Blog
May 2, 2011
Indian government seems not to have learned much from the Fukushima Nuclear Meltdown which has thrown millions of Japanese lives out of gear and caused massive disruption to the economy.The Jaitapur Nuclear Power Plant to be built by NPCIL using Areva's experimental nuclear reactors has got the federal government's environmental clearance.Note the protests against the plant had got a political color with local opposition parties getting involved.A number of villagers have already been killed by police firing and further protests are expected.Note India's activist environment minister Jairam Ramesh has proven to be selectively biased towards large industrial projects in Congress ruled states.After appearing to be hero stopping the Niyamgiri project from Vedanta,Ramesh has given the go ahead to politically favored projects.Not a surprise given the endemic corruption present in the ruling coalition which has given birth to a number of corruption scams and scandals.Like everything,even a project of this criticality has acquired a political cover with everyone sounding their party positions without worrying about the possibility of a nuclear meltdown in India.
May 2, 2011
Arch Coal is the 3rd largest Coal Company in the USA. During the year ended December 31, 2009, the Company sold approximately 126.1 million tons of coal and operated 19 active mines at 11 mining complexes located in the United States. On October 1, 2009, the Company acquired Rio Tinto’s Jacobs Ranch mine with 345 million tons of coal reserves and integrated it into the Black Thunder mine.International Coal on the other hand is a small producer with a market cap of $2.2 billion previously which has managed a nearly 50% premium.Market Cap of $2.2 Billion is a producer of coal in Northern and Central Appalachia .As of December 31, 2009, the Company operated a total of 11 surface and 11 underground coal mines located in Kentucky, Maryland, Virginia, West Virginia and Illinois.The Company’s mines in Central Appalachia produced 10.1 million tons of coal in 2009, and the mines in Northern Appalachia produced 3.9 million tons of coal in 2009.
May 2, 2011
Solar Panels have grown exponentially in the last few years driven by declining costs and growing energy prices.The advent of the low cost manufacturers of silicon solar panels from China,falling raw material polysilicon costs,subsidies from governements fighting climate change have all contributed to the more than 150% increase in world solar demand in 2010.Solar Panels are not only being used on roofs and giant rooftop ground plants,but also are being integrated in buildings known as BIPV applications.Solar Panels are also available in flexible forms which can be used in backpacks and other innovative ways.Now there is another niche for solar panels that is growing.Note most of these companies are using the Concentrated Photovoltaic Technology (CPV).The traditional CPV suffers from heating problems as high concentration of sun power leads to high temperature.Building the CPV systems on water will help them solve their problems according to these companies.
May 2, 2011
Osama Bin Laden used to live in an area which was populated with affluent retired Pakistani senior military offiicers.The compound had 18 foot walls,barbed wire and internet connections.The compound was built in Abbotabad which is just 35 kms away from the Pakistan capital of Islamabad.Living in such a big compound amongst important military officials it would take a really dumb person to think that Pakistan government did not know or shelter Osama Bin Laden.It is a damning indictment of the Pakistani establisment.Note a number of terrorist incidents have a common origin in Pakistan.The Mumbai terrorist bombing in which the prime accused has said that Pakistani government officials were in the know about the bombings in which Americans and Israelis were targeted in India's financial capital Mumbai.The failed London bombing too had its origin in Pakistan.Now this operation which was conduced in the very heart of Pakistan to kill the most dreaded terrorist the world has seen.
May 2, 2011
Lavasa is a story of corruption,looting of the poor and raping of the surrounding environment by the Indian politician-bureaucrat-businessmen nexus in a beautiful cover of a township built for the rich and well heeled.There is little concern for the law as these powerful developers know that they can get away with murder quite literally.The long term sustainability of the township is in doubt which defeats the entire purpose anyway.Any buyer of property in Lavasa should be aware of these problems and should not buy it as their investment will be eroded in the future anyway besides having the taint of being looted from the poor.However the media too has lost interest as a new scandal emerges everyday.
