Monday, December 3, 2012

INR-USD could there be twist ?

Rupee has been steadily depreciating against USD . From a high of Rs 45 to a dollar , it is now around Rs 55 to a dollar.

I recall my working days  in APC , between 2000-05, the rate was around Rs 42-45 to a dollar , in fact, it had appreciated  from a low of Rs 49 or so in between. Once rupee started moving up , in fact , I recall it ( may be after 2005) had gone to a high of Rs 40 , the self proclaimed experts started coming out with theories of how rupee could appreciate further.This did not happen .

Between India and USA , there are probably  more negatives in US economy than in the Indian economy. While that may not be enough reason for INR to appreciate, the state of economies is definitely not such that INR should depreciate as badly as it had done in the past year or so.

It may be a good idea to invest in Import heavy Industries . There is a very good chance of the rupee appreciating going forward. Of course there is always an element of risk but at this point of time, it appears a reasonable guess . IT Industry could struggle , could in fact see negative growth numbers. Inspite of such a strong depreciation of INR and the fact that IT Companies still have earnings in USD and significant part of expenses in INR, the last few quarters have hardly seen a growth even in INR. 

Thursday, November 29, 2012

India Nippon- Could be a very Interesting buy


Went through the financials of India Nippon Electricals Ltd, part of Lucas TVS ...

Very interesting. The financials are very good. Good and steady EPS, last EPS was around Rs 30

Very little or no debt. Is a subsidiary of (51% holding ) Lucas Indian services which in turn is a 100% subsidiary of Lucas TVS.

India Nippon holds 8% in Lucas TVS. Lucas TVS plus Lucas Indian Service themselves could be around Rs 1200 Crs value  considering the fact that as of Mar 2011, the two together has PAT of around Rs 100 Crs.

Market capitalisation of India Nippon is Rs 200 Crs ( approx) out of which value of embedded investment alone would be Rs 100 Crs. 

Turnover of India Nippon is Rs 260 Crs and pays dividend of Rs 9-10/share.

Asset base is also small, just around Rs 38 Crs

Not much could go wrong in this share at Rs 180-190 per share.Equit of Rs 11.3 Crs

One can't expect some super normal profits but one can expect returns of around 10-12% compounded .

Wednesday, November 28, 2012

Sundaram Clayton and Tata Investments-Good buy and arbitrage opportunity



Was trying to look in to the shareholdings of some of the TVS Companies. One interesting fact which cam up a few months back was the fact that Sundaram Clayton which holds more than 50 % in TVS Motors has an embedded value which is at a significant discount to the price of TVS Motors Ltd.

Buying one share of Sundaram Clayton is equivalent to investing in to Sundaram Clayton standalone plus  14 shares of TVS Motors.

Sundaram Clayton is selling at Rs 320 and TVS motors at Rs 37 per share. You can see that against embedded value in terms of TVSM itself of Rs 518 per share of SCL (14 shares of TVSM at Rs 37 per share ) plus the standalone value of SCL, you get the share  at Rs 320 , a discount of 38% and more or if and when there is parity , you could gain 62 % on your investment .

Of course, there has always been a trend of the Holding Company being at a discount Vis a vis the embedded value of subsidiaries in the same. Can't understand the reason. 

The case of Tata Investment is quite different. It is in the business of investing in to equity of Tata and other Companies also. It is almost like investment in to a Mutual fund.

In Tata Investment case, the NAV is almost Rs 800 plus , the share is available at Rs 450.When we subscribe to mutual funds at NAV , why not in to Tata Investments.

Monday, November 19, 2012

Largest democracy ?


Atroicious, two girls being arrested on putting comments about the overreaction in the City of Mumbai after Bal Thackeray's death.

One girl had put up a comment on the following lines

.... why such a fuss over the death of a man when many like him die everyday. We hardly observe a two minute silence rememebering Bhagat Singh and Sukhdev.....

This girl was arrested and the other one who liked it also arrested.

She is entitled to her opinion. You can't be arresting some person for such an innocuous comment. This is no better than Mamata's arrest of the professor in Bengal who had some unsavoury remarks about her handling of things.

Scary. Are we living in a democracy or are we also getting  Talibanised ? Clear Fascists laenings. Use of State machinery to cow down people. Just shows , Hindu or Muslim, if we start pandering to religious fundamental elements, this is the likely trajectory and shape the nation could take . Is it competitive fundamentalism . You are fundamental , I am more fundamental .

 It is quite possible that the girl who commented was a Muslim influenced the action of the mob.

Her uncle's clinic was vandalised. No arrests of the vandals.

Nation's DNA especially the Political class was shaped by Indira Gandhi in the 70 s. She made "State control" , an acceptable norm .

