Glodyne Technoserve Ltd.

Glodyne Technoserve (erstwhile Paradyne Infotech) in Mumbai
and were impressed with the company’s robust pace of growth and IMSfocused
business model. Company seems well-poised to exploit the
Remote IMS wave with proved expertise, established customer base and
low competition. On organic basis, Glodyne expects to clock 44-52%
revenue growth in current year with significant expansion in margins due
to ongoing shift towards Remote IMS. In addition, company also has
aggressive inorganic growth plans, which would supplement organic
growth. However, the funding of any large acquisition may require some
equity dilution. Based on management’s expectations about growth and
margins, we derive a likely EPS band of Rs64-68 for FY09. At 7.5-8x FY09
P/E (just below median mid-cap valuations), Glodyne is an attractive long
term growth story.
Company Background
Glodyne Technoserve (Glodyne) was incorporated in the year 1997 with a modest
beginning by a group of first generation entrepreneurs. The company set out with
an objective of extending high quality IT services across various industry
segments. Gradually, the company has evolved into an end-to-end IT services
provider with core competencies in Technology IMS and Application software
services. Glodyne has strategic alliances with various global technology giants like
Sun, IBM, CISCO, SAP, Oracle, Microsoft and Acer among others.
Company’s service offerings straddle across industry segments such as BFSI, egovernance,
education, retail, manufacturing, ISVs & ISPs. Its clients include some
blue-chip companies and mid and large size organizations. The service
engagements vary from few months to years of partnership.
Glodyne is a Level-1 Turnkey Solution Provider empanelled by Department of
Information Technology and Government of Maharashtra. Apart from Glodyne,
there are a select few IT companies like IBM, TCS, Wipro, CMC and Tata Infotech
in this league.
Glodyne has presence in the US through its 100% subsidiaries in California,
Virginia & New York.

Business Segments

Glodyne operates in two strategic business segments (SBUs) of Technology

Technology IMS Application Software Services

Facilities & Helpdesk Management Application Development & Maintenance

Network Management Business Process Management

Remote Management Enterprise Application Integration

Disaster Recovery Management Testing & QA

Database & Datacenter Management IT Consulting

Server & Desktop Management Customer Relationship Management

Security & Storage Management HR Information Management Solution

Key clients

Industry Rev share % Key Client Names

BFSI 24.0 IDBI, JM Fin, Amex, HDFC, Stan C, Corp Bank, Deutsche Bank

E-Governance 21.0 Air India, MSSIDC, Mhada, BHEL, GoI, Indian Rail, Dept of Mah

IT/ITES 21.0 KPIT, Geometric, Acer, IBM, Symantec, Plateau, msoft, bmcsoft

Mfg & Retail 18.0 BPCL, Saint Gobain, Hindalco, Tata Motors, Globus, Pantaloon

Education & Research 11.0 IIMB, IMRB, SNDT, TAPMI, Bangalore Univ, IIA, AIMB

Telecom & Media 5.0 BSNL, CellBrite, Nortel, UTV, Hathway, O&M, Equant, ECI Tel

Glodyne has about 240 active clients with the Top 20 clients contributing 30-35% of revenues.
Domestic revenue share at 75%
With majority of the clients from India, about 75% of the Glodyne’s revenues are from the domestic market. The
balance 25% of revenues is from the US where the company has presence through subsidiaries. As the profitability is
higher in the US business compared to India, Glodyne is keen on increasing US revenue share by increasing its
presence. Company also believes that the current recessionary environment in the US would not impact its IMS business
as it targets the clients’ operational expenditure and not the capex, which is discretionary. Company has been
witnessing increasing ticket size of the deals in India.
Remote IMS Industry Size
As per McKinsey, the global IMS industry size is estimated at US$524bn in 2008. Out of this, the addressable market for
Remote IMS services is estimated at US$104bn. Remote IMS services out of India has been growing at a fast pace
increasing from ~US$1bn in 2005 to ~US$3.6bn in 2008. The projected Remote IMS industry size is US$28bn by 2013
of which India is expected to contribute US$15bn. Within the Tech-IMS, the wave towards Remote IMS has been driven
by:
ä Increasing realization by clients and vendors that majority (93-95%) of the technology infrastructure problems can
be solved remotely from the network operations centre (NOC).
ä Significant reduction (1/4th-1/5th compared to onsite) in problem resolution time from NOC assuring higher uptime
and better quality.
ä Cost savings for clients especially those outsourcing IMS for first time.
ä The vendors have been pushing for remote management due to higher profitability as compared to onsite
management. Remote resources are cheaper and could be deployed for multiple clients and attend (13-15 calls/daycompared to 4-5 calls/day onsite) higher number of calls/problems

Remote IMS is ~15% of Tech-IMS revenues for Glodyne
Currently, Remote IMS is ~15% of Tech-IMS revenues for Glodyne and has increased from a negligible contribution 2-3
years ago. This has been the single most important factor behind expansion in company’s operating margin from 11.6%
in FY06 to 18.2% in FY08.
Typically, IMS contracts are annual and pricing is based on assets managed
IMS services are provided under annual contracts, which are governed by strict SLAs (service level agreements) and
contains the uptime requirement (typically 97-99%). These contacts come up for renewal in the period of March-April-
May. In terms of pricing of the contracts, there has been a marked shift towards IT asset billing (US$xx/asset on
monthly or annual basis) from traditional manpower billing by global IMS vendors. An asset could be a desktop, server,
database, etc. The key reason behind this trend is the scalability and non-linearity of the former pricing model. As the
client’s IT assets increase, revenues for the vendor increases irrespective of whether additional manpower is deployed or
not. The client is mainly concerned about the uptime of his IT infrastructure. Further, clients’ sensitivity to pricing (in
context of switching between vendors) is lower compared to software services.
Penetrating an existing IMS account in three ways
Typically, an IMS vendor can penetrate a client or increase his wallet share in IMS budget in three ways:
ä By increasing the locations under service – For instance, starting with the main office of a BFSI customer and then
covering offices across state or country.
ä By increasing the number of asset under service – For instance, starting with managing 100 desktops and then
increasing the coverage number.
ä By increasing the type of assets under service - For instance, starting with desktop management and then managing
servers, database, security, etc.

Important alliances in place

Partner Nature of Partnership
SAP End-to-end enterprise applications services partner
Microsoft .NET Application Suite, development environment, desktop & server O/S
Oracle
Strategic relationship with Oracle for customized package development based on Oracle RDBMS. Glodyne is an Oracle
Technology Partner (OTN), the highest level in Oracle Technology.
Cisco Systems
Premier Partner of Cisco Systems for the entire range of its Networking products, specializing in providing enterprisenetworking
solution to its customers.
Sun Microsystems Platinum and iForce Partner as a privileged Sun ONE family member. Java J2EE Development Framework.
IBM Premium Business Partner for their Intel Servers, Laptops, Desktops and services
Glodyne has important alliances with leading global technology companies like Sun, IBM, Cisco, Oracle, Microsoft and
SAP. These alliances keep the company abreast about the latest technological developments and skill-sets apart from
providing direct business opportunities ie partnering with them for services in projects and indirect business
opportunities through reference/lead generation.