Lavasa Township being constructed near Pune,Maharashtra has been in the media off and on for creating a environmental disaster in the shape of a beautiful township constructed on the hills.The town which has been constructed for 300,000 residents has violated all building and environmental norms of the state and centre.With powerful politicians and businessmen backing the project,its not as surprise that the state government of Maharashtra actively helped the township in bypassing all the laws and regulations.There is no provision for permanent water supply and it would lead to a clash between the water wants of Lavasa and Pune.Note builders in India are notorious for leaving out water and waste sustainability in their plans.The residents of the buildings,apartments and other shelters have to bear the brunt later on when there is no water and problems like waterlogging.Gurgaon the millenium township suffers from both of these problems quite acutely.Note these problems are common to both million dollar homes as well as slums in India.
May 2, 2011
Osama Bin Laden the architect of the dealiest terrorist attack in human history when the Twin Towers and numerous other targest in US were attacked using airline planes has been killed.10 years after starting the campaign to kill Osama Bin Laden,US today said a military mission in Abbotabad Pakistan managed to kill the dreaded fanatic.Note Al Qaeda is the most dangerous international terrorist organization with roots in the badlands of Pakistan and Afganistan.He has been long been suspected of being sheltered in Pakistan which has become a worse hotbed of terrorism than Afganistan.What was surprising that Osama was hiding near the capital of Pakistan which implies that top officials of the Pakistani government had to be involved in hiding Osama.It is an open secret that Pakistan which is being touted as the "US ally" in fight against terrorism has long been playing a double game.The death of Osama in Pakistan brings irrefutable proof to this fact.
May 2, 2011
Air India which is India's government owned airline is a cesspool of corruption,sloth,mismanagement and inefficiency.Most of the the aircraft are worse than the second class cabins in Indian trains with cobwebs hanging and dirt piled around.The air hostesses are rude and hostile and over aged as well.The airline has one of the highest manpower to aircraft ratio in the world with more than 200 per aircraft.The airline routinely loses thousands of crores each year which is wasted on the employees who seem more like arrogant owners than workers.Government officials and politicians treat the airline as their personal property making passengers wait in case they are late.Note its not uncommon to find that the seats are torn up and dirty.If you are unlucky you might even find rats running on your feet as the dirtiness invites rodents to make Air India their home.While all airlines have faced tough years,even the worse private airline does not have rats running through them.
May 2, 2011
SBI and HDFC Bank which are the 2 of the largest banks in the country have protested against the RBI proposal to free up the interest rate given on savings account in India.Note RBI fixes the rate at which money deposited in saings account earns interest currently for all banks in India.The current rate is 3.5% which is way below the near double digit inflation rate being experienced in India.Most Indians deposit their savings in bank saving and fixed deposit accounts as there is no widespread equity or debt investment culture in the country.This allows banks with a large retail depositer base to earn supernormal profits by paying pathetic interest rates on savings account and lending that money at 12-13%.While the public sector banks have to serve a lot of priority sectors private banks have no such concerns.This leads to high NIM for private banks leading to huge profit growth each year.This has made investing in top banks in India such an attractive proposition.
May 1, 2011
NTPC,India's largest power generating utility with around 35 GW of electricity capacity is set to enter renewable energy in a big way as it has singed 500 MW of PPAs with state distribution companies for supplying green energy.Note India's electricity regulator CERC has mandated a 6% Renewable Purchase Obligation (RPO) in 2011 which will increase by 1% each year to 15% by 2020.A number of states have fallen behind in meeting their RPO and would need to either generate or buy Green Energy to meet the CERC targets for renewable energy.NTPC which is predominantly a thermal power utility has been planning to set up wind and solar power plants but nothing has been done till now.However after signing these PPA with the Madhya Pradesh,Orissa and Karnataka government,the renewable energy projects should get accelerated.
