Indian Economy: News and Discussion (June 8 2008)

[Raju]

Why is it that Karnataka and Kerala face maximum obstruction to any new power projects despite being on the west coast and that too within sniffing distance of west asia?

And why is it that Gujarat and TN can get away with any projects they want ?

[Dileep]

I don't know about KA, but the problem with KL is that there are too many mallus.

Would post in NUKKAD about why we mallus protest anything.

[Viswanthan]

Vina can provide a better perspective but could it be something to do with the fact that TN/Gujarat are the two states which witnessed rapid urbanisation in the last decade.I think economies of scale operate well in Urban areas.Also governance in TN/Gujarat is largely de-ideologised and quality of governance is good irrespective of party in power

Karnataka is probably the most promising state in South India given its bountiful resources but had the misfortune of two disastrous coalition in power.Also the raithas are mightily well organised compared to other states.I am not sure whether the current dispensation can turn around things any day soon.

I tend to subscribe to Dilip'a analysis though as far as Kerala situation goes.I think the Present CM of Kerala became a celebrated folk hero by his retrogade opposition to any mega project.Infact he catapulted himself to big stage by his indeftigable opposition

[vina]

Why is it that Karnataka and Kerala face maximum obstruction to any new power projects despite being on the west coast and that too within sniffing distance of west asia?

And why is it that Gujarat and TN can get away with any projects they want ?

Dileep is not joking when he talks about too many Mallus. Yes he is right. The coastal regions of Kerala and Karanataka are a treasure and a place of great ecological biodiversity. There really is no space there to build these kind of smokestack industries and power plants. Too much dislocation of people and all that. Heck, you cant even build a road in Kerala from Kanyakumari to Kasargod and beyond without running into those issues.

The problem is lack of imagination. Why should Karnataka and Kerala with no resources of coal etc have to aspire to build powerplants within their own borders. TN and Gujarat have it easy. Those places are much less sparesly populated, and largely dry areas .. Places like Tuticorin, Ramnad etc are the best places to have those kind of smoke stack industries. TN power plants import coal via bulk carriers. TN also has the Neyveli Lignite Corp and gets it's share from those places. Why cant Karnataka, Kerala etc set up powerplants at pitheads in places like Orrissa, Jharkand etc to use domestic coal and also set up ultramega powerplants in Tuticorin and Ramnad kind of areas in the dry parts of TN and build HVDC lines to evacuate power ?. .Yeah, you will not be able to dole out a couple of hundred of "engineer" and technician jobs in those powerplants to your vote base and other lal jhanda wallahs, but if you can think out of the box and work collaboratively and set up UMP plants in a 3 way partnership with the govts of the states that have coal (Jharkhand, Orissa, etc) and also TN (for imported coal and gas), along with a private partner (so that you share risk, have to put up less capital and bring discipline into the whole thing) , it is eminently doable.

But no, our political system prevents that kind of thinking. No way in hell like a US style system where Iron Ore flows from Minnesotta , Coal from Appalachians to giant steel plants on Lake Michigan in Gary Indiana and output sold all over the contry without any impediment is possible.. The Europeans were flabbergasted by such an arrangement. It was simply not possible in old Europe. India unfortunately , has the thinking of each state like a country with the " 100% self sufficiency" fetish and "beggar thy neighbor" thrown in , that leads to such things. Think on how it happens in the US. There is a port authority of NY &NJ and NYC actually shares Newark with NJ!. In Cincinnati a major hub for Delta, the airport is in Kentucky while the City is Ohio!. No . Karnakaka would not allowed the BIAL to have been set up in Hosur (I think ideal location), which would have made it equally accessible to Mysore (as Devanhalli is), and also fed Salem, Dharmapuri,Krishnagiri, and North Arcot places like Vellore, Ambur as catchment .. and you could have shared the jobs and everything..

This dog in the manger / "100 % self sufficiency" fetish is the bane of much of India. The day we have a law like the US where "Inter State Commerce" becomes a Federal (Central) responsbibility and states are forced to give "national treatment" to goods and service from outside, will the Indian political system be forced to think up more pareto efficient and sensible solutions than beggar thy neighbor.

[Avinash R]

Oxford business graduates eye India Inc

[putnanja]

Karnataka was in talks with chattisgarh to build coal plants at the pitheads. But it didn't take place as planned. The one at Chattisgarh fell through as the conditions demanded by Chattisgarh didn't make any economic sense.

Gujarat, Karnataka jt venture plans for pithead-based power station fall through

KPCL mulls joint venture for coal-based power plant — Chhattisgarh, Gujarat to take part

[vina]

Karnataka was in talks with chattisgarh to build coal plants at the pitheads. But it didn't take place as planned. The one at Chattisgarh fell through as the conditions demanded by Chattisgarh didn't make any economic sense.

Gujarat, Karnataka jt venture plans for pithead-based power station fall through

KPCL mulls joint venture for coal-based power plant — Chhattisgarh, Gujarat to take part

Chattisgarh plays hard ball and then KA quietly puts tail between legs and walks away ?. That is the problem if it is a KPTCL/assorted babu driven initiative. Put it to a private guy and show him money and the plant will be put up. Why not invest jointly with TN if Chattisgarh was playing hard ball? TN gave up depending on Coal India and the railways long ago. That is why they have their own captive shipping fleet called Poompuhar Shipping which ships in high quality coal from outside India (Indonesia I think) for its plants in Tuticorin and Ennore. They didn't wait for the "Central Govt" to create "policy" .

Now you know why TN has power and KA doesn't.

[svinayak]

Why is it that Karnataka and Kerala face maximum obstruction to any new power projects despite being on the west coast and that too within sniffing distance of west asia?

And why is it that Gujarat and TN can get away with any projects they want ?