Dangerous precedent.

Saturday, November 17, 2012

SPB and Ponni Sugars

A few years back had progressively bought a couple of thousand shares of  Seshasayee Paper and Boards Ltd and around 500 shares of Ponni Sugars Ltd.

 Have risen to Rs 270 plus and Rs 390 plus respectively. Wish, I had invested a lot more in both. Atleast in the case of Ponni , had seriously thought of buying some more. No point in regretting now.Happy that I had not sold earlier when the price went up to Rs 200/share ( Ponni)

Now the more difficult question is when to exit.

Interestingly , SPB has 21% in Ponni and Ponni has 10.67% in SPB.

Had run the numbers and found them interesting. SPB has a capacity of around 120 k Tonnes paper production and Ponni has been producing around 76 k tonnes of sugar

SPB had initiated process to add on to capacity , instead has gone ahead and bought a Paper Company Subburaj Papers with a capacity of around 98k tonnes.

They seem to have paid Rs 25 Crs to acquire 83 % equity plus taken over Rs 210 crs of debt, I think. Total debt free consideration is Rs 240 Crs. Appears okay , considering that SPB has an asset base of Rs 400 Crs currently.

SPB is planning a merger with an equity swap of 1 SPB for 11 shares of Subburaj papers. 125 lac shares -83%. Total shares should be 150 lacs. SPB would end up addding 1.36 crs to equity (13.6 lac shares )

41.67% would be held by Ponni and balance with SPB Ltd. promoters and shareholders.

Ponni sugars might have reached close to the peak, SPB may have some steam left.
My assessment is that Ponni could touch Rs 500 and SPB also around 500-600 , after which sale would make sense. May be pushing my luck a bit, but prepared to wait.

Tuesday, October 30, 2012

Life and Times of Einstein by Ronald Clark-



This is just a synopsis and not a critique on the book.

Well researched , I would think , considering the fact that , records if any , available those days were only the written ones and possibly helped by interviews with several people. Of course in the case of Einstein who had become a celebrity of sorts , even those days, his being in the printed news more often and the fact that must have been preserved must have helped .

It was quite surprising to read somewhere that there was no electricity in one of the places Einestein stayed, early in his career, was it Berne ?

Born in Ulm, term him swabian,must have been the term for Jew form that area. While Einstein was born a Jew , did not seem to  have had strong religious feelings or affiliations  till his community started getting  persecuted .

Did his Graduation in ETH, Zurich

Secured  doctorate by submission of thesis to ETH  ?

Left Germnany to pursue education in Switezerland

Gave up German citizenship once, very early in life in his teens to avoid conscription and later again in protest 

Struggled to get a job, research or teaching and after a lot of effort gets a low level job in the Patent office in Switzerland

The time he spent as an employee of Patent office, was almost a science sterile atmosphere. Was almost left to his imagination. Of course did seem to have had some access to scientific journals , but no access to great minds. Had a very average lifestyle. Meeting ends appears to have been a  stretch. Such an imaginative mind , being left to himself,  must have been able to think out Photoelectric effect and  Special theory of relativity in 1905 . Visualising  something totally against the trend of the then  current thinking  is one thing but thinking something radically different and against what no one would suspect even in a dream requires vision beyond any great visionary. Could anyone have imagined that space, length and time are not absolute.

 One understands that he was helped in this, in having got an inkling of things from Maxwell,(electromagnetic field), Lorentz and a few others. Morley Michelson who experimentally disproved the existence of "ether" also helped Eisntein to come to a conclusion that speed of light was absolute and independent of the frame of reference or speed of the origin point. Speed of Light is the limiting speed , nothing can equal or exceed this. While earlier scientists had come close to finding that Matter Very difficult to comprehend. An average brain like yours truly would require several more readings to even come close to understanding the concepts.The mats , for the special theory of relativity was provided by Minkowski, his teacher in ETH.Notwithstanding the gentle nudge that Max Planck, Lorentz and the Morley Michelson experiment gave, still to come out with what he thought out on the relativity of time, space ... was extraordinary to put in the mildest terms.

Shifts to Berlin in 1919 to Kaiser Wilhelm Institute and possibly does he best work in the next 14 years or so.Had become very famous by then and publishes his general thoery of relativity

Great friendship with Max Planck, the quantum man.Had great respect for Lorentz.

Eddington was one of the early converts to relativity and did huge service to the cause of spreading the same across Europe .

Einstein was a confirmed Pacifist . Was completely against Germany's armament and against any kind of armament.

