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"HUGO BOSS SELECTS POKARNA

Pokarna Ltd has informed BSE regarding a Press Release dated September 25, 2008, titled "HUGO BOSS SELECTS POKARNA". This relates to collaboration of HUGO BOSS Ticino SA, a strategic business unit of HUGO BOSS Group with Pokarna Ltd in the Shifting Manufacturing segment.

Press Release :

"HUGO BOSS Ticino SA, a strategic business unit of HUGO BOSS Group is starting a new collaboration with Pokarna Limited in the Shirting Manu acting segment. Pokarna Ltd would be manufacturing high end premium Shirts for HUGO BOSS Ticino SA.

Commenting on the collaboration with HUGO BOSS Ticino SA, Mr. Gautam Chand Jain Chairman & Managing Director of Pokarna Ltd said “Pokarna is excited about the confidence HUGO BOSS has shown in our company. There is great potential to optimize synergies of both Companies which would help rapid growth of our apparel business and improve its profitability. We hope this is a long and rewarding partnership into the future".

Commenting on the collaboration with Pokarna Ltd Mr. Jan Huger of HUGO BOSS said
“As we aim for perfection in our manufacturing standards we were observing this opportunity since we first met more than three years ago, but now we feel that the time is right to start working together on a regular basis. We believe in long term relationship and consider our suppliers as partners rather than suppliers. Due to this we go through many tests and procedures before we add a new business partner to our portfolio. It is our objective to keep a business partner for minimum seven ears and therefore we have to exclude all potential risks. We also do not want to perform inter-regional transshipments of raw-materials and trimmings, which was another reason for having waited that long. We believe Pokarna Ltd's manufacturing skills would enable is to produce Hugo Boss Quality Standards following or even exceeding our expectations. Having done various test orders we are very optimistic and look forward to a prosperous and growing business relation with Pokarna Ltd".

Tulsyan NEC Limited

Tulsyan NEC Limited, a flagship company of the Tulsyan group, has reported a turnover of Rs.21036.90 lakhs for the quarter ended June 2008, an increase of 94.74% over the corresponding period last year. The net profit after tax has gone up to Rs.985.88 lakhs for the first quarter this year, against Rs.272.96 lakhs for the same period {last year(07-08) it has posted 535Cr.turnover and net profit of 13.34cr.}

The company was able to achieve substantial growth in sales due to increased demand for steel and plastics and also partly due to better sales realization. The additional demand for steel was met from the new rolling mill plant which had started commercial production from 1st July 2007 onwards.

About Tulsyan NEC Limited

Tulsyan NEC Limited is the flagship Company of Tulsyan Group. It is listed in the BSE and was established in the year 1947. Tulsyan NEC is one of the leading manufacturers of Thermo Mechanically Treated Bars (TMT) and Billets in the country. It is privileged to be the first Licensed Rolling Mill in South India to produce TMT Rebars and has got ISI 1786 and ISO.

The Tulsyan Group of Industries was founded by Late Shri. G. L. Tulsyan in the year 1938. The group, since its then has come a long way backed by well-planned diversification and expansion policies with its present annual turnover being Rs. 680 crores.


i am expecting net profit between 30-35Cr on an equity of 5Cr e.p.s should be 60-70rs. currently it is available at 09 earnings 1.3 p.e. current price 90 rs. it has fallen form 125 level expecting 150 level before second quarter results.(in a month time)

Credit crisis – Impact on us

The crisis is now full blown. I have not seen panic at this scale personally. I have read about it, but not seen it personally. It almost feels as if companies are being targeted one at a time. Lehman went into bankruptcy and AIG just survived through government help, though equity holders have been wiped out (almost). Now it seems the market has moved on to Morgan Stanley, Goldman Sachs and Washington mutual. It almost feels as if the market is killing one company at a time. Scary!

How does it impact us in India?
I think, the impact would initially be limited to companies with Global businesses. So IT companies with revenues in this space could get hit in the short term. However I think it should work out for these companies in the medium to long term as they find new clients, geographies and start growing again. The business model for IT companies is not under threat. However in the short run, IT companies are and could keep getting hit. However I would be worried about small IT companies with high exposure to the Financial and associated sector.

The next in line to get hit could be banks like ICICI bank and others, which have foreign operations and derivatives on their balance sheets. I am currently analyzing ICICI bank and I can tell you that complexity for most banks have gone up. As I wrote earlier, I exited banks quite some time back when I realized that I could not evaluate the risks correctly. That said, I think none of the Indian banks are under serious solvency threat. The profits could get hit, but most of the Indian banks do not have massive exposure of derivatives. I am analyzing ICICI and other banks from a depositor’s point of view and not from an equity investment point of view. So I am looking at these banks from a safety point of view.

Other than the above two sectors, I cannot think of any broad sectors, which could get hit hard by this crisis.

Second order and higher order effects
What is missed out in most analysis, is the second and higher order effects of an event. Indian companies may not get hit directly, but a recession in developed countries and lack of liquidity and risk aversion is bound to affect us in the medium term.

