a longer range due to high energy density stole the show.. cheap cheap oil made gasoline cars affordable. Thus high energy density, cheap availability of fuel and better road networks...were prime reasons for the death of electric cars.
Cutting the discussion short lets look at the summary of Vision 2020 (according to me):
- Automobile industry needs to reduce oil dependency and pollution to ensure sustainable growth in the future.
- To meet the challenges transition to electrified powertrain will completely change the Value equation.
- China adopted industrial policy to accelerate Electric Vehicle (EV) technology to leapfrog US/EU/Japanese auto industry - goal was to become dominant auto exporter of EV technology.
- China strategy is failing due to high cost, low quality and consumer resistance for EV.
(this shows that EV and Plugin Hybrid Electric Vehicles (PHEV) adoption will be slow in China, US, EU and elsewhere.) << == Very Important observation.
- Necessary to restrain demand, but by providing good mobility and accessibility.. enhance public transportation specially for middle class .. charge full cost of vehicle use ..considering pollution, energy security, Green house gases.. through fuel, vehicle and usage taxes.
- Consider "Climate Policy" in Context - Strategies to reduce Green house Gases are the same strategies to reduce .. oil imports.. air pollution .. road infrastructure cost.. improve urban livability..
Actually there are 3 presentations which are trying to address the future.
1 - The most presentable one is by Booz & Company (link)
2 - Institute of Automotive Research at the University of Applied Sciences Nuertingen (Germany) (link)
3 - The Best presentation ..as far as addressing the real problem is UC Davis (University of California Davis) (link)
Looking at the presentation of the 3 Keynote speakers .. we can see the real problem..
Speaker1 and 2 are looking at the peak oil problem from an automotive standpoint and giving an automotive solution .. Electric Vehicle (EV)
Speaker 3 Prof Daniel Sperling is looking at the problem holistically and saying..
- Reduce the adoption of person use vehicles.
- Encourage public transport
- Encourage city development to reduce requirement of long distance commute for work/play.
Conclusion: The most effective way to deal with "peak oil" crisis is to discuss it openly and make changes at the country, state, city, community and personal level and take a holistic view of the problem. 1/2 the oil used in the world is for transportation!!
Most likely solution adopted by Indian political system will be:
- Stop building/repairing highways motorways for vehicles. (make the journey .. a torture)
- Increase fuel prices (pinch where it hurts the most .. in the pocket)
- Create Metro rail and public/bus transport network. (will take its own sweet time..)
- Pray ..Middle class public will get frustrated by the long commute with bursting bladders and get the message (wink wink..) use public transport!! (Gotcha!!)
Unfortunately freedom to choose and freedom to travel with personal space (provided by a car) .. will delay the mass movement of the working middle class to public transport .. till the very end...
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