HAPPY DIWALI AND A VERY HAPPY NEW YEAR

HOPE THAT ALL OUR READERS HAVE BEEN BENEFITED FROM OUR CALLS & WE HAVE EARNED MORE THAN 300% IN THE CALLS GIVEN LAST YEAR.

NOW, WE RECOMMEND OUR READERS TO START BOOKING THEIR PROFITS FROM NOW ON.

HAPPY DIWALI & A VERY VERY HAPPY NEW YEAR

Father - Son - Donkey - Stock Market (Story)

Hello Friends,

A Man and his son were once going with their Donkey to market. As they were walking along by its side a countryman passed them and said: "You fools, what is a Donkey for but to ride upon?"So the Man put the Boy on the Donkey and they went on their way.

But soon they passed a group of men, one of whom said: "See that lazy youngster, he lets his father walk while he rides."So the Man ordered his Boy to get off, and got on himself.

But they hadn't gone far when they passed two women, one of whom said to the other: "Shame on that lazy lout to let his poor little son trudge along."Well, the Man didn't know what to do, but at last he took his Boy up before him on the Donkey.

By this time they had come to the town, and the passers-by began to jeer and point at them. The Man stopped and asked what they were scoffing at. The men said:
"Aren't you ashamed of yourself for overloading that poor donkey of yours and your hulking son?"

The Man and Boy got off and tried to think what to do. We all know what was the End.

Good Story when we listen to too many views put forth on daily basis.

This is just to emphasise that to go forward a Stock Trader/ Equity Advisor also has to have his home work done before opening his ears, and finally deciding with his mind.

Regards,

Engineer India Ltd - A good long term story

This call was also given earlier when the stock was trading @ 410/- and still we feel it to be a good long term story.


Engineers India Ltd
cmp:618
Traded in:Nse-bse

ENGINEERS INDIA (EIL) provides engineering and related technical services to petroleum refineries and other industrial projects.Apart from engineering consultancy, EIL also undertakes lump-sum turnkey projects (LSTK).

It mainly focuses on refineries and other petrochemical industries, which contribute almost 90% to its revenues. Despite its expertise in turnkey projects, its LSTK division has not grown at a rapid pace and most of the growth comes from the consultancy division. However, LSTK contributes nearly 50% to EIL''s current order book. The division is expected to start contributing to EIL''s growth once revenue from this segment starts reflecting in the company''s financials.

EIL''s engineering consultancy business is yet to catch the attention of most investors, as most of its peers are in the unlisted domain. This is because of limited investment in fixed assets, reducing the need for companies to go public.The public sector company is looking at the exports market, especially in the Middle East, more aggressively now, which also provides better margins.EIL is a major beneficiary of the existing shortage in refining capacity as investment in petroleum refining is likely to remain high for the next few years, domestically as well as globally. This is likely to translate into huge business opportunity for the company.

A must buy at dips for long term investors. Make it a part of your core portfolio.

Book your profits before the market tanks again

The recent stock market rally has seen prices of a few scrips rise without change in fundamentals . Some of the stocks that should be offloaded at current levels before the market tanks again

THE stock market has been reaching for the skies since early March 2009. Over the past six weeks, the 50-share Nifty has gained by more than a third. Many stocks have surged past the broader index, even as the slowdown takes a toll on their fundamentals. For retail investors, though, there couldn’t be a better time to book profits; they could even consider re-entering the market at lower levels. The stock market has been through similar rallies in the past, and there is a strong likelihood that it will be followed by a slump, providing an attractive opportunity to investors who are willing to wait it out. ETIG picks out some stocks that have off late seen huge jumps, providing investors with a golden opportunity to sell. Tata Motors has seen its stock price rise by nearly 80% since early March. The company is a commercial vehicle (CV) manufacturer, a sector that is witnessing its worst slump in recent times. CV sales were down by 50% in March 2009 on a year-on-year basis. The company incurred a loss of Rs 84.5 crore on a standalone basis in the December 2008 quarter. Moreover, it needs huge reserves for Jaguar and Land Rover, which it has acquired. Traditionally, the twists and turns in the CV industry’s performance are far greater than those of the economy. In a downturn, this is only expected to aggravate. Similarly, Suzlon Energy’s stock has witnessed a 80.3% rise in price in the past one-and-a-half months. The company incurred a loss in the December 2008 quarter. Even after excluding exceptional losses on account of foreign exchange and blade restoration costs, its performance was dismal. Defective blade issues and the global slowdown continue to cripple its performance. Siemens is another cyclical stock. Its price has risen by 58.5% since March 2009. This capital goods giant has seen its topline shrinking in the December 2008 quarter, as its sales fell by 14.9% on a year-on-year basis. Much like automobiles, the capital goods industry also witnesses higher variability than the economy. It will see tough times ahead as corporates postpone capital expenditure. Fundamentally, then, Siemens is in a weak spot right now and investors could use the recent surge in its stock price to book profits. Close on its heels is Reliance Communications (Rcom), which has seen its stock price jump by 68.9% in the past six weeks. However, the company’s performance in terms of revenue and net profit is way behind that of other players in the industry like Bharti Airtel and Idea Cellular. In the December 2008 quarter, Reliance Communication’s sales and net profit grew by 18.8% and 2.7% compared to the 39.1% and 38.3% growth reported by Bharti Airtel. Reliance Infrastructure (Rel Infra) too has seen its share price go up by 62.3% since the market started rising in the beginning of March, while the fundamentals haven’t really changed. In fact, its profit fell by 16.5% in December 2008 quarter. Moreover, the company is planning to transform itself from a power utility to an infrastructure company. It is an equity investor in the Mumbai Metro Rail project and road projects of the National Highway Authority of India. Such projects have long gestation periods. Revenue and profits projections are stretched, making investments in the company loaded with risk. Retail investors could use the opportunity provided by the markets to reduce exposure to this stock. Another company, which falls into this category, is Reliance Capital (Rcap), a non banking finance company (NBFC) with a presence in asset management, distribution, insurance and consumer banking. Its stock price has risen by 89.4% in the current run, while its performance is hardly anything to write home about. This is because of the slowing economy, which has affected the financial services industry’s growth. Most NBFCs are re-evaluating their growth plans. Reliance Capital’s profit grew by just 11.3% in the December 2008 quarter. Moreover, the company’s performance has poor visibility due to its presence in many businesses. Metal companies Tata Steel and Sterlite Industries too have seen their stock prices rise by 72.5% & 59.4% respectively. Metals — which have one of the longest cycles in industry — are well past their prime. Up until last year, high demand growth in China was fuelling metal prices. This phase is now over, with demand for metals likely to be subdued in the near-to-medium-term, and the two companies’ third quarter results clearly showed this. While Sterlite’s net profit declined by 38.5% YoY in the December 2008 quarter, Tata Steel saw a 21.5% slump in profits. It is clear that the rally in these two scrips is purely for technical reasons — where it is merely following a market trend — and investors could reduce exposure to these stocks. ICICI Bank too witnessed a 61.1% rise in its stock price since March. The bank continues to be a laggard among its domestic peers, going by its FY09 performance. Its net profit has remained flat in the first nine months of FY09. Moreover, the banking industry will face tough times as credit growth slows and non-performing assets go up. Retail investors should thus use the rally to book profits and wait for the market to cool before making their next move. Real estate players like Unitech and DLF have also been at the forefront of this rally. The two stocks have appreciated by 84.5% and 71.6% respectively since early March. Both these companies have undertaken ambitious debt restructuring to improve their financial situation. Unitech’s outstanding debt is at Rs 8,500 crore as on March 2009. It was able to restructure Rs 1,000 crore, which will be due for repayment in the second half of fiscal 2010, depending on the restructuring terms. The company has also managed to place its QIP and repay mutual funds. Similarly, DLF has managed to replace Rs 4,000 crore of short-term debt payable in calendar 2009 with long-term debt. It appears that the stock price has factored in the improvement in fundamentals, and it makes sense for investors to reduce a portion of their holding in these two real estate companies at current levels. While the current rally may call for a reduction in exposure to these stocks, many of the companies dissected here could prove to be a good bet over a very long horizon. If an investor does want to remain long in one of these stocks, he can sell a part of its holdings now, and buy it again at lower price, bringing down the average acquisition cost.

