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Sunday, March 18, 2007


Burj Dubai

Dubai, United Arab Emirates

Designed by the U.S. architectural firm of Skidmore, Owings & Merrill in Chicago, the Burj Tower will reach 800 m. (2624 ft.) in height and eclipse Taiwan’s Taipei 101 building when it is completed in late 2008. The tower complex will have 160 floors and feature a hotel, a shopping mall, offices, and luxury apartments. Oil-rich Dubai, part of the United Arab Emirates, is spending lavishly to position itself as a global financial center and world business hub

Millennium Tower

Busan, South Korea

In late January, the New York-based design firm Asymptote Architecture won an international design competition — held by the municipal government in Busan, South Korea -- to build what will be Asia’s tallest tower early next decade. The 560 m. (1,837 ft.) Millennium Tower World Business Center will boast a breakthrough design with three slender towers emerging from a powerful base.

Taipei 101


Back in 2004, this 509 m. (1,671 ft.) spiraling skyscraper overtook Malaysia’s Petronas Twin Towers as the world’s tallest building as measured from the ground to the tower’s structural top. It was designed by C.Y. Lee & Partners. Taipei 101 also holds the world’s record for the fastest ascending elevators that clock 60.4 km. per hour (37.5 mph). It will be overtaken as the world’s mightiest skyscraper when the Dubai Burj Tower is completed in late 2008.

Shanghai World Financial Center


Shanghai is the Chinese mainland’s premier business center and already home to some stunning skyscrapers. It will get another one in 2008 with the opening of the 492 m. (1614 ft.) Shanghai World Financial Center that will feature the world's highest observatory, a five-star luxury hotel, and acres of retail space. It was designed by the architectural firm Kohn Pedersen Fox and developed by Mori Building Group of Japan

Petronas Twin Towers

Kuala Lumpur, Malaysia

Standing 452 m. (1,482 ft.), these iconic towers were designed by renowned architect Cesar Pelli and were the world’s tallest buildings when completed in 1998. The mega-structure’s steel and glass design has elements of Islamic art motifs and sits atop the world’s deepest building foundations.

Sears Tower

Chicago, Ill.

This 442 m. (1,450 ft.) Chicago landmark was completed in 1973 and designed by the architectural firm Skidmore, Owings & Merrill for Sears, Roebuck & Company, then the world’s biggest retailer. It held the record for tallest building for 25 years until Malaysia’s Petronas Towers were erected in 1998. Fiercely proud Chicagoans, however, still note that the building is No.1 if you measure from ground to the top of the tower’s antennas.

Jin Mao Tower

Shanghai, China

The 88-story Jin Mao Tower, designed by Skidmore, Owings & Merrill, is the tallest building in China. It rises to 421 m. (1,380 ft.) and is a centerpiece structure in Shanghai’s Pudong financial district. Its tiered pagoda draws heavily from traditional Chinese architecture and its name in English can be translated as the “Golden Prosperity Building.”

Two International Finance Center

Hong Kong, China

Cesar Pelli designed this mega-structure that now towers over the Hong Kong skyline overlooking Victoria Harbor. It stands at 415 m. (1,366 ft.) and is one of the most prestigious business addresses in Hong Kong.


Guangzhou, China

This 80-story high-rise is situated in the Tianhe District of Guangzhou, a thriving business center in southern China about an hour’s train ride from Hong Kong. It was completed in 1997 and while it is no longer the tallest in China (that title belongs presently to the Jin Mao Building in Shanghai) the 391 m. (1,283 ft.) structure is the tallest concrete building in the world

Shun Hing Square

Shenzhen, China

Things move fast on the mainland, and when the 384 m. (1,260 ft.) Shun Hing Square was finished in 1996, the 69-story skyscraper was the tallest building in China — until the CITIC Plaza in nearby Guangzhou arrived on the scene a year later.

Empire State Building

New York, NY

This fabled product of Art Deco design was finished back in 1931 and was the world’s tallest building for more than 40 years. It stands at 381 m. (1,250 ft.). Following the demise of the World Trade Center during the 2001 terrorist attacks, the building is the tallest in New York and the second tallest in the U.S. after Chicago’s Sears Tower.

Central Plaza

Hong Kong, China

From 1992 through 1996 the Central Plaza in the Wan Chai district had a run as the tallest building in Asia. And the 374 m. (1,227 ft.) skyscraper was tops in Hong Kong until the completion of Two International Finance Center a few years back.

Bank of China Tower

Hong Kong, China

One of the most recognizable buildings in Hong Kong, if not the world, this building designed by I.M. Pei and completed in 1989 resembles sprouting bamboo shoots, a symbol of prosperity in Chinese culture. It stands 367 m. (1,205 ft.) and was the tallest mega-structure outside of the U.S. until 1990

Emirates Office Tower

Dubai, United Arab Emirates

Finished in 1999, the Emirates Office Tower is a 54-floor office building in Dubai and is currently one of the city’s tallest structures. However it will soon be dwarfed by the 800 m. (2624 ft.) Burj Tower set to be completed in late 2008

Tuntex Sky Tower

Kaohsiung, Taiwan

This tower boasts a distinctive design with a central tower that rises to a spire and emerges from a broader base structure. Opened in 1997, the Tuntex Sky Tower is designed to resemble the Chinese character meaning tall. It’s the second tallest building behind Taipei 101 in Taiwan.