Pursuing inorganic growth opportunities actively

Links Group International Inc Front Office Technologies Inc
Acquired in March 2007 Acquired in October 2007
A Virginia based software services company A New York based IMS services company
Clients: Symantec, France Telecom/Orange Business, Openet,
Plateau, Equant Inc, etc.
Clients: Amex Bank, Stan C Bank, O & M worldwide, Bartle Bogle
Hegarty, Sotheby’s, Alchemy, etc.
Rationale: Client acquisition and cross-selling Remote IMS services
Rationale: Client acquisition and leveraging the onsite:remote delivery
model
Integration completed and the company is now
Glodyne Technoserve Inc
Integration is in process and the company is now Glodyne
Technoserve Inc
Clients added: 41 Clients added: 45

Over the last couple of years, Glodyne acquired two entities based in the US, Links Group International Inc (LGI) and
Front Office Technologies Inc (FOT). The former being a software services company, the key rationale behind its
acquisition was to cross-sell Remote IMS services to its esteemed clientele. Glodyne has already started providing
Remote IMS services to couple of LGI’s clients. The rationale behind FOT acquisition was to transition to Remote IMS as
FOT was a 100% onsite IMS services provider. Presently, Glodyne has already started providing Remote IMS services to
O&M Worldwide, one of the large clients of FOT. Company plans to pursue larger strategic acquisitions like these going
ahead.

Buoyant about growth potential of its HR solution

Glodyne has developed a complete HR information management solution called HrWorQ. It is a web-based solution
covering the entire employee lifecycle right from pre-recruitment to exit. With this solution, company intends to exploit
the domestic market for HR solutions, which is under-penetrated and does not have a choice of any complete solution
but individual modules like payroll processing solution, etc. Company intends to target the huge SME market in India by
offering HrWorQ on a SaaS (software as a service) model unlike the traditional license model. Under the SaaS model,
Glodyne would be hosting the web-based application governed by SLAs and charging the client on a per-person-permonth
basis. Presently, company is providing this solution on a SaaS basis to a financial services company in Mumbai
where it is charging Rs100-150 per-person-per-month.
Apart from above, company has also developed a core banking solution called FinWorQ. With this solution, company is
targeting the mid-sized and small-sized private banks and co-operative banks. As this solution cannot be provided on a
SaaS model due to regulatory restrictions, company would be selling it on the license model. All the costs associated
with development of the above two solutions have already been expensed.

NOC in Mhape; planning for an SEZ facility

Glodyne has a NOC in Mhape, New Mumbai, where 140-150 people work on 3-shift basis (24*7). It is fully occupied and
company is scouting for lease facilities nearby for meeting near-term growth requirements. For the long-term, company
is planning for an SEZ facility in Pune or Nagpur. The arrangement of the lease facility is critical for growth in the next
two years.

Manpower dynamics are different in Remote IMS

Presently, Glodyne employs ~650 people of which ~150 are in the US (including the recent acquisitions) and the rest
~500 are in India. In terms of segmental distribution, ~450 employees are in the Tech-IMS space with the balance
involved in ASS segment and support functions. According to the company, Remote IMS being a nascent service
offering, the salary levels and attrition levels are lower compared to traditional IT services. Glodyne offers Rs1.5-2lakh
pa to freshers (BE, BSC, MCS, etc) with relevant certifications. This is significantly lower than Rs3-3.25lakh pa salary
offered to freshers by large and mid-sized software companies. Further, the attrition for Glodyne is lower than industry
at 12%.

Company expects 45-50% organic growth in FY09

Based on the current revenue visibility, company expects organic revenues between Rs4.42-4.68bn in FY09 implying 44-
52% growth over FY08. Company, presently, has committed revenues to the tune of Rs2.4bn (50-55% of guidance)
from the recently renewed IMS contracts. With further shift towards Remote IMS, company expects operating expansion
by ~250-300 bps to 21-22% in FY09. For Q1 FY09, revenues are expected at Rs1-1.04bn representing 2-7% qoq
growth.

Targets Rs10bn revenue by 2010

Glodyne targets Rs10bn revenues by 2010 through both organic and inorganic growth. In 2010, it expects Tech-IMS to
form a far higher proportion (compared to 65% currently) of revenues due to its faster growth potential and
management’s focus. ASS segment would continue grow at industry rate. However, company cannot afford to ignore the
ASS segment as software capabilities are critical for winning large turnkey projects, which would include both IT
infrastructure and software management. Within Tech-IMS, Remote IMS is expected to contribute 50% as compared to
~15% at present. Operating profitability is estimated to expand to 24-25% with increase in Remote IMS share. In terms
of geography, company is looking at a revenue composition of US-40%, India-30% and Europe & Others–30%.

About the management

Mr. Annand Sarnaaik – Chairman & MD

Annand is the founder promoter of Glodyne. He holds a bachelor’s degree in Engineering and Master’s in Business

Administration from Jamnalal Bajaj Institute of Management Studies. Annand plays a key role in defining the company

strategy and in using technology and innovation continuously to achieve the company’s vision. He leads the company

efforts in growth strategy, alliances and corporate structuring, a recent instance being the acquisition of Links Group

International, Virginia & Front Office Technologies Inc by Glodyne.

Annand began his career in 1990 with HCL-HP Limited where he experienced the changing face of IT and recognized the

opportunities in the sector. With a desire to create a world class IT organization, he started Glodyne in the year 1997. In
2007, Annand was conferred with the prestigious “Udyog Rattan Award” by The Institute of Economic Studies, New
Delhi.

Mrs. Divvyani Sarnaaik – COO & ED

Divvyani is the co-founder of Glodyne. She overseas all the operating business units and is responsible for account
delivery management including people and operations management. Divvyani focuses on increasing competitiveness,
improving customer experience, improving employee engagement and increasing the depth of services. She has an
overall experience of about 16 years in IT and Finance.
Over the last 2-3 years, company has expanded its management bandwidth by attracting experienced people from Sun,
Lucent, etc, to join as head of sales, finance, software services and HR.


source :-visit note of india infoline

TOP SCRIPS TO BUY FOR LONG TERM (TECH SECTOR)

1. KLG Systel Ltd                    --- NOW355 ONE YEAR TARGET 1000

2.Glodyne Technoserve Ltd     --- NOW 475. ONE YEAR TARGET  1000 2YEARS 2000   3.Accentia Technologies Ltd    --- NOW 189  ONE  YEAR TARGET 500 ONYL FOR LONG  TERM

The secret behind great investments is `gutsy moves'

The masters don't gamble. "They invest deliberately and purposefully, and they outperform the average investor as a result."

Markets have been going down and up. If that makes you feel queasy, here is help. "You can achieve success in the stock market if you follow a set of well-defined investment principles and refuse to abandon them when the market acts irrationally," assures Scott Kays in 5 Key Lessons from Top Money Managers, from Wiley (www.wiley.com).

First check if you belong to the majority in the world of investment that comprises those who want hot stock tips. "Unwilling to learn the rudiments of investing, they invest in companies because `they've been going up.' The thrill of the action is as important to them as the profits they make." To them, investing is not about maximising the returns over time.

The minority are the few who study the art of investing "in a constant effort to increase their knowledge and improve their skills." Kays points out that these people take time to learn what matters when buying the stocks. "They don't gamble; they invest deliberately and purposefully, and they outperform the average investor as a result."

Chapter 1, titled `The return of common sense', reminds us that many complex investment strategies only veer investors away from the crux. "What kind of pattern is the stock's price chart forming? What was the stock's relative strength last week? The masters classify these questions as irrelevant distractions."