I have talked to people on the ground in the coastal area and also about the MRPL in DK. Some of my family work in those operations. It is a long story outside of the forum like this. What vina has posted is right.

[sunilUpa]

^^^Dunno Acharya, I was in Kundapur just 2 months back. Majority of people I spoke to were against the oil project! But they were not against development as such.

Frankly after spending almost a month in Pondicherry, Chennai, Ahmedabad and Mumbai, I tend to agree with them. When the plane was landing at Mangalore Airport, I felt we are landing in heaven (except for that Maharshtra chief minister who was in the same flight for election campaigning )

The country side was pristine, same flora/fauna. It is 'Gods original country' as some one else put it in this forum. While the towns has 'developed' a bit (shocked to see multi-storied apartment buildings in Kundapura, there is no central sewage system there!) my village was great. I for one don't want that disturb it one bit. You want a thermal plant, put it Raichur. One has to choose projects based on the footprint and enviornment.

I don't see why a thermal powerplant can't be set up ..say in Hasan. Import the coal from Australia (via Mangalore port) and ship it to Hasan by train (Mangalore-Bangalore train has at last restarted1

[Suraj]

Cement prices are a significant component of the current bout of inflation, as well as the flareup in late 2006. There's significant cement production capacity augmentation in the pipeline now:
Lafarge to invest $1bn to raise cement capacity to 20M tonnes

In a move that could push Lafarge several steps up among the cement-makers in India, the French company is all set to pump in over $1 billion (Rs 4,300 crore) to take its overall capacity close to 20 million tonnes (MT) in the next five years.

After acquiring L&T Concrete and capturing over 25 per cent of the market share in ready-mix concrete space in the country, the cement major is set to establish a pan-India presence. The company has plans to set up at least three greenfield units with a capacity of 2.5 MT each. According to sources, the company has zeroed in on Rajasthan, Karnataka and Meghalaya for the facilities.

The fresh capacities will place Lafarge in close vicinity of UltraTech Cement and Ambuja Cements, which currently have capacities of 21 MT and 19 MT respectively. However, in comparison to its global competitor Holcim, Lafarge will still have a long way to go.

Holcim (through ACC and Ambuja) currently has a capacity of 41 MT, and the Swiss cement major plans to take it further to 55 MT in the next five years. Lafarge, which so far is known as a regional player with a capacity of mere 5.5 MT, is gearing up to have cement-making units in new regions. The company has already embarked on its projects in Chhattisgarh and Himachal Pradesh, which, once completed, will take its capacity to 12 MT.

M&As, VC flows dry up in first half of 2008

India Inc has attracted $7.54 billion private equity funding in the first half of 2008, an 11% jump compared to what it got in the corresponding period of the previous year.

The data in the monthly report of global auditing major Grant Thornton also reveal that there has been a 56 per cent decline in the value of total mergers and acquisitions (M&As) to $18.54 billion in the same period.

"Companies are resorting to private equity funding as raising money through the equity market has become difficult and debt has become expensive," said Dhanraj Bhagat, partner, Grant Thornton.

Dhanraj attributed the decline in the value of M&A deals to the two high-value deals struck by Tata Steel and A V Birla Group company Hindalco in the previous year.

In a separate release of data, the Chennai-based Venture Intelligence, which conducted a study in partnership with the US-India Venture Capital Association, said that the value of venture capital (VC) deals in the country in the first six months of 2008 has declined by over 6 per cent to $340 million across 51 deals.

[svinayak]

^^^Dunno Acharya, I was in Kundapur just 2 months back. Majority of people I spoke to were against the oil project! But they were not against development as such.

Frankly after spending almost a month in Pondicherry, Chennai, Ahmedabad and Mumbai, I tend to agree with them. When the plane was landing at Mangalore Airport, I felt we are landing in heaven (except for that Maharshtra chief minister who was in the same flight for election campaigning )

The country side was pristine, same flora/fauna. It is 'Gods original country' as some one else put it in this forum. While the towns has 'developed' a bit (shocked to see multi-storied apartment buildings in Kundapura, there is no central sewage system there!) my village was great. I for one don't want that disturb it one bit. You want a thermal plant, put it Raichur. One has to choose projects based on the footprint and enviornment.

I don't see why a thermal powerplant can't be set up ..say in Hasan. Import the coal from Australia (via Mangalore port) and ship it to Hasan by train (Mangalore-Bangalore train has at last restarted1

I agree with you. I grew up in that area and the forest I used to go to as a child are no more.
It is the fuel transport which is making the location feasible. But with pipelines they can change the location to Hassan/chikmagalur etc and still make it feasible.

[Suraj]

The provident fund is being broadened to encompass smaller companies. Singha wrote about this at length in the past, criticizing the prehistoric operations of the EPF:
Expand, but also improve

The Provident Fund Board has recommended a dramatic increase in the number of workers covered under the Provident Fund scheme. All establishments with 10 workers (20 earlier) and all cooperatives with 20 employees (50 earlier) are proposed to be covered, thereby doubling the number of workers covered to 80 million.

However, this must be accompanied by some urgently required reforms which the PF Board has not recommended, but which the government should introduce. For instance, the PF organisation must emerge from its outmoded ways and take on the characteristics of a modern, service-oriented organisation. It simply will not do if its annual statements are issued one or two years late (the last set issued is for March 2006!), when there is no pass-book issued to contributors, when there is no electronic database that can be accessed with a password or a phone service that contributors can turn to for simple questions, and when withdrawal of the money deposited becomes a painful and drawn-out exercise. In short, the PF experience has to stop being antediluvian.

Poor data collection for inflation data reporting:
Only one-third of WPI items revised

The industries department has started revising a large number of items in the wholesale price index (WPI), including coke, lignite and pigments, which had not been revised for a long time — over four years in some instances.