For the last, 3-4 years almost every asset class in India has gone up. There were all kinds of reasons given for this rise, but rarely was liquidity mentioned as one of the key reasons. Now with the liquidity drying up, I don’t think we will be seeing such double-digit growths in Real estate and other markets.

What am I doing?
I don’t get worried about drops in stock prices. Such drops are a part of the game. When I invest in equity, my main worry is permanent loss of capital and not temporary losses due to volatility.
Personally, I had put my buying on hold for the last couple of months. For some reason, I felt that the markets could go south in the medium term. As a result I stopped buying some time back. However I did not back this hunch by going short, as I may very well may have been wrong. I did buy some puts, but did not build a decent position as I was not sure. I think I should start trusting my gut more.

I am still standing pat and not planning major activity for some time. I personally don’t expect these issues to get worked out in a few weeks and feel that I could be getting better bargains in the near future.

I have a question and would appreciate if some could answer, as I have not been able to figure it out – If the bank/ DP fails, what happens to my shares. Is it similar to a savings account where you can lose your savings or are the shares held by NSDL or someone else and hence I am safe?


source:valueinvestorindia

Wall Street Meltdown: Warren Buffett Told You So

The old man has been proved right once again.

As I've watched the mess on Wall Street unfold over the past few days, I can't help but think back to my earlier career as a financial reporter, more specifically, to the warnings Warren Buffett delivered about derivatives -- the complex financial instruments that are playing a central role in the current market crisis.

While the housing market was booming and derivatives were all the rage on Wall Street, it was Buffett who said they were a "time bomb, both for the parties that deal in them and the economic system" and he dubbed them "financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

Back in May of 2004, I made the trek to Omaha, Nebraska, to cover the annual meeting of Buffett's holding company, Berkshire Hathaway. Unlike most annual meetings, which are tedious affairs featuring slide presentations and a series of pre-written speeches by top executives, Berkshire functions more like the corporate equivalent of a town hall meeting. Buffett and his longtime partner, Charlie Munger, sit behind a table and spend a day answering questions from the roughly 20,000 shareholders and admirers in attendance.

That prior year had seen Freddie Mac rocked by a scandal resulting from its failure to properly account for the value of its investments in derivatives (which was only a tiny precursor to its more recent problems).

Buffett seized on the news to deliver a lecture on the danger of such investments, noting the fact that Freddie was a company overseen by a board of directors, the U.S. Congress, and a separate regulatory body, and yet nobody was able to get a handle on them. And he informed the crowd that even the CEOs whom he knew didn't understand the investments.

"I know the people that run these companies and they don't have their minds around what is happening," he said.

And then Buffett predicted: "Some time in the next 10 years, you will have a huge problem that will either be caused by or accentuated by people's activities in derivatives."


THE HOUSING CRISIS that started by affecting a small number of subprime loans has now triggered the collapse or takeover of some of the biggest names in the mortgage industry (Countrywide Financial, Fannie Mae and Freddie Mac) and three of the top five U.S. investment banks (Bear Stearns, Lehman Brothers, and Merrill Lynch). And last night, the Federal Reserve initiated an $85 billion bailout of insurance giant American International Group (AIG).

It gets to be a chicken in the egg argument as to whether the availability of these new and ever more creative financial instruments caused the housing bubble, or if the expansion of the housing market created more demand for more of these types of investments. But either way, it's pretty clear that the instruments helped accentuate the problem by fostering the easy money-lending environment in which mortgage brokers were able to pump up sales by granting mortgages to borrowers with patchy credit.

The derivative market served a useful function by allowing banks to bundle loans and to sprinkle different parts of the risk among investment firms, which is one reason why as chairman of the Federal Reserve, Alan Greenspan posited that the benefits of derivatives outweighed the costs. But unfortunately, by spreading the risk around so widely in ever more complex ways, financial firms lost sight of what they actually owned, and became overleveraged.

Conservatives aren't generally fans of Buffett, now 78, because he's a loyal Democrat who has advocated higher taxes, and this year, is supporting Barack Obama. But there's still room to admire Buffett's strength of conviction when it comes to investing, and his application of his simple Midwestern common sense to complex financial matters.

Even though he's the richest man in the world according to Forbes, with a net worth of about $62 billion, Buffett still lives in a modest house in Omaha that he purchased in 1958 and maintains a small office in the city. Though he's a numbers whiz, Buffett built a lot of his fortune making long-term investments in classic American companies, including American Express, Gillette, and Coca-Cola.

His success as an investor has been as much about knowing when to stay away from the latest fads as it is about when to buy, and he refuses to invest in things he doesn't comprehend. During the Internet boom, some dismissed Buffett as a dinosaur, because wouldn't put his money in companies when he didn't understand how they could make a profit. When that bubble burst in 2000, he was vindicated, and revived his reputation for prescience that earned him the nickname "The Oracle of Omaha."


BUFFETT'S CONCERNS about derivatives were heightened when Berkshire purchased the large insurer General Re in 1998, and he had to spend years merely trying to close down a derivatives business that came with the deal, because of the difficulty of untangling the web of transactions.