May 1, 2011
Private Banking in India has become one of the fastest growing businesses in the country with a rising wave of millionaires forming an attractive target segment for MNC banks looking for growth.Top Indian Banks have given spectacular returns driven by India's 8% GDP growth and increasing financial penetration.Note Private Banking or Wealth Management business involves providing taxation,wealth managment,investment,insurance and other financial products under one umbrella to wealthy customers.The private banking customers recieve privileged services from the banks who provide a one stop contact person in the shape of a "relationship manager".Compare this to normal banking customers who face namelss contact centre operators with little knowledge.Most of the foreign banks in India like Barclays,Standard Chartered,Citibank which have a big presence in India have been hiring aggressively and targeting wealthy customers through a big marketing spend.However the services being given leave a lot to be desired."Trust" is the biggest quality in a banking relationship as a customer trusts his life savings and in this quality these banks have failed miserably.
May 1, 2011
Note Big Oil and Gas has been slowly been retrenching form the solar energy industry despite initial leadership.Shell which was one of the biggest solar players has become almost non-existent while BP has shut down a number of solar factories outsourcing production to China.Other Oil and Gas companies like Exxon,Valero,Chevron and others have concentrated their energies on related green sectors like algae based biofuels rather than on solar and wind energy.So the move by Total comes as a surprise as it acquires one of the top 15 solar panel companies in the world.Sunpower is being acquired at a cheap price considering its world beating solar cell technology and its massive systems business which has gigawatts of solar projects under development.Note Sunpower makes the highest efficiency solar panels on a commercial scale and recently tied up with AUO.It is the 2nd biggest solar plant installer in the US and has a massive presence in the commercial and government sector.Total said it looked at over 200 companies before buying Sunpower.Note M&A has been strong in the Solar Thermal Industry and has now started picking up in the Solar PV Industry as well.With solar company valuations at a historic low,it makes sense for the larger chemical and energy companies to pick up good companies on the cheap.
April 25, 2011
It is a common practice amongst these companies to add value added services like caller tunes without the customer's permission which is totally illegal.Since most of the customers do not know how the billing is happening and do not know how to turn it off,these companies make millions of dollars in illegal profits from such customers.Airtel,Reliance and other major telecom companies in India follow this practice widely and openly.Nobody is going to complain about 50c/month being charged wrongly by the telecom provider.However 50c multiplied by a 100 million customers is neat $50 million in profits for these companies.This overbilling of customers even extends to broadband customers as I recently found out .After a nightmarish experience with Tata Indicom whose pathetic customer service forced me to change to Airtel,I found a blatant case of overcharging of money in my very first bill.
April 25, 2011
China has recently put increased scrutiny and control over the mining,smelting and export of important minerals like tungsten and rare earth oxides.Note mining in China often takes place illegaly without any regard to environment in quest for a quick buck.Japan which is the largest importer of rare earth oxides from China gets most of its demand met through illegal mining.However China has cracked down on this practise as it regards these minerals like tungsten,iron,rare earth,antimony and molybdenum as important for national goals.China has severely curtailed the exports of rare earth exports leading to a sharp rise in rare earth prices and stocks of rare earth companies.This has sparked concern in developed countries and blocks like EU,Japan and USA which has taken the case to the WTO.
April 25, 2011
India has lately become a nation known for endemic corruption rather than the world's poster growth boy with the ruling party members implicated in a number of corruption scams.With the government reluctant to take action against its own,the Supreme Court was forced to take over the supervision of the investigating agency CBI.In the first chargesheet top corporate honchos and CEOs were put under arrest alongwith the former telecom minister Raja and his cronies.With the ruling party under pressure from a civil society movement against corruption,the ability to manipulate the investigation process is limited.Not that the government is not trying put impediments in the court cases and top ministers and leaders indulging in character assassination of the eminent social activists like Santosh Hedge and others.This comes even as other chief ministers of the Congress like Gehlot get caught in nepotism.