In effect, only one-third of the items have seen an index revision. During this period, headline inflation has moved from 8.27 per cent to 11.63 per cent. While a significant portion of the rise is on account of the petroleum fuel price hike on June 4, the delayed revisions have also contributed to the increase along with the high base effect.

This underscores opinion that had the data for March and April been revised timely, India would have been spared the shock of massive upward revisions to inflation data, a development that adds to inflationary expectations.

"Headline inflation would have touched 8 per cent in March and 9 per cent in April, had there been timely revisions. The WPI was 50-200 basis point (bps) downward biased between February and April due to lack of timely revision of data," said Abheek Barua, chief economist, HDFC Bank.

Article about how the current commodities boom benefits Russia and Brazil while impacting China and India:
New BRIC winners

This group, which accounted for barely a seventh of the GDP of the G6 countries in 2000 would, Goldman Sachs forecast, surpass the G6 by 2040 in straight dollars (not with currency corrections for purchasing power parity).

A couple of years later, with the Bric economies doing even better than had been predicted, Goldman Sachs advanced its forecasts, and India was set to become bigger than the US even before 2050. How seriously this was taken can be seen from the fact that the country's largest retailer, the Future Group, hired the Goldman Sachs author, Roopa Purushothaman, as its lead economist — if India was going to be a big part of the future, then the woman who predicted this was going to be part of it.

With the resulting commodity boom still on, and oil prices continuing to burn up the charts, the two fastest-growing Bric economies (India and China) have been exposed for their import dependency when it comes to commodity needs, while the other two have profited from the boom. Russia accounts for over 12 per cent of global oil production, and Brazil is a strong exporter of things like iron ore and ethanol, the oil substitute. It's not surprising, then, that while India's stock market has fallen more than 35 per cent in the last six months, and China's by even more, Russia's has risen marginally and Brazil's by around 15 per cent. For the first time in six years, Brazil's stock market capitalisation is greater than that of India. Indeed, with Brazil's GDP growing 5.8 per cent in the latest quarter, its economy is picking up speed.

The change within the Bric quartet is already visible, even as all four countries continue to do better than expected. By 2015, for instance, the original Bric report's forecast was that the Bric GDP would be 56 per cent of the US; the latest forecasts by the IMF suggest this could rise to over 80 per cent by 2013. Within this, while Brazil's 2015 GDP relative to the US was forecast to be around 6.5 per cent in the original Goldman Sachs report, the IMF thinks this will be double that number by 2013; Russia's GDP was forecast to be 8.3 per cent of the US by 2015 in the Goldman Sachs report while the IMF thinks this will more than double, to 19 per cent. The IMF forecast is that, by 2013, both India's and China's GDP too will be bigger than forecast by Goldman Sachs, but the overshooting is more modest. This could be a case of short-termism, but if nothing else India and China are now more conscious of the commodity-dependence of their ambitions.

[vina]

..
I don't see why a thermal powerplant can't be set up ..say in Hasan. Import the coal from Australia (via Mangalore port) and ship it to Hasan by train (Mangalore-Bangalore train has at last restarted1

I agree with you. I grew up in that area and the forest I used to go to as a child are no more.
It is the fuel transport which is making the location feasible. But with pipelines they can change the location to Hassan/chikmagalur etc and still make it feasible.

Ah.. Now I hope you get it and realize why the 123 is so vitally important. We cannot have thousands of trains and ships running around ferrying coal from place A to B and also use coal to generate the massive power requirements in future. Mark my words, as India gets richer and everyone else in places like Gulbarga emulate Dilli Billis and buy air conditioners en-masse the demand will shoot up exponentially. The rail and transport infrastructure will break and secondly the pollution , carbon footprint and environmental dislocation will be immense.

We need to standardize on a 1000 MW Nuke plant as a module and put up 4 to 5 modules in units in the interior in places like Gulbarga, Raichur, the arid parts of andhra, etc and use them as the base load stations. To start with something like 5 of those 4000 MW units in central India, clustered around Vidharbha, Andhra, Karnataka etc ..ie the arid parts in the middle of the country, where dislocation will be minimal, land more easily available and where they can be well defended ,and nation wide HVDC evacuation systems built to take these to the regional grids is needed in the next 10 years. That is the ONLY way we will see an end to these brown outs and black outs.

Nukes are great as base load stations. We can use gas turbines /hydel etc in the states as peaking stations as and when required to top the base capacity from the nukes.

So basically wake and realize which way the bread is buttered and stop the quixotic scare mongering in the name of "conspiracy /national security" crusade against the 123 deal. The sooner we get those 20kMW nukes on the ground the better off we will be.

[svinayak]

Ah.. Now I hope you get it and realize why the 123 is so vitally important.

So basically wake and realize which way the bread is buttered and stop the quixotic scare mongering in the name of "conspiracy /national security" crusade against the 123 deal. The sooner we get those 20kMW nukes on the ground the better off we will be.

Dont connect me with 123.
123 for me is more national security than power. power plants and nuke plant will come eventually. The world cannot ignore 1.2B for their needs.

[vina]

Dont connect me with 123.
123 for me is more national security than power. power plants and nuke plant will come eventually. The world cannot ignore 1.2B for their needs.

What is "National Security" without power ?. It will be just "Notional" Security, just like Nukes in the hands of North Korea and Paki land are like. South Korea is a first world economy with glittering lights and well fed people. North Korea is a terrorist kleptocracy with Nukes and Dear Leader hiding away in his palace and eventually will probably be swept away by a velvet revolution or end up found hiding in a hole like Saddam Hussein. Same with Pakiland. That is a "Nuclear" State with Mush rat lording over others and basically all set to be flushed down the toilet (or whatever is remaining of Paki land)

[svinayak]

Dont connect me with 123.
123 for me is more national security than power. power plants and nuke plant will come eventually. The world cannot ignore 1.2B for their needs.

