Stock Market
January 10, 2012
The massive solar panel glut has not only caused Western solar companies to go bankrupt but has also caused mayhem in the Chinese solar panel industry.Many of the smaller companies have seen their utilization go down to 35% or lower with many of the others shutting down their production entirely.There are hundreds of small solar companies in China which started during the 2010 boom when global solar demand increased by more than 150% . However their small scale of operatoins and lack of brand power means that they are bearing the brunt. While the large Chinese solar panel producers have seen their utilization go down , most will survive given the support from Chinese Banks. For example LDK despite its more than $3 billion in debt and losses is still getting loans from Chinese Development Bank. But the smaller Chines OEM panel makers don't have the government sugar daddy behind them.
January 9, 2012
Solar Trade Wars are becoming the norm in the globe these days with the major one between USA and China.The instigator is the German solar company Solarworld which helped started the ITC Case in the USA.India too is thinking of putting some kind of import duty to protect its domestic solar panel producers which are dropping like flies.Chinese solar panel producers have swamped the world with super cheap solar modules.Though a part of their low prices can be explained by competitive advantage, another part is due to the labor,capital subsidy given by the Chinese government.It would not take a rocket scientist to say that some of the biggest Chinese solar companies are insolvent and would be dead within a month without Chinese state loans.
January 9, 2012
Saving bankrupt solar companies has become the national pasttime of most governments it seems.Competition in the solar market has become so severe that solar comapnies are failing left and right.This has made the government come out to save them with bailouts which only make the oversupply situation in the solar panel industry worse.While China is the worst culprit supporting hundreds of failing solar companies through cheap loans which will be never paid back,other governments are not far behind.
January 9, 2012
Solar Power in India is growing by leaps and bounds with the federal and state governments heavily promoting solar energy production.India is set to become a gigawatt market in 2012 with around 400 MW already installed by 2011.The ancillary industries around the main solar power market are set to grow at a rapid clip as well.One of the unlikely sectors in solar products in India is the growth of solar cables.Note solar power plants require a lot of wire and cabling to connect thousands of solar panels to each other and to solar inverters.Besides solar power plants also require interconnection with the power grid.While today most of the solar cable is imported from outside,there is potential for a solar cable manufacturer to build a domestic capacity as well given the rapid growth expected in solar power.
January 9, 2012
Note blatant pump and dump IPO's have made the Indian market a heaven for stock market operators.Despite this going on for years,only recently SEBI has taken some steps against the manipulartion of the primary market.Now SEBI has taken some steps in the Insider Trading case as well by fining executives of JP Associates and Ranbaxy both of which are constituents of the Indian main stock market index. However a mere fine will not do to deter insider traders.A big jail term for a insider trader will make white collar criminals think more in indulging in criminal activity rather than small fines .
January 7, 2012
power projects.See below for the problems besetting India's thermal power project developers.Note wind and solar power projects are seeing more interent from debt syndication lenders like IDFC,IL&FS because of 2 reasons
a) Strong support from state and federal governments which are going all out to support Renewable Energy through tax breaks,feed in tariffs,capital subsidy
b) Secure Power Purchase Agreements (PPA) by NVVN at even higher prices for green energy
c) No problems of fuel supply availability that plagues the coal and gas power plants in India
d) Lesser Environmental issues that beset the Coal Power and Nuclear Power Plants in India with local agitations
e) Land Acquisitions problems are also lower as solar and wind power plants don't require prime land
January 7, 2012
Reliance has a massive balance sheet which is has used strategically to acquire 4G spectrum (Infotel) and content.The company had revolutionized the telecom space through the Monsoon Hungama campaign when it had provided super cheap telecom mobile plan with handsets. It could do the same in the Internet space through providing super cheap Talbelts like Aakash with super cheap broadband plans on 4G. It already has content to provide its subscribers.Note broadband companies in India provide poor service at high rates, so Reliance can takeover the broadband space in India easily if it executes right.
January 7, 2012
The German Solar Energy Market is biggest in the world and has installed the largest number of solar panels for the last few years.2012 promises to be no different with Germany again set to the biggest solar market for solar panel manufacturers though Italy would give good competition.The German Solar Subsidy program has been the best in the world unlike the start and stop feed in tariff programs of Spain,Czech,UK,Australia and other places.A stable step in cut of feed in tariffs has helped solar energy prices coming down by more than 50% in the last few years though demand has only increased.