Board Meetings - March 21 2007

Mar 21 2007 ADF Foods LtdAdf Foods Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider payment of interim dividend for the financial year 2006-07.
Mar 21 2007 Ashok Leyland LtdInterim Dividend the approval of the Board of Directors is being sought, through a Circular Resolution, for payment of Interim Dividend for the financial year 2006-07.
Mar 21 2007 Crompton Greaves LtdInterim DividendCrompton Greaves Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, to consider declaration of third interim dividend for the financial year 2006-07.Further the Company has informed that, March 26, 2007 has been fixed as the Record Date for the purpose of payment of third interim dividend. The dividend payment date will be April 05, 2007.(As Per BSE Announcement Website Dated on 06/03/2007)
Mar 21 2007 Gammon India LtdGammon India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider, the payment of interim dividend for the financial year ended 2006-2007, if any.
Mar 21 2007 Great Offshore LtdGreat Offshore Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider, payment of interim dividend on equity shares of the Company for the year 2006-07.
Mar 21 2007 Hiran Orgochem LtdHiran Orgochem Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider the issue and allotment of equity shares to the holders of Optionally Fully Convertible Warrants (OFCWs) (Warrants) exercising their option to convert the Warrants that were allotted by the Company on September 22, 2005 on preferential basis to promoters and others, in accordance with the Special Resolution passed by the members of the Company u/s 81(1A) of the Companies Act, 1956 at the Extra-Ordinary General Meeting held on September 09, 2005.
Mar 21 2007 Jumbo Bag LtdGeneral
Mar 21 2007 Mahindra & Mahindra LtdInterim DividendMahindra & Mahindra Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider declaration of Interim Dividend on the Equity Shares of the Company for the financial year ending March 31, 2007.Further the Company has informed that, March 26, 2007 has been fixed as the Record Date for the purpose of payment of Interim Dividend. The Dividend, if declared at the Board Meeting will be paid tentatively around March 29, 2007.(As Per BSE Announcement Website Dated on 07/03/2007)
Mar 21 2007 Nagarjuna Construction Company LtdNagarjuna Construction Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, for the purpose of considering, declaration of interim dividend on the equity shares of the Company.
Mar 21 2007 Nagreeka Exports LtdNagreeka Exports Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007 to consider allotment of 4,37,000 equity shares of Rs 10/- each, fully paid up following conversion of 4,37,000 equity linked warrants of Rs 62.25 each issued and allotted on January 10, 2006.Further the Company has informed that, this is the third tranche of conversion of warrants into equity shares.
Mar 21 2007 Neha International LtdNeha International Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider the following.1. To identity the eligible share holders for issue of new share certificates consequent to Reduction of Capital.2. To Cancel the existing share certificates.3. To issue new share certificates in lieu of the old share certificates.
Mar 21 2007 Rane Engine Valves LtdRane Engine Valves Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, to consider, the payment of Interim Dividend proposed for the year ending March 31, 2007.
Mar 21 2007 Sacheta Metals LtdSacheta Metals Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, to consider the following:1. Issue of preferential share u/s 81 (1A) of the Companies Act, 1956.2. Increase the authorized share capital of the Company.3. Expansion of the existing production capacity of the Company.
Mar 21 2007 State Bank of Bikaner and JaipurState Bank of Bikaner & Jaipur has informed BSE that a meeting of the Board of Directors of the Bank will be held on March 21, 2007, inter alia, to declare interim dividend on Bank's shares for the financial year 2006-2007.
Mar 21 2007 Sundaram Clayton LtdSundaram Clayton Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 21, 2007, inter alia, for the purpose of considering, declaration of second interim dividend to the shareholders of the Company for the financial year ending March 31, 2007.