Looking back, what's amazing about Buffett's warnings on derivatives is not merely that he said they could be dangerous -- many others did -- but that the scenarios he spoke of were eerily similar to what we're witnessing today.

AIG faltered because in addition to its regular insurance operations, the company owned a massive amount of credit default swaps, which insure large bondholders against the risk of default. As a result of rising defaults stemming from the housing crisis, AIG suffered tremendous losses, leading to a dwindling stock price and Monday's downgrades by the major ratings agencies. Collapsing under the weight of huge collateral obligations, the company was forced into the arms of the Fed, which will take an 80 percent stake in what was once the world's largest insuerer.

Back in his 2002 annual letter to his shareholders (which was written in February of 2003), Buffett theorized:
Another problem about derivatives is that they can exacerbate trouble that a corporation has run into for completely unrelated reasons. This pile-on effect occurs because many derivatives contracts require that a company suffering a credit downgrade immediately supply collateral to counterparties. Imagine, then, that a company is downgraded because of general adversity and that its derivatives instantly kick in with their requirement, imposing an unexpected and enormous demand for cash collateral on the company. The need to meet this demand can then throw the company into a liquidity crisis that may, in some cases, trigger still more downgrades. It all becomes a spiral that can lead to a corporate meltdown.


source:sigcarlfred.blogspot

The worst is yet to come

Jeffrey Gundlach, chief investment officer at Los Angeles-based mutual-fund company TCW Group Inc., told clients on a conference call late Wednesday that the crisis in credit and housing may not abate for several years and is actually getting worse.


Gundlach based his assessment on a belief that housing prices still face several more years of decline, a protracted slump, he said, not seen since the Great Depression. Moreover, Gundlach said it's possible that home prices could be sluggish until 2022.

"If it's like the Depression experience -- and it sure is shaping up that way -- it could take several years. Maybe we won't see a bottom in home prices until 2014," he said.
Write-offs could top $1 trillion
As a forecaster, Gundlach didn't just climb aboard the gloom-and-doom wagon. He was early to spot the cracks that subprime loans were making in the financial system, and among the first to warn that an era of easy money would come to a bad end.
"The subprime market is a total unmitigated disaster and it's going to get worse," Gundlach told money managers and financial advisers at an investment conference in June 2007. See full story.
And Gundlach has put his shareholders' money where his mouth is, shunning derivatives and counterparty risk in his bond fund portfolio.
That defensive posture should offer protection in the continuing credit storm that Gundlach foresees. In this bleak scenario, an unprecedented -- and growing -- number of home foreclosures, along with mortgage loans that are under water as soon as they're originated and a glaring lack of buyers for even modestly risky assets keeps the financial system under enormous stress.
Expect loan default rates to rise, Gundlach said, not just in the subprime market, but among the top-drawer prime borrowers as well. The prime default rate could approach 10% from a current 2% before the carnage is over, he said.
"The current environment is maybe a little worse that what was experienced in the Depression in terms of the housing market," Gundlach said.
More troubles ahead
Accordingly, financial institutions may suffer write-offs that could surpass $1 trillion before conditions improve, he said. As of late August, credit losses and writedowns at the world's 100-largest banks and brokerages topped $506 billion, he noted.
Among the casualties, Gundlach said, is Citigroup. The company's balance sheet problems could be on a scale similar to that of insurer American International Group, which the U.S. bailed out this week.
"I would give a very meaningful probability to the biggest, next AIG-size debacle being Citigroup," the strategist said.
"I would definitely not be a buyer of Citigroup stock," Gundlach said.

Other financial giants also won't escape the crisis unscathed, Gundlach said. "I don't see how Wachovia can make it as a stand alone," he said. He expressed the same sentiment about Morgan Stanley.
Indeed, late Wednesday the New York Times reported that Morgan Stanley was exploring a merger with Wachovia or another bank. See full story.
Europe's financial giants are in similar or even worse shape than their U.S. counterparts, Gundlach said, with "substantial exposures to assets which U.S. banks are now getting taken to the woodshed over. I would rate all European banks as not a buy."
The breakdown will take a further toll on U.S. stocks, Gundlach added. The S&P 500 will tumble below 800, he said, about 35% below its 1156 close on Wednesday.
Said Gundlach: "None of us have ever seen this, and it's no market for old men, but risk aversion is the order of the day." End of Story


Jonathan Burton is an assistant personal finance editor for MarketWatch, based in San Francisco.