January 6, 2012
LDK Solar is one of the most insolvent companies in the world right now with billions of dollars in debt,a battered balance sheet,continuing losses and dodgy accounting.However LDK has acquired a German company Sunways and continues to build new solar power plants as the Chinese state owned banks continue to fund it with cheap money without any consideration about losing their investments.LDK has become the poster boy of the Solarworld complaint against Chinese solar panel producers as it continues to run and thrive despite being insolvent.The Chinese government is hurting itself and its other solar companies like Trina,Yingle which are more competitive by continuing to support and increase the global glut of cheap solar panels.These solar panels are being clearly sold at below cost as most of the companies would be bankrupt without these absurd loans which make no free market sense
January 5, 2012
Chinese Wind Turbine Companies have unleashed a global price war in which Western producers are unable to compete.While Solar Panel producers in the West are dying like flies,Western WTG Makers too face survival questions.Vestas which is the world's biggest turbine company in terms of installations announced another revenue shortfall for the nth time in the last couple of years.The company has already restructed ,reduce workforce etc etc.However the price competition from the Asian companies is too severe and too sustained for Vestas to surive too long.Like First Solar,Vestas seems a likely candidate for takeover by one of the big industrial conglomerates.It has become too tough for a renewable energy company in the West to survive on their own.
January 5, 2012
Biomass Plants in India are shutting down as feedstock costs have increased rapidly while government regulated electricity tariffs have yet to increase.60% of India's Biomass Plants have closed down as they are longer profitable.Note India has a massive growth target for biomass electricity capacity up from 1 GW at present (2 GW if you count cogeneration).A number of agricultural companies have set up a number of plants besides dedicated green utilities.However inflation in India has affected the operation of plants specially those who don't have inhouse feedstock supply.
January 5, 2012
China has announced a new solar subsidy for BIPV systems of 9 Yuan per Watt ($1.4/watt) and CNY 7/watt for PV systems for home.Note China has already become a top 5 market in the world in 2011 after announcing a $1.15/kwh Feed in Tariff for utility scale solar power instalations.This new subsidy by the Chinese ministry of finance should boost the home and commercial segment.Note China had recently raised the target of solar energy to 15 GW by 2015 from 10 GW as solar energy has grown amazingly fast in the recent past.
January 5, 2012
Pakistan is a energy deficit country like most other South Asian countries with inadequate investment in the electricity sector and the distribution infrastructure.The cause of the energy crisis in the country is due to massive corruption and misgovernance , a theme which will be familiar to citizens of India as well.Pakistan has been looking at investments from the Chinese power companies in the hydro and wind sectors to boost electricity generation.However these investments take time and some may never come to fruition.However Pakistanis are now turning towards cheap Chinese solar panels to beat the high electricity tariffs and dependence on expensive diesel generators and UPS systems.
January 4, 2012
Adani Power,which is a leading Indian electricity company and part of the Adani Group is set to invest big money in the solar power in India.The company plans to set up 140 MW of energy capacity according to news reports with an investment of $600 million.Given the current costs of solar equipment and solar panels ,the price tag looks high at almost $3.5 million/MW when the current prices are more like $2 million/MW for large power plants in low cost locations like India.
January 4, 2012
JNNSM Phase 2 recieved almsot 8 times the bids with 2500 MW worth of bids out of which around 350 MW was selected for providing Feed in Tarifffs with the average tariff of Rs 8.77 or 17.5c/Kwh .Note India's execution record has not been great with only 400 MW solar capacity reached in 2011 against a target of more than 1000 MW.However weaker and unknown players have gone out of this business and the winners this time look more likely to construct these solar power plants.No doubt a massive glut of solar panels in the world with prices as low as 80-90c/watt helping .Compare that to prices of solar panels which were more than $2/watt last time.
January 4, 2012
This new plan has following features
1) Reduce the Power Purchasing Agreement Tenure to 5 years from 25 years.This would make it easy to change the prices of power purchased to reflect the changed realities
2) Some sort of fuel cost indexation for electricity tariffs .The reason is that prices of imported coal has risen dramatically which has made the large UMPP get stuck because the revenues don't meet the costs.
This plan will take 6 months to be implemented as the government talks with stakeholders like states which are reluctant to change the power prices decided in the PPA with the earlier UMPP being built by Tata Power and Reliance Power in Gujarat and Andhra Pradesh.
January 4, 2012
Telecom Companies in India are in general an unscrupolous lot with the 2G Scam showing the whole telecom industry of India in a Bad Light.While a number of top executives of telecom companies spent time in jail,it seems that these companies have learned nothing.They continue to find loopholes to take both their customers and government for a ride.Indian Broadband and Telecom companies have made defrauding customers an art by illegally adding value added services and charging for them.They also burn millions of dollars in subsidized diesel to power their telecom towers since there is no restriction on that.Now these comapnies have been caught again in another manipulation trick in 3G services.