Remember this URL to view ALL Board Meetings

Board Meetings - March 20 2007

Mar 20 2007 Diamond Cables LtdDiamond Cables Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, to consider acquisition of Company / Companies engaged in the business of manufacturing of Power Transformers.
Mar 20 2007 Euro Ceramics LtdQuarterly ResultsEuro Ceramics Ltd has informed BSE that the meeting of the Board of Directors of the Company which was scheduled to be held on March 16, 2007, is postponed and scheduled to be held now on March 20, 2007, inter alia, to consider the following business:1. To receive and take on record the Audited Results for the Quarter ended December 31, 2006.2. To consider the proposal for declaration of Interim Dividend for the financial year 2006-2007.(As Per BSE Announcement Website Dated on 13/03/2007)
Mar 20 2007 Exdon Trading Company LtdExdon Trading Company Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to transact the following.1. To Change the registered office of the Company.2. To take on record the steps taken by the Company for the Dematerialisation of the equity shares of the Company listed on the stock exchange at Mumbai and the progress made by the registrar of the Company M/s. Purva Sharegistry P Ltd in this regard.
Mar 20 2007 Kanoi Paper & Industries LtdKanoi Paper & Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007 to consider and approve the filing of a reference for de-registration from B.I.F.R.
Mar 20 2007 N R Agarwal Industries LtdNR Agarwal Industries Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to consider the following:1. Approval of Accounts for the year ending March 21, 2006.2. Recommendation of Dividend for the year ended March 31, 2006.3. Declaration of Interim-Dividend in respect of Financial Year ending on March 31, 2007.
Mar 20 2007 Nestle India LtdNestle India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, to consider the Audited Financial Results for the year ended December 31, 2006 and Recommendation of final dividend for the year ended December 31, 2006, if any, shall also be considered at the meeting.
Mar 20 2007 Prestige Foods LtdPrestige Foods Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to transact the following business:1. To obtain disclosure of interest of directors of the Company in other bodies corporate, pursuant to section 299 of the Company Act, 1956.2. To discuss repayment of dues and apprise the Board of OTS Agreements arrived at with State Bank of India & SASF.3. To inform the Board regarding status of MDRS which has been forwarded to Monitoring Agency for consideration.4. To take note of unaudited quarterly results for the quarter ended on December 2006.
Mar 20 2007 Rain Calcining LtdRain Calcining Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to approve the Scheme of Arrangement between Rain Commodities Ltd, the Company and Rain Industries Ltd.
Mar 20 2007 Rain Commodities LtdRain Commodities Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to approve the Scheme of Arrangement between the Company, Rain Calcining Ltd and Rain Industries Ltd.
Mar 20 2007 Rane (Madras) LtdRane Madras Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to consider, the payment of 2nd Interim Dividend proposed for the year ending March 31, 2007.
Mar 20 2007 Rane Holdings LtdRane Holdings Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to consider, the payment of 2nd Interim Dividend proposed for the year ending March 31, 2007.
Mar 20 2007 Speciality Papers LtdSpeciality Papers Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to consider and decide the issue of further fresh Equity Shares by way of Follow on public offer / Rights Basis / Private Placement through FII / Overseas Corporate Bodies or to such other persons or entities as may be considered to be in the best interest of the Company, to augment the finance required for the expansion projects under consideration / developments of the Company.
Mar 20 2007 Wire & Wireless India LtdWire & Wireless India Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on March 20, 2007, inter alia, to consider and approve the issue of further shares on a rights basis, as already considered in their meeting held on January 29, 2007, to the shareholders of the Company as on a Record Date to be determined by the Board.

Investment Nuggets

Considered as one of the top money managers in the US, Bill Nygren, Portfolio Manager of the Oakmark family of funds is famous for his `simple' value investing philosophy. His investing secret sauce is said to be the relentless focus on the basics of identifying companies that meet the fund's value criteria. In the two-and-a-half decades with Harris Associates (the firm that launched Oakmark Fund in 1991), Bill Nygren has worked his way up from being an investment analyst to become the firm's Director of Research from 1990 to 1998. He was recently featured as one of the money managers in the book 5 Key Lessons from Top Money Managers by Scott Kays in 2005.

We employ an intensive, in-house research process to identify companies that meet our value criteria. While some value investors may search only for stocks with low price-earnings ratios irrespective of the companies' underlying worth, Oakmark takes a more in-depth approach. In evaluating potential investments, we focus on the following characteristics:

A company's stock price and whether it is a significant discount to our estimate of underlying business value;

Free cash flows and intelligent investment of excess cash;

High level of manager ownership.

Oakmark Funds investment philosophy and process

"As a value investor you are always trying to identify good companies, but typically you can't see the future clearly enough to justify paying the premium that the market is asking. I don't think in our history we have ever paid two or three times the market multiple for a business we thought was outstanding. But today the market is making you answer a very different question. The basic question on a Wal-Mart, Home Depot or Dell is if this company is average or not. The P/E is average, so if fundamental performance, say the next five years' growth, is merely average, that should be enough for the stock to have average performance. If the businesses grow faster than average, as we think they will, then not only should they be deserving of a higher P/E, but the growth in earnings should be better than the average business, so you win on earnings growth and on P/E expansion."

"To speak of day traders in any investment context is silly. These people are fulfilling a need for entertainment and are using the stock market for that."

"(Analysts themselves are getting back to basics, digging further into the numbers behind the numbers found in annual reports and other corporate filings.) It is amazing how fast the invisible hand of competitive marketplaces is correcting these problems. Two years ago you saw almost no new research come out after the annual 10-K filing. Now when a company comes out with its 10-K, you see half a dozen analysts immediately coming out with a report analysing all the details."

Orbit Corporation: Avoid

Investors can give the initial public offer of Orbit Corporation (Orbit) a miss for now. While the company's business of redevelopment of real-estate properties holds potential in Mumbai, where it operates, the lack of track record and the complex nature of transactions can be negatives. Further, the lack of diversification, with the business largely related to redevelopment projects that are governed by regulations, adds to the company's risk profile.

At the offer price of Rs 108-117, the price-earnings multiple works out to 17-18.5 times its consolidated annualised earnings for FY-07 on the existing share capital. The valuation appears steep given the risks involved. Further, a number of listed peers have seen a sharp correction in the past couple of months and trade at a discount to Orbit.

Profile and Objective

Orbit Corporation is a real-estate developer with focus on redevelopment of residential properties in the island city of Mumbai. The company plans to raise Rs 98-106 crore in the price-band offered. Majority of the fund requirement is for investment in wholly-owned subsidiaries which are likely to execute a number of the current planned projects. The company also needs funds to acquire new projects and develop the current ones.

Uncertainties writ large

Orbit primarily operates in Mumbai, where there is scope for redevelopment work, given the large number of dilapidated buildings (classified by the Mumbai Housing and Area Development Authority or MHADA), in this location. These projects are also different from slum clearance projects undertaken by players such as Akruti Nirman.