More right than wrong

Great investments are about `gutsy moves,' requiring the execution of the fundamentals, using `straightforward methodologies,' even as lesser mortals look for `something flashy, something unusual, to give them an edge.' The difference is simple: "The naïve talk of what should do well over the next few weeks; the masters consider the long term."

The author devotes a chapter each to five top money managers, beginning with Andy Stephens of Artisan Mid-Cap Fund. The art of portfolio management, the way Stephens does it, is to be right more than being wrong — at least to be right in a bigger way. "It's a trade-off between capitalising on opportunities and protecting my downside if I make a mistake," he says.

Structural competitive advantage that he seeks in enterprises has four components, viz. dominant market share, proprietary asset, lowest cost structure, and defensible brand. "Firms that possess two or more of these advantages will likely perform in the upper quartiles of their industries. Because their cash flow is safeguarded, investors can value these firms with a higher level of confidence."

Lessons from mother

Next expert is Bill Nygren of Oakmark Select Fund, who learnt all about investing from his mother. She kept the family on a strict budget, he remembers. "A true value shopper, she visited three supermarkets each week, checking out the specials they were each running... If an item was fully priced, she bought less of it or passed on it completely."

Kays notes that buying quality, undervalued-companies gets you only halfway to a successful investment experience. "Knowing when to sell a security is just as important. Fortunes have been lost because investors have tried to squeeze every penny out of winning situations and held on to positions long after they should have gotten rid of them."

Sell a company when its price reaches 90 per cent of its fair valuation, Nygren advises. "Liquidate a position when a company fails to perform fundamentally as you expected. If you realise you made a mistake, the sooner you admit it and deal with it, the more likely you will minimise its impact on your performance," are further insights of immense value.

No lottery tickets

The third expert that Kays introduces you to is Christopher C. Davis of Selected American Shares. The foundational principle he adopts to select securities is, "Stocks are not pieces of paper like lottery tickets, but they represent ownership interests in real businesses." Once you accept that, answer the following two questions: "What kind of businesses do you want to own? And, how much should you pay for them?"

According to Davis, "Businesses that grow their values at above average rates for long periods of time make the best investments." His three criteria of superior businesses are: Financial strength (as evidenced by a strong balance sheet and high returns on invested capital), competitive advantages (such as brands, patents and economies of scale), and shareholder-oriented management (with a strategic vision and a realistic plan).

To assess the last criterion, that is, shareholder orientation, Davis digs deep to understand `the thought process and logic' of the company managers' capital allocation decisions. "Before he invests in a company, he ensures that managers have a strong understanding of their cost of capital and the return they expect to achieve on investments."

Compound mystery

Bill Fries of Thornburg Value Fund, the fourth expert you encounter in the book, recounts how his eighth-grade teacher unlocked the mystery of compound interest, and sparked his interest in saving and earning money on money!

What is his investment technique? He divides his portfolio into three types, viz. basic value, consistent earners, and emerging franchisees. Fundamental research that he uses filters out for promise and discount. "A cheap stock can remain cheap indefinitely," he cautions. Identifying cheap stocks is easy; what's tough is "finding companies that can achieve a healthier than generally expected future."

Two core philosophies

The fifth expert is John Calamos Sr, of Calamos Growth Fund. His core philosophies are two. One, "to create wealth, you have to give up some of the upside to preserve capital on the downside." Calamos quips, "I'm long-term bullish, short-term scared, all the time." While the economy can create significant prosperity over time, "the stock market can drop unexpectedly at almost any moment," he warns. "When that happens, he wants to maintain his principal intact, even if that means missing out on some of the market's growth during the good times," explains the book.

His second philosophy reads, "No strategy works very well for very long, so you have to keep evolving your process." Calamos says there is no `magic quantitative equation' that works all the time. "If such a formula existed, everyone would use it and it would no longer work. What works at any point in time constantly shifts."

source:DEEPWEALTH

What Lessons Did You Learn Or Relearn From The Recent Market Crash?

The recent market correction has taught (again) every investor a thing or two. Although the recovery in the past weeks has given investors some relief, but some of the losses might as well be permanent loss of capital. We started a thread, ask our users to share the lessons he/she learned in the market crash. Hopefully all of us can learn from each other’s lessons and do better next time.

These are the summary of the lessons shared by our users. If you have something more, please feel free to add at the end of the article.

1. Only invest in what you understand

One of the key factors in investment decision making is how much confidence you have to your investment idea. Warren Buffett has taught us many times that we should only invests in simple businesses. If investors stays in their circle of competence, it is easier for them to build the higher level of confidence in the investment ideas. They will know better what to do if this idea declines another 30%.

2. Don’t settle for less

“I learned that if there aren't any good deals, there aren't any good deals. Don't try to convince yourself and change your standards if there is nothing that meets your criteria (undervalued, good business, good prospects, etc.).” Wrote user sleepyhungry.

One of reasons that our Guru Robert Rodriguez avoided the recent market crash is that he has an absolute value approach. In March 2006, he wrote: “As an example, the value screen that I have used for many years recently identified only 73 names, close to the record low of 47, out of a universe of 9,440 in the Compustat database. This screen included stocks with market capitalizations between $150 million and $3 billion. Of the 73 names, 53 were between $150 million and $1 billion. When I expanded the screen to include stocks with market capitalizations up to $20 billion, only 20 additional companies were identified.”

Considering that, Robert Rodriguez has been very cautious with market valuations. He and his fund did not buy any stocks since Nov. 2007.


3. Don’t Buy on Margin

Buy on margin helps you generate better returns when market is at your favor. However, market will never be in one direction. It can quickly erase your returns if things don’t work out. Worse yet, you may be forced to sell on margin calls, when it is the time that you should be buying.

4. Buy slowly and average down

Don’t be concerned that you will miss the opportunity and buy too quickly. Buy slowly. If you miss it, don’t try to catch up by paying a higher price. Buy slowly; Mr. Market will always give you another opportunity.

5. Mr. Market can also kill businesses

We have always learned that business valuation is independent of Mr. Market. But for companies that are highly dependent on capital market, Mr. Market’s sentiment can break the chain of operations of some business. Avoid companies that are highly leveraged and susceptible to Mr. Market’s sentiment.

Do not forget the lesson of Bear Stearns.

6. Always keep some cash

Staying fully invested helps your returns when the market is going up. But the benefits of holding some cash and buy on better opportunities may help even more. Bruce Berkowitz is willing to hold cash. He fund always holds about 20% of cash. Holding cash may hurt the overall performance if the market goes up, but he is willing to hold cash because he believes that a certain amount of liquidity in the Fund’s portfolio is desirable to take advantage of new investment opportunities. “No. 1, we don't have to sell that which is cheap [in order to] to buy that which is cheaper, especially companies that we have gotten to know and love. And No. 2, where there are special situations, we can act quickly.” He wrote.

Please add the lessons you have learned in the comment area. We may give an update on this article if users contribute better ideas.

source:-GuruFocus News

Aegis Logistics Ltd

Aegis Logistics is an India based company that provides logistics and warehousing services. It is broadly engaged in five businesses including port handling and storage; sourcing, marketing and distribution of chemicals; gas sourcing, storage and distribution; petroleum sourcing and distribution; and supply chain and logistics services. The company operates primarily in India. It is headquartered in Mumbai, India and employs 139 people.