15 stocks you can buy - Kotak

In last few days stock trades & volumes have picked up substantially in the market, institutional investors are buying stocks has started, foreign institutional investors (FIIs) have bought 1,600 crore in the last five days.

Kotak Institutional Equities team has put out a list of top 15 stocks to buy now for 2009 - 2010, which are not penny stocks but are reasonably large cap names and stock buying in these counters can give returns of 50-100% over the next 18 months.

Most analysts believe that domestic participation has picked up quite significantly and so people may trade back into the market as there are lots of values and accumulate stocks.

Following are Sanjeev Prasad, ED, Kotak Institutional Equities' fabulous 15 picks

Punjab National Bank (PNB): Valuations are attractive and gross non-performing loans (NPLs) are seen at 5% for FY11

HDFC Bank: It is a large cap stock with attractive valuations

Axis Bank: Valuations are cheaper than that of HDFC Bank and see high return on equity (ROE)

United Phosphorous: See fair value of the company and in a year�s time it would be Rs140-150 per share

Crompton Greaves: See seven times prcie to earnings (PE) on 2010 numbers. It is a pretty good buy, despite whatever has happened on the investment in the power

India Infoline: The brokerage stock will see upside in market volumes

Tata Steel: See FY10 earnings per share (EPS) at Rs 55

Indiabulls Real Estate: The occupancy levels in the properties are going higher and there will be a re-rating of the stock to some extent.

Reliance Infrastructure: See clarity in Q4 on the usage of cash available with the company

JP Associates: The company will benefit from higher cash flows from its cement business

Biocon: Although valuations are cheap and the stock has fallen a bit, but by 2010 things will start improving.

Warren Buffet's Advice for 2009

BHEL - A good long term story

Bharat Heavy Electricals (Bhel), the country’s largest power equipment manufacturer, managed to buck the slowdown but surely the flat bottomline is a pointer to some effect surely playing on the performance of the company. Compared to the superlative growth shown by L&T in Q3FY09, that of BHEL has been more subdued.It posted a meager 2% increase in net profit at Rs.791 crore while net sales rose 21% at Rs 6,022 crore. Despite costs coming down, the cost incurred in raw materials remains a concern. Its consumption of raw materials amounted to Rs 4,059 crore, which was 67% of net sales as against 57% in Q3FY08.Orders worth Rs.15200 crore were received during Q3FY09. The order outstanding was at about Rs.113500 crore. Every other day, we see that BHEL has received an order and most of the time, almost all the orders are big ticket orders. This, to a large extent is reassuring as it means the company is showing no signs of a slowdown. It has enough orders to keep it busy and the cash registers ringing for the current fiscal.Now the big question – L&T or BHEL? Both are blue chips and a must in any valuable portfolio. Right now, in this scenario of slowdown, BHEL has a march over L&T on two counts – firstly, over 60% of the orders of L&T comes from the private sector and hence it could face some slowdown if the companies decide to cut down on their capex or postpone it for later. For BHEL the order backlog is huge and for BHEL, it’s a question of how and when to complete rather than what to complete. L&T has been cautious when it announced 30% guidance for FY09 and its current takeover bid of Satyam is also causing some jitters. Mind you, L&T also remains a great buy. Advice :Every dip, use it for accumulating BHEL for the long term.

Buy - Nestle India Ltd - Good Long Term Story

Nestle India Ltd - Buy

CMP - 1,444

52 week H/L - 1880 / 1220

Summary -

Nestle India Limited engages in the manufacture and sale of nutritious food products in India. The company’s products primarily comprise milk products, such as sweetened condensed milk, baby milk foods, milk powders, acidified infant food, and other milk products. It also offers beverages, prepared dishes and cooking aids, and chocolates and confectionery under various brand names, such as KitKat, Friskies, NESCAFE, Maggi, Nestle, Dreyer’s, DogChow, and NESTEA. The company is headquartered in Gurgaon, India. Nestlé India Limited operates as a subsidiary of Nestle S.A.

Result analysis -

Nestlay India has decalred its fourth quarter results. The company's Q4 net profit was up 29.1% at Rs 534 crore.

Its net sales were up 23.4% at Rs 432.4 crore.(A good result during recession time)

Growth -

Nestle India is best placed to ride on the expected growth in processed food market due to the strong technology of the parent company. Dominant market share and strong brands will prevent margin erosion of the company. Going ahead, high penetration and innovative prod-uct launches would further fuel its growth.

Positive Factors -

Good financials/results.

A divident paying stock (paid 25.50 Rs per share last yr)

Good market demand & growth potential.

Indians have a reason to cheer - OSCAR

The Indian Oscar

Unlike the earlier Oscars this years Oscar gave lot to rejoice for Indians. A bunch of awards for Slumdog Millionire and Smile Pinky in short documentary section. ‘Smile Pinky’ is a 39 minute-long documentary about a cleft-lip girl and her struggle for joy in an alienating society. Though both the films, Slumdog Millionire(Danny Boyle) and Smile Pinky( directed by Emmy-nominated producer Megan Mylan), the film crew contains mostly Indians.

A R Rahman got 2 oscars for Slumdogs music(best original song(Jai Ho) and original score). Kerala born Resul Pookutty bagged Oscar in Best Sound Mixing category for his work on Slumdog Millionaire. Pookutty hails from Vilakkupaara in Quilon district, Kerala.