However, redevelopment projects can not only be long-drawn ones but are typically riddled with uncertainties. For one, the company has too many parties such as clients, owners/co-developers, tenants and regulatory authorities to liase with. This involves identifying properties, getting the owner to sell or co-develop them, obtaining the consent of at least 70 per cent of the tenants, providing suitable rehabilitation packages as per the regulations, securing the approval of various authorities, including the Development Control Regulation (DCR), and so on. While the company states that the project completion time is about three-four years, the complexities involved can delay the projects, thus making the revenue flow cyclical to other real-estate developers.

Further, one of the regulations under the DCR (under which the company redevelops property) is a subject matter of review under a court order. The near-term prospects for new projects under the said regulation, therefore, appear none too bright.

Execution capabilities

Orbit Corporation has so far executed and sold only one project. The company now has 16 projects on hand with 11 in the preliminary stages. For a company with such a limited track record, the capability to undertake a large number of projects is a risk factor.

However, the positive feature is that the company has, by and large, cleared the regulatory aspects in most of the above projects. This also reflects its experience in such procedures.

The company may also face cash crunch, given that many of the projects signed in 2006, are slated for completion only after three-four years.

The company has had negative cash flow from operations in all fiscals from 2003, except in 2005. This clearly reflects the cyclical nature of the business.

Orbit's consolidated revenue for the nine-months ended December 2006 stood at Rs 54 crore against Rs 17 crore in FY-06.

While the revenue growth appears encouraging, real-estate developers with a lower equity base have delivered higher revenues. Orbit's return on equity is also lower than some peers.

Conversion of warrants tagged to this offer may see equity dilution, if earnings growth does not keep pace.

Offer details: The IPO is open from March 20 to 23. Each share comes with one detachable warrant, which can be converted after 18 months but before 30 months from the date of allotment of equity shares and warrants.

The holder will receive one equity share for every warrant conversion exercised. The warrant exercise price will be calculated as stated in the prospectus. Edelweiss Capital is the lead manager.

ICRA: Invest at cut-off

Investors can consider subscribing to the book-built public offer of ICRA Ltd at the cut-off price. The high-margin profile and scalability of ICRA's businesses make the stock an attractive investment option for those with a three-year perspective. The offer is being made in the price band of Rs 275-330, translating into a price-earnings multiple of 15-18 times the company's likely earnings for FY-07. As this is an offer for sale by two of ICRA's promoters, there will be negligible equity dilution, post-offer.

Positive triggers

Though the valuations are not cheap in the light of the company's historical financials and the stock's small-cap status, the opportunities for ramp-up in earnings from the ratings and knowledge businesses are huge, especially given the company's position as one of the two entrenched players in the domestic ratings business. The take-off in the corporate investment cycle and the potential for new business from a variety of issuers and debt instruments are some of the possible triggers to revenues and earnings from this level.

ICRA is one of the two entrenched players in the domestic ratings business, enjoying about a 28 per cent market share, based on a number of outstanding issues rated (399 out of 1,382). Given that the rating business is its key earnings driver, ICRA's financials bear a high degree of correlation with trends in domestic debt issuances. Sluggish revenue and earnings growth from FY-02 to FY-05 was followed by a significant improvement in both metrics over FY-06 and in the first nine months of FY07, as corporate fund-raising efforts took off after a moribund phase in the preceding years.

Rated corporate debt issuances in FY-06 increased 32 per cent increase over FY-05 while rated commercial paper issuances grew 47 per cent growth.

These trends have continued into the current fiscal, with the second half of this year seeing a significant increase in activity. This has reflected in a sharp expansion in revenues and profits from ICRA's ratings business in FY-06 and FY-07.

Ratings, the key driver

ICRA's consolidated operations generated net profits of Rs 13.5 crore on revenues of Rs 51.2 crore for the first nine months of FY-07, translating into an annualised EPS of Rs 18.1 on the post-offer equity base. The ratings business accounted for about 55 per cent of revenues, with businesses such as consulting (17 per cent), outsourcing (5 per cent) and information services (2 per cent) chipping in with the balance. The rating business, however, is the key profit driver.

The margin profile of ICRA's businesses is high, with EBIDTA margins consistently at 33-34 per cent. The ratings business has a healthy margin profile and has offset marginal or negative contributions from the other nascent businesses. The ratings business appears to offer scope for significant scalability, with low incremental costs, allowing further leeway for margin expansion. Personnel costs have been the key element of cost. Though ICRA's attrition levels have been high, it has managed to steadily augment its headcount from 239 employees to 407 over the past three years.

New opportunities

Going forward the prospects for the ratings business are predicated on a continued increase in domestic debt issuances by companies and the financial sector.

The activity in the corporate debt market appears set to remain brisk. The domestic capex cycle is likely to remain robust in the light of the emerging capacity constraints in manufacturing, ambitious expansion plans lined up in sectors such as commodities, automobiles and chemicals and continuing public investments in infrastructure.

Since about 97 per cent of the debt offers in India are rated and ratings are often driven by regulatory fiat, an increase in debt issue activity would directly translate into more business for the domestic rating agencies.