What is "National Security" without power ?. It will be just "Notional" Security, just like Nukes in the hands of North Korea and Paki land are like. South Korea is a first world economy with glittering lights and well fed people. North Korea is a terrorist kleptocracy with Nukes and Dear Leader hiding away in his palace and eventually will probably be swept away by a velvet revolution or end up found hiding in a hole like Saddam Hussein. Same with Pakiland. That is a "Nuclear" State with Mush rat lording over others and basically all set to be flushed down the toilet (or whatever is remaining of Paki land)

It is OK. We can disagree. It is OK to have different views
But remove the crap about conspiracy theory label one me. I had enough of it on the main forum already but not here.

[Theo_Fidel]

We need to standardize on a 1000 MW Nuke plant as a module and put up 4 to 5 modules in units in the interior in places like Gulbarga, Raichur, the arid parts of andhra, etc and use them as the base load stations. To start with something like 5 of those 4000 MW units in central India, clustered around Vidharbha, Andhra, Karnataka etc ..ie the arid parts in the middle of the country, where dislocation will be minimal, land more easily available and where they can be well defended ,and nation wide HVDC evacuation systems built to take these to the regional grids is needed in the next 10 years. That is the ONLY way we will see an end to these brown outs and black outs.

Vina,

Nuke plants actually use tremendous amounts of water as coolant.
Arid places are not necessarily the best choice. Even RAPS uses Indra Canal water.

Koodankulam uses Sea Water.

20,000 MW is one years increase in demand.
Nuclear plants are extremely long gestation projects. 15 years or so. Even in China.

There is also the small matter of where the fuel will come from
and how to dispose of the waste.

There is however roughly 200,000 MW of untapped energy in the Himalayan Rivers.
That would be a much better bet and the GOI for once has sensibly
diverted large money flows to harness this.

Once the Kaveri issue is settled roughly 2500 mw of run of the river power can be
developed between Mysore and Mettur on both sides.

TN is surplus primarily due to Wind power. Esp. right now.
Something Kerala & KT continue to sit on their A##es about.

Also the power consumption of Madras exceeds that of the entire state of Kerala.

[Theo_Fidel]

^^^Dunno Acharya, I was in Kundapur just 2 months back. Majority of people I spoke to were against the oil project! But they were not against development as such.

Frankly after spending almost a month in Pondicherry, Chennai, Ahmedabad and Mumbai, I tend to agree with them. When the plane was landing at Mangalore Airport, I felt we are landing in heaven (except for that Maharshtra chief minister who was in the same flight for election campaigning )

The country side was pristine, same flora/fauna. It is 'Gods original country' as some one else put it in this forum. While the towns has 'developed' a bit (shocked to see multi-storied apartment buildings in Kundapura, there is no central sewage system there!) my village was great. I for one don't want that disturb it one bit. You want a thermal plant, put it Raichur. One has to choose projects based on the footprint and enviornment.

I don't see why a thermal powerplant can't be set up ..say in Hasan. Import the coal from Australia (via Mangalore port) and ship it to Hasan by train (Mangalore-Bangalore train has at last restarted1

Power that is shipped over such large distances will always be expensive power, putting these areas at a permanent disadvantage.
And have you seen the path way for a transmission line?

Trust me I know all about the lush green jungle, It is also filled with Malaria, Snakes and Death.

Great to visit not to live in. At least my town is losing all its young people due to the failure to develop.

[vina]

Vina,

Nuke plants actually use tremendous amounts of water as coolant.
Arid places are not necessarily the best choice. Even RAPS uses Indra Canal water.

Koodankulam uses Sea Water.

20,000 MW is one years increase in demand.

The coolant water is a one time and then it is just top up kind of thing. In fact, same problem with steel plants. Jamshedji Tata couldnt put up the steel plant in Durg and use the best quality ore because steel making required tremendous amount of cooling water and no water was available there. That was a once through kind of cooling. After cooling towers became available as a viable technology , the Bhilai Steel Plant came up to use the Durg ore , because the huge amount of water was not needed anymore. Nukes can be put up in arid areas . The technology is there and it is wholly viable. Of course if it is a coastal unit or on the banks of a perennial river or a huge lake , you dont need to build cooling towers. But the cooling towers are a very small part of the overall cost of the project. Evn thermal power plants in the interiors away from a water source will use cooling towers.

Nuclear plants are extremely long gestation projects. 15 years or so. Even in China.

There is also the small matter of where the fuel will come from
and how to dispose of the waste.

It is long gestation if it is wholly a Nuclear Power Corp thing, subject to the vagaries of budget and GOI Bureaucracy. If 123 is signed and we import plants, then the nuke stations can come up in private/joint/foreign / govt sector. The fuel cycle part will of course be in the govt's hands and they will handle , transport and recycle the fuel. Just like we opened UMPP to competitive bidding, we could open Nukes too to competitive bidding on a BOO basis. If such a thing is done , we will see the nukes of 20K MW to start with , within 10 years.

There is however roughly 200,000 MW of untapped energy in the Himalayan Rivers.
That would be a much better bet and the GOI for once has sensibly
diverted large money flows to harness this.

Ah.. but that has been stuck in the India /Nepal politics for 50 years. Yes, have heard statistics like harnessing Kosi alone will take care of the entire power needs of Bihar and UP for the next 20 years or so. So far, Nepali politicos couldn't move on that, without cries of "Sell Out" .With the Maoists now in power and if they need to deliver on their promise to the people, developing hydel energy jointly with India is a sure fire way of generating revenue and wealth for Nepal. If they come to their senses and move, it will happen. Not otherwise. But I am not hopeful on that.

Arunachal Pradesh has some 80,000 MW untapped hydel. We should tap that of course.