READ THE STORY OF A R RAHMAN appeared in GOD TUSI GREAT HO... CILCK HERE

THE OSCAR LIST

Best Picture: Slumdog Millionaire

Best Actor: Sean Penn, MilK

Best Actress: Kate Winslet, The Reader

Best Director: Danny Boyle, Slumdog Millionaire

Best Original Score: A.R. Rahman, Slumdog Millionaire

Best Song: A.R. Rahman for Jai Ho penned by Gulzar Slumdog Millionaire

Adapted Screenplay: Simon Beaufoy, Slumdog Millionaire

Best Cinematography: Anthony Dod Mantle, Slumdog Millionaire

Best Sound Mixing: Resul Pookutty (India), Ian Tapp and Richard Pryke Slumdog Millionaire

Best Film Editing: Slumdog Millionaire

Best Short Documentary: Smile Pinky

Best Foreign Film: Departures (Japan)

Best Supporting Actor: Heath Ledger, The Dark Knight

Best Supporting Actress: Penelope Cruz, Vicky Cristina Barcelona

Jean Hersholt Humanitarian Award: Jerry Lewis

Original Screenplay: Dustin Lance Black, Milk

Animated Feature Film: WALL-E

Animated Short Film: La Maison en Petits Cubes

Makeup: The Curious Case of Benjamin Button

Costume: Michael O'Connor, The Duchess

Art: The Curious Case of Benjamin Button

Animated Short Film: La Maison en Petits Cubes

Live Action Short Film: Spielzeugland (Toyland)

Visual Effects: The Curious Case of Benjamin Button

Sound Effects: Dark Knight

---

Smile Pinky

The documentary is about a six-year-old girl born with a cleft-lip in the far-away Mirzapur. The poor girl is shunned and ostracised by the society, while a surgery to get rid of the deformity is out of question.

Made in Bhojpuri and Hindi, the film is directed by Emmy-nominated producer Megan Mylan, and also talks of Ghutaru, a similar social outcast due to his facial deformity.

The curing surgery is simple, but seemed out of bounds until Pankaj, a social worker travelling village to village, crosses their path. The film was shot in the village and G S Memorial Plastic Surgery Hospital where Pinki was actually operated by plastic surgeon Subodh Kumar Singh.

Resul Pookutty

The name Resul Pookutty has become almost synonymous with sound direction in Hindi films, especially after the success of Sanjay Leela Bansali's `Black.' Resul was recently in Thrissur in connection with the second Thrissur International Film Festival.

Resul hails from Vilakkupara in Anchal in Kollam district and it was fate that landed him in tinsel town, that too in Bollywood movies.

Joining the Film and Television Institute of India, Pune "was a turning point in my life." Resul passed out from the Institute in 1995 and moved to Mumbai, the dreamland of Indian commercial filmmakers.

"That was a natural immigration as a graduate of the institute. Ninety-five per cent of the technicians of the Mumbai film industry are alumni of FTII, Pune," points out Resul. "After my graduation from Pune, my interest to specialise in sound became clear, and today I feel I am successful, both aesthetically and commercially," he says.

Importance of sound

Until recently sound artistes were merely considered as sound recorders without much significance in the industry, but Resul's generation totally changed it into sound direction. Rajat Kapur's `Private Detective' was his maiden work and after that his career graph accelerated. His recently released films include `Black' and `Mathrubhumi - a national without women' by Manish K.J. (this film, an Indo-French venture, eamines the issue of female infanticide). `Missed Call' by Mridul Vinay and `Mixed Doubles' by Rajat Kapur will be released soon.

SOURCE:THE HINDU

AR Rahman's Journey to the Oscar

The Mystic Master

Music and spiritual surrender are the two big themes of AR Rahman’s life. As he returns with the Golden Globe, SHOMA CHAUDHURY explores how the public gift and private search intersect to create magic

BEFORE THE gift, there was the prophecy. After their first child — a girl — was born, an array of astrologers told the disappointed Tamil music composer, RK Shekhar and his wife Kasturi, that they would soon be gifted with someone extraordinary: a son whose name would illumine the world, a musical genius whose soul would arc across the sky.

Dileep Kumar was born just over a year after on January 6, 1966. The name — AR Rahman, mysteriously wrapped in instant and acetylene fame — would come later, but by the time he was three, the signs were firmly in place. He was, indeed, the fortunate one: he could play the harmonium before he could speak; and soon after his birth, his father inexplicably began to prosper. The word spread. His sister Kanchana, the elder one, music coursing in her blood too but born without prophecy, remembers her father taking the little boy to Sudarshan, a reputed music director, when he was four. “I hear your child can play anything,” Sudarshan challenged him, “let’s see if he can do this.” He played a particularly complex piece, then covered the harmonium with his veshti to make the playing more difficult — a kind of surrogate blindfold — and handed over the harmonium to the young boy. The calm little boy executed it perfectly. Humbled, Sudarshan leapt up and embraced the child.

The virtuosity has never abated since. On January 11, 2009, watched by elated countrymen across the world, Rahman became the first Indian to win the Golden Globe — a coveted precursor to the Oscars — for his musical score in the acclaimed Hollywood film, Slumdog Millionaire. This may be just one more crest in the stream of awards and recognitions that have lapped around him — a Padmashree, four national film awards, 12 Screen awards, 21 Filmfare awards, among innumerable others — but the excitement around the man Time magazine called “the Mozart of Madras” has never been higher, his name never more luminous.

In Chennai though, away from the champagne speeches and applauding lights of Los Angeles, a more profound underlayer of Rahman’s music reveals itself. It is three days after the award, the maestro is yet to come home. The city is unusually quiet; the shops are closed, the roads are empty. It is Pongal and everyone is on holiday. Rahman’s studio — AM Studios — the most state-of-the-art, hitech studio in all of Asia, usually bustling with dozens of musicians and directors and sound engineers, is empty too. The four-storey white and lilac and parquet building has the aura of a prayer house, zinging with the vibration left by an intense concentration of human energy. In the heart of the studio is a large room that can host a 30-piece string orchestra. Facing it, in a glassed-off control room sits a massive mixing console — a Neve 88R, estimated to cost Rs 4 crore — a console with such a daunting array of knobs it could tune the universe. Elsewhere in the building, small soundproof rooms house gleaming pianos, synthesisers, violins, harmoniums, and drums. In a large, airy room on the roof, instruments of every conception sit waiting for the imaginations that will finally unlock their sound.

A world to win A visbily moved Rahman accepts the Golden Globe award Photo HFPA

The silence is a kind of serendipity: it allows one to sense what very few people know. Rahman’s music — always new, groundbreaking, wildly intuitive, experimental, a kind of sound that masters of cinema craft like Baz Luhrmann, Shekhar Kapoor and Danny Boyle say “they had never heard before” — is deeply rooted, in fact, “sourced”, from Rahman’s idea of divinity.

When Rahman, or Dileep as he was known then, was nine, the radiant prophecy seemed to falter. His father, Shekhar died suddenly — on the very day his first film as a music director was released. The golden circle was breached, the family was devastated. Kasturi was certainly overworked, and insufficient sleep had precipitated her husband’s cancer. Although her sister and parents were part of the large joint family, there was no one to turn to. It fell on mother and son to find the money to keep the family together.

