Kalidas

@9
Letters from Kalidas
Table of Contents
19th Aug 2007.....................................................................................................................6

IFCI – Can touch 712 if Goldman takes 26% stake......................................................... ......6
IFCI 26 Stake Sale Analysis...................................................................................... ...............9
15th Oct 2007....................................................................................................................10
NOCIL – Annual Report Fact Analysis............................................................................. ....10
18th Oct 2007....................................................................................................................11
Global Trust Bank Scam................................................................................ ........................11
9th Nov 2007.....................................................................................................................13
Markets may crash – US Slowdown........................................................................... ...........13
13th Nov 2007...................................................................................................................14
Essar Oil Compared with MRPL/RPL.......................................................... .......................14
14th Nov 2007...................................................................................................................16
Essar Group Ruias: Delisting Essar Oil................................................................... .............16
Scams in Stocks Market......................................................................................... ................18
15th Nov 2007...................................................................................................................19
Essar Shipping.................................................................................................... ....................19
16th Nov 2007...................................................................................................................20
MRPL and UCO Bank: Analysis............................................................................. ..............20
Metal Stocks (Steel) and Oil and Gas............................................................................ ........22
Top of the Document 1

17th Nov 2007...................................................................................................................23
Effect of Delisting........................................................................................ ...........................23
Notice to BSE...................................................................................................... ....................24
19th Nov 2007...................................................................................................................26
Hotel Leela and Fertilizer stocks.......................................................................... .................26
21st Nov 2007....................................................................................................................27
Tata Steel: Corus Acquisition ................................................................................................ 27
25th Nov 2007...................................................................................................................28
Tata Steel: Corus Acquisition ................................................................................................ 28
26th Nov 2007...................................................................................................................34
Government policy: Appreciating rupee ...................................................................... ........34
27th Nov 2007...................................................................................................................36
Tata Steel: SAIL instead of Corus ................................................................. .......................36
IFCI: Conversion of Debt to Equity........................................................................... ...........37
28th Nov 2007...................................................................................................................39
Tata Steel: SAIL vs. Corus and PSU Oil companies................................. ...........................39
Strengthening Rupee........................................................................................... ...................41
Strengthening Rupee........................................................................................... ...................42
Tata SAIL: Better preposition?..................................................................... ........................44
6th Dec 2007.....................................................................................................................45
Tata Steel: Leveraged Buyout...................................................................................... ..........45
11th Dec 2007....................................................................................................................49
IFCI Rocky – NSE lot size reduced..................................................................... ..................49
14th Dec 2007...................................................................................................................57
Kalidas: Stock Picks for King Porus..................................................................... ................57
Kalidas: Essar Oil......................................................................................................... ..........58
Kalidas: Metal Stocks Out................................................................................... ..................59
Kalidas: Troubled banks........................................................................................ ................60
Kalidas: Stock picks......................................................................................... ......................61
Ifci Rocky: Loans............................................................................................................... .....62
Ifci Rocky: TFCI.................................................................................................................. ...65
16th Dec 2007...................................................................................................................66
Kalidas: Defend IFCI Comments........................................................................... ...............66
17th Dec 2007...................................................................................................................69

Kalidas: Offline Orders...................................................................................................... ....69
18th Dec 2007...................................................................................................................70
IFCI – Rogue CEO & Sterlite/Morgan winner............................................. .......................70
19th Dec 2007...................................................................................................................73
IFCI – Stake sale called off.............................................................................. ......................73
20th Dec 2007...................................................................................................................73
IFCI – Discussions post stake sale was called off...................................... ...........................73
21th Dec 2007...................................................................................................................77
IFCI – Discussions Sterlite Industries IFCI...................................................................... ....77
21st Dec 2007....................................................................................................................80
IFCI – Post Actions........................................................................................................... ......80
24th Dec 2007...................................................................................................................82
Kalidas: Investing principles ***............................................................... ...........................82
07362 for Guest - King Porus Dated 12/24/2007 ........................................................... .......82
Kalidas: Airlines business – Capital intensive; IDA......................................................... ....86
27th Dec 2007...................................................................................................................87
General talk............................................................................................................................. 87
28th Dec 2007...................................................................................................................90
General talk............................................................................................................................. 90
31th Dec 2007...................................................................................................................92
Bonus issue, EPS, RONW................................................................................. .....................92
Kalidas on IPO and market................................................................................... ................94
01th Jan 2008....................................................................................................................95
2007: The year of crazy bull run......................................................................................... ...95
02nd Jan 2008.................................................................................................................101
IFCI: Inside news and crash................................................................................. ...............101
What to sell and what to hold........................................................................ ......................102
Why Spice jet (Go Air takeover)?.................................................................................. ......104
03rd Jan 2008.................................................................................................................106
Analysis of expected market crash in January ***.......................................... ..................106
Advice from Kalidas ***..................................................................................... .................109
Kalidas Decision Making ***................................................................................ ...............111
Kalidas Life experiences......................................................................................... ..............111
04th Jan 2008..................................................................................................................113