Once the Kaveri issue is settled roughly 2500 mw of run of the river power can be
developed between Mysore and Mettur on both sides.

Nah.. Dont think so. Kaveri is fully tapped. There is really no flow year around and much of it is dammed in multiple places. Not much to do there. Anyway, hydel power is the bane of the Kaveri politics... Since Karnataka is power deficient, they sometimes don't release water in the Kaveri, even when karanataka has sufficient water for agricultural and drinking water use, because they want to generate power out of it.

TN is surplus primarily due to Wind power. Esp. right now.
Something Kerala & KT continue to sit on their A##es about.

Really ? What is the installed and actual generated Wind Power in TN ?.I know it has a lot of wind power, but didnt think that they had it in such quantity.

Also the power consumption of Madras exceeds that of the entire state of Kerala.

Chew on that Messrs Karat, Achutanandhan and other Kerala Commies and Kangress wallahs..

[vina]

Power that is shipped over such large distances will always be expensive power, putting these areas at a permanent disadvantage.

It will be cheaper than expanding railway infrastructure / gas pipelines to first transport the fuel to the interior and then generate power and distribute it. Pit Head UMPPs will always be more efficient (economies of scale, allowing use of more efficient technology like super critical boilers etc) than sub-scale distributed thermal plants . With HVDC, the long distance loss in transmission will be very little. I think if we do the math properly and factor in new infrastructure cost to expand rail and pipelines and then the lower inefficiencies of the smaller regional plants, large centralized plants at pit heads and high voltage long distance power distro will win.

[Singha]

well the thing is trickle funding smaller plants and infra is easier on budget
and delivers "some" result quicker than a giant capex intensive project in one location. spreads around the jobs and opportunities to make money too among multiple layers and players. land required for such mega projects inevitably brings
protests.

thats why its so popular in india. monolithic 3-gorges type projects are tough to get going...witness the narmada thing.

[Singha]

Sensex down to 12500. I am seeing 9500 by end CY08 or 1Q09 based on
tea leaves...i.e another sickening 30% drop as leveraged FII/HNIs totally
liquidate holdings to save their undies back home.

we havent even started the credit card bust cycle yet. not the economic
slowdown, further rate hikes, $200 oil....

looks like those of us who missed the bus in 2005 to enter at low levels
will get another chance

suddenly EMs are a dirty word and fitch has already downed Indian
credit rating.

cash, grains, sheep, whisky and goats are best assets for these times.
on second thought add a gun incase someone comes to rob ya.

[Amitayus]

For those of us who shopped at 16,000-17,000 level
SAIL @ 237, NTPC @ 250, LnT @ 3200, DLF @ 630, Mundra @ 995

Not even penny left to buy tissue papers for wiping the tears

[vina]

For those of us who shopped at 16,000-17,000 level
SAIL @ 237, NTPC @ 250, LnT @ 3200, DLF @ 630, Mundra @ 995

Not even penny left to buy tissue papers for wiping the tears

Ah.. If only you had read BRF back then ..But despair not. There will be buying opportunities in the future. A tip for now. Stay away from the markets, unless you are an active trader and trade on a short bias and are good with stop losses. I said this when the Sensex was 19,000 and yelling at people to get out of the market. On a risk adjusted basis, you are far far better on a Fixed Deposit. Now with FDs giving 10% + that advice still stands. Get out and stay out!.

My sense is that the inflation will come down over the next 6 months (there is a base effect in play here) , and interest rates will soften in another 6 months going forward. So you will actually gain money in real terms with a 9 month FD.

Or another thing, after the upcoming rate hike, I think you could enter bond funds which would have gotten beaten down in price, in anticiption of falling interest rates in the medium term.

[Amitayus]

Thank you Vina. I basically go for fundamentally strong scripts. So I have abhored trading stocks like Ispat, RNRL, IFCI in spite of all the hoopla. Only one thing is boggling my mind. At what level shall I think of making an average? If the nuke deal fails, no doubt the market will further go down. Assuming UPA survives, then will it be the best time to average before the General Elections? Again assuming a stable Govt. (NDA or UPA or whatever) will come power. But if the Govt. comes to power with Left support, the market may see a further beating.
Plus is it better to have a sector wise perspective than do a script wise average? Book loss in SAIL and pick up JSPL, Jindal Steel etc at lower level?

[G Subramaniam]

I have actually made money in Indian stocks over the last few months

I invest in EPI, an ETF run by wisdomtree.com, traded on NYSE

It uses a method called fundamental indexing, which focuses on low P-E
methods
Fundamental indexing has been back tested on all US and international and emerging markets and wins over a 10 year period with lower downside risk