Rahman remembers it as a difficult, opaque time when there seemed to be no answers. His mother made some money by renting out musical instruments, but by the time he was 11, Rahman was more often out of school than in, repeatedly called away from the playground by his mother to record music for a fee. It should have felt like an escape: he was never particularly interested in school or playground games, for that matter. In fact, he had such low attendance and marks, he was asked to leave his first school. He went to another local one for a year, and then joined MCC. Barely a term in, when he was about 15, he gave up school altogether. He played the piano and guitar on television shows, and became a sort of “roadie” with different Malayali, Tamil and Telugu composers. For a year, he played with the celebrated Iliayaraja. It should have felt like an escape, but it didn’t.

Kanchana says her brother wanted to be an ordinary boy — sleep late, play carom — and used to resist being woken at seven by his mother to practice the piano. But the mother, fervently knocking at temples, churches, and mosques, was determined to refuel the prophecy. Suddenly, around the time he was 11, destiny came knocking again. The family met Karimullah Shah Kadiri, a Sufi pir (at a railway station, goes the apocryphal story). Karimullah foresaw the boy’s entire future and said Dileep would come to him in 10 years. “That was the turning point,” Rahman admitted in a rare moment of candour to a CNN interviewer. “Everything happened as he said it would.”

ON HIS music teacher John Jacob’s insistence, Dileep applied for a scholarship to study music in Trinity College, Oxford — a crucial interlude that exposed him to western classical music. In 1987, around the time he was 21, moved by everything that had happened to them — dreams, oracles, signs — Dileep, his mother, and two younger sisters converted to Islam (Kanchana would convert a little later).

Two years later, in 1989, he set up Panchathan Record Inn in his backyard — the foundation stone was laid by Karimullah Shah — and began to make jingles for ads. In 1991, legendary director Mani Ratnam took a chance on the untested youngster and invited him to score the music for his new film, Roja. With the divine assurance of a prodigy, Dileep proceeded to break every rule with his debut.

Family man Rahman, seen with wife Saira Banu, wants to spend more time with his children Photo SHAILENDRA PANDEY

Now, on the eve of Roja, seven new names were offered to him: Dileep chose Allah Rakha Rahman, the first of the 1,000 names of Allah. Soon after, Roja was released, and as the pir had prophesied, the Isai Puyal — “musical storm” — AR Rahman was born. Wrapped in instant and acetylene fame.

Like other prodigies across time who have bent the arc of history, Rahman’s debut track was unlike anything anyone had heard before. It sent ripples through the industry and got Rahman the National Film Award for Best Music Director, the first time ever for a firsttime film composer. In 2005, Time magazine picked it as one of Top Ten Movie Tracks of All Time. “Rahman is like a weaver. With Roja, he created this incredibly intricate, complicated sound that no one had ever tried before,” says lyricist and friend Prasoon Joshi. “The Indian music and film industry had always relied on extraordinary melodies and singers, the mukhara and the antara. But Rahman played with the structure, he layered the melody with different strands of sound, he created spaces where one could listen to a single string or enjoy a beat before returning to the voice. He created a river with many side streams you could step into. It was unlike everything that had gone before.”

Over almost two decades since, the experimentation has never stopped. Director Rakeysh Mehra likens Rahman to the great Chinese travelers of 2,000 years ago, who wandered the world gathering influences from faraway lands. Western classical, Indian classical, reggae, hip-hop, rap, rock, pop, blues, jazz, opera, sufi, folk, African beats, Arabian sounds — there is nothing Rahman has not dared to meld together. No new voice he has not dared to use. No texture of sound he has not strained to perfect. The stories are legion. Of how he got Maryem Toller, a Canadian, to sing the hit song Mayya, Mayya, itself triggered by the sound of a man selling water, saying mayya, mayya — Arabic for water — overheard on a Haj trip. Of how he got R&B singer Ash King from the bylanes of London to sing Dil Gira Dafatan for the forthcoming film, Dilli 6, although King didn’t know a word of Hindi, just because he liked the texture of his voice. Of how he spotted Naresh Aiyar, who had been sidelined by judges like Adnan Sami in a Channel V talent contest, and picked him to sing the sublime song Ru ba ru. Of how he spotted Blaaze and Sukhwinder and Madhushree and Vijay Yesudas and scores of other new voices he has launched in the world. Of how he took 17 years to give his sister Kanchana — or Raihanah, as she is called after her conversion — a song of her own in the blockbuster Sivaji, because her voice finally matched the sound playing in his head.

The stories are legion; what is less known is Rahman’s understanding of his own gift. Unlike Mozart, the legendary giant TIME magazine compared him to, whose creative genius seemed to flow from some mercurial, manic yet sublimely flamboyant ego, those who know Rahman say he has absolutely no ego. A little like the shy Srinivasa Ramanujan, the untutored mathematical genius from Chennai who believed his prodigious acumen was channeled to him by his family devi, Namagiri, apparently Rahman too believes he is merely an instrument. As director Shekhar Kapoor puts it, “Rahman does not believe music resides in him, but that he sources it from a field of consciousness that exists eternally. He believes that to access or to be able to reach that ‘field’ you need to be very pious. I believe as long as he continues to believe the music is not his, that he is merely the conduit, he will have no limitations.”

The search for piety — the complete purity that will keep him in touch with his music — has meant a kind of twin journey for Rahman. On the one hand, there has been an ever amplifying outward honing of craft, a restless search for new stimuli, a mastery of technology, a constant self-education, a perfecting of the conduit. Parallel to that has been an ever intensifying private inward journey towards submission and surrender to the will of God — a destruction of ego, an effacement of self.

At the heart of this journey are two figures. Arifullah Mohammad al Husaini Chisti ul Kadiri — son of Karimullah Shah, no more than in his 20s or 30s, who took his father’s place as Rahman’s spiritual teacher after his death. Said to be descendants of Hazrat Mohammad, Arifullah’s dargah in Karrapa sharif, Andhra Pradesh, is both pilgrimage and refuge for Rahman. ‘Malik Baba’ Rahman calls him. AM Studios, set up in 2005, is probably named after his initials — Arifullah Mohammad — an educated guess, because even many of Rahman’s closest associates say they don’t know what the initials stand for.

God is music Rahman, seated at his piano, believes his creativity is divinely inspired Photo SANJAY GHOSH

(My brother is the most secretive man in the world,” laughs Raihanah. “If I ask him for a house, he will give it to me. If I ask for a studio, he will give me one, just don’t enter mine, he will say.”) But an observant eye cannot fail to miss it. A small picture of Malik Baba adorns the entrance to the studio that hosts the tuning console for the universe. There are curious palm-marks in auspicious chandan on many windows and walls — quiet signs of faith.

RAHMAN IS the most spiritual person to ever touch my life,” says Mehra. “He has zero ego, there is no ‘I’ or ‘me’ in him.” “It is true. He has a surreal influence on people,” agrees Deepak Gattani of Rapport entertainment agency, who constructs most of Rahman’s extravagantly mounted concerts and has been a friend for 16 years. “He has taught me there is more to life than we normally see. He never has knee-jerk responses to things.” “He is sent by God, kudrat ne unko banaya hai,” says singer Kailash Kher, who has toured with Rahman often. “One day you will see him in Los Angeles, standing with people like Weber and Boyle and the owners of Fox. The next day he might be sitting in a dargah among fakirs and dervishes.” “His spirituality is not something others can understand,” says his sister. “I am in complete awe of him. He is a blessed thing. God considers him a special child. He has surrendered totally — every move, every action, every thought is surrendered to God.”