The company recorded revenues of INR3,915.4 million (approximately $97.3 million) during the fiscal year ended March 2008. The net profit of the company was INR384.4 million (approximately $9.5 million) in the year ended 2008.

stock has fallen from 280 rs. consolidated at 170 level.stock is ready to spurt up to 225 near term .

after first quarter results on 29 june. just buy for short term

Maithan Alloys Ltd.

Maithan Alloys Ltd.- An ISO-9001:2000 company



Manufacturer of Ferro Manganese and Silico Manganese with combined annual production capacity of 80000 Tons.

Mainly catering the need of all major Steel Plants in India and supplying to overseas buyers throught own export wing

Furnace Capacity :
1 x 8.25 MVA submerged arc furnace
1 x 7.5 MVA submerged arc furnace
2 x 6 MVA submerged arc furnace


equity capital - 9.71 cr.

it has posted for 06-07 -150cr turnover and net profit of 11.96(e.p.s 11.96)

for 07-08- posted 378.43 cr turnover and net profit of 39.18 cr(e.p.s -40.03) .
for 08-09- first quarter posted 206.44 cr turnover and net profit of 31.44 cr(32.37e.p.s)


it was listed in bse only . it was listed on last may in bse. listed at 2230rs. on listing day close at 580on same day because of low liquidity public share holding only 5%
year low -178 rs
JUST BUY FOR SMART GAIN

TOPDividend Yield Stocks

Company- Ex Dividend - Dividend -CMP- Fv- DIV Yield- N. SalesQ4- N. ProfitQ4 -Eps -PE

1 Flex Foods 30/07/2008 20% 25 10 8.10% 40 7 5.6 4.4
2 Polyspin Exports 30/07/2008 7% 10 10 6.84% 36 1 1.3 8.0
3 Royal Orchid Hot 23/07/2008 60% 90 10 6.68% 86 31 11.3 8.0
4 GIC Housing Fin 16/07/2008 40% 62 10 6.49% 271 56 10.5 5.9
5 Barak Valley 17/07/2008 20% 32 10 6.20% 70 11 5.0 6.5
6 Valson Inds. 23/07/2008 25% 42 10 5.95% 61 2 4.6 9.2
7 Munjal Showa 17/07/2008 100% 34 2 5.81% 709 19 4.8 7.1
8 Hawkins Cookers 16/07/2008 100% 174 10 5.76% 204 11 21.3 8.2
9 Ador Welding 17/07/2008 80% 139 10 5.75% 261 23 16.6 8.4
10 NIIT Tech. 18/07/2008 65% 116 10 5.62% 445 143 24.4 4.7
11 PAE 17/07/2008 15% 27 10 5.48% 230 6 6.3 4.4
12 Atul 18/07/2008 30% 55 10 5.44% 1014 37 12.3 4.5
13 XPRO India 17/07/2008 15% 28 10 5.36% 129 0 0.3 91.9
14 Bhagiradha Chem 24/07/2008 25% 47 10 5.31% 82 7 13.0 3.6
15 Visaka Inds. 23/07/2008 30% 57 10 5.25% 433 8 4.8 11.8
16 Cosmo Films 16/07/2008 50% 97 10 5.18% 585 45 22.9 4.2
17 Natural Capsules 24/07/2008 10% 20 10 5.08% 20 3 5.8 3.4
18 Ashok Leyland 16/07/2008 150% 30 1 5.07% 7729 469 3.5 8.4
19 Jenburkt Pharma 23/07/2008 12.50% 25 10 5.06% 38 1 2.8 8.8
20 Z F Steering 22/07/2008 80% 158 10 5.06% 223 28 30.7 5.2
21 Guj. Borosil 21/07/2008 10% 10 5 5.02% 82 6 0.8 12.1
22 IP Rings 15/07/2008 25% 50 10 5.00% 54 3 3.6 14.1
23 Elnet Technolog 22/07/2008 20% 43 10 4.67% 16 4 9.2 4.7
24 AVT Natural Prod 16/07/2008 35% 76 10 4.61% 87 9 12.2 6.2
25 Blue Star Info. 22/07/2008 25% 54 10 4.60% 110 5 5.0 10.8
26 Albert David 23/07/2008 30% 67 10 4.51% 158 7 12.9 5.2
27 Transwarranty Fi 28/07/2008 10% 22 10 4.47% 6 2 1.7 13.3
28 Oriental Hotels 22/07/2008 105% 240 10 4.38% 216 43 24.4 9.9
29 Cheviot Company 31/07/2008 100% 231 10 4.32% 180 22 48.8 4.7
30 GTN Textiles 17/07/2008 6% 14 10 4.17% 109 1 1.0 14.4
31 NRB Bearings 24/07/2008 120% 58 2 4.16% 321 34 6.9 8.3
32 Karur Vysya Bank 16/07/2008 120% 296 10 4.05% 1134 208 38.6 7.7
33 Mayur Leather 31/07/2008 8% 20 10 4.00% 24 3 5.5 3.6
34 Everest Inds. 17/07/2008 40% 102 10 3.92% 285 14 9.7 10.5
35 Damodar Threads 31/07/2008 15% 38 10 3.92% 176 3 8.6 4.4
36 SKP Securities 17/07/2008 12.50% 33 10 3.84% 15 2 4.0 8.1
37 J K Cements Ltd 16/07/2008 50% 131 10 3.82% 1458 265 37.9 3.5
38 G G Dandekar 17/07/2008 300% 80 1 3.76% 17 4 7.7 10.4
39 Bank of Baroda 17/07/2008 80% 215 10 3.71% 11813 1436 39.3 5.5
40 Khaitan Chemical 17/07/2008 18% 49 10 3.70% 394 9 9.3 5.2
41 Harita Seating 30/07/2008 25% 70 10 3.60% 191 6 8.2 8.4
42 Tata Coffee 30/07/2008 70% 196 10 3.57% 307 25 13.2 14.8
43 Magna Electrocas 30/07/2008 21% 59 10 3.54% 54 4 8.6 6.9
44 Cravatex 16/07/2008 35% 99 10 3.54% 51 1 9.7 10.2
45 Central Bank 22/07/2008 20% 57 10 3.52% 7996 550 13.6 4.2
46 Cholamandalam DB 23/07/2008 40% 114 10 3.51% 891 59 11.4 10.0
47 Aeonian Invest. 18/07/2008 350% 199 2 3.51% 22 18 37.1 5.4
48 Hyd.Industries 08/01/2008 50% 143 10 3.51% 483 14 18.8 7.6
49 PRICOL 24/07/2008 60% 17 1 3.45% 606 19 2.1 8.2

India's rating is lowered to negative by firm

Fitch Ratings lowered India's domestic rating outlook to negative from stable on Tuesday, citing the central government's worsening fiscal position.

It maintained the country's BBB-minus rating for both its local currency rating and its foreign currency rating.

The outlook on the country's foreign currency rating is stable.

Fitch said higher subsidies, interest payments and public wages, along with bonds issued to oil and fertilizer companies, could push up the underlying federal fiscal deficit in 2008/09 to 6.5 percent of gross domestic product or even higher.

The government is trying to contain the fiscal deficit within 2.5 percent of GDP in 2008/09, below last fiscal year's 2.8 percent. The fiscal year runs from April to March.

James McCormack, Fitch's head of Asia sovereign ratings, said in a statement that the change in the outlook was also partly due to a notable increase in government debt issuance to finance subsidies not reflected in the budget.