Financial mess may prompt Fed to cut rates: Analysts

Washington: The financial market turmoil stemming from the collapse of Wall Street giant Lehman Brothers has boosted odds for a cut in interest rates by the Federal Reserve on Tuesday, analysts said.
The failure of weekend talks to save Lehman has sparked worries about a financial tsunami, prompting the Fed to open up new liquidity to avert a knock-on effect.
Some economists said the Fed also needs to cut rates to keep credit flowing, even though last week most analysts had been expecting the Tuesday policy meeting to hold the federal funds rate at 2.0%, below the level of inflation.
“Markets are now expecting the Fed to cut rates 25 basis points tomorrow (Tuesday), although there was no real macroeconomic reason for them to do so prior to last night,” said Sherry Cooper, chief economist at BMO Capital Markets.
“One thing is certain, the Fed will do whatever it takes to calm financial markets. Inflation is no longer a major concern with oil and other commodity prices falling.”
The futures market was pricing in a 68% chance of a quarter-point cut in rates, up from a 9.0% chance last week.
Global stock markets were in a freefall amid fears of contagion from Lehman, already believed to be pressuring American International Group, one of the world’s biggest insurance firms whose shares were down over 60%.
Rating agencies Standard & Poor’s, Moody’s and Fitch all lowered AIG’s credit score, and the Wall Street Journal reported Tuesday that people close to the situation say AIG may be forced into filing for bankruptcy if it can not secure sufficient fresh funding by Wednesday.
Cary Leahey, senior US economist at Decision Economics, said he believes the Fed should fight the urge to respond to market pressure for a rate cut.
He said a rate cut might be construed as a sign of panic: “It might send a signal that they (Fed members) know something we don’t know” about the financial crisis, Leahey said.

New York Governor Says AIG Can Access $20 Billion

Sept. 15 (Bloomberg) -- American International Group Inc., the largest U.S. insurer by assets, has been given special permission to access $20 billion of capital in its subsidiaries to free up liquidity, New York Governor David Paterson said.

The move ``is not a government bailout,'' Paterson said today at a New York City press conference. The arrangement allows AIG to make a bridge loan to itself, and the New York- based insurer remains ``extraordinarily solvent,'' he said.

AIG may need to raise $20 billion in capital and sell $20 billion of assets to ease a cash crunch brought on by the collapse of U.S. mortgage markets, people familiar with insurer's plans said. Prospects dimmed today when Lehman Brothers Holdings Inc. went bankrupt after failing to find new funds or a buyer. Bank of America Corp. Chief Executive Kenneth Lewis said today AIG's failure would be a ``much bigger problem'' than Lehman's demise.

AIG has a ``liquidity problem'' and will be able to use assets held by units as collateral for cash to run the ``day to day operations'' of the insurer, Paterson said. ``We have seen some of the companies that serve as the bedrock of our financial system unraveling before our eyes,'' Paterson said.

AIG plunged as much as 71 percent in New York trading. The stock was down 50 percent to $6.05 a share as of 12:30 p.m. in New York Stock Exchange composite trading after Paterson's statement.

Eric Dinallo, the New York State insurance superintendent, has become the lead regulator charged with finding a solution to AIG's financial crunch, according to two people familiar with the situation. The people declined to be identified because talks between Dinallo and AIG are confidential.

Lehman-investment loss

Lehman Brothers’ move to file for bankruptcy on Monday wiped off more than Rs2,000 crore from the market valuation of those Indian companies in which the US financial major has made equity investments.

Lehman itself recorded a loss of more than Rs50 crore on Monday on its investments in India, which is nearly 10% of its current holding worth an estimated over Rs500 crore.

The loss would have been much higher if Lehman had not started offloading its equity holding in Indian companies late last month.

In a major selling spree that started on 21 August, Lehman has sold shares worth close to Rs400 crore in nearly 10 companies, including NIIT Ltd, Cranes Software, Amtek Auto, Amtek India, Fedders Llyod, Northgate, Mastek, Triveni Engg and Prajay Engg.

Prior to this sell-off, Lehman’s Indian equity portfolio is estimated to have been worth more than Rs1,000 crore, which has now nearly halved to about Rs500 crore.

Most of the shares offloaded by Lehman in India, including those in NIIT, Cranes, Amtek Auto, Amtek India and Northgate, has been purchased by Deutsche Bank, according to the bulk and block deal data available with the bourses.

Besides the 10 companies where Lehman has offloaded its shares, Lehman had equity holding in about two dozen firms at the end of June quarter.

These firms include Spice Communications, Spice Mobile, Anant Raj Industries, Edelweiss Cap, IVRCL Infra, Tulip Telecom, Consolidated Construction, PSL, Orbit Corp, Development Credit Bank, Champagne Indage, Godawari Power, KPIT Cummins, West Coast Paper, IOL Netcom, Dhampur Sugar, Prithvi Info, Golden Tobacco, Emkay Global, Vijay Shanti Builders and Pioneer Embroidery.

A failure a week

First it was Bear stearns, but the US treasury (similar to our Finance ministry) and the Fed (similar to our RBI) engineered a bailout. Bear stearns, an investment bank was bought out by J P morgan, a commerical bank, in March. This bailout was done to calm the markets and reduce systemic risk.

Well, next in line were Freddie Mac and Fannie Mae which were nationalized (federal takeover) for the same reason last week. Now this week it is the turn of Lehman brothers which seems to be on the verge or ready to file for bankruptcy protection. Merrill lynch, another Investment bank and brokerage, is in merger talks with Bank of america. After Lehman brothers, Merrill lynch seems to be the weakest firm and so it could come under attack.