This surrender has taken many forms. Absolute simplicity. Frequent visits to dargahs. Generous alms to the poor. Sleeping on bare cement or sand if necessary. A sublimation of material desire not related to music. (Rahman apparently loved cars, but never drove anything fancier than an Innova until he finally indulged in a BMW last year, 18 years after monumental commercial success.) Sometimes, for others, the forms of surrender have seemed more irrational and inexplicable. For instance, his daughter was born with a hole in her heart, but Rahman refused to have her operated. Prayers, he believes, can change destiny, so he surrendered to the healing faith of his pir. Miraculously, his daughter was cured when she was two.

(“God always looks after him. It is uncanny. What others have to knock for just comes to him,” laughs his sister. Press for examples and she says facetiously, “You might be traveling abroad and desperate for some good hot food. People like us will have to worry about going out in the cold, catching a taxi, finding a place. But Rahman will just be sitting and praying and then, suddenly, someone will come and ask him, what would you like to eat? North Indian or South Indian?”)

But in other cautious snatches from friends respectful of Rahman’s desire for privacy but willing to share their marvel of him, slowly a small trickle of illustrations pile up. Gattani talks of an unexpectedly stormy night in Bangalore. Thirty thousand people are gathered in the Palace Grounds. Rahman’s pioneering Three Dimensional Concert — staggering in scale — is about to start. A sudden squall catches everyone unaware. The backdrop collapses, the grounds flood. Amidst the panic, an unperturbed Rahman locks himself in his green room for half-an-hour. When he emerges, he tells his associates to ask the crowd what they want — have the show or postpone it. Have it, they say. On cue, the rain stops, the songs roll out. Just as Rahman sings the last bar of Vande Mataram, it starts raining again. “It was astonishing,” says Gattani. At other times, when an important decision is to be taken, Rahman retreats into himself and says he will ask for “permission”. A couple of days later, depending on how the divine consultation has gone, he calls back with either a refusal or a go-ahead. Take his most cherished project — KM Conservatory, for instance, a pioneering school of music he has dreamt of for years. Initialed after the elder pir, Karimullah? Again, no one knows. For a long while, there was talk of partnering with the government. Finally, Rahman said he would seek “permission” for the partnership. It did not come and Rahman went it alone — funneling huge sums of personal money and passion to start the conservatory on his birthday last year.

Malik Baba is the most visible manifestation of this surrender. It is to him that Rahman turns to most. Often, to a critical eye, such faith can seem to skate precariously close to subjugation rather than creative surrender. But it seems to work unerringly for Rahman. “Everyone may not understand it, and it may not work for everyone,” says superstar Aamir Khan, “but Rahman is a very spiritual person, and in a curious way, his complete surrender to his faith opens him up completely. It frees him to work.”

The other figure key to Rahman’s journey is his mother, Kasturi — or Kareema Begum, after her conversion. “Amma”, as she is universally known — a jovial, quintessentially motherly figure — has remained a powerful leitmotif in Rahman’s life. “Their relationship is like the bhakt for his bhagwan,” says Kher. He follows her wishes with unquestioning faith — “aastha” is the evocative word he uses. “If she had asked him not to go to LA to receive the Golden Globe and go to a dargah instead, I am sure he would have done it.” She, in turn, is affectionate, solicitous, the keeper of the prophecy, often traveling with Rahman on his tours abroad. Ask her about her son and she says, “He prays five times a day. He is Allah’s gift.” “Old worldly” her elder daughter calls her, momentarily dismissive, and through the crevices of the brisk praise that follows, you catch a glimpse of the inevitable shrapnel around a blessed sibling — the mistakes of a conservative family, the unintended but painful eclipses, the little neglects, the big oversights, the sisters unconsciously less precious than the boy. “We were there, somewhere in the atmosphere,” jokes one of them.

The foundation Mother Kareema was determined that her son should become a musician Photo SANJAY GHOSH

BUT NOW it is the fourth day after the award, and late in the evening. The maestro has come home and the driveway to his house is swarming with waiting journalists. There is a comforting smell of incense in the air. The windows in his reception are curtained with white veshtis, carpets adorn his walls. It is a decorative detail repeated in all his buildings.

The Panchathan Record Inn — Rahman’s private studio, his sanctum sanctorum — is a lush, comfortable room draped in rich red curtains, alternated with white. Computers, consoles, instruments and hi-tech gizmos strew the room like books might in another’s study. It is past midnight before we meet; a journalist’s deadline looms over the meeting like a vengeful shadow and in an unfortunate inversion, Rahman is game for a long conversation, but I am in a hurry. The encounter is briefer than it should have been. Still, none of the conversations around him has prepared one for the man himself. Neat, boyish, he is incredibly youthful, light-hearted — calming in an odd way — and disarmingly open. Every account of him has steeled one to meet a man of few words — the secretive brother one has to tease things from. Instead, Rahman is willing to talk about everything. And is, often, unexpectedly funny.

As we retrace his life, it is suddenly cast in more complex light than music, prayer and simple surrender. “I did not convert overnight, nor did anyone force me,” says Rahman.

“It was a long process. I was really intrigued by the whole Sufi thing and had gone very deeply into it, puttingx aside three hours every day to learn Arabic. I was drawn to Sufism because they have no regulation, no rules, no distinction between Hindu-Muslim — they just look straight into your heart and see your love for the auliyas, the noor of the Prophet.”

THE SURRENDER, too, has a complicated relationship with the music. “When you are in a creative field, particularly something like film or music,” says Rahman, “you can be tossed between highs and lows, good reviews and bad reviews. To maintain equilibrium, you have to detach yourself and abandon yourself merely to the service of music — look at it all from a different perspective. For this, the destruction of the ego is very important. At the same time, there are ironic counterpoints. If you don’t have an ego you can switch on and off, you cannot make music, you cannot do something extraordinary. You have to be committed to the idea of excelling the standards you have set yourself, fulfilling expectations. So, there is a good ego and a bad ego. Something like music also draws you away into another energy field — money, fame, women. For a long time, these impulses used to pull me in separate ways — the desire to renounce and the desire to achieve. You can never perfect these things, but finally now, I feel I am walking in sync, with both impulses hand-in-hand.”

Over the years, Rahman admits to many moments of stasis and saturation — phases when he felt enough is enough, he had done it all and would like to renounce the world. Each time, he laughs, something would come and uplift him, raise the scales. When Roja was offered to him, he was fed up with everything he had been doing: the jingles, the recordings for other music composers in Malayalam, Telugu and Tamil. “I revered Mani Ratnam and it was my dream to work with him. I thought this would be the last soundtrack I would make, so I just did what I pleased. I wanted to have fun. There were no walls in my head, no limitations. All the young people were listening to Western stuff those days, even me, so I thought, what’s the problem, are we not experimenting enough? And I let myself go.”