"Future actions with respect to India's local currency rating will depend largely on whether the FY09 fiscal slippage is reversed, which would allow for a resumption of the decline in India's high government debt ratios," McCormack said.

Fitch expected the trade deficit to widen further to 8.2 percent of GDP in 2008/09 from 7.7 percent of GDP in 2007/08, driven by high oil prices.

It projects the current account deficit to be broadly unchanged around 1.5 percent of GDP.

"Based on the change in global investor risk appetite and the less certain short-term macroeconomic outlook for India, Fitch believes capital inflows will decline sharply in FY09, but they are expected to be sufficient to finance the current account shortfall," it said.

Some Advice from Warren Buffet for Difficult Times

There is an alleged ancient Chinese curse, “May you live in interesting times.”

While there is no historical proof of the origin of that curse, there is ample current proof in the securities markets that  we are living in interesting times. It’s simply nasty out there — or at least it feels that way.

The image shows the year-to-date performance of six key asset classes:

• US Total Stk Mkt (VTI)
• Non-US Developed Stk Mkts (EFA) - excludes Canada
• Emerging Markets (EEM)
• US Equity REITs (VNQ)
• Commodity Basket (DJP)
• US Aggregate Bonds (AGG)

Commodities are up, REITs are up but rolling over, and everything else (stocks and bonds) is down.

Click image to enlarge

That made us think about advice from Warren Buffet for difficult times.  Here are some of his comments that may be relevant as investors watch wilting portfolios:

Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful.

Our favorite holding period is forever.

If you are a professional and have confidence, then I would advocate lots of concentration. For everyone else, if it’s not your game, participate in total diversification. The economy will do fine over time. … buy a cheap index fund and slowly dollar cost average into it.

We don’t get paid for activity, just for being right. As to how long we’ll wait, we’ll wait indefinitely.

The stock market is a no-called-strike game. You don’t have to swing at everything  –  you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’

Clearly, Warren Buffet did not mean that if you hold a poorly designed portfolio you should hold forever.  He means that if you used good judgement and had conviction when you invested, you should not be troubled by storms, which are always followed by sunshine.

Billion dollar investing tips from Warren Buffett

Widely considered the most successful investor of all time, Warren Buffett is a luminous example of the school of value investing. Starting with an initial fund of $105,000 in 1956, Buffet grew it to $45 billion over the next 50 years, making him the second richest man in the world.  Though he is widely recognized as being an investor, the bulk of Buffet's wealth was built through intelligent use of leverage offered by his insurance companies. Since most individual investors do not have access to the type of capital that Buffet does, it is not easy to replicate his astounding wealth-building feat. However, by understanding and applying the basic guidelines of Buffett's investment approach to their own investing decisions, most long term investors can comfortably beat the returns of all but the best mutual fund managers.

So, how did Buffet accumulate the huge fortune that he eventually gave away to the charitable foundation run by his best friend, Bill Gates? One of the greatest attractions of Buffett for investors is that his investment methodology is easy to understand. However, it is far more difficult to apply because it calls for large amounts of patience and calm when your stocks move against you. It is also difficult to apply because it requires an orientation towards research and the ability to understand the complexities of accounting and finance. But for those willing to invest time and effort into mastering this approach, superlative investment performance over the long term is guaranteed.

Invest in Businesses, Not in Stocks

"Whenever we buy common stocks for Berkshire's insurance companies (leaving aside arbitrage purchases), we approach the transaction as if we were buying into a private business. We look at the economic prospects of the business, the people in charge of running it, and the price we must pay." -- Warren Buffett

This is the cornerstone of Buffett's investment style. Whenever he evaluates an investment opportunity he analyses it as a business and not as a stock.  This makes him look closely at the company's fundamentals, earnings prospects, financial health and management.  Conversely, this style of evaluating a business prevents him from buying a stock just because it is going up even though it has dubious prospects. A lot of investors tend to buy stocks based on tips from friends, acquaintances or brokers. By adopting Buffett's approach, you can save yourself a lot of grief later on.

Only Buy Businesses that You Understand

"Did we foresee thirty years ago what would transpire in the television manufacturing or computer industries? Of course not. Why, then, should Charlie and I now think we can predict the future of other rapidly evolving business? We'll stick instead with the easy cases. Why search for a needle buried in a haystack when one is sitting in plain sight?" -- Warren Buffett

Buffett has a track record of generating 21 per cent annually compounded returns over a 50-year time frame, a feat matched by very few investment managers. Though technology companies delivered some of the best returns during this period, Buffet has never owned one for the simple reason that he could not understand the long term prospects of these companies and evaluate them thoroughly. So the next time you get a tip to buy a "hot" company that you do not understand, you should ask yourself: "If the greatest investor in the world will not invest in something he doesn't understand, should I?"

Buy Companies with Defensible 'Franchise'

"As Peter Lynch says, stocks of companies selling commodity-like products should come with a warning label: 'Competition may prove hazardous to human wealth'." -- Warren Buffett

Most of Buffett's portfolio companies, such as Coca Cola, Gillette (now Procter and Gamble), American Express and Washington Post, are businesses which have a significant hold over their market. This is because they have inherent competitive advantages, whether it be a highly recognizable brand, or near-monopoly status in a geographic area. Such companies can typically raise their prices without fear that customers will walk away. This in turn produces fantastic earnings growth and, consequently, great investment performance. So, before you make an investment in future, try to understand whether the company you are investing in has a strong and defensible market position and whether it can raise prices if it needs to.

Hold for the Long Term

"We are willing to hold a stock indefinitely so long as we expect the business to increase in intrinsic value at a satisfactory rate . . . we do not sell our holdings just because they have appreciated or because we have held them for a long time." � Warren Buffett

Buffett's companies have generated enormous returns for him. For example, his investment of $10 million in 1973 in the Washington Post Company had grown to more than $1 billion by 2003. While a lot of us may be able to do this occasionally, Buffett has generated such returns with startling regularity. One of the reasons he is able to do so is because he holds for the long term and is not quick to enter or exit businesses. In fact, he stuck with WPC for two years even though its price fell below his purchase price because he understood the fundamentals of the business and believed that it was undervalued. Even once it became profitable, he was not quick to exit because he believed that it had greater potential. He held it through several bull and bear markets and no greater proof is needed than the return he achieved to show that he was right in holding it for so long.

Ignore Short-Term Fluctuations in Price

"Charlie and I let our marketable equities tell us by their operating results�not by their daily, or even yearly, price quotations�whether our investments are successful.  The market may ignore business success for a while, but eventually will confirm it." � Warren Buffett

The stock market has a tendency to overreact on both the upside and downside. Often the market ignores the fundamentals of a business and reacts sharply to news flow. Sometimes entire sectors become either unduly depressed or overpriced. One of the key pillars of Buffett's approach is to ignore short-term fluctuations in price. He does not sell a stock because the market suddenly decides to drop. Neither does he buy one because it is going up. Once Buffett has calmly evaluated the fundamentals, he will buy the stock if its price is right. If the stock dips after he has purchased it, he does not worry so long as its fundamentals are good. Had he gotten jittery due to short-term price fluctuations, he would have been a lot less richer than he his currently.