IPO Fundas................................................................................................. ..........................113
Judiciary System........................................................................................................ ...........115
Selling Strategy.............................................................................................. .......................116
05th Jan 2008..................................................................................................................117
Tata Jaguar acquisition................................................................................. .......................117
Kalidas Book..................................................................................................... ....................119
06th Jan 2008..................................................................................................................119
Tata Jaguar acquisition................................................................................. .......................119
09th Jan 2008..................................................................................................................120
Advises on Trading........................................................................................... ....................120
19th Jan 2008..................................................................................................................124
Sir John Templeton: Interview – Future of Stock Market............................................... ..124
Equity payback longest for Indians.............................................................................. .......130
Indian Economy: Total Convertible rupee......................................................................... .132
23th Jan 2008..................................................................................................................135
Market crash................................................................................................................ .........135
Margin Trading ******............................................................................................... .........136
25th Jan 2008..................................................................................................................138
Trading Strategy Bubbu***.......................................................................................... .......138
06th Feb 2008.................................................................................................................144
Markets are crashing....................................................................................................... .....144
08th Feb 2008.................................................................................................................145
IFCI Earnings....................................................................................................... ................145
11th Feb 2008..................................................................................................................147
IFCI ............................................................................................................... .......................147
12th Feb 2008.................................................................................................................148
IFCI ............................................................................................................... .......................148
13th Feb 2008.................................................................................................................149
IFCI – Trading Strategy ***................................................................................... .............149
14th Feb 2008.................................................................................................................152
IFCI ............................................................................................................... .......................152
19th Feb 2008.................................................................................................................154
IFCI ............................................................................................................... .......................154
03rd Mar 2008................................................................................................................155

Warren Buffet – US recession................................................................................ ..............155
05th Mar 2008.................................................................................................................157
Stocks to Pick/Play............................................................................................................... .157
05th Mar 2008.................................................................................................................159
11th Mar 2008.................................................................................................................162
12th Mar 2008.................................................................................................................168
FED can’t save...................................................................................................... ................168
14th Mar 2008.................................................................................................................170
Forex Derivatives....................................................................................................... ...........170
18th Mar 2008.................................................................................................................175
Reply to C. P. Sahay................................................................................. ............................175
Bears and Stern.................................................................................................................... .178
19th Mar 2008.................................................................................................................180
20th Mar 2008.................................................................................................................186
24th Mar 2008.................................................................................................................190
CLSA buying ICICI – may sell warrants...................................................................... ......191
Gold price and Siver..................................................................................................... ........192
Stocks purching during/now crash.......................................................................... ............193
Short Selling............................................................................................................... ...........195
25th Mar 2008.................................................................................................................196
Bloomberg Machine.................................................................................. ...........................196
JP Morgan Bear and Sterns.................................................................................... .............197
26th Mar 2008.................................................................................................................198
ICICI bank.................................................................................................................. ..........198
27th Mar 2008.................................................................................................................200
nk...................................................................................................................... .....................200

19th Aug 2007
IFCI – Can touch 712 if Goldman takes 26% stake
In one of my older post in May 2007, I mentioned the target of Rs 300 to Rs 500 and
gave ample reasons for such calculated forecasts.
Since then many variables have changed, including general market condition, so we need
to reassess the prospects of IFCI. It is reported on 14/Aug that Goldman acquired 20 lakh
shares of IFCI in open market operation (at prices above Rs 60 per shares). The current
holding is around 5.21 %.
If IFCI sells the stake of 26% by issue of new shares, total stake will be around 31%. If
they are forced to make general offer for at least 20% of remaining shares, and if it
succeeds, it may get controlling stake of 51%. It is possible; IDBI (5%) and LIC (8%)
may sell into 20% general offers. In short, they will have about 405 Millions shares (out
of 804 Millions shares, including issue of 165 Millions of new shares)
If this happens, then following scenario may be noted:

1. Goldman is perhaps the largest security firm in the world with closest connection
with US establishment (White House and FED). IFCI acquisition will be very miniscule
investment for them. 5% investment might cost them Rs 153 crores (5% of 638 Mln
shares x Rs 48 average price) Remaining 26% may cost them Rs 1600 crores (16 crores
extra shares x Rs 105 rumored price). General offers for 20% will cost them 1200 crores.
In short, 51% will cost them Rs 3000 crores app. or US$ 750 Millions.
2. Goldman will have instant access to Loans and Advances of over Rs 13500
crores or US$ 3.5 Billions. It will help identify the leading borrowers for its investment
banking side, and may raise IPO for such companies.
3. Goldman will also identify the NPA (already written off) companies, and may
nurse them back to health by bringing them to market and raise IPO or make secondary
offers. Thus, old written off debts might be recovered substantially (almost 100% in some
cases) that may add straight to bottom lines.
4. Thus, in a matter of just 2 years, the EPS of IFCI may rise to over Rs 60 per
shares as under: (I mentioned part of it in my previous post when I had shown target to
Rs 300 to Rs 500 for IFCI without taking into account of it being taken over by foreign
entity)
a. Regular Earning = Rs 625 crores (5% Interest spread of Rs 13500 crores Advance
– Operative expenses) = Rs 7.80 EPS
b. Investment Earning = Rs 800 crores per year (from existing Equity and debt
holding) = Rs 10 per share

c. Recovery earning = Rs 1600 crores per year (from debt tribunals etc) = Rs 20 per
share
d. New Investment Banking income from IPO’s promoted by Goldman management

– (Expected flow will be Rs 16000 crores per year or 5% fees/green shoes of such Gross
Proceeds = Rs 800 crores or Rs 10 per share
e. The expected EPS for next 3 years at least will be sum of a,b,c,d = Rs 7.80 (a) +
Rs 10 (b) + Rs 20 (c) and + Rs 10 (d) = Rs 47.50 per share
f. Presenting growth P/E ratio of at least 15 times (generally over 20 times), the
stock price may zoom to Rs 712 in less than 18 months
5. However the above target has following caveats or Assumptions:

a. IFCI is really bought by Goldman. If they don’t buy, everything will fall, and the price
target may come down to modest Rs 150 (in 12 months) and Rs 300 (in 2 years)
b. GOI does allow Goldman to change the name from IFCI and repeal IFCI Act, so that
the company is fully privatized and no longer a GOI company
c. Goldman does not go bust in the present sub-prime scenario. It is already in trouble to
the extent of over US$ 30 Billions (including CDOs of Chrysler and Alliance Boots)
6. Following scenario may emerge as result
a. IFCI may be turned into full fledged Investment Banking and Term Lending
Institutions. It is possible, after 2 years, both activities may be separated and listed
separately. There may be spin off
b. It is also possible that Goldman may consolidate shares in the ratio of 2: 1 or existing 2
shares may be converted into 1 share (reverse split) to enhance the share value in absolute
terms. (Goldman is US brokers with access to major pension funds. These funds usually
buy stock having denominated value of US$ 15 or more).
c. IFCI may come out with ADR issue to be traded on NYSE
d. IFCI has Long Term Prospect of trading at Rs 700 or above in about 2 years from take
over date.
Kalidas, Hong Kong

19Aug2007

Latest Quarterly/Halfyearly
As On(Months) 31-Dec-2007(3) 31-Dec-2006(3) % Change
Sales of Products/Services 5744.00 3616.60 58.82
Other Income 45.00 58.80 -23.47
Total Income 5789.00 3675.40 57.51
Total Expenses 0.00 2356.20 --
Stock Adjustments 0.00 0.00 --
OPBDIT 5789.00 1319.20 338.83
Interest 0.00 0.00 --
Depreciation 16.70 22.00 -24.09
Extraordinary Items 0.00 0.00 --
Prior Period Adjustments 0.00 0.00 --
Provision for Tax 1620.70 3.50 46205.71
After Tax Profit 3189.40 1293.70 146.53
Equity Capital 6386.80 6386.80 0.00
Reserves 0.00 0.00 --
Notes to Accounts Click here Click here
Notes To Accounts : Dec 2007
status of investor complaints for the quarter ended december 31, 2007
complaints pending at the beginning of the quarter 2
complaints received during the quarter 583
complaints disposed off during the quarter 584
complaints unresolved at the end of the quarter 1
1. in view of goi letter dated december 12, 2007, the reduction of pro-rata interest, as done in earlier years
and current half-year has not been done in the current quarter. accordingly, interest cost for the current/nine
months period is higher by rs 1215.00 million (incl rs 810 million for the half year ended september 30,
2007).
2. during the quarter the psbs/fis exercised their option to convert rs 13239.90 million of zero coupon
convertible debentures (zcocds) of total zcocds of rs 14792.20 million held by them. the shares converted @
rs 107/- per share (incl. premium of rs 97/-) shall be credited to beneficiary accounts on receipt of formal
approval of stock exchanges and accordingly, as on december 31, 2007 the amount has been shown as share
capital pending allotment.
3. segment reporting as required under as-17 is not applicable as more than 90% of revenue comes from a
single segment of development financing.
4. other income for the nine months includes interest on income tax refund of rs 1315.10 million.
5. information on consolidated figures -
(i) turnover: rs 16639.60 million

(ii) pat: rs 10647.90 million
(iii) eps: rs 16.57 (basic); rs.8.74 (diluted)
6. figures of the previous period / year have been re-arranged / re-grouped, wherever necessary.
7. the above financial results were taken on record by the board of directors in the meeting held on january
18, 2008.