More companies at risk
AIG, one of the largest insurers has fallen by 30% and is at risk now. So is washington mutual, another large bank. So we have a situation where the credit crisis (acutally bad investments on part of the banks and institutions) is now engulfing the financial system. Finally the S*** is hitting the fan !

We could very well see a domino effect and the US government may decide not to bail out any more companies. We could be in for some nasty times.

What does it mean for us ?
So how does it effect us ? Well if you are into medium to long term investing, not much. Actually the panic could create opportunities for us in india. I really don’t see Indian companies getting impacted (other than IT or export oriented companies due to a possible recession in the US and other economies). The impact for IT companies in the long run should not be too much. However there could a short term impact in companies with a high percentage of revenue in the BFSI segment.

All this mess, makes you wonder what kind of risk our banks and financial services firms are taking. I am repeatedly reminded of this statement by warren buffett


source: valueinvestorindia

9 great management lessons from Dhirubhai Ambani

Dhirubhaism No 1: Roll up your sleeves and help.

You and your team share the same DNA.

Reliance, during Vimal’s heady days had organized a fashion show at the Convention Hall, at Ashoka Hotel in New Delhi.

As usual, every seat in the hall was taken, and there were an equal number of impatient guests outside, waiting to be seated. I was of course completely besieged, trying to handle the ensuing confusion, chaos and protests, when to my amazement and relief, I saw Dhirubhai at the door trying to pacify the guests.

Dhirubhai at that time was already a name to reckon with and a VIP himself, but that did not stop him from rolling up his sleeves and diving in to rescue a situation that had gone out of control. Most bosses in his place would have driven up in their swank cars at the last moment and given the manager a piece of their minds. Not Dhirubhai.

When things went wrong, he was the first person to sense that the circumstances would have been beyond his team’s control, rather than it being a slip on their part, as he trusted their capabilities implicitly. His first instinct was always to join his men in putting out the fire and not crucifying them for it. Sounds too good a boss to be true, doesn’t he? But then, that was Dhirubhai.

Dhirubhaism No 2: Be a safety net for your team.

There used to be a time when our agency Mudra was the target of some extremely vicious propaganda by our peers, when on an almost daily basis my business ethics were put on trial. I, on my part, putting on a brave front, never raised this subject during any of my meetings with Dhirubhai.

But one day, during a particularly nasty spell, he gently asked me if I needed any help in combating it. That did it. That was all the help that I needed. Overwhelmed by his concern and compassion, I told him I could cope, but the knowledge that he knew and cared for what I was going through, and that he was there for me if I ever needed him, worked wonders for my confidence.

I went back a much taller man fully armed to face whatever came my way. By letting us know that he was always aware of the trials we underwent and that he was by our side through it all, he gave us the courage we never knew we had.



Dhirubhaism No 3: The silent benefactor.

This was another of his remarkable traits. When he helped someone, he never ever breathed a word about it to anyone else. There have been none among us who haven’t known his kindness, yet he never went around broadcasting it.

He never used charity as a platform to gain publicity. Sometimes, he would even go to the extent of not letting the recipient know who the donor was. Such was the extent of his generosity. “Expect the unexpected” just might have been coined for him.

Dhirubhaism No 4: Dream big, but dream with your eyes open.

His phenomenal achievement showed India that limitations were only in the mind. And that nothing was truly unattainable for those who dreamed big.

Whenever I tried to point out to him that a task seemed too big to be accomplished, he would reply: ” No is no answer!” Not only did he dream big, he taught all of us to do so too. His one-line brief to me when we began Mudra was: “Make Vimal’s advertising the benchmark for fashion advertising in the country.”

At that time, we were just a tiny, fledgling agency, tucked away in Ahmedabad, struggling to put a team in place. When we presented the seemingly insurmountable to him, his favourite response was always: “It’s difficult but not impossible!” And he was right. We did go on to achieve the impossible.

Both in its size and scope Vimal’s fashion shows were unprecedented in the country. Grand showroom openings, stunning experiments in print and poster work all combined to give the brand a truly benchmark image. But way back in 1980, no one would have believed it could have ever been possible. Except Dhirubhai.

But though he dreamed big, he was able to clearly distinguish between perception and reality and his favourite phrase “dream with your eyes open” underlined this.

He never let preset norms govern his vision, yet he worked night and day familiarizing himself with every little nitty-gritty that constituted his dreams constantly sifting the wheat from the chaff. This is how, as he put it, even though he dreamed, none of his dreams turned into nightmares. And this is what gave him the courage to move from one orbit to the next despite tremendous odds.

Dhirubhai was indeed a man of many parts, as is evident. I am sure there are many people who display some of the traits mentioned above, in their working styles as well, but Dhirubhai was one of those rare people who demonstrated all of them, all the time.

5. Dhirubhaism: Leave the professional alone!

Much as people would like to believe, most owners (even managers and clients), though eager to hire the best professionals in the field, do so and then use them as extensions of their own personality. Every time I come across this, which is much too often, I am reminded of how Dhirubhai’s management techniques used to be (and still remain) so refreshingly different.