Buy Good Businesses When Prices are Down

"If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?  Many investors get this one wrong.  Even though they are going to be net buyers of stocks for many years to come, they feel elated when stock prices rise and depressed when they fall.  Only those who will be sellers of equities in the near future should be happy at seeing stocks rise.  Prospective purchasers should much prefer sinking prices." � Warren Buffett

On 19 October 1987, all global stock markets crashed. The Dow Jones Industrial Average actually suffered a decline of 22 per cent, the greatest single-day drop in its history. Every stock on the market fell. Most people sold their holdings in panic that day. Buffett, however, was buying! He made the single largest stock purchase of his life that day. While all others around him hit the panic button, Buffet bought 10 per cent of Coca Cola for $1 billion. Not only was it his largest single stock purchase, he also became the single largest shareholder in the company. In his analysis, Coca Cola had a great business, great long-term prospects and the ability to expand because of globalisation. If the market was willing to sell it at an unreasonably cheap price, he wanted to scoop it up with both hands. And scoop it up he did! Coca Cola became one of the most successful investments in Berkshire's portfolio. By 2006, Buffett had made over $11 billion on Coke since he bought it.

Don't Be an Active Trader

"Indeed, we believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a romantic." � Warren Buffett

Buffett is an atypical investor not only because he is highly successful, but also because he does not even look at stock tickers. He believes that trading too much is a tax-inefficient and costly approach to investing. Consequently, he has a very low turnover portfolio, very low brokerage charges and has not paid very much in the nature of capital gains taxes.

Do Not Over-Diversify

"If you are a know-something investor, able to understand business economics and to find five to ten sensibly priced companies that possess important long-term competitive advantage, conventional diversification makes no sense for you." -- Warren Buffett

A striking aspect of Buffett's portfolio at Berkshire is the small number of stocks in it. This number has rarely exceeded 10 stocks. Buffett believes that there are very few outstanding investment opportunities at any given point of time and that one should invest enough in each of those to make a substantial difference. In contrast, most people fill up their portfolios with more than fifty stocks. As a result, even if a stock appreciates 100 per cent, the impact on their net worth will only be 2 per cent. Investors who want to generate truly outstanding returns should identify a small number of great businesses at the right prices and invest a significant amount of their money in each of them.

Invest Only When There is a Margin of Safety

"Margin of safety" is a slightly difficult concept to understand. It can be loosely defined as the difference between value and price. If the value of what you buy is higher than the price you pay for it, you have a high margin of safety. If the price you pay is greater than value, you have a low margin of safety. When the margin of safety is high, the investor need not worry about short-term fluctuations in price and can buy more if he or she has the resources to do so. Also, if you are investing in a situation with a significant margin of safety, you are likely to make a higher return because you are buying at a relatively low price.

 However, how does one quantify this margin of safety? It is admittedly a grey area. There are seemingly scientific approaches, such as the discounted cash flow, which are taught in most corporate finance textbooks. In practice, though, it is both very subjective and very difficult for an individual investor to apply. However, there are other short cuts which are more approachable. Since the discounted cash flow ultimately crystallizes into the price / earnings (P/E) ratio, one way of estimating the margin of safety is to look at the P/E ratio. A low P/E means there is a margin of safety. But even this approach has its pitfalls. Slow growing, lousy companies often tend to have low P/E ratios. And, sometimes, very promising companies have high P/E multiples. 

One way around this problem is to divide the P/E ratio by the growth rate of the company's profits to arrive at its price-earnings to growth ratio. Thus, if a company's P/E is 20 and the growth rate of its profits is 20 per cent, its PEG is 1. Oftentimes, a PEG of less than 1 implies that there is a significant margin of safety. A PEG of greater than one means that the margin of safety is not very high.

That said, PEG is not the holy grail of valuation and there are several ways to value a company -- and all these approaches have their flaws. You can consider your time well invested if you spend some time researching valuation by reading a corporate finance textbook.

Thus, Warren Buffet's investment approach is easy to understand, but calls for significant effort on your part to understand businesses, evaluate them and invest successfully but then, nobody said that becoming a billionaire was easy! 

Flex Foods Ltd.

Flex Foods Ltd is a part of Flex Group Of Companies including Flex Industries Ltd., Flex Engineering Ltd. and other companies involved in packaging and information technology business with a total turnover of Rs 1.4 Billions( Dollar 300 Millions).The Company is engaged in the business of agro based value added food products catering to the international markets mainly in Europe, USA, Canada & Middle East countries. The company started its commercial operations in 1992 by establishing an 100% EOU for vacuum freeze dried vegetables mainly mushroom and culinary herbs with a total processing capacity of 2000 MTs per annum. As a backward integration, company simultaneously established an "state-of-the-art" mushroom growing unit with a capacity of 2000 MTs per annum and successfully achieved the 100% capacity utilization by producing high quality white button mushroom through in-house technology development & process optimization along with the technical support from M/s Agrisystems, Holland. The company also deals in canned mushroom with the brand 'Chef's Choice'. Recently FFL has embarked on a major expansion programme by installing the world class manufacturing facilities for IQF and Air- Dried Mushrooms, Culinary Herbs & Fruits/ Vegetables.The company has been a major success story in the food processing sector in India with very high degree of value addition through annual export turnover of approximate Rs.300 Millions


Flex Foods offers a wide range of Vacuum Freeze Dried, Air-Dried, Frozen and IQF (Individually Quick Frozen) product range of mushrooms, herbs, spices and fruits / vegetables, meeting strict quality & hygiene standards. Canned button mushroom in various shapes and sizes .

Manufacturing Plants:

Its processing infrastructure comprises the most modern plant and equipments from leading technology providers like Niroan of Denmark, Non of Holland, Binder of Germany and Eurotek of UK along with others from Indian companies. The plant can process upto 20,000 TPA of fruits & vegetables in the form of freeze dried, frozen, IQF, air-dried and canned products. All the steps from the receipt of raw materials till final packaging of the products are under strict quality environment & hygienic conditions to achieve the highest level of microbiological & phyto-sanitary standards..

FFL uses the most modern compost technology. It has taken steps to produce economically and efficiently the best quality of mushrooms and herbs and produces high-yielding, visually attractive mushrooms with the desired flavour. It mainly produces white button mushrooms as the world demand continues to be centered on white mushrooms, which accounts for nearly 40% of the world production with major growers located in USA, Netherlands and China.

it has equity of 12.44Cr .it has posted 40Cr turnover and posted 7Cr net profit (e.p.s. of 5.6rs).and declared 20% dividend current price at26 dividend yield at 7.6% better that bank yield.
and available at 4.5 p.e .EV/EBIDTA is only 4.5 .
compare with peer company's .it is the cheapest stock in food industry

and i am expecting price of 40 rs in next 3 months.

and if u see the chart some body accumulating the stock .

BUFFETT: AN EVOLVING STRATEGY

BUFFETT:  AN EVOLVING STRATEGY
(exerpt from The Only Three Questions That Count by Ken Fisher, 2007)

Consider this... some category of stock outperforms the market for five years. A perponderance of investors jump on its band wagon, doing whatever it was that was so successful in those years. But those things stop working for the next five years or so, leading investors to think they will never work again. Because investors think they won't work anymore, it's very possible for them to start working again. They are no longer discounted into pricing but simply ignored because of cognitive error. They come through long periods where they haven't worked, so they are ignored for another long period. Then, when value comes back into favor they can and do work temporarily. Traditional craftsmen hate this kind of very real market phenomena because they want their tools to work the same way all the time.