January 3, 2012
India faces a Long and Dark Summer in 2012 with its Electricity Industry in Shambles.The list of woes is almost non-ending and the government is the biggest culprit.Locked in a policy paralysis due to its corruption taint,the authorities have failed to move.Indian Electricity Companies too are facing losses and may even default on some project debt.The state distribution companies already have racked up billion of dollar in losses due to total mismanagement of tariffs and power theft.So the whole supply chain is in trouble with the Indian Banks also in trouble as they have lent billions to the power producers.
January 3, 2012
Chinese Solar Panel Producers have become a famous target of an anti dumping petition brought on by Solarworld and other companies.Though US Solar Installers have opposed the move as it will increase the solar panel prices in US,ITC has gone ahead with the investigation.Though the charges of subsidies and efficiency can be debated,the fact remains that US Solar Panel Producers can't compete with Chinese Solar Panles.Massive industrial overcapacity in China has made the prices of products very cheap and made it difficult for Western producers to compete in most areas such as Chemical,Renewable Energy,Textiles etc.The Chinese win because of their low interest rates,cheap labor,free land,massive government support.
January 2, 2012
Note Chinese companies too would have shut down but the state owned Chinese banks are keeping them alive with loans at ridiculous interest rates.LDK which is buying Sunways is almost insolvent as well with its convertibles trading at less than 50c on the dollar in Singapore.It has more than n$3 billion in debt compared to its market cap of around $600 million.It faces massive losses in the coming qtrs and can't serve the interest payments much less expand.The strong support of the Chinese government for its green companies is keeping them alive.Chinese solar panels have become super cheap due to companies selling at below cost and massive scale.Note all the cheap solar panel brands in the world are Chinese with the exception of First Solar and some Asians.
LDK has managed to spend 22 million Euros despite burning hundred of millions of dollars in cash because it has got the Chinese government trillions backing it.So while Western companies burn and crash,the big crony Chinese companies can expand and acquire.
Most of the German solar manufacturing industry is finished and it is unlikely that except a couple of them like SM Solar or Wacker will live to see 2013.Q-Cells too should go bankrupt or get consolidated .Note despite European companies shifting factories to Asia ,they just can't compete.Some of the smaller module makers with 20 MW plants have seen huge losses with the equipment not selling for 10 cents on the dollar
January 2, 2012
2011 has been a bad year for emerging markets with high inflation,slowing growth and rising interest rates.Most of the problems are a consequence of the 2008 Financial Crisis when emerging countries increasing fiscal spending and reduced interest rates to reduce the affect of the Lehman crisis.Now the Bill is coming due with slowing growth and higher inflation.Most of the BRIC countries have heavily increased interest rates in 2011 to slow inflation as their poor population can ill afford the damaging effect of inflation.
Brazil has reduced its 2012 Budget by $32 billion to control inflation drawing howls of protest from politicians who always want to spend more as if money grows on trees.The country has reined in spending in both 2011 and 2012 to reduce the fiscal deficit and spend more money on productive sectors like infra.
January 2, 2012
For Foreign individuals
a) The idea may be bad as well as Indian stock markets are a quagmire of bad corporate governance and corruption.Insider trading and manipulation is quite rampant which has made retail investors flee the market.
b) They will be faced with foreign exchange volatility which can be quite high.In dollar terms the Indian market fell by almost 35% in 2011.
c) Some sectors are notorious for corruption with even professional fund managers avoiding real estate because of accounting shenanigans and indian small cap stocks being like casino games rather than companies
December 7, 2011
Investing Money in India right now is a very confusing matter given the large number of choices and the lack of attractiveness of different assets due to different reasons.There are hundreds of voices seemingly intelligent but who are selling their own books.If you turn on the finance new channels they will keep saying buy stocks for the long term as if a normal investor can make money by buying stocks for the short term.Gold proponents will say that it has been a great investment over the last several years and with the US,European systemic shocks it will remain so.However the rapid uptrend in gold prices has made it a somewhat risky investment.Investing in Gold is also not easy given the wide array of choices like Gold ETFs,physical or futures.So lets see each asset class with its pros and cons
November 1, 2011
HDFC Gold ETF along with Kotak and Gold Bees are one of the best gold etfs to invest in India and provide a sharp contrast to the worst ETFs like SBI and Axis Bank.HDFC Gold ETF has the added advantage of being one of the largest Fund Houses and is a subsidiary of one of the largest private banks with a great distribution strenght and reputation.It is also one of the few mutual fund ocmpanies which is offering a SIP on the Gold ETF unlike many others.Expense Ratio is also one of the lowest in the industry at 1% . All in all HDFC Gold ETF is a good buy if you are thinking of putting money in gold through ETF.