The  author tries to bring out that Einstein , while great physicist was a bit muddled in other aspects.From a lot of information that the author brings out, it does not appear so. He might have been a bit innocent about the ways of the world but to come to a conclusion based on his change from pacifism to armament once Hitler came to power that he was muddled is not correct.

He realised later that Pacifism does not always work. There are occasion when you have arm yourself and threaten to protect the larger interests.

Einstein became such a popular figure ( the splayed and flying hair on the head also created aura and halo like looks must have helped ) that he was perennially invited to address several public meetings , science as well as others.
During the period till mid 1930 s , was a clearly the leader amongst scientists , his opinions and views mattered more than others.

In 1933 , shifts to US and sometime later gives up his German Citizenship again, Continued to retain his Swii Citizenship.

Won the Nobel in 1920 for his discovery on something to do with Photoelectric effect

Spent the last 20-25 years trying to come out with a Unified theoery. Did come out a few times, rejected them himself when it did not quite come comprehensive and logical or when one of the premises was proven wrong (mostly by himself )

Could not quite agree with Bohr on Quantum theories . Bohr had theorised the concept of electrons jumping from shell to shell, giving up and sometimes absorbing energy. Einstein could not quite accept the probabilistic aspect embedded in this.

He was quite sure that any theory should have as one of the basic premise the  Determinancy, and Causal  and not probabilistic as suggested by  Bohr in his quantum theory and Heisenberg.... Famous words of Einstein " God does not play dice" and or something on those lines.

At the time of dying still had fond hopes that the theory of everything  would sometime in future be unravelled.

His unmatched humility and kindness is brought out , so was his being most of the time not being too bothered about personal aspects,conveniences and people were not of great concer also most of the time including his first wife.

Spent last 20 years trying to come out with a simple and comprehensive unified theory

Letter to Roosevelt to speed up the A bomb project though it was quite possible that he was not aware that anyway , US was going ahead albeit at slow speed. Einstein appeared to have been swayed by the fact that there were reports that Germany had made progress on the same.

Offered Presidency of Israel, but rejected due to  a combination of health, inability to devote time and his own perception of his inability to do justice such jobs and also a desire to devote time on science ( Unified theory et al)

Involved a bit with Weizman ( who was the first President ) in the Zionist movement and formation of Israel

Was Involved in founding of  Hebrew University. 

Without doubt , Albert Einstein was a rounded intellectual, less rounded in some aspects but all the same a great thinker who appeared to have applied himself to a variety of things and left no one in doubt as to what was his true calling and talent.
One of the greatest minds , a great and imaginative one at that.Relativity appears almost like a Hindu concept, more specifically , Sankara on the whole universe being "maya". A confluence of wave and matter, interchangeability of energy and matter all appear more Hindu philosophy than Advanced physics.

One understands that he had no fear of death and had a peaceful death when he was 75-76 years , aneurysm of aorta (enlargement of aorta ) which required surgery and with  just about 50% chance of survival. He rejected the idea of any surgery.

Quite a nomadic life, he had, from Germany to Berne, Switzerland to Berlin to USA , initially CALTECH in USA and finally Princeton

The author very well captures how various groups , starting from Jewish group to Pacifists group to..... try using his name and get mileage. Einstein also understood it and lends his name to many. The author suggest that he also had a tendency to make inappropriate statements occasionally.

Einstein had a nice take on him spending the last  20-25 years on "Unified theory", it was almost like chasing a mirage. He was convinced that there could be a simple way of conceptualising and quantifying a comprehensive unified theory and mentions that , he, having a name for himself can afford to spend time on a potentially unsuccessful effort Vis a Vis younger scientists who would be better off spending time on something more concrete with probability of success being more.
Fabulous to read about such great personalities . Uplifting experience and in this case , considering  the theory , almost a spiritual experience.
The author appeared to have felt that , Einstein should have been a bit more forgiving of the Germans. Einstein developed a strong hatred towards the country and to a great extent , large population of the people who went along with Hitler and persecuted, tortured and killed Jews.I find that a normal reaction even of an extraordinary man when one considers the atrocities perpetrated on Jews, imagine 6.0 Mil Jews killed, almost 25% of the global Jewish population annihilated by a mad man .

Thursday, October 25, 2012

Great selection of books or wonderment of an average human being



Almost all the books that I have been reading ( most bought ), I have been finding them good or great and sometime extraordinary. It could be either a case of fabulous selection of authors and/or  books or just that , I am of such average intelligence with low expectations and standards that I end up appreciating anything which is above average and most of the books, I would presume would be good concepts written by significantly above average people.

The truth could be somewhere between the two. I have definitely been making sincere attempts at selecting good books by good authors plus also the factor that I go for subjects which interest me a lot.The bias also adds to the "liking" factor.