This further illustrates the importance of continued testing and ongoing innovation... Let's take a sidestep on Warren Buffett. He doesn't or hasn't thought at all like I do, and my guess is he would say much of what I say is silly. Again, what other people think of me isn't my business. But I've spent a lot of time thinking about him for many obvious reasons. Among other things, I wrote the introduction to the second edition of The Warren Buffett Way by Robert Hagstrom (published by John Wiley, 2005)-- the bestselling biography of the man.

A quality standing out about Mr. Buffett is his ability to morph. If you read his materials from the 1960s, he said very different things than in the 1970s and early-1980s. Early on he was buying dirt-cheap stocks by simple statistical standards and typically smaller stocks-- which would today be referred to as small-cap value (although that term didn't exist until the late 1980s).

Later he bought what he called "franchises." Then he entered a period of buying great management of big companies and being a long-term holder-- otherwise thought of as big-cap growth today-- that many ascribed to the influence of my father (Philip Fisher) coupled with Charlie Munger. When Mr. Buffett was buying Coke and Gillette, you couldn't quite reconcile those activities with the kinds of things he owned two decades earlier.

Then, amazingly, seven years ago, at just the right time, he was buying smaller things dirt cheap again just as value came back into play as the twenty-first century began. I have other comments about Mr. Buffett throughout this book but I'd like you to see, while he never lost the core of what he was doing or what he was looking for, he tactically morphed steadily over the decades. Trying to freeze his tactics from any decade and replicate them in the next few would never have led you to his actual actions.

There is nothing wrong with that. It's as it should be. That he doesn't develop capital markets technology is just his way because-- I think-- he is mainly intuitive and in that regard very rare. But whether developing capital markets technology or being instinctual like Mr. Buffett, morphing, adapting, and changing are fundamental to success. Stagnancy is failure long term. Since I don't know how to be instinctual, I rely on the Three Questions and building capital markets technology.

Credits: This article is extracted, with minor modifications, from The Only Three Questions That Count, by Ken Fisher, 2007 (Wiley Finance). 

THE STOCK PRICE UNCERTAINTY PRINCIPLE

I tend to look at stock markets in much the same way that a quantum physicist looks at photons or electrons. Every stock has an individualistic aspect to it (call it particlelike behavior) and a market aspect to it (call it wavelike behavior). A stock's market price at any given moment of any given day is determined by a very large number of influences-- some that influence just this particular business (like a profit warning or a big project award) and some that influence the overall market to varying degrees (like a natural disaster or a hike in interest rates).

When a stock is not being carefully observed day-to-day (or minute by minute) it can be considered to have a very wide range of possible movements. These price swings between new highs and new lows over any given period of time is inconsequential to us-- just a function of the stock. However, once any particular stock is added to our personal portfolio (it is "observed and measured"), it takes on a definite valuation-- our purchase price-- and all future price movements will be precisely monitored from this (irrelevant to the universe, but very relevant to us) new base value.

The range of all possible stock values has suddenly collapsed into one very important personal portfolio value because of our decision to purchase it. Future returns on this stock with every market movement are no longer viewed in terms of possibilities, but in terms of definite positive or negative percentages away from our clearly defined cost basis. The stock's return potential has suddenly moved from the realm of uncertainty to certainty.

There is, to put it mildly, says physicist Jeffrey Schwartz, something deeply puzzling about the collapse of wave function. The Schrodinger equation itself contains no explanation of how observation causes it; as far as that equation is concerned, the wave function goes on evolving forever with no colapse at all. And yet that does not seem to be what happens. All that we know from experiment and hard-nosed mathematical calculations is that the Schrodinger wave equation, describing a microworld of superposed wave functions, somehow becomes a macroworld of definite states. The most philosophical question about quantum mechanics is: "What happens to turn Schrodinger's wave equation into a single observed state, and what does that process tell us about the nature of reality?"

There have been at least three views expressed by physicists on this question. Einstein believed that the world was governed by what he called hidden variables. Although so-far undiscovered and perhaps undiscoverable, they are supposed to be the certainties of which the wave function of quantum physics describes the probabilities. As Schwartz explains, Einstein would compare us to goldfish rising to the surfact of their tank or pond with every passing giant blurry observer, somehow understanding there was some probability of flakes of food being sprinkled into the water with such occurrences. If only our little friends knew more about the world outside their confines of the pond or tank, they would understand that the arrival of the food is completely causal (a certain human walks over and sprinkles flakes on the water's surface at given feeding times).

Einstein's hidden variables view, in other words, says that things look probabilistic only because we are too stupid to identify the forces that produce determinism. If we were more clever, we would see that determinism rules. Einstein's beliefs tended in this direction, leading him to his famous pronouncement (often misrepresented as a religious statement from a scientist) "God does not play dice with the universe." It is easy to have the same opinion about stocks and markets, that we could possibly know where the price of any stock would trend tomorrow if only we were smart enough to anticipate and interpret all the causes and effects.

A second interpretation of quantum physics came from physicist Hugh Everett III in 1957. Instead of attempting to answer how the act of observation induces the wave function to collapse into a single possibility, the many-worlds view holds that no single possibility is ever selected. Rather, the wave function continues evolving, never collapsing at all. Every one of the experiential possibilities inherent in the wave function is realized in some superrealm, Everett proposed. If the wave function gives a fifty-fifty probability that a radioactive atom will decay after thirty minutes, then in one world the atom has decayed and in another it has not. Correspondingly, the mind of the observer has two different branches, or states: one perceiving an intact atom and the other perceiving a decayed one. The result is two coexisting parallel  mental realities, the many-minds view. Every time you make an oservation or a choice your conscious mind splits so that, over time, countless different copies of your mind are created.

In terms of stock market reality, Everett's many-worlds view offers an interesting proposal. Every stock really does have an infinite number of possible returns, as it can be purchased by an infinite number of portfolio managers at an infinite number of specific times. Each individual portfolio will have its own reality over time as the stock price continues its vacillation among all its probabilities of movements. In some worlds, some portfolios will achieve gains from their fortunate purchase at what, in hindsight, turned out to be a low price, while others will suffer losses after urchasing at what turned out, in hindsight, to be a high price. For some portfolio managers, it is a good stock, and for others, simultaneously, it will be a bad stock.

A third view of the change from superpositions to a single definite state is the one proposed by Neils Bohr. For Bohr, the abrupt change from superpositions to single state arose from the act of observation itself. This view developed during the intensely creative 1920s when the greatest minds in physics-- Paul Dirac, Neils Bohr, Albert Einstein, Wolfgang Pauli, and Werner Heisenberg-- struggled to explain the results of early quantum experiments. Bohr insisted that quantum theory is about our knowledge of a system and about predictions based on that knowledge; it is not about reality "out there." That is, it does not address what had, since before Aristotle, been the primary subject of physicists' curiosity-- namely, the real world.

Before the act of observation, reasoned Bohr, it is impossible to know which of the many probabilities inherent in the Schrodinger wave function will be actualized. This is not to say we can't calculate the probability of any single outcome, but we simply can't know with certainty which outcome will become our reality. We don't know exactly which stocks will be winners and which will be losers next year. But that is not to say we can't enhance significantly our judgment of the probability of a given stock falling into either category by employing a set of rational business screens. Uncertainty is not to be feared; it is the spring from which opportunity flows.