Dividend Yield = 1.60 %
P-E = 10.60
Price-Book = 2.71
Price-Cash Flow = 8.45

1 year loss
MSCI India Index = -14%
EPI = -7%

3 year annualised gain
EPI = 28.2%
MSCI = 24.5%

5 year annualised gain
EPI = 36.4%
MSCI Index = 33.3%


10 year annualised gain
EPI = 23.2%
MSCI Index = 18.3%


--
Weighting in %
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1. Reliance Industries Ltd (RIL) 14.9648
2. Infosys Technology (INFO) 7.4081
3. Oil & Natural Gas Corp Ltd (ONGC) 7.4074
4. Bharti TeleVentures Ltd (BHARTI) 4.4343
5. Tata Steel (TATA) 2.6096
6. Sterlite Inds (India) Ltd (STLT) 2.5816
7. Hindustan Unilever (HUVR) 2.5026
8. Satyam Computer Services (SCS) 2.3024
9. Icici Bank (ICICIBC) 2.2652
10. Reliance Communication Ltd (RCOM) 1.9842
11. National Thermal Power (NATP) 1.8016
12. Steel Authority (India) (SAIL) 1.8004
13. Hindalco Industries Ltd (HNDL) 1.6876
14. Indian Oil Corp Ltd (IOCL) 1.6826
15. Gail India Ltd (GAIL) 1.6495
16. ITC Ltd (ITC) 1.5966
17. Mahindra & Mahindra Ltd (MM) 1.4602
18. Tata Consultancy Services Ltd (TCS) 1.4520
19. Wipro Corporation Ltd (WPRO) 1.4261
20. Dr. Reddys Labs (DRRD) 1.3502
21. Jindal Steel & Power Ltd (JSP) 1.3200
22. Larsen & Toubro Ltd (LT) 1.3122
23. Bharat Heavy Electricals (BHEL) 1.2093
24. National Aluminum (India) (NACL) 1.1919
25. Tata Motors (TTMT) 1.1672
26. Bharat Petroleum Corp (BPCL) 1.1419
27. JSW Steel Ltd (JSTL) 0.9668
28. CIPLA (CIPLA) 0.9605
29. Reliance Infrastructure Ltd (RELI) 0.9303
30. Hindustan Petroleum (HPCL) 0.9251
31. Tata Power Co (TPWR) 0.9150
32. Sun Pharmaceutical Industries (SUNP) 0.8632
33. Hero Honda Motors (India) (HH) 0.8549
34. HCL Technologies Ltd (HCLT) 0.8101
35. Great Eastern Shipping Co (GESCO) 0.6878
36. Grasim Industries Ltd (GRASIM) 0.6579
37. Maruti Udyog Ltd (MSIL) 0.6524
38. Reliance Capital (RCFT) 0.6475
39. Bank of India (BOI) 0.5854
40. Shipping Corp (India) (SCI) 0.5792
41. Sesa Goa Ltd (SESA) 0.5606
42. Canara Bank Ltd (CBK) 0.5375
43. Hindustan Zinc (HZ) 0.5296
44. Ranbaxy Laboratories Ltd (RBXY) 0.5014
45. Tata Tea Ltd (TT) 0.3948
46. Axis Bank (AXSB) 0.3915
47. Suzlon Energy (SUEL) 0.3894
48. Associated Cement Co (ACC) 0.3814
49. Tata Chemicals Ltd (TTCH) 0.3801
50. Videocon Industries (VCLF) 0.3772
51. Glenmark Pharmaceuticals Ltd (GNP) 0.3559
52. Glaxo (India) Ltd (GLXO) 0.3523
53. Indiabulls Financial Services (IBULL) 0.3150
54. Indian Overseas Bank (IOB) 0.3145
55. Jaiprakash Associates (JPA) 0.2974
56. Indian Hotels Co Ltd (IH) 0.2966
57. Amtek Auto (AMTK) 0.2961
58. India Cement Ltd (ICEM) 0.2919
59. IVRCL Infrastructures & Projects (IVRC) 0.2881
60. Bharat Electronics (BHE) 0.2865
61. Bharat Forge Ltd (BHFC) 0.2758
62. Ultratech Cement (UTCEM) 0.2705
63. Asian Paints (India) Ltd (APNT) 0.2663
64. Nestle India Ltd (NEST) 0.2592
65. United Phosphorus Ltd (UNTP) 0.2584
66. Allahabad Bank (ALBK) 0.2492
67. HCL Infosystmes Ltd (HCLI) 0.2467
68. Lupin Ltd (LPC) 0.2444
69. Ashok Leyland Ltd (AL) 0.2282
70. Syndicate Bank (SNDB) 0.2238
71. Bajaj Hindusthan (BJH) 0.2197
72. Corporation Bank (CRPBK) 0.2052
73. Zee Entertainment Enterprises (Z) 0.2042
74. Apollo Hospitals Enterprise (APHS) 0.1885
75. Industrial Dev Bank of India (IDBI) 0.1848
76. Siemens AG (SIEM) 0.1754
77. Jammu & Kashmir Bank Ltd (J&KBK) 0.1721
78. Patni Computer Systems (PATNI) 0.1711
79. Divi's Laboratories Ltd (DIVI) 0.1702
80. Dabur India Ltd (DABUR) 0.1673
81. Andhra Bank (ANDB) 0.1630
82. Petronet LNG (PLNG) 0.1609
83. Mangalore Refinery & Petr (MRPL) 0.1585
84. EIH Ltd (EIH) 0.1554
85. Power Finance Corp (POWF) 0.1542
86. Piramal Healthcare Limited (PIHC) 0.1510
87. Aditya Birla Nuvo Ltd (ABNL) 0.1499
88. Bajaj Holdings & Investment (BJHI) 0.1474
89. Asea Brown Boveri (India) (ABB) 0.1463
90. Adani Enterprises (ADE) 0.1463
91. Mphasis BFL Ltd (MPHL) 0.1426
92. GTL Ltd (GTS) 0.1412
93. CESC Ltd (CESC) 0.1398
94. Crompton Greaves (India) (CRG) 0.1317
95. I Flex Solutions Ltd (IFLEX) 0.1266
96. Alok Industries (ALOK) 0.1251
97. Hinduja Ventures Ltd (NMTMF) 0.1222
98. Godrej Consumer Products Ltd (GCPL) 0.1176
99. Aurobindo Pharmaceuticals Ltd (ARBP) 0.1175
100. Balrampur Chini Mills Ltd (BRCM) 0.1164
101. Biocon (BIOS) 0.1163
102. Voltas Ltd (VOLT) 0.1150
103. Birla Corp Ltd (BJUT) 0.1106
104. Arvind Ltd (ARVND) 0.1081
105. Century Textiles & Ind Ltd (CENT) 0.1072
106. United Spirits Ltd (UNSP) 0.1066
107. Neyveli Lignite Corp (NLC) 0.1045
108. Cummins India Ltd (KKC) 0.1011
109. Sterling Biotech (SLT) 0.1009
110. Hexaware Technologies Ltd (HEXW) 0.1008
111. Colgate-Palmolive (India) (CLGT) 0.0916
112. Ballarpur Inds Ltd (BILT) 0.0894
113. Punj Lloyd (PUNJ) 0.0893
114. Centurion Bank (CBOP) 0.0793
115. Wockhardt Ltd (WPL) 0.0759
116. Maharashtra Seamless Ltd (MHS) 0.0723
117. Bharat Earth Movers Ltd (BEML) 0.0722
118. Thermax Ltd (TMX) 0.0660
119. Marico Industries Ltd (MRCO) 0.0658
120. Financial Technologies (India) (WWTC) 0.0600
121. Pfizer Ltd (India) (PFIZ) 0.0576
122. Areva T&D India Ltd (ATD) 0.0570
123. Hotel Leela Venture Ltd (LELA) 0.0557
124. Sun TV (SUNTV) 0.0551
125. Moser Baer India Ltd (MBI) 0.0525
126. Titan Industries Ltd (TTAN) 0.0485
127. Exide Industries Ltd (CHLR) 0.0462
128. Yes Bank (YES) 0.0408
129. Raymond Ltd (RW) 0.0396
130. Nagarjuna Construction (NJCC) 0.0339
131. Hdfc Bank Ltd (HDFCB) 0.0331
132. BF Utilities (BFUT) 0.0327
133. Matrix Laboratories Ltd (HDPH) 0.0321
134. Bombay Dyeing & Mfg Co (BD) 0.0196
135. TVS Motor Co Ltd (TVSL) 0.0189
136. Reliance Natural Resources (RNR) 0.0167
137. Hindustan Construction Co (HCC) 0.0133
138. Gammon India (GMON) 0.0124
139. GMR Infrastructure (GMRI) 0.0113
140. Jet Airways India (JETIN) 0.0067
141. Mahanagar Telephone (MTN