April 25, 2011
India's Leather Industry worth more than $7 billion annually is heavily fragmented with small scale units accounting for almost 80% of the industry's revenues.The lack of scale has led to the leather industry not using the best technology and practises as a result it has been heavily polluting the surrounding water and air.The leather industry is present in clusters in many parts of the country like Kolkata,Kanpur,Punjab and other other places.The common theme running across these clusters is their uniforming polluting ways.Leather industry is a a typically developing country activity as the labor and low value add involved has made developed countries mostly outsource production to least developing countries where regulations are lax.However the environment unfriendly activities have become untenable with the major export markets imposing strict ecological regulations about production and sale.This has made it difficult for the industry to cope up as they lack the capital and technology to put in pollution control equipment.
April 25, 2011
Wind Power in India is the 5th biggest wind energy market in the world with more than 2 Gw of wind capacity being installed in the country.However Wind Energy Companies in India are seeing increasing competition from the entry of low cost Chinese Wind Turbine manufacturers Shanghai Electric and Dongfang.Chinese Wind Companies have seen astronomical growth in the last 5 years to occupy 7 of the top 15 global positions in the top wind companies in the world from zero.On the other hand India has only Suzlon in that list. Wind Turbines in India which are not as sophisticated and advanced in the western market with most turbines being of lower than 1 MW capacity.However with increasing focus on improving the LCOE and development of low wind locations,India Turbine producers are concentrating on introducing higher capacity 2.5 MW turbines and advanced technology like "direct drive" wind turbines.
April 25, 2011
India is a massively energy deficient country with official figures citing around 15% of peak electricity demand deficit due to lack of power generation and distribution.The […]
April 25, 2011
Maharashtra which is the largest power generating state in India but deficient in renewable energy sources of generation will not use the discredited reverse auction bidding mechanism being used in the First Phase of the JNNSM Federal Solar Subsidy Policy.The reverse auction bidding was done due to the massive deluge of applications for setting up solar PV and solar thermal power plants.Based on the Rs 17.91/Kwh Feed in Tariff,developers had bid discounts with the solar project owner offering the biggest discount winning the right to build the solar power plant.This had led to irrationally low bidding for projects and it is all but certain that these solar projects will either be not be built at all or run into heavy losses.
April 25, 2011
The Government of India issued an Ordinance on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The Life Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign insurers in all. In 1972 with the General Insurance Business (Nationalization) Act was passed by the Indian Parliament, and consequently, General Insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.Now more than 20 life insurance companies in India have started operations with the industry size expected to reach a mammoth $350-400 billion by 2020. Before that, the industry consisted of only two state insurers: Life Insurance Corporation of India, LIC and General Insurers (General Insurance Corporation of India, GIC). GIC has four subsidiaries
April 22, 2011
Mining Industry in India is an important economic sector which contributes significantly to the economy of India. India's minerals range from both metallic and non-metallic types.The total working mines were 2,854 in 2007-08 with 569 mines belonged to coal and lignite, 676 mines to metallic minerals and 1,609 mines to non-metallic minerals.There were 755 mines in public sector and the remaining 2,099 mines in private sector.India is an important exporter of iron ore, titanium, manganese, bauxite, granite, and imports cobalt, mercury, graphite etc. India mineral resources of the country are surveyed by the Indian Ministry of Mines, which also regulates the manner in which these resources are used. The ministry oversees the various aspects of industrial mining in the country.Note Mining in India comes under both the ferderal and state supervision.
April 22, 2011
The Congress Party and its leaders can't stop being caught in corruption scams and instead of trying to correct them,they slander and character assassinate civil rights activists who try to bring about an anti-corruption bill in the country.The Adarsh Housing Scandal in which the Congress Chief Minister in Maharashtra was involved had to resign though no jail time for him or for his associates.The Scam which also involved top bureaucrats,Corrupt Indian Military Generals and other sleazy officials has died a natural media death as fresh scams take their place.Not that the Opposition party BJP is any better with its Karnataka Chief Minister failing to resign despite being accused of a number of scams.Note the Karnataka Ministry of the BJP has robber mining barons as top ministers who have made billions of dollar through illegal mining of iron ore.