Over the medium term, new business opportunities for ICRA could also arise from rating requirements for bank loan exposures as they transition to Basel-II, a revival in securitised debt as banks face liquidity constraints, and greater depth in the debt markets arising from participation by insurers and local bodies. Other businesses such as consulting, outsourcing and information services also offer scaling up possibilities as ICRA can leverage on its existing knowledge base and skilled personnel to deliver these services.

With CRISIL being ICRA's only competitor in the listed space, the valuations for the company's stock are bound to be compared to the former. The CRISIL stock trades at a price-earnings multiple of about 24 times the current earnings, considering consolidated operations, and at about 38 times, based on the standalone operations. This valuation reflects CRISIL's larger revenue and earnings base, its higher growth trajectory arising from its research outsourcing operations and pedigree from the controlling stake held by S&Ps, apart from the company's sizeable investment book.

With a stronger focus on the ratings business and a smaller scale of operations, the ICRA stock is likely to be valued at a discount to CRISIL. However, evaluated for the domestic ratings business alone, ICRA's operations compare reasonably well with CRISIL's on market share, margin profile and return parameters.

With Moody's Investor Services emerging the sole promoter of ICRA after this offer, with a 28.5 per cent stake, the possibility of new business opportunities from an expanding relationship with Moody's, and a possible stake hike by the promoter at a later date, also remain possibilities.

The offer price may, thus, allow scope for reasonable appreciation in stock price, for investors with a three-year perspective.

Offer details: IFCI, the Specified Undertaking of the UTI and the SBI are jointly putting up their 25.81 lakh shares in ICRA Ltd for sale to public shareholders, through this offer for sale. The proceeds will thus go to the offerors.

The offer for sale is also being followed by a preferential allotment of 2.88 lakh shares to Moody's India and 9.06 lakh shares to ICRA's ESOS Welfare Trust at the offer price. ICRA's post-offer equity base will amount to Rs 10 crore.

The Indian experience

A few Indian companies have attempted to process bio-diesel in a small way and use it in their vehicles. The most prominent among them being DaimlerChrysler India (subsidiary of the German company) and Mahindra & Mahindra.

DaimlerChrysler AG and DaimlerChrysler India with their partners — Central Salt and Marine Chemicals Research Institute (CSMCRI) and the University of Hohenheim — have been working with bio-diesel processed from the seeds of the Jatropha plant. The project, which is in its second and final phase, has been partly financed by Deutsche Investitions and Entwicklungsgesellschaft (DEG).

Since 2004, the Jatropha Biodiesel project by DaimlerChrysler and its partners has generated public interest in alternative energy sources, particularly bio-diesel, and community-wide support, mainly because the Jatropha plant can grow on wasteland. The project also included field-tests with Mercedes-Benz cars powered by pure (unblended) bio-diesel across nine States in 2004. This was followed by cold weather, high altitude tests of the bio-diesel cars across Khardung La, the highest motorable road in the world, and across the Himalayan terrain in 2005. This was a significant road test, as bio-diesel is said to be unsuitable for use as automotive fuel in low temperatures. The inputs from these road tests paved the way for further improvements to characteristics of bio-diesel from Jatropha.

Tough Plant

Jatropha is a species of plant that occurs in the wild in many parts of India, and the oil extracted from its seeds has been found to be suitable for conversion into bio-diesel. Jatropha can grow on poor, degraded soils and is able to ensure a reasonable production of seeds with little input. It is not grazed by animals and is highly pest and disease resistant.

DaimlerChrysler has had a long history of developing alternative fuel vehicles, including cars that run on hydrogen and other non-traditional fuels. With the methanol-powered NECAR fuel-cell vehicles, the German company had presented passenger cars suited for bio-methanol refuelling. Bio-methanol can also be blended with conventional gasoline and refuelled to conventional internal combustion engines, to a certain extent without engine modifications being necessary. The same holds true for bio-diesel, for example, from Jatropha biomass. Blending would require no new refuelling infrastructure.

Recently, M&M also formally announced its emphasis on bio-diesel and unveiled the bio-diesel Scorpio and Bolero DI vehicles for 100 per cent real world usage trials. The Scorpio, with indigenously developed CRDE technology, is said to be the first Asian vehicle in its class to run on 100 per cent bio-diesel. M&M also unveiled a 5 per cent bio-diesel tractor along with its utility vehicles, another first in the country.

Mahindra & Mahindra has organised two projects as part of its bio-diesel programme, one in conjunction with the Indian Institute of Technology, Kanpur, and the other with Indian Oil Corporation's R&D Centre and Lubrizol.

The vehicles are to be run in real world environment that will involve severe and demanding terrain including hot and cold weather operations at high altitudes. M&M has done extensive R&D work in the area of alternative propulsion technologies and also set up its own bio-diesel pilot plant in 2001.

Bio-diesel — a compelling alternative

One of the provisions of Budget 2007-08 extends the benefit of excise duty exemption to bio-diesel. Now, many of us know bio-diesel to be some kind of alternative fuel. But what exactly is it? What is it got out of and how good an alternative is it to the regular fuels? Will vehicles need considerable alterations to run on bio-diesel? These are the questions many will be asking after Mr P. Chidambaram put bio-diesel in the spotlight last month.

What is bio-diesel?