[Dileep]

I took most of my money out near 16K level and bought a piece of land with yielding rubber trees.

[Theo_Fidel]

TN is surplus primarily due to Wind power. Esp. right now.
Something Kerala & KT continue to sit on their A##es about.

Really ? What is the installed and actual generated Wind Power in TN ?.I know it has a lot of wind power, but didnt think that they had it in such quantity.

Installed capacity of 3,500 MW at last count. Not sure what the capacity factor is.

I still don't think that nuclear can be anything but a tiny fraction of our demand.

Now the fusion ITER plants would be some thing all together different.

[Rupesh]

S.No.
State
Million Units

1
Andhra Pradesh
1190.48

2
Gujarat
1916.22

3
Karnataka
3740.00

4
Kerala
15.86

5
Madhya Pradesh
304.56

6
Maharashtra
5131.61

7
Rajasthan
1455.32

8
Tamil Nadu
20682.14
9
West Bengal
3.00


Total
34439.19

TN accounts for nearly 2/3rd of our total wind power generation.

http://www.windpowerindia.com/statcumul.html

[SwamyG]

As of of 31.3.2007, TN had about 3475MW (~3500) installed capacity. It was 3198 as of 31.12.2006. TN's share is well over 51% according to government sources.

In TN, the Wind energy comes from private sector. And IIRC TN has about ~11000MW installed capactiy. ~5500MW from TNEB owned generators, rest purchased from center, CPP and private players. I am not sure if the Wind energy is part of the 11000, or if it is in addition to that. In any case the percentage is huge.

Sad thingy is that electricity from wind mills is not available through out the year.

I agree with Theo on his concerns on nuclear waste.

[Raju]

As of of 31.3.2007, TN had about 3475MW (~3500) installed capacity. It was 3198 as of 31.12.2006. TN's share is well over 51% according to government sources.

this is lesser than Delhi's consumption during summer and peak winter.

[vina]

.. Dilli sure does generate a lot of wind though. If only if they could turn all that wind into power.

[Singha]

that will be GTRE's next project - a wind turbine ... after kaveri's last rites are done.

[Suraj]

Folks, please keep the nukkadization in check

[SwamyG]

Raju sahib: I think TN has utilized well its potential energy sources. It is a leader in India as far as electricity from wind farms go. On the whole India was a laggard in the last few years when compared to the globe in tapping the Wind energy. If you think it is still less than Delhi's consumption, then it just points out that lot more can be and should be done in this area. AP and KA would probably have greater potential than TN.

It costs about Rs5 crores to set up a windfarm that can generate 1MW. The most often windmill that is used is in the range of 225-250KW. So that would be about 4 in number. Although there are mills that can generate upto 2.0MW, 225KW is the common one. TN purchases @Rs.2.9 per unit. There is lot of scope for private sector to invest and reap benefits. Rs.100crores is nothing for companies that are prowling the entire globe swallowing global companies.

I am sure we are going to be reminded that there is a separate thread for energy, and we are encroaching. Before we are shooed away, let me remind that a mallu owned one of the biggest windfarms in TN {IIRC, I read this long back. If this is not true, please blame my memory and not me}

[Suraj]

UPA is making hay while it can, planning to push through several stalled economic reforms under the assumption of clearing the trust vote, with the Communists no longer around to stall everything:
North Block to fast-track reform

Soon after the trust vote in Parliament on July 22, the finance ministry hopes to push through a series of non-legislative reforms, chief among them disinvestment of minority stakes in around 10 central public sector undertakings by listing them on the stock market.

The ministry may also separately consider a further relaxation in external commercial borrowing norms for the current financial year, senior officials told Business Standard today.

Finance Minister P Chidambaram has asked officials in his ministry to draw up a reform agenda that can be pushed through in the days after the trust vote is cast in Parliament, the sources added.

Against the background of strong jockeying for the votes of independent and small party MPs, the ministry is betting on the United Progressive Alliance to win the trust vote with the help of new allies like the Samajwadi Party.