For instance, way back in the late 1970s when we decided to open an agency of our own, he asked me to name it. I carried a short list of three names, two Westernised and one Indian. It was a very different world back then. Everything Anglicised was considered “upmarket.”

There were hardly any agencies with Indian names barring my own ex-agency Shilpi and a few others like Ulka and Sistas. He looked at the list and asked me what my choice was. I said “Mudra”: it was the only name that suited my personality. And the spirit of the agency that I was to head.

I was very Indian and an Anglicised name on my visiting card would seem pretentious and contrived. No further questions were asked. No suggestions offered, just a plain and simple “Go ahead and do it.” That was just the beginning.

He continued to give me total freedom — no supervision, no policing — in all my decisions thereafter. In fact, the only direction that he gave me, just once, was this: “Produce your best.”

His utter trust in me was what pushed me to never, ever let him down. I guess the simplest strategies are often the hardest to adopt. That was the secret of the Dhirubhai legend. It was not out of a book. It was a skillful blend of head and heart.

6. Dhirubhaism: Change your orbit, constantly!

To understand this statement, let me explain Dhirubhai’s “orbit theory.”

He would often explain that we are all born into an orbit. It is up to us to progress to the next. We could choose to live and die in the orbit that we are born in. But that would be a criminal waste of potential. When we push ourselves into the next orbit, we benefit not only ourselves but everyone connected with us.

Take India’s push for development. There was once a time our country’s growth rate was just 4 per cent, sarcastically referred to as the “Hindu growth rate.” Look at us today, galloping along at a healthy 7-8 per cent.

This is no miracle. It is the product of a handful of determined orbit changers like Dhirubhai, all of whose efforts have benefited a larger sphere in their respective fields.

In a small way, I too have experienced the thrill of changing orbits with Mudra. In the 1980s, we leapt from the orbit of a small Ahmedabad ad agency to become the country’s third largest ad agency — in just under a decade.

However, when you change orbits, you will create friction. The good news is that your enemies from your previous orbit will never be able to reach you in your new one. By the time resentment builds up in your new orbit, you should move to the next level. And so on.

Changing orbits is the key to our progress as a nation.

7. The arm-around-the-shoulder leader

I have never seen any other empire builder nor the CEO of any big organisation do this (why, I never adopted this myself!).

It was Dhirubhai’s very own signature style. Whenever I went to meet him and if on that day, all the time that he could spare me was a short walk up to his car, he would instantly put his arm around me and proceed to discuss the issues at hand as we walked.

With that one simple gesture, he managed to achieve many things. I was put at ease instantaneously. I was made to feel like an equal who was loved and important enough to be considered close to him. And I would walk away from that meeting feeling so good about myself and the work I was doing!

This tendency that he had, to draw people towards him, manifested itself in countless ways. This was just one of them. He would never, ever exude an air of aloofness and exclusivity. He was always inviting people into sharing their thoughts and ideas, rather than shutting them out.

On hindsight I think, it must have required phenomenal generosity of spirit to be that inclusive. Yes, this was one of the things that was uniquely Dhirubhai — that warm arm around my shoulder that did much more than words in letting me know that I belonged, that I had his trust, and that I had him on my side!

8. The Dhirubhai theory of Supply creating Demand

He was not an MBA. Nor an economist. But yet he took traditional market theory and stood it on its head. And succeeded.

Yes, at a time when everyone in India would build capacities only after a careful study of market expectations, he went full steam ahead and created giants of manufacturing plants with unbelievable capacites. (Initial cap of Reliance Patalganga was 10,000 tonnes of PFY way back in 1980, while the market in India for it was approx. 6000 tonnes).

No doubt his instinct was backed by years and years of reading, studying market trends, careful listening and his own honed capacity to forecast, but yet despite all this preparation, it required undeniable guts to pioneer such a revolutionary move.

The consequence was that the market blossomed to absorb supply, the consumer benefited with prices crashing down, the players increased and our economic landscape changed for the better. The Patalganga plant was in no time humming at maximum capacity and as a result of the plant’s economies of scale, Dhirubhai’s conversion cost of the yarn in 1994 came down to 18 cents per pound, as compared to Western Europe’s 34 cents, North America’s 29 cents and the Far East’s 23 cents and Reliance was exporting the yarn back to the US!

A more recent example was that of Mukesh Ambani taking this vision forward with Reliance Infocomm (which is now handled by Anil Ambani). In India’s mobile telephony timeline there will always be a very clear ‘before Infocomm and after Infocomm’ segmentation. The numbers say it all. In Jan 2003, the mobile subscriber base was 13 million, about 16 months later, shortly after the launch, it had reached 30 million.

In March 2006, it has touched 90 million ! Yes, this was yet another unusual skill of Dhirubhai’s — his uncanny knack of knowing exactly how the market is going to behave.

9. Money is not a product by itself, it is a by-product, so don’t chase it

This was a belief by which Dhirubhai lived all his life. For instance when he briefed me about setting up Mudra, his instruction was clear: ‘Produce the best textile advertising in the country,’ he said.