Bio-diesel is a clean burning alternative diesel fuel that is obtained from natural, renewable sources such as vegetable oils and fats. The most common source of bio-diesel is soybean. Soya oil is the base vegetable oil from which all the bio-diesel in the US is processed. On the other hand, in Europe, most of the bio-diesel is processed from rapeseed oil.

In India, a mix of these two and also the oil extracted from the nuts of the Jatropha plant have been used to obtain bio-diesel. Around the world other oils of plant origin, such as canola oil, cottonseed oil, mustard oil and palm oil, have also been tried.

Bio-diesel is a cleaner burning fuel than the regular fossil fuel, not just in India, where the quality of regular diesel is relatively speaking poor, but also in the advanced automobile markets. Bio-diesel, as the name suggests, is also renewable as it is derived from plant sources and is less harmful to the environment.

How is bio-diesel obtained?

Bio-diesel, or alkyl/methyl esters as it is also known, is produced through a chemical process called transesterification, which usually involves the addition of alcohol. The process leads to the separation of glycerine from the oil and the end product is methyl esters or bio-diesel.

Bio-diesel burns better than conventional diesel and is extremely low on sulphur content, one of the biggest problems oil companies producing fossil fuel have to deal with. Since bio-diesel is plant derived, it is also high on oxygen content.

As a result, bio-diesel is less toxic and less polluting than regular diesel. When used in conventional diesel engines the improved quality of emissions with bio-diesel include lower levels of carbon-monoxide, sulphates, particulate matter and unburned hydrocarbons.

Can it substitute regular diesel?

This alternative fuel can be used in all the compression-ignition engines (as diesel engines are called), in which the regular fossil fuel is used. Most modern-day diesel engines can handle a blend of the regular fuel that contains up to 20 per cent of bio-diesel. At that level of blending, engines do not need major modifications or adjustments.

Bio-diesel blends, for example B20 (which is the nomenclature for a 20 per cent blend) and for than matter B100 (which is pure bio-diesel), have pretty much the same performance properties as the regular diesel fuel.

So, there is no reduction in the torque characteristics of the engine and the other performance parameters also remain unaffected.

Even when pure bio-diesel is used, many diesel engines will not require modifications, though car manufacturers are still studying the impact of the use of B100 on engine durability.


Unlike the other alternative fuel — bio-ethanol from sugarcane — bio-diesel has not picked up that much in terms of production volumes. It continues to be attempted only on a small scale for experimental purposes. The Government has cleared ethanol blending with regular petrol, but it is yet to take off due to a number of reasons, including arriving at a viable price for the fuel manufacturers and the worries about the possibility of adulteration at the blending stage. The government's blending norms already exist for B20.

As for bio-diesel, since production of fuel alone may not render the enterprise profitable and therefore sustainable, processors of this alternative fuel will have to also consider generating revenue from by-products such as glycerine, seed cake, fertiliser, etc.

So far, the only stumbling block for the adoption of bio-diesel, as was the case with the other alternative fuel, was the non-availability of any fiscal incentives for increased production. With increased public awareness, there will be no hesitancy among diesel car owners to fill up B20 at the local pump. Will the Budget sop kick-start the process?

Dos and don'ts in stock picking

If you are an investor on the look out for undiscovered stocks with great growth prospects, be assured you are not the only one! With the stock market no longer predictable, chancing upon value buys in the current market is no more anybody's game. If the bull market that made us all feel like geniuses, remember that the same market, when in a downward or sideways mood, can make fools out of geniuses too. The point is though stock picking in this market is not impossible, it is not going to be easy either. You would have to exercise more caution and restraint.

Though there are no foolproof ways of stock picking, there are some dos and don'ts to help invest wisely. Here are some of them.

Stick to fundamentals

Remember to put money only in those stocks that you think are well-placed fundamentally. A company in a known business with reasonable financials is likely to provide better returns over the long term than one without a convincing business model or history.

Keep in mind that returns, in most cases, are commensurate with the risk you are willing to take. Hence, you would be better off keeping a moderate return expectation from your investments if you plan to stick to the safe bets (read fundamentally good stocks) in the market.

Do your own homework

Nobody can comprehend your investment needs relative to your risk tolerance better than yourself. Hence, it is advisable to do your own homework on any stock you plan to invest in, especially when the market appears volatile. Basing your investment decision on your broker or even a successful trader friend whom you consider the ultimate authority on the stock market, can prove to be costly at times.

Buy in instalments

Once you have identified a good stock to buy, it may also make sense to consider accumulating stocks in small lots, over a period.

Notwithstanding the short-term price fluctuations that can act against you, this strategy is likely to help mitigate the risk of buying stocks at a high price, thanks to the benefits of averaging your investment.

Furthermore, it would also ensure that at any point of time, you are left with cash to buy stocks when the market appears weak. Similarly, you can also consider pyramiding your profits on stocks when the stock price appreciates, that us, selling small lots at different prices.

Confront your fear of regret

If you regret not having invested in a particular stock (a multi-bagger now) that your friend or broker recommended in the past and feel compelled to do so in the latest recommendation from them, think twice. Investment decisions cannot be emotional ones. Moreover, markets always throw up opportunities to make money and, hence, an opportunity lost is certainly not the end.

Fear of regret can also creep in when you invest in a stock recommended by your friend, after which it tanks 50 per cent. This could prompt you to stay away from even good stocks that are recommended later on. Though stock markets are sentiment-driven, remember that it always pays to make informed decisions rather than emotional ones.