April 22, 2011
India's Oil and Gas Industry has an interesting mix of Oil & Gas companies from the government and private sector.Except for some companies providing ancillary and drilling services,most of the companies are huge with billion dollar balance sheet and huge operations as is the case with the Oil and Gas Industry worldwide.Except for Reliance Industries,the upstream sector of oil and gas production and distribution is dominated by government owned companies which are heavily regulated.Despite attempts at liberalizing the APMC and the operations of the PSU Oil Companies,HPCL,BPCL and IOC run billions of dollars in losses as they are forced to sell oil and gas products at below their cost.The government's policies are mostly ad-hoc compensating these companies through bonds and money transfers.It is quite strange as the minority investors are forced to pay for government subsidies for energy.India's Oil Subsidies has led to the flourishing of a massive Oil Mafia which does not think twice before killing government officials and has led to poor outcomes for the country.Despite this government stupidity,some government companies like GAIL,OIL India and ONGC which operates in the production and have to bear less of the subsidy burden have grown and performed admirably.In the private sector companies like Reliance,Aban,Great Offshore,Essar have managed to grow rapidly as well with varying degrees of success.Here is the list of the major Oil and Gas Companies in India.
April 22, 2011
General Insurance covers all the non-life insurance types such as Motor Insurance,Health Insurance,Calamity Insurance,House Insurance etc.The biggest money earner for General Insurance Companies is Health Insurance and its associated policies like Disability Insurance etc.Having health insurance is important for several reasons. Uninsured people receive less medical care and less timely care, they have worse health outcomes, and lack of insurance is a fiscal burden for them and their families.
Government General Insurance Companies are the best ones to take health insurance policies because of a simple fact that do not cheat and harass you like the private insurance companies whose only aim is to earn a quick profit.Given the pathetic system of contract enforcement in India this become especially important as legal cases can go remain stuck in the justice system for years.Just like LIC is the best life insurance company in India because of the TRUST factor so are the Four government health insurance companies because of their government ownership and lack of overarching profit motive.
April 22, 2011
In India, Insurance is a national matter, in which life and general insurance is yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% of India's GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. of India opened up the insurance sector for private companies to solicit insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a flourishing market amongst global insurance companies. However, the largest life insurance company in India is still owned by the government.The Insurance Industry has grown (premium as percentage of GDP) from 2.3 per cent in 2001 to 5.2 per cent in 2011.The report estimates the total insurance premium at approximately Rs $350-400 billion in 2020 with Life Insurance making 90% of the premiums.The profitability of the industry is negative as they have spent their energies in expanding their base in a rapidly growing market without concentrating on the margins leading to a cumulative loss by private insurers of around $3.5 billion.However the huge size of the insurance market which has been estimate at an astounding $350 billion in premium by 2020 is attracting companies in droves.Almost all major global insurance companies have a presence in India through JV (as government regulations only allow 26% holding).Major Indian Banks and Finance Companies too have a presence in the sector through JV with foreign partners who bring the expertise.
April 22, 2011
Future Ventures is a VC/Private Equity Company that has invested in a number of small Indian companies and startups mainly focused on the consumption industry in India.With India growing at around 8-9% in the last few years and expectations of strong future growth driven by consumption,Future Ventures seems a good investment considering the portfolio of companies that it owns (analyzed below).Future Ventures is a part of the Future Group run by Kishore Biyani who started India's most famous retail company Pantaloons.The Company has set a price band of 10-11 rupees a share with a target of raising around Rs. 750crore though the IPO.This would represent around 40% of the equity which would give it a post IPO market capitalization of around $375 million.Note the company had tried to come with an IPO 2 years ago but it was deemed to expensive at that time.