He did not breathe a word about profits, nor about becoming the richest ad agency in the country. Great advertising was the goal that he set for me. A by-product is something that you don’t set out to produce. It is the spin off when you create something larger.

When you turn logs into lumber, sawdust is your by-product and a pretty lucrative one it can be too! It is a very simple analogy but extremely effective in driving the point home. Work toward a goal beyond your bank balance.

Success in attaining that goal will eventually ring in the cash. For instance, if you work towards creating a name for yourself and earning a good reputation, then money is a logical outcome.

People will pay for your product or service if it is good. But if you get your priorities slightly mixed up, not only will the money you make remain just a quick buck it would in all likelihood blacklist you for good. Sounds too simplistic for belief? Well, look around you and you will know exactly how true it is.

N-Deal: India Inc sees $40 bn foreign investment

NEW DELHI: As many as 400 Indian and foreign firms are seen as the beneficiaries of the far-reaching verdict in Vienna on Saturday where the 45-member Nuclear Suppliers Group (NSG) decided to resume civilian nuclear commerce with India.

India's apex industry bodies, which have hailed the decision, also feel that the country can now attract over $40 billion in foreign investment over the next 10-15 years as the result of private sector entry into India's nuclear power generation.

"The go-ahead to the nuclear deal will signal the building of scores of nuclear plants in India on assured fuel supply," said Amit Mitra, the secretary general of the Federation of Indian Chambers of Commerce and Industry (Ficci).

"This will trigger the participation of 200 firms with capabilities to operate, and maintain nuclear plants, but put on the Entities List by the US in 2005 for perceived possession of technologies for nuclear plants or dual-use technology."

That list has since been pruned to about four, giving the 200-odd companies full play in nuclear power production.

"We expect another 200 medium and small firms to get into the act as ancillary producers to the big companies, thereby giving a new direction to efficient and cheaper power production in the country," Mitra added.

The NSG's decision to grant India a clean waiver from its existing rules, which forbid nuclear commerce with any country, which has not signed the Nuclear Non-Proliferation Treaty (NPT), came at its meeting in Vienna on Saturday afternoon.

The historic moment, which will end more than three decades of nuclear isolation for India, came after three days of intense diplomacy by the US and India in the nuclear cartel that controls the global flow of nuclear fuel and technologies.

"Today's development is a major confidence-building move for the international community to engage with India especially in high technology trade," said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).

"It will provide opportunity for Indian manufacturers to supply spares and components to the global manufacturers of nuclear power plants besides providing business opportunities for Indian power plant construction companies."

The Associated Chambers of Commerce and Industry (Assocham) that had conducted a survey among 300 chief executives recently also says that 400 firms, domestic and international, may get a chance to build nuclear power plants.

An overwhelming 85 percent of the 300 chief executives polled held the view that modifications to India's Atomic Energy Act of 1962 could help the country to generate some 20,000 MWe (unit of nuclear power) by 2020.

The modification, which the chamber suggested should be immediate by way of a presidential notification, is necessary to facilitate the entry of the private sector in nuclear power generation. The act and the decades of India's nuclear isolation had resulted in capping the country's nuclear power generation capacities to an extent of just 3,900 MWe in over 60 years of independence.

As a result, out of a total installed generation capacity of about 145,000 MW of electricity, 70 is accounted for through thermal fuel and 20 percent by hydro, with nuclear energy contributing to just two percent. The remaining capacities come by tapping the various sources of non-conventional energy such as solar, wind, biomass and tidal waves.

Following the NSG waiver, the India-US nuclear deal will head for the US Congress, which meets Sep 8 to discuss and approve the 123 India-US bilateral pact to seal the negotiations that were started more than three years ago.

The two countries are expected to formally sign the bilateral agreement when Prime Minister Manmohan Singh goes to Washington towards the end of September, eventually restoring nuclear trade with the US after a gap of 34 years. The US and the rest of the world imposed economic sanctions when India first conducted its nuclear test in 1974.

source: economictimes

pokarma ltd

pokarna is going to spin-off their business shortly


just buy for short term gain

Updated: 31/08/2008 | 02:27 PM IST Interviews Mind of the Market: Oil holds key to rally

In an exclusive interview to NDTV Profit's Namrata Brar, First Global’s Director and Chief Global Strategist Shankar Sharma does not rule that markets may reach close to 21,000 mark if there is sharp fall in oil prices. He pointed out that the five-year long bull run in the Indian markets doesn’t transforms itself completely in a period of just six months. According to him India is still a reasonably young bear market.