As Schwartz notes, physical theory at this time underwent a tectonic shift, from a theory about physical reality to a theory about our knowledge. Science is what we know, and what we know is only what our observations tell us. It is unscientific to ask what is "reality" out there, what lies beyond observations. Physical laws as embodied in the equations of quantum physics, then, ceased describing the physical world itself. They described, instead, our knowledge of that world. Physics shifted from an ontological goal-- learning what is-- to an epistemological one: determining what is knowable. This is not entirely unlike the shift from informed market speculation in the robber baron days to the Graham/Buffett methods of business analysis.

Sage@wallstraits.com

This article is extracted from The Philosophical Investor, published by WallStraits, 2005.

WHAT IS EV/EBITDA?

What is EV/EBITDA Useful For?

According to Peter Temple (Magic Numbers for Stock Investors, Wiley 2004), the definition of EV/EBITDA is as follows:

EV/EBITDA is shorthand for a valuation method similar to the price-earnings ratio (PE). It tries to gauge the value of the company by comparing one of the measures of its market value with a profit number derived from the income statement.

EV is enterprise value. It is the market capitalization plus debt minus cash. You can calculate market capitalization by taking the issued shares of a company and multiplying them by the stock price.

EBITDA is an acronym. It stands for earnings before interest, tax, depreciation, and amortization. It is 'operating income' or 'operating profit' after adding back the charges for depreciation of fixed assets and amortization of goodwill. The reason for disregarding these charges is that they do not involve an actual cash expense.

The Formulas

EV/EBITDA = (market capitalization + total debt - cash) / EBITDA

EBITDA = pre-tax profit + interest paid + depreciation + amortization

The Components

Enterprise value (EV) has four elements:

• Issued shares: (common stock outstanding) -- these are shares that have been issued and are publicly trading.
  
  
• Share (or stock) price-- this is the current market price of the stock quoted every day in the newspaper or on your broker web site.
  
  
• Multiply these two together to arrive at the company's current market capitalization. EV is market capitalization plus total debt minus cash.
  
  
• Total debt-- this is the total of long- and short-term debt issued by or owed by the company and its subsidiaries. You can find it on the balance sheet or on the separate 'bank borrowings and debt securities' table on all MASNET earnings announcements.
  
  
• Cash-- the cash and fixed deposits stated on the balance sheet or cash flow statement.

EBITDA-- you can calculate this with relative ease from information in the company's accounts (and earnings MASNET announcement or company Annual Report). Most income statements (profit and loss statements) follow a similar pattern, with sales at the top. The cost of materials and other external inputs is subtracted from this figure to arrive at gross profit. From gross profit, various operating expenses are deducted to arrive at operating profit. But there are some charges like depreciation of fixed assets and amortization (annual write-offs) of goodwill that are book entries rather than actual payments.

EBITDA is operating profit after adding back the specific non-cash items of depreciation and amortization.

What It Means

EV/EBITDA is used as a means of comparing companies with high levels of debt or lots of cash, or those that are making losses at the net income level, but not necessarily further up the profit and loss column. You can also use it for comparing companies in the same industry but in different countries.

EV is a way of valuing a company in the same way, irrespective of its capital structure. Excluding the impact of interest and tax, the taking of earnings before interest and tax (the EBIT in EBITDA) as the denominator of the fraction balances this up.

In other words, debt is added back on the one side (in the EV calculation), and interest on debt is added back on the other (in EBITDA). Also, using a figure taken before deducting tax means that international differences in company tax rates can be ignored when comparing companies.

Is adding back charges like depreciation and amortization valid? The case is easier to make for amortization. It is usually related to amortizing goodwill, an arbitrary policy introduced by accountants. Those seeking to exclude depreciation from the equation are on shakier ground. Depreciation reflects the fact that physical assets wear out and have to be replaced. So though it is a notional charge at the time it is made, depreciation is a marker for real cost that must be borne by the business. It mirrors a cash expense in the future, which will occur when the assets are replaced.

Whether valid or not, EV/EBITDA is now widely used. However, it needs to be treated with extreme care, especially where used to justify the stock market valuations of loss-making companies. For example, you may notice Chartered Semiconductor and UTAC discussing EBITDA quite a bit. If a company has sizeable income from partly-owned companies, an adjustment may need to be made for this too.

Credits: Much of this article content is borrowed from Peter Temple's book, Magic Num8ers for Stock Investors, Wiley 2004.

TRF Ltd

TRF Ltd, established in 1962, is a pioneer in India for solutions in bulk material handling/processing systems and equipment, port & yard equipments and trailer undergears. It has over a period of 45 years been able to create a high demand for its products in the infrastructure sector in India such as power, steel, mining, cement, port, etc. TRF Ltd through its manufacturing base at Jamshedpur offers engineered products to meet specific requirements of its customers. The company undertakes turnkey projects for power and steel plants, ports and mining sectors.

The company also owns a subsidiary, York Transport Equipment (Asia) Pte Limited, Singapore,(http://www.yorktransport.com and http://www.yorktransport.com.au) which is engaged in the business of production and distribution of trailer undergears, with a market presence in 27 countries.

TRF envisages to flourish further in the days ahead through new investments in adjacent business areas and by expanding the current business.


CURRENT YEAR IT HAS POSTED 75 E.P.S(20RS . OTHER INCOMIN THIS ) AND 2009 IT WILL POST 85 AND 2010 E.P.S WILL BE125RS.
YEAR HIGH WAS 2100RS YEAR LOW 545 CURRENT PRICE 585 IS A OPPORTUNITY TO BUY

SEE THIS REPORT




NEWS CLIP MARCH 9, 2008
BUSINESS LINE SUNDAY MARCH 9, 2008
TRF ARM YORK TRANSPORT’S FACILITY TO COME UP BY YEAR‐END
Ambar Singh Roy
Kolkata, March 8
The second global production facility of York Transport Equipment (Asia) Pte Ltd
of Singapore – a subsidiary of the Jamshedpur‐headquartered TRF Ltd — is going
to be set up in India by the end of 2008‐09.
York Transport Equipment is engaged in the business of manufacturing and
distributing trailer undergears and trailer components and has a presence in 27
countries. The proposed manufacturing facility would be set up under the York
India umbrella, according to Mr Sudhir Deoras, Managing Director, TRF Ltd.
Possible location
The Tata Strategic Management Group has undertaken a study to determine the
size of the market for York products in India, its growth potential, and so on. The
location of York’s manufacturing facility in India, however, is yet to be decided.
“We need to be where the trailer manufacturers are located. One possible
location could be the Mumbai‐Delhi corridor,” Mr Deoras told Business Line.
According to him, with growth in the economy and expansion of the road
infrastructure in the country, movement of trailers was bound to go up. As such,
this offered great scope for business growth of companies such as York Transport
Equipment.
Mr Deoras said TRF Ltd — which is in the business of engineered equipment,
systems and services for bulk material handling systems, steel plant systems, coal
beneficiation systems, and so on — has acquired 51 per cent of the equity stake in
York Transport Equipment with a call and put option in place for acquiring the
balance 49 per cent by April 2010. Consequent to the acquisition of the 51 per
cent equity stake in York Transport, TRF has also taken over the management of
the company.
At present, around Rs 15 crore worth of York products are sold in India annually
under the York brand. It is hoped that, within the next three years, sales of York
products would generate a revenue of “at least Rs 200 crore” for York India, Mr
Deoras said.


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