Finally something on subsidy sharing

http://business-standard.com/india/news/crude-price-cap-for-ongc-oil-mooted/462276/

I think its a great step from a valuation perspective because modelling would be far more easier. I think it is only fair to cap the realizations at $60/bbl because the average realizations have been in this range for ONGC over the past 4 years.

CFL

Lighting companies, Philips, Havells and Bajaj Electricals, have increased the prices of CFL (compact fluorescent lamp) bulbs by up to 15% due to soaring prices of key raw material — rare earth element — after the Chinese cut its production and exports.

Phosphor, the rare earth element, prices have shot up almost six times to $300 per kg in the last few months because its supply fell short of demand following the Chinese government's move to protect its CFL industry. An entry level CFL bulb, which was selling at Rs 80 a few weeks ago, now costs Rs 90 in the domestic market.

"Increase in rare earth prices diluted the advantage we had earned through economies of scale," Havells India president Sunil Sikka said.

Weakening rupee too has made imports costlier. Sikka said his company has proposed to the government to remove taxes on rare earth imports to keep prices of the energy-efficient bulbs under check. Indian companies are paying a tax of close to 20% on imports of rare earth.

About 97% of global rare earth is produced in China. The country also dominates the global CFL production with a share of 70%. China's move to limit rare earth exports makes the industry's movement towards clean energy products difficult because there are no alternatives for phosphor, Philips Lighting India President Nirupam Sahay said.

Rising incomes, along with falling prices and increased awareness, have helped CFL lighting to become a Rs 2,000-crore industry, growing 25-30 % a year.

The total lighting market in the country is pegged at Rs 7,000 crore, still dominated by incandescent lamps, or light bulbs. Philips Lighting has increased CFL prices by 7-10%, while Bajaj Electricals increased them by 8-10%.

The cost component of phosphor in CFL has increased to 18% from 5% till the second quarter of this year, Philips Lighting's Sahay said. Companies have not revised the prices of LED, or light-emitting diode lamps, because the cost component of rare earth in LED bulbs is low.

revenue recognition

revenue recognition policies
1. revenue is recognized at point of dispatch of materials to customers
2. Sales is recognized on dispatch to customers
3. Sales is recognized on delivery or passage of titles of goods to customers
4. Sales is recognized at the time of despatch of goods from factory
5. Sales is recognized on dispatch of the goods to the customers
6. Sales is recognized when the products leave the premises of the company

Check out the 6th revenue recognition policy. As soon as the goods
move one meter outside the boundary wall of the factory, the products
is booked as sales. ;)

Regards

Short term Vs Long Term - Difficult to decide once you are listed

http://www.thehindubusinessline.com/industry-and-economy/logistics/article2452876.ece

After reading the article, it is difficult to say whether the
government was too conservative in its estimates of projects or the
players too aggressive in their bidding with traffic projections. But
it is hard to believe that the difference can be so huge that a
positive grant projects turns into a negative grant project. All I can
say at this point is, the players are hungry for order book or sales
and may be are willing to compromise on the margins. Something that
happened with the aluminium conductor industry during FY2009 and
FY2010. PGCIL did not release orders and players went extremely
aggressive in bidding, since these contracts take time to execute, the
actual effect was felt only towards the second half of 2010 and the
entire 2011. Would not a similar situation arise, market will cheer
them for the short term increase in order book but when the execution
happens the problems will begin to show up in the P&L statement. One
more classic example... the air conditioning majors like blue star
entered into the EMP segment and have been badly hit due to the
different nature of the business. They also in order to keep the
revenues growing bid for projects at extremely competitive rates and
now are facing the same problems of low margins or negative margins.
And now they say they will look at managing costs better and improving
the payment terms. Ridiculous. The RoE in the mean time for Blue star
have dropped from the highs in 2009 to the lows it has witnessed now.
I am nowhere saying, that the managemnet of the company is inefficient
all i think is how being listed on stock exchanges and showing the
analysts an increasing trend in sales affects the ability of the
companies to see what their actions will do in the future over just a
slightly long term period say 1-2 years.

Yesterday i read an interesting interview by Samir Arora of Helios
Capital.. He says the markets have become increasingly short term, i
would say they were never long term, analysts are always right on the
short term side of the game, on the long term as i see only two things
can be predicted
1 . The competitive advantage/durability of the moat and you buy this
at a decent price
2. Normailized earnings

Predicting anything else seems a waste of time.

EXCEL VBA

Debug. Print

Immediate Window

Two pretty useful features in excel. You can read about them on the
website here. I would say they are pretty interesting features which i
was unaware until now.

http://www.cpearson.com/excel/debug.htm

Desperate Attempts

The company had a blockbuster IPO listing day and hence forth the
street has thrown the stock on street. First of all the run up to the
price of 255 looked quite a dramatic one. But now the stock is at 15
rupees. or put another way at one point of time, the market value of
the company rose to 334cr and now stands at 25cr. The company has been
trying hard to draw the attention of the investors, through entering
into new areas like

Successful demo plant running in Coastal Gujarat on saline land with
saline water of 15000 TDS with organic fertilizers produced from
effective biocomposting unit and by product biogas is for captive
power for agriculture and irrigation.
Pilot plant on small scale successful for desert land and bigger demo
plants on 10 Acres will start after Diwali.

Dont know if they will actually work out or they are just trying to
draw the attention by doing some random announcements. But its
actually funny how the managerial behavior changes once your company
gets listed and you see the market cap or your total networth getting
eroded as each day passes.

I really need to check up the financial performance of the company,
though i am sure it cannot be good.. otherwise rather than coming out
with these BSE announcements, the management would have done well to
buy its own shares from the open market.

Regards
Vivek Jain

One more Hyderabadi Biryani

Ramky Infra - Two particular interesting things with this company, one
it is based out of Hyderabad and two it is in the infrastructure
space. Our fixed Income Professor at XLRI once mentioned volatility is
not spread out evenly, it occurs in bunches or is grouped together. :)

And every company after being framed with the charges, comes out with
the same statement. We are cooperating and that it was a regular drill
by the CBI.