The government is expected to take advantage of the exit of the Left to push through various legislative reforms in insurance, telecom and pensions.

But given that these will take time to pass through Parliament, the government is betting on several non-legislative reforms that can be pushed earlier.

A meeting to discuss the disinvestment through public issues was held earlier this week and the details like the number of companies, the issue size and the timing will be finalised soon, added officials.

Earlier reports had suggested that the government may divest 5-10 per cent of its equity in around 24 companies such as Rashtriya Ispat Nigam Ltd and Manganese Ore (India) Ltd, Nuclear Power Corporation, Railtel and TCIL, among others.

India`s outward FDI up 29.6% at $17.4 bn last fiscal

The country's outward foreign direct investments (FDI) rose by 29.6 per cent to $17.4 billion in 2007-08, backed by India's Inc large-scale acquisitions, growing appetite for an overseas presence and the hunt for energy assets. The outward FDI in 2006-07 was $13.45 billion.

Outward investment refers to investment by Indian entities and partnership firms in joint ventures and wholly-owned subsidiaries abroad, besides remittances for production sharing agreements for oil exploration. The data does not include investments by individuals and banks.

Of the total investments in 2007-08, 81.6 per cent were in the form of equity and loans accounted for the remaining 18.4 per cent. During the same period, about 95 per cent outward FDI proposals were for investments exceeding $5 million.

This is a nice article discussing the talk of S&P and Fitch suggesting ratings downgrades, also covering the hypocrisy of those agencies, whose lax ratings regimes contributed to the US economic issues. However, sovereign ratings are still very important, considering India's investment boom in 2007 coincides with its elevation to investment grade by all three ratings agencies (S&P,Moody's, Fitch):
Dangers of downgrade

Last week, rating agency Standard & Poor's published an article indicating that India's sovereign rating was under threat from the "triple whammy" of rising inflation, the fiscal deficit and the current account deficit. The agency viewed the factors driving the credit deterioration as temporary but warned that, if they persisted, the sovereign rating could be lowered to the speculative grade that it was in before January 2007. This week, a second agency, Fitch, went a step further and actually lowered its outlook on India's local currency rating to negative. Although this is short of a ratings downgrade, which would also take India down to speculative grade on the Fitch scale, it indicates that the likelihood of a downgrade in the next review has significantly increased. The main reason for this change cited by Fitch was the "considerable deterioration" in the central government's fiscal position during the current year, stemming from the mounting burden of off-budget borrowings.

At a time when rating agencies are viewed with deep suspicion with regard to their role in the sub-prime crisis, it is tempting to dismiss these announcements as mere irritants. For one thing, no downgrading has actually been done and the lowering of Fitch's outlook is for local currency exposures only. The outlook on foreign currency exposures, which is much more important from the foreign investors' perspective, is significantly influenced by the size of the foreign exchange reserves, on which score India still has plenty of cushion.

While the agencies are under fire for their assessments of complex financial instruments, there have been no serious questions raised yet on their more conventional and long-standing activities, of which sovereign rating is one. Their views on individual countries are taken seriously by investors, who, given the conditions in global financial markets, are more risk-averse today than they have been for a long time. Any whiff of a problem with an emerging market could well trigger significant outflows, putting further pressure on both markets and the balance of payments. In India's case, it is currently at the bottom of the investment grade scales of both Standard & Poor's and Fitch. A move to the speculative grade will reinforce the outflows because several sources of funds are mandated to put their money in investment-grade countries. The flood that was seen in early 2007 will be reversed in the event of a downgrade. But, beyond the implications for capital flows, the balance of payments, and the exchange rate, these warnings should make the government think hard about its fiscal legacy.

[Katare]

Credit growth is still well above RBI's comfort zone although it has come down from peak of 30% a year back. Also credit can't keep growing faster than deposites forever, eventually it'll have to closly match deposit growth rates.

http://www.business-standard.com/common ... =0&chkFlg=

[bala]

On TN Windpower: With the addition of 413 MW in 2007-08, the present installed capacity of wind power in the State till last March 2008 is 3873 MW.

The total wind potential for the state is 13,490 MW.

TN Chief Secretary Tripathi at TIECON said that the state's wind energy translates to roughly 1500-1800MW of sustained power - akin to 24x7 power station.

India has a potential of roughly 44,000 MW of wind power - sustained roughly 20,000 MW.

The total worldwide production of wind power is around 75,000MW or on a sustained basis roughly 35,000MW.

The US has the potential to produce 3x its current energy production by wind alone and on sustained basis roughly 1.5x. So, wind energy can solve US energy needs, but they have to put up large investment and dot the countryside with wind turbines.

I saw a recent article on Solar power in West Bengal where an entire complex is solar powered - all homes. When there is no solar power they can draw on the grid power. I think this is a highly feasible scalable model for all homes/offices in India. During sunlight they use solar power and when there is none draw from the grid. This should substantially reduce the investments in mega power stations - coal especially and CO2 emission.

[Raju]

I saw a recent article on Solar power in West Bengal where an entire complex is solar powered - all homes. When there is no solar power they can draw on the grid power. I think this is a highly feasible scalable model for all homes/offices in India. During sunlight they use solar power and when there is none draw from the grid. This should substantially reduce the investments in mega power stations - coal especially and CO2 emission.

bala this is very relevant. Infact I am of the opinion that buildings should integerate solar power in their construction phase itself. Windows, and covered areas can be designed out of appropriate solar panels to generate electricity. Thus peak watt consumption during summers will drastically reduce and individual consumers can opt out of the grid itself. Especially in view of the obscene power charges for erratic, unreliable power that is levied in India.

[Dileep]

Just how much energy, fossil fuels and pollution would it take to make all those solar panels?