THE INSTANT and meteoric success brought its own counter stasis. “I thought, this is it,” says Rahman. “I have won the National film award, now I can just live off the earnings of my studio.” But then the excitements and challenge of the Hindi film industry came calling. Rangeela first; then a flood of other Hindi films. When the stasis of that threatened, there was the spike of Elizabeth, Bombay Dreams and Lord of the Ring. The western world came calling. By the time that threatened to pale, the KM Conservatory had been born, and Rahman’s Foundation Against Global Poverty — committed to eradicating poverty in India, Africa, and now, he chuckles, even America. “With all of this, I struggle less with the desire to renounce. I have found new meaning, a new sense of duty towards living, not only towards these projects, but to my wife and kids, and even my music. I see music now as being all about love, a service to humanity — it is about sharing joy with fellow human beings,” says he.

For many years, Rahman’s family — wife Saira Banu, daughters Kathija and Raheema, and son Rumi, were rarely seen publicly around him. “I plan to take them around with me much more now,” says he. “Be it in my studio, my tours abroad, or on my spiritual journeys. I don’t want them to feel separate. My father was such a huge influence because we were always around him. Without him, there would have been no music in our life.”

Typical of Rahman, his encounters with the western world too have yielded deeper things than success and awards. “After my first National Film Award, the Golden Globe has mattered the most to me because I wanted to bridge that vacuum — the fact that no Indian had won these international film and music awards. But as an individual, there is only so much of fame you can take in. Very quickly you detach yourself from it, you are only there as a representative of something else, not as an individual.”

What the forays into the western world have yielded for Rahman then is an expanded consciousness. “When I went to London first for Bombay Dreams, I was living isolated in this house, making music, meeting nobody. I used to pray five times a day and try to keep my fast. All around me were these pubs and drunk kids would piss under my window. Each time I went out, I would come back and bathe. But slowly I realised love can transcend all these segmental issues. You need to find a larger perspective which bridges all these worlds — west and east, Muslim and non-Muslim, or whatever else divides us.”

Bridges — that is an apt metaphor for Rahman and his music. In a jostling, frenetically commercial world — brimful of quick encomiums and sudden deaths — it has become difficult to gauge the true merit of things. Is Rahman the Mozart of our times? We may not be sure yet, but of this we can be certain: his music offers a way to bridge that huge void between the known and the great unknown from which earthly beauty stems.

A BLOCK AWAY from Rahman’s home, his new sense of “duty towards the living” is illumining a new generation. As the maestro was flying back across the continents with the globe — literally — in his hands, on the day of the Pongal holiday, you could have chanced on a handful of young boys and girls on the first floor of AM Studio. Students of Rahman’s dream project, the music school, KM Conservatory, they pored over their computers and music sheets. Occasionally, the strains of music wafted out from adjoining practice rooms. It would be difficult to find a more eclectic group: Anurag Sharma, 16, had given up on school and traveled with his mother (another keeper of prophecy?) all the way from Delhi to rent a room in Chennai for the opportunity of studying music in Rahman’s school. Ashrita Arockiam, a 23- year old post-graduate in English from Hyderabad, was straining to put together a scholarship to study music abroad, when the opportunity to do a similar course suddenly bloomed on home ground. Saurav Sen, 32, a computer engineer from Kolkata, gratefully gave up his job, and exchanged it for a year cocooned in music.

mix of foreign and Indian faculty, exposure to Western and Indian classical music, training in music technology, and a chance to workshop with many of the great musicians across the globe is only a part of the grooming the students from the Conservatory get. Three of the 40 chosen for the full-time foundational course — all of them had to audition before they were selected — are already apprenticing with Rahman. “We put together a concert every week,” says young Anurag, “whenever he is here, Rahman sir sits in on the session. It is amazing to be able to do that.”

But before the stasis of this can set in, a new scale is waiting for Rahman: the dream of creating India’s first symphonic orchestra. “We are a country of a billion people, bursting with talent,” says he, “why doesn’t India have a single orchestra?” KM could well be the womb for that. And in nurturing all of this with love, he might finally overcome the difficult opacity of his own teenage years.

Market Outlook for 19.2.2009

US markets ended flat.
Europe ended marginally lower.
Asia is trading mixed.
Expect Indian Markets to open flat to negative.

The support for the Sensex is 8865 and the resistance to the up move is at 9445

Nifty: (2776) the support for the Nifty is at 2727-2685 and the resistance to the up move is at 2890

Day Trading Ideas -

LNT

Buy above 659 for targets of 664 and 670

Sell below 648 for targets of 645 and 641

Unitech

Buy above 29.90 for targets of 30.40 and 30.90

Sell below 27.50 for targets of 27.05 and 26.50

Power Grid

Buy above 88.45 for targets of 89.10 and 89.70

Sell below 86.45 for targets of 86.00 and 85.40

A special Report on how markets will react in 2009 is comming this Sunday

Highlights of the Interim Budget

Following are the highlights of the interim budget presented by Minister for External Affairs Pranab Mukherjee in the Lok Sabha Monday:


* India remains second-fastest growing economy in the world
* Economy expected to grow 7.1 percent this fiscal
* Need to make economic growth inclusive
* Government spent Rs.70,000 (Rs.700 billion) crore on 37 infrastructure projects in 2008-09
* Under public-private partnership (PPP), 54 central infrastructure projects approved
* Total expenditure of PPP projects estimated at Rs.67,700 crore (Rs.677 billion)
* India Infrastructure Finance Company to raise Rs.10,000 crore (Rs.100 billion) by end-March
* India has weathered inflation crisis, but no room for complacency
* Country's agriculture outlook is encouraging
* Focussed attention to agriculture
* Plan allocation for farm sector hiked 300 percent in past five years
* Three-fold increase in short-term agriculture credit to Rs.250,000 crore (Rs.2,500 billion)
* Farm debt worth Rs.65,300 crore (Rs.653 billion) waived
* Government will continue to provide additional subsidy to farmers
* Corpus of Rural Infrastructure Development Fund hiked to Rs.14,000 crore (Rs.140 billion) from Rs.5,500 crore (Rs.55 billion)
* Outlay for higher education hiked 900 percent for 11th Five Year Plan
* Country's social security net will be strengthened
* Record foreign direct investment of $32.4 billion attracted
* Global economic situation not encouraging
* Extraordinary situation merits extraordinary measures
* Need to consider additional fiscal measures in regular budget
* Financial sector reforms need to be accelerated
* In past three years, India grew by average of over 9 percent
* Per capita income expanded by 4.7 percent per annum
* Fiscal deficit was brought down from 4.5 percent to 2.7 percent
* Revenue deficit was cut from 3.6 percent to 1.1 percent
* Exports increased 26.4 percent per annum
* Foreign trade increased from 27.3 percent to 35.5 percent
* Tax to gross domestic product ratio expanded by 9.2 to 12.5 percent
* Agriculture grew by 3.7 percent per annum

How to choose the right Mutual Fund in declining markets?