NDTV: What is your assessment of present situation in equity markets in India?
Shankar Sharma: The equity markets were looking quite okay till last December but at the moment it is not looking too good.
NDTV: When would you buy India? What exactly are you waiting for?
Shankar Sharma: The decision to buy India would be born elsewhere because it won’t be just India buy but it has to include global perspective. Looking at the current situation in all probability you could see at least one bank fail in the US. Those will create terrific opportunities. You’ll need some cataclysmic event that will signify a market bottom and things will then look very dark. That’s the time when you could see a bull market. So why pick a level, all I am saying is that when the market will be full of bad news, then the world will buy India.
NDTV: But you don’t think that happened when US investment bank Bear Stearns announced liquidity crisis?
Shankar Sharma: That was the moment perhaps in the US not in the rest of the world. Even then the credit problem in the US is widely believed to be not over, it is still unfolding, so it will probably reach a climax when another similar bank going belly up. Bear Stearns was a relatively smaller fish but there are companies with far larger problems who are still afloat, for how long we don’t know. So those events will shape the way the Indian equities markets behave. We unfortunately or fortunately are coupled with the world in the equity markets.
NDTV: So the decoupling theory does not hold value?
Shankar Sharma: The decoupling theory is rightly related to only macro economic issues. Yes, the US is flirting with recession and emerging markets are growing well between 7-10 per cent, so in that sense you could say that we have decoupled. But for the equity markets the opposite of decoupling theory is true, as the US market has outperformed India and China. So strange things always happen in the market and conventional wisdom always never holds good.
NDTV: Hence, should one enter the market when the markets are full of pessimism?
Shankar Sharma: Yes, at that time you can invest 35-40 per cent of your capital and then if the market sell off 10 per cent from their on, go and buy some more. We are telling people that there is value in Tier-II and Tier-III stocks but buy them with the clear understanding that they could be around there for next 1-1.5 years. In 2001 people started getting their feet wet, but none of the stock moved till 2003. A lot of them actually went and became cheaper than what they were in 2001. Like I said if you are a 5,000 shares investor, you can keep your powder dry.
NDTV: Does the present situation remind you of 2001?
Shankar Sharma: Our take is that the rallies you are seeing are very similar. They are punctuated again by talk of infrastructure story as against tech stock earlier. Don’t forget one thing that bar none in India’s tech pack if you ever see those prices again.
NDTV: Do you think the Sensex might not ever reach the 21,000 mark again?
Shankar Sharma: There is very interesting statistics that no market in the world ever has given you six consecutive up years. It is no brainer that India has had five up years till December 2007 and sixth year had to be a down year. Further interesting statistics is that after five consecutive up years, 90 per cent of the time those market will never see those highs again for a minimum of three years. But I am not ruling out that you may reach close to 21,000 mark if there is sharp fall in oil prices.
NDTV: Markets usually sell-off during election time because the government talks of populist measures, which is not something great for equities.
Shankar Sharma: The strange thing is that markets always like to be optimistic than being pessimistic. So around pre-election time, the talks of reforms agenda and to-do list, is good for equity markets. But reality is bad for equity markets.
NDTV: The managements are posting different dreams when they say that they don’t have any problem with input costs rising.
Shankar Sharma: It is quite galling when our new set of management especially the new 2-3 years old listed companies or old companies with big projects on hand, come out and make these kind of statements. You’d rather be out there and be saying the truth.
NDTV: Are you telling your clients that this is the right time to go ahead and buy the US stocks and dollar?
Shankar Sharma: Yes, our best global long trade is US technology and that’s been the case for the last 7-8 months. The dollar bear market is also there for 6-7 years which is again set to reverse. Our best long trade is US technology pack but that’s a surprising trade and most people will disagree with that. But so far the evidence on the ground is that the market has done very well.
NDTV: What does the market expect regarding stability on the political front?
Shankar Sharma: The truth is that India has kept growing despite so many contradictions so I think there is God up there who watches over India. We have to be less analytical about these things but I think India will come through despite whosoever comes at the center. India is a nation of very bright people and a bunch of politicians just can’t hamstrung them. But hey all set and done, equities markets march to a different tune!
NDTV: But somewhere equity markets will have to catch up may be after 2-3 years?
Shankar Sharma: They will eventually catch up. The stock markets still benefits is large parts. I always say that India is a two-square mile bull market.
NDTV: But has you seen the maximum disappointment in those two square miles this year?
Shankar Sharma: If you’ve been into the markets long enough then you do know that it is never just a one way linear trend up. People might say that markets will give you 16-17 per cent compounded returns, but the returns don’t come every year and they come in bunches. If you understand the long term statistics of markets then you don’t get carried away.
NDTV: Do you still stay with defenses of the market? People talk of sticking to FMCG, pharma and tech stocks and get out of high beta stocks?
Shankar Sharma: We should be talking of high beta stocks in December last year. Nobody was calling L&T and BHEL high beta stocks last year but they are suddenly becoming high beta stocks. Also nobody was saying that HUL and tech stocks were defensive but you know the tags change. Whether defensive stocks will give you absolute returns in a bear market is hard to tell. Like I said in bear market if you don’t lose money, you are still okay.
NDTV: In the interim bear market rally, you go and buy these beta stocks.
Shankar Sharma: You just can’t be so brave in six months of decline. A bull market that lasts for five years doesn’t transforms itself completely in a period of six months. So this is still a reasonably young bear market. This bear has got legs and the bull is a tired bull. So you will see these interim rallies.