All said and done, these are only guidelines to assist you in picking the right stocks. At the end of the day, you need to put in sufficient efforts to make a well-informed investment decision.

Remember the old adage — "What's obvious is obviously wrong."

Bank deposits now look more `interest'ing

Are you a conservative investor who has been put off by the gut-wrenching volatility in the stock market in the last few weeks? Are you considering a temporary rejig of your portfolio to reduce exposure to equity and increase investment in safer options such as debt, including term deposits? If so, there couldn't be a better time than now to do it.

A big tussle has broken out in the market amongst major banks, public sector and private, to garner short-term deposits, leading to the kind of rates not seen at the short end of the maturity spectrum for a long time now.

Attractive short-term interest rates

Rates range between 8.25 per cent to as high as 9.5 per cent for short-term deposits with a one-year or lower tenor (see graphic). Deposits by senior citizens fetch a premium of 0.25-1 percentage points over the prevailing general rate.

These attractive rates open up a few possibilities for those willing to reshuffle their portfolios and ride out the market volatility.

Depending on your risk profile, you could pull out partially from stocks and invest the funds in a short-term bank deposit. For instance, Oriental Bank of Commerce's 300-day deposit that offers 9.5 per cent is an excellent option that combines safety with decent returns, though it may not be comparable to what could be had in stocks.

If you are a passive investor you could opt for the cumulative option; if you are among the more active types, you could opt for the fixed deposit option with monthly interest payments which could be re-invested either in stocks or in systematic investment plans (SIP) of mutual funds.

This way, you can get the best of both worlds — safety of the principal through the deposit and incremental returns through investment in SIPs that are ideal in volatile stock market conditions. The basic idea here is to capitalise on the extremely attractive short-term rates on offer and to diversify your portfolio.

For those of you already locked into long-term deposits at considerably lower rates of interest, it may even make sense to break the deposits and look at re-investing the money in a short-term deposit now. Of course, such a decision should be a function of how long the existing long-term deposit has been in place and the penalty that your bank/financial institution/company would levy for foreclosure. By shifting now (assuming that the arithmetic is in your favour, of course) it will be possible for you to exploit a further surge in interest rates if it were to occur in the next one year.

With your short-term deposit maturing in the next 12-18 months, you will be in a position to reinvest the same funds at a higher rate then. Of course, to do this you should be in a position to judge the possible trend in interest rate movements over the near-to-medium term.

Going by current indications it seems unlikely that rates will drop in the next year; they are likely to either stay where they are now or move up further.

In fact, the latter appears a distinct possibility now given the rapid economic expansion and the corporate sector's investment plans that are bound to push rates upwards; there is the spectre of inflation too and its effect on monetary policy.

While choosing the best option amongst all the banks now, you would do well to note the following issues:

Some banks have a lock-in for the entire term of the deposit. Foreclosure would mean you will forfeit interest for the entire tenure.

So, if you anticipate a need for funds before the term ends, you may be better off choosing a bank that does not have such a condition and there are many of them. Some, such as ICICI Bank and HDFC Bank, permit partial pre-mature withdrawal with a penalty.

Most of the attractive offers close by March 31 with some such as Canara Bank open till May 31, and others just calling it a "limited period" offer. So decide and act quickly to take advantage of these rates.

The minimum deposit amount ranges from Rs 100 (City Union Bank) to Rs 25,000 in the case of UCO Bank and Punjab National Bank. But in most cases it is an affordable Rs 10,000.

There are some banks, such as Canara Bank, that offer only a cumulative deposit option. This will right away make it unattractive for a senior citizen depending on a monthly inflow of interest income.

Finally, if you are someone who likes to shop around for the best deal, you may want to look at banks that throw in additional features, such as a free ATM card, Internet banking and so on, along with the deposit.

The Web sites of most, if not all, banks that are in the market now have all the details you will need to make a decision.

Tata Elxsi: Buy

Investors with one/two-year perspective can consider taking exposure in the Tata Elxsi stock. At the current market price, the stock trades at a price-earnings multiple of 17 times its annualised 2006-07 per share earnings. Even in the latest correction in the market, the stock remained fairly stable. The returns from this stock are likely to be sedate and linked strongly to the company's financial performance and growth plans.

The sustained improvement in the business environment for offshoring, the encouraging demand for product design and engineering services, the strong third quarter financial performance and the association with the Tata group lend strength to the company.

However, the high exposure to project-based business, scale-up challenges, slowdown in end-user markets in the US, and appreciation of the rupee remain the key risks.

Key Segments

Tata Elxsi classifies its business broadly into two key segments: Software development and services, and systems integration and support services. Over the past four years, the company has consciously transformed its revenue profile from systems integration to software development and services.

For instance, systems integration, which accounted for 39 per cent of its revenues in 2003-04, had dwindled to 14 per cent in the first nine months of 2006-07.

This switch is clearly linked to the low profit before interest and tax (PBIT) margins of systems integration (below 10 per cent) vis-à-vis software development (at over 20 per cent).

The software development and services segment comprises three key focus areas: Product design services, design and engineering services, and visual computing.

The company offers product design services to a whole host of industries that range from automotive, consumer electronics, semiconductors, media, storage and wireless apart from handling IP and product solutions in these areas. Over 70 per cent of its employees are in this segment.