As you probably know, a mutual fund is an investment that pools together money from a number of investors. It then uses professionals to manage and invest this money with the aim of achieving a return. The mutual funds industry is regulated by the Securities and Exchange Board of India. If you are interested in investing in mutual funds, here are some terms you need to understand.

AMC

An Asset Management Company is the fund house or the company that manages the money.
The mutual fund is a trust registered under the Indian Trust Act. It is initiated by a sponsor. A sponsor is a person who acts alone or with a corporate to establish a mutual fund. The sponsor then appoints an AMC to manage the investment, marketing, accounting and other functions pertaining to the fund. For instance, ABN AMRO Trustee (India) Private Limited is appointed as the trustee to the ABN AMRO mutual fund. ABN AMRO Asset Management (India) Limited is appointed as its investment manager. Various funds with different objectives can be floated under the umbrella of one parent. So ABN AMRO Equity Fund, ABN AMRO Opportunities Fund and ABN AMRO Flexi Debt Fund are all independent schemes of ABN AMRO Mutual Fund. They are managed by the ABN AMRO AMC.

NAV

The Net Asset Value is the price of a unit of a fund. When a fund comes out with an NFO, it is priced Rs 10. Later, depending on the value of the investments, this price could rise or fall.

Load

This is a fee that is charged when you buy or sell the units of a fund. When you buy the units of a fund, you pay a percentage of it as a fee. This is known as the entry load. Let's say you are investing Rs 10,000 and the entry load is 2%. That means you pay Rs 200 as the entry load and Rs 9,800 is invested in the fund.

Now, let's assume you are selling the units of your fund. And the Rs 10,000 you invested initially is now Rs 15,000. Let's further assume the exit load is 2%. So you pay Rs 300 and get back Rs 14,700. Generally, if funds charge an entry load, they will not charge an exit load. Or vice versa. Only one of the loads is charged. The load is a percentage of the NAV.

Portfolio

This is the term given to all the investments made by the fund as well as the amount held in cash.

Corpus

Let's assume a very small mutual fund has an initial investment of 1,000 units and each unit is

worth Rs 10. Hence, the total amount with the fund is Rs 10,000. This is referred to as the corpus. Later, some other investors invest Rs 2,000. Now the corpus will be Rs 12,000 (Rs 10,000 + Rs 2,000). The total amount invested (Rs 12,000) is called the corpus or the total amount of money invested in the fund.

AUM

Assets Under Management is the total value of all the investments currently being managed by the fund.

Let's say the corpus is Rs 12,000 but, due to a rise in the price of the shares it has invested in, the value of the units has increased. So the Rs 12,000 invested is now worth Rs 15,000. This figure is referred to as AUM.

Diversified equity mutual fund

This is a mutual fund that invests in stocks of various companies in various sectors.

ELSS

Equity Linked Saving Schemes are diversified equity mutual funds with a tax benefit under Section 80C of the Income Tax Act. To avail of the tax benefit, your money must be locked up for at least three years.

Balanced fund

A fund that invests in both equity (shares) and debt (fixed return investments) is known as a balanced fund.

Debt fund

These are funds that invest in fixed return investments like bonds. A liquid fund is one that invests in money market instruments, these are fixed return investments of a very short tenure.

NFO

A New Fund Offering is the term given to a new mutual fund scheme.

SIP

A Systematic Investment Plan refers to periodic investing in a mutual fund. Every month or every three months, the investor will have to commit to putting in a fixed amount. This will go towards the purchase of units.

Let's say that every month you commit to investing, say, Rs 1,000 in your fund. At the end of a year, you would have invested Rs 12,000.

If the NAV on the day you invest in the first month is Rs 20, you will get 50 units.

The next month, the NAV is Rs 25. You will get 40 units.
The following month, the NAV is Rs 18. You will get 55.56 units.

So, after three months, you would have 145.56 units. On an average, you would have paid around Rs 21 per unit. This is because, when the NAV is high, you get fewer units per Rs 1,000. When the NAV falls, you get more units per Rs 1,000.

First time investors in Mutual Funds act in the face of imperfect information and often get overwhelmed by uncertainties characterizing the investment situation. But there’s more to Mutual Fund investing than market timing.

First things first..

The first thing an aspiring unit holder must do is to establish what type of portfolio he wants to build. In other words, to decide the right asset allocation. Asset allocation is a method that determines how you invest your money in different investments with the proper mix of various asset classes. Remember, the type or class of security you own i.e. equity, debt or money market, is much more important than the particular security itself.

The popular thumb rule for asset allocation says that whatever the investor’s age, he should keep that percentage of his portfolio in debt instruments. For example, if an investor is 25, he should have 25% of his investments in debt instruments and the rest in equity. However, in reality, different circumstances and financial position for each individual may require different allocation. Portfolio variable is another factor that one needs to understand to practice asset allocation. These are age, occupation, number of dependants in the family. Usually the younger you are, the more riskier the investments you can hold for getting superior returns.

How to pick the right fund/s?

Next, focus on selecting the right fund/s. The key is to select the fund/s based on their investment philosophy and consistency in terms of returns. To ensure you are selecting the right type of funds that are appropriate for your needs, consider following:

Determine what your financial goals are.

Are you investing for retirement? A child’s education? Or for current income?
Consider your time frame. Do you need money in three months time or three years? The longer your time horizon, the more risk you may be able to take.

How do you feel about risk? Are you in a position to tolerate the ups and downs of the stock market for the possibility of higher returns? It is necessary to know your own risk tolerance. It can be a guide for choosing the right schemes. Remember, regardless of the potential returns, if you are not comfortable with a particular asset class, you should consider other options.

Fund Candy

Diversified equity funds
Index funds
Opportunity funds
Mid-cap funds
Equity-linked savings schemes
Sector funds like Auto, Health Care, FMCG, IT, Banking etc.
Balanced funds for those who are not comfortable with 100% exposure to equity
If selected properly, these equity and equity-oriented funds have the potential to deliver returns that could be far superior to other asset classes.

Remember, all these factors will have a direct impact on the fund you choose and the return that you can expect to get. If you are a long-term investor with some appetite for risk and are looking for returns to beat inflation, equity funds are your best bet. MFs offer a variety of equity and equity-oriented schemes (See table ‘Fund Candy’). For a beginner, it makes sense to begin with a diversified fund and gradually have some exposure to sector and specialty funds.

Keeping track..Filling up an application form and writing out a cheque is not the end of the story. It is equally important to keep an eye on how your investments are performing. While having a qualified and professional advisor helps both in terms of making the right decision as well as measuring performance, it makes sense to know how to do yourself with a little help from these

sources:
Fact sheets and Newsletters: MFs publish monthly fact sheets and quarterly newsletters that contain portfolio information, a report from the fund manager and performance statistics on the schemes managed by it.