April 22, 2011
Indian Politicians after being forced to bend against the popular support received by Anna Hazare and other civil rights activists in the recent fast unto death […]
April 22, 2011
Offshore Wind Energy has been foretasted from around 3 GW to 75 GW by 2020 as countries in Europe,Asia and North America heavily support this industry.Onshore wind energy growth on the other hand is expected to slow down as 38 GW of Wind Capacity were installed in 2010 with Western Markets showing a sharp slowdown.Offshore Wind is seeing increasing growth as government heavily subsidize and support Offshore Wind Energy.Though the costs of offshore wind parks are much higher today,they will decrease as the installed offshore wind capacity increases from around 3 GW today to around 75 GW which is being foretasted globally by 2020.Note every industry sees costs declining with large capacity except the mature industries.For example Wind Energy has seen a 10% decline in costs for every 100% increase in installed capacity.Note offshore wind projects offer even more Wind Energy Advantages than normal Land Based Wind Farms.The only problem facing offshore wind power is high costs as the industry still is on the learning curve.However as companies gain experience and build capacity,the prices will be cut as costs come down and volumes increase.European Wind Companies are leading the pack as almost 80% of the current global capacity has been installed in Northern Europe.The opportunity is so large that South Korea shipbuilders like Samsung,Daewoo and Hyundai are investing heavily in this area.
April 19, 2011
The Indian telecom industry is the world's fastest growing industry with 792 million mobile phone subscribers as of February 2011. It is also the second largest telecommunication network in the world in terms of number of wireless connections after China. The industry will reach around $80 billion in revenues by next year showing an astounding CAGR of over 25% and will employ a stupendous 1 crore employees making it one of the biggest value creators in India in recent times.However the telecom companies in India after enjoying a boom period in the early 2000s have faced a couple of tough years with hypercompetition leading to a price war in auction of 3G spectrum.This was followed by one of the most high profile corruption scandals in the country which resulted in the jailing of the former telecom minister in the 2nd auction of 2G spectrum.Most of the telecom companies have been found to be implicated in colluding with sleazy politicians/bureaucrats in looting the Indian taxpayers.India Real Estate Sector is one of the most corrupt in the country and after the 2G Scam,the telecom sector is giving it close competition for the No.1 spot in corruption
April 18, 2011
Offshore Wind Energy grew by more than 50% in 2010 and is expected to continue at above 50% growth rates over the next several years as the global installed offshore wind capacity multiples by more than 25 times over the next 10 years.The massive investments and government interest in offshore wind farms has attracted a number of companies to this sector.Top Wind Turbine Companies are leading the pack as it falls right in their domain of expertise as Wind Turbines form almost 50% of the cost of a offshore wind park.Other companies with expertise in related areas such as building foundations for the giant 5 MW and greater capacity offshore wind turbines and the logistics in transporting them also get involved.Shipbuilders from South Korea and Northrop Gruman are also getting in through JV and M&A.European Wind Companies are leading the pack as almost 80% of the current global capacity has been installed in Northern Europe.Also these companies possess a high level of expertise at building and designing wind turbines.Here is a list of the major offshore wind turbine companies.
April 18, 2011
Offshore Wind Energy has been forecasted from around 3 GW to 75 GW by 2020 as countries in Europe,Asia and North America heavily support this industry.Note onshore wind energy growth has slowed down as 38 GW of Wind Capacity were installed in 2010.Offshore Wind Energy is being subsidized as it has a number of advantages over onshore wind power despite its higher costs.The oppurtunity is so large that South Korea shipbuilders like Samsung,Daewoo and Hyundai are investing heavily in this area.Note Onshore Wind Energy also has many advantages which have overcome the drawbacks to become the biggest green industry.Offshore Wind Power is set to take up the growth baton fro Onshore Wind as Costs are expected to come down as the industry and technology matures and more Wind Turbine Companies gain experience in this area.Note USA has 4000 GW of Offshore Wind Capacity which is enough to meet the entire electricity need of the biggest power consumption country in the world.
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