July 15, 2011
Phono Solar is a JV between Phono Technologies Switzerland and Sumec Group of China.Phono’s parent company SUMEC Group has been in the PV industry from early 2004. Sumec and Sinomach family of companies claim to have $15 billion in revenues each year.SUMEC Group Corporation (SUMEC), founded in 1978, is a key member of China National Machinery Industry Corporation (SINOMACH).SUMEC’s core business consists of shipbuilding and project contracting of complete equipment and engineering; the R&D, manufacturing and export of machinery and electric products including power tools, garden tools, power machinery
Phono Solar’s three production facilities will produce more than 500MW of PV Modules in 2011.The products are widely used in many fields such as power station, telecom, transportation, lightening, broadcasting, civil defense, marine etc.The company's products are made in China and marketed by the Swiss company under the Phono Solar Brand.The Company also sells micro wind turbines which are used in small residential installations.
July 10, 2011
Goldman Sachs Liquid Exchange Traded Scheme (GS Liquid BeES) is an open ended liquid scheme & was previously known as Liquid Benchmark Exchange Traded Scheme (Liquid BeES). GS Liquid BeES is the first Liquid ETF (Exchange Traded Fund) in the world. It is a unique liquid fund that is listed and traded on the stock exchange just like a share.
The investment objective of GS Liquid BeES is to enhance returns and minimize price risk by investing in a basket of call money, short-term government securities and money market instruments of short maturities while maintaining safety and liquidity. It seeks to provide current income, commensurate with relatively low risk while providing a high level of liquidity, primarily through a portfolio of treasury bills, Government Securities, Call Money, Collateralised Lending & Borrowing Obligation (“CBLO”) /similar instruments, Repos and Reverse Repos, and other Money Market Instruments.
July 10, 2011
Mutual Fund Companies have seen a steady growth driven by the growing financial assets being generated by the fast growing Indian economy.But the Mutual Fund Industry like other sectors such as Real Estate and Telecom too has come under the spotlight for some illegal activity.While you can't call the industry corrupt because of some fraudulent activities it does raise questions on the industry ethics.Top Mutual Funds in the country like HDFC and L&T have been fined by the stock market regulator SEBI for front running.For those who don't understand what the term means,front running is an illegal activity whereby a fund manager or fund official makes personal gains by making trades on his account before doing a trade for the fund.This causes losses for the fund investor and is akin to stealing.However like other corrupt practices in the stock market industry,SEBI lets them go with small fines which don't deter more such frauds.It is also not unknown that some fund managers connive with company promoters and market operators to rig and do circular trading.Not only is this a problem,another massive problem with the industry is its underperformance as compared to the benchmarks.While earlier mutual funds were known to outperform the benchmarks like the Nifty,a recent Crisil study has dispelled this myth.Given these disadvantages of mutual fund ,it is time to invest in Indian ETFs though not a lot of variety exists in the Indian stock market yet.
July 8, 2011
Renewable Energy Corporation (REC ) is one of the biggest European solar companies and is completely vertically integrated.What that means is that REC makes all the components in the crystalline silicon supply chain from polysilicon to wafers to cells and modules.REC was earlier primarily a polysilicon and wafer producer but it is not becoming more active in the solar panels area.REC Silicon and REC Wafer are among the world's largest producers of polysilicon and wafers, respectively, for solar applications.This is the reason that REC solar panels are in general cheaper than other European and Japanese solar panels like Solarworld,Sharp,Kyocera and others.Due to the high cost of production,REC has shut down its factories in Norway and is mainly producing solar cells and solar modules at its new solar complex in Singapore.REC Solar has production facilities around the globe but it is concentrating its production in Asian factories.Despite stiff competition from Chinese solar panels which has led to bankruptcy of numerous solar companies in the West,REC is well capitalized and should be one of the survivors of the current solar price wars.As such the warranty on the solar panels from REC should hold good for the 25 years.
July 8, 2011
JA Solar is the biggest solar cell producer in the world with more than 2000 MW of silicon cell capacity.The company has one of the lowest costs in processing of solar cells from solar wafers.The company is primarily a supplier of solar cells to most solar panel producers in Europe and Asia.However the sharp fall in solar panel prices in 2011 has resulted in most of the European companies shutting shop which has meant that JA Solar has faced a large loss in customer orders for its solar cells.Unlike its peer Trina and Yingli Solar,JA Solar does not have a good brand name or distribution of solar panels.It is more of a upstream supplier of solar products to solar comapnies rather than a end distributor of solar panels.JA Solar has diversified into making solar panels of its own and in partnership with other companies.Having a strong presence in the end market has become essential to survive in the cutthroad solar market.