Websites: MF web sites provide performance statistics, daily NAVs, fund fact sheets, quarterly newsletters and press clippings etc. Besides, the Association of Mutual funds in India, AMFI, website, contains daily and historical NAVs, and other scheme.
Newspapers: Newspapers have pages reporting the net asset values and the sales and redemption prices of MF schemes besides other analysis and reports.
Remember, it is very important for you to be well informed. To achieve this, you need to spend a little time to understand and analyze the information to enhance the chances of success. Even if you spend one percent of the time that you spend on earning money, it’ll be a good beginning. Above all, take help of a professional advisor to select the right fund as well as the right mix of one time investment, SIP and the STP.

Blue Star Ltd

Cooling Business; Feeling The Heat

Air conditioners and electro-mechanical services providers Blue Star and Voltas are not comparable to each other in true sense. While Voltas makes revenue from hawking engineering products and services for textile and mining industries, Blue Star’s business includes marketing and maintenance of hi-tech professional electronic and industrial products. Devangi Joshi takes a look into the companies’ performance

BLUE STAR

PREMIER AIR-CONDITIONING and commercial refrigeration provider Blue star works under three business segments and earns 7% of its total revenues through exports. The electro mechanic project and packaged air-conditioning system business contributes the most to its top line. The segment comprises central air-conditioning, packaged air-conditioning and electrical contracting businesses, besides after- sale services and customised original equipment manufacturing business. Under the segment, the company provides HVA (heating, ventilation and air-conditioning), M&E (mechanical and engineering) and VRF (variable refrigerant flow) products and services. Blue Star is the country’s first and only manufacturer of VRF systems and owns nearly 20% market share.

Blue Star offers a range of contemporary window and split air-conditioners under cooling products segment. It also manufactures and markets a range of commercial refrigeration products and services catering to the industrial, commercial and hospitality sectors.

The electronics segment exclusively distributes hi-tech professional electronic equipment and industrial products . The company has moved up in the value chain by offering system integration, apart from distributing products like analytical instruments, medical electronics, data communication products, material testing, and measuring instruments from global manufacturers.

The company exports to middle-east countries like the UAE, Qatar, Bahrain, Oman and Kuwait.

FINANCIALS

Falling demand has affected the top line and profitability in the electro mechanic (EM) and cooling segments . Both the segments, which contribute nearly 80% to the bottom line, showed a negative growth in profitability in the December quarter. On the other hand,
electronics segment posted a 31% growth in revenues and 19% growth in profits during the quarter. On the export side, though the product export business witnessed profitability, it was contributable to a 10% dollar appreciation against the rupee in the quarter. However tight control over total expenses has helped profit margins post stability in the last three quarters.

GROWTH POTENTIALS

Contracting global and domestic demands are expected to have a significant effect on the electro mechanic and cooling business, especially pertaining to the retail and building sectors. However, the company is expecting to see good prospects from the hospitality, healthcare and education sectors. The company is aggressively pursuing business from infrastructure sector, especially government projects as it has received several orders from government for air conditioning various stadiums for the Commonwealth Games in 2010.

The company also undertakes water management and LEED ( leadership in energy and environment design certification) consultancy for green buildings as a part of its after sales services. It has submitted bids for a number of such projects, that can be implemented in the coming months.

In the December quarter, the order inflow has seen a rise of 12%, while carry forward order book as of December 2008 has grown by a 52% compared to the same period last year.

RISKS

The company’s gross block has seen a compounded annual growth rate (CAGR) of 19% in the last four years, while the interest payment rose by 86% during the period. The interest cover ratio has, on the other hand, has declined in the last three quarters, from 33.2 in March 2008 to 10 in December 2008. This, in turn, has affected the company’s net profit in September and December quarters of FY09. Company exports to the west Asian region, where the construction activity has been slowing down. Moreover, growth in the exports would be dependent on the dollar’s strength against the local currency.

The liquidity crunch and economic downturn could affect the company’s project execution and top line.

TO SUM IT UP

Blue Star has a healthy carry-forward order book, slowing demand from the construction and retail sectors may impact the company’s top line. Moreover, the liquidity crunch can lead to delays in project executions. However, the company focuses to reap the benefits from the growth in infrastructure, health care and hospitality sectors. A healthy 60% CAGR of net cash from operations in the last four years and sustained dividend payouts during the period makes the company a value buy. Lower beta and high debt-to-equity ratio makes it a safer bet for risk-averse investors.
Beta: 0.52 Institutional Holding: 8.12%* Current dividend Yield: 5.22% Current P/E 7.57 Current m-cap: Rs 1205 cr Current Market Price: Rs 134
* Dec’08
VOLTAS
VOLTAS IS a major engineering service provider whose operations is organised into four independent strategic business units. Under the engineering products and services segment, the company designs and manufacturers, machine
tools, mining & construction equipment and sells textile machinery. About 80% of the revenues from this segment comes from manufacturing of forklift, trucks, cranes, warehousing equipment and construction equipment and sale of accessories, spare parts and maintenance services, while the rest 20% comes from commission income.
The company provides electrical, mechanical, HVAC and refrigeration solutions under the EM projects and services division.
Water treatment and management is also a part of this business, which contribute the most to the total revenues and profits.
Cooling appliances and commercial refrigeration products are manufactured and marketed under unitary cooling products division. The company is also in chemicals trading business, but it contributes less than 1% to the top line. Voltas earns 5% of its revenues from its foreign operations, which mainly include execution of projects in Middle East, Far East and South East Asia.
FINANCIALS
The company posted a 29% growth in revenue during December 2008. In comparison, total operating expenditure during the quarter was up by 33% YoY. This resulted in contraction in its operating margin which hit its bottomline. On expense side, the employee cost rose over 40% in year ended December 2008.
GROWTH STRATEGY
In last few years, it has changed its business strategy to emerge as a onestop solution provider rather than a
manufacturer. The strategy has paidit handsomely. At the end of September ‘08, its domestic order book in EM projects and services segment stood at Rs 1,000 crore, while international order book stood at Rs 4,500 crore with an average completion cycle of 24-30 months. For the domestic market, the company has formed industrial verticals in order to focus on areas like airports, power and steel, which are likely to have sustained growth.
RISKS
Historically, Voltas tends to sit on higher inventories, which depressed its cash flows. In last few years, it has cleaned up its act but, its cash flows from operations continues to be erratic. The company is a big importer of equipment and cooling products. The recent depreciation in the rupee raised the cost imported goods which hurt its profitability. Bulk of Voltas’ overseas business is in West Asia especially UAE and Qatar. The global credit crisis and falling crude oil prices has hit these economies hard leading to a slowdown in construction activities. This will have an adverse impact on Voltas’s earnings in next few quarters.
TO SUM IT UP
Voltas is expected to take a hit on its earnings and profitability thanks to its high exposure to the gulf countries as well as slowing construction and engineering activities in domestic market. The company earns substantial non-operating other income from recurring rental income and investment of surplus funds. However, this segment is likely to hit due to a gloomy realty sector and fall in yields across asset classes. It doesn’t have a track record of higher dividend pay. However, with a higher beta, the company could turn out a well fit for risk-loving investors.
Beta: 0.94 Institutional Holding: 26.54%* Current dividend Yield: 3.34% Current P/E 5.45 Current m-cap: Rs1337 cr Current Market Price: Rs 40.4
* Dec’08