In engineering design services, the company is primarily involved in mechanical design for consumer products, electronic enclosures, FMCG packaging and transportation. It enjoys a roster of blue-chip clients for which it has executed projects, including GM and Toyota in automotives, Hindustan Lever and Procter and Gamble in packaging, Whirlpool and Maytag for consumer appliances and several international design firms. Finally, Tata Elxsi's Visual Computing Labs has created animation, special effects and gaming services for the entertainment industry.

Using its experience garnered in the domestic film and advertising industry, including films such as Dhoom 2 or Salaam Namaste, the company has bagged some significant work in Hollywood. Given the high quality manpower available at reasonable cost, the animation and gaming industry is likely to provide huge potential for Tata Elxsi in the coming years.

The steady rise in the operating profit margins in the last few quarters testifies to this strategic switch to software development.

For the nine months ended December 31, 2006, the company reported profit before interest and tax (PBIT) margins of 24 per cent for the software development and services segment compared to 20 per cent in the corresponding previous period.

Over the same period, both the revenues and PBIT margins from the systems integration business has been on a decline.

The contribution of systems integration to overall revenues fell to 14 per cent from 19 per cent. The PBIT margins were also lower at 7.8 per cent vis-à-vis 13.6 per cent over the same period.

Considering the niche focus of Tata Elxsi, it enjoys return on equity and capital employed in the 50-60 per cent range, significantly higher than most of its mid-sized peers.


Investors can consider exposure in Bharat Heavy Electricals (BHEL) with a medium-term perspective. Since the markets are likely to remain volatile in the near-term, any weakness linked to the broad market can be utilised to step up exposure. Strong order backlog, capacity expansion to meet demand and robust capex lined up for power projects augur well for the company's earnings growth. At the current market price, the stock trades at 16 times its likely earnings for FY08.

BHEL's present order book is robust at over Rs 50,000 crore — about three times its FY06 revenues. While the high order book does raise concerns of timely execution, BHEL's capacity expansion plan to 10,000 MW, appears to be running on schedule. The capacity, once on stream, will provide comfort on execution capabilities. The company also has an in-principle approval from the Government for further expansion through acquisition of small-sized units. Given the company's comfortable cash position and low debt equity ratio, such acquisitions are likely to help efficient execution of the burgeoning order book and protect its margins. With a successful track record in Government projects, the company may continue to enjoy its preferred supplier status. However, it will have to play on a more competitive field in the `super-critical' equipment segment.

BHEL's renovation/modernisation and spares/services segment has also witnessed robust growth. The company is likely to benefit from NTPC and State-owned units spending on equipments when they reach the replacement threshold.

BHEL has negotiated raw material cost pressures better than many engineering companies. The operating profit margins at 21 per cent for the quarter ended December 2006 is superior to peers. About 60 per cent of its orders have inbuilt escalation clauses. Further, domestic central utilities and international bidding rules provide for escalation clauses for raw material prices.

BHEL has, in the past, lost to Korean and Chinese players in international bidding for super critical segment. While it has subsequently entered into technology tie-ups with Siemens and Alstom, it does not preclude these international majors from bidding independently. Any slowdown in the Government spending for power projects remains a principal risk

Motilal Oswal- Auto Components

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FIIs take a hard knock

Foreign institutional investors which subscribed a major share of the qualified institutional placement (QIP) issues, mainly from infrastructure and real estate firms, have taken a hard knock in the recent market correction.

Since the opening up of qualified institutional placement (QIP) route, 19 companies have used this route to raise about Rs 4,500 crore in the last six months. Of these, 12 are trading below their issue prices. Among them, eight are currently trading at prices 20-45% lower than the issue prices. On an aggregate basis, the current market value of the stocks is around 15-16% lower than the invested amount.

The FII had shown heavy appetite for these stocks, since infrastructure and real estate companies were the toast of the market some six months back. But they were the worst sufferers in the correction which unfolded in the last three months.

The institutions also paid heavily for their faith in a host of other mid-cap stocks offered through the QIP route. After the reversals in the market, a number of companies which were planning similar issues have shelved their plans.

Ansal Infrastructure, now ruling at around Rs 548, is going at 47% lower than the issue price of Rs 1,005. The issue had raised a whopping Rs 678 crore just three months back. The other two real estate stocks - Gesco Corp and Peninsula Land - are also faring poorly in the market. While Gesco Corp, which had raised Rs 480 crore at a price of Rs 800 per share, now commands a market price of Rs 620 (a fall of 21%), the Peninsula Land stock now trades at 30% lower. IVRCL Infrastructure is another stock which has taken a beating. It trades at around Rs 270, 27% lower than the issue price of Rs 370.

Apart from real estate and infrastructure sectors, several other mid-cap stocks issued through this route suffered heavy erosion in shareholder values. The shares of Mcleod Russel, Bombay Rayon Fashions and S. Kumar Nationwide are trading at prices 20-50% lower compared to the QIP price. The exceptions where QIP subscribers have notched up healthy notional profits are Emco Ltd, Deccan Chronicle and Kalpataru Power Transmission. These stocks are currently trading 16-50% above the issue price.

Sharekhan Eagle Eye & Derivatives Info Kit for March 19, 2007

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