Detailed Quarterly
Curr.Quarter 31- Prev.Quarter Corr.Quarter 31-

As on (Months) %OI %OI %OI
Dec-07(3) 30-Sep-07(3) Dec-06(3)
Sales of
5744.00 99.22 5916.00 99.33 0.00 0.00
Products/Services
Other Income 45.00 0.78 40.00 0.67 58.80 100.00
100.0 100.0
Total Income b 5789.00 5956.00 58.80 100.00
0 0
Stock 0.00 0.00 0.00 0.00 0.00 0.00
Raw Material
0.00 0.00 1709.70 28.71 0.00 0.00
Consumed
Employee
0.00 0.00 197.50 3.32 0.00 0.00
Expenses
Power & Fuel 0.00 0.00 0.00 0.00 0.00 0.00
-57.5
Other Expenses 0.00 0.00 -3429.00 0.00 0.00
7
-25.5
Total Expenses 0.00 0.00 -1521.80 0.00 0.00
5
100.0 125.5
OPBDIT 5789.00 7477.80 58.80 100.00
0 5
Interest 0.00 0.00 0.00 0.00 0.00 0.00
Depreciation 16.70 0.29 16.40 0.28 22.00 37.41
Extra incomes 0.00 0.00 0.00 0.00 0.00 0.00
Prior Period inc 0.00 0.00 0.00 0.00 0.00 0.00
Prov. for Tax 1620.70 28.00 2488.50 41.78 3.50 5.95
2200.1
Profit after Tax 3189.40 55.09 4972.90 83.49 1293.70
7
Equity 6386.80 -- 6386.80 -- 6386.80 --
Reserve 0.00 -- 0.00 -- 0.00 --
Notes Click here -- Click here -- Click here --
IFCI 26 Stake Sale Analysis
Dear Marketbear,
Read the para 4F and 5a of my original post in answer to your queries.
Since the selection process is very long, the stock may have very little downside (except
due to global market meltdown)

Further, IFCI September quarter result should be very good - boosted by recovery of
Malvika steel and Prakash Industries, and also Income Tax refund of over Rs 234 crores
(or thereabout) which does not appear to have been accounted for in June quarter. These
recoveries and refund combined should add Rs 600 crores or more or Rs 10 EPS in
addition to regular earning, which may be Rs 2.50 per quarter (without being annualized).
By the time the September quarter is reported, the bidding outcome might have been
known, because deadline for bid submission is 15/Sept, whereas September quarter might
be reported in middle of October.
Actual sale of stake may take another 6 months. 20% General Offer may take another 2
months. So by the time the foreign entity assumes the complete control, it will be at least
8 to 9 months from now, unless IFCI decide quickly (before 6 months deadline).
It all depends how the whole deal is structured. IFCI Act will need to be amended or
repealed altogether. GOI's Loan is another hurdle, though it is very long term.
The stock may not run amuck for the time being, although 10% to 15% move upwards
(not beyond 75) is quite likely due to excitement.
Downside is likely to be due to global liquidity problem and also Goldman's own
problem in USA. For the time being, FED has saved Goldman from disaster. Still, FED is
not everything - market is supreme - No one has guts or stamina or power to manipulate
the 8 trillion dollar market with the help of just $ 200 Millions (FED discount rate
turnover is just $200 million per day) - not even FED
Kalidas, Hong Kong

19Aug2007
15th Oct 2007

NOCIL – Annual Report Fact Analysis
Dear Guest,
I have called for the latest Annual Report on Nocil - which may help me to fine tune my
expectations and target.
However, what you mentioned is true, then certainly I will change my view. It is true that

Reliance has taken over debt, for which it caused Nocil Petrochemical formed as
subsidiary. However, the fact remains that currently trading NOCIL is almost debt free,
profitable, and restarted paying dividends/ As such, it is more of a recovery play qualifies
to be evaluated on stand alone basis.(without Reliance effect)
If Reliance factor is out, then certainly the target may change. Judging from the recent
market activity, it does look like that strange events are taking place inside the company
(for the better). Consistent volume on upside never lies.
However, I do value your feedback. Right now, I am not reducing my position, but at the
same time, I am put on caution NOT to increase the position aggressively after your
presentation of certain facts.
I have still not come across specific news where old management has completely
relinquished the control. Normally, it requires approval of all shareholders by way of
special resolution.
Anyway, thanks for your views. We do need the persons like you who can contribute
constructively. I will return here soon to have the final discussion on this matter.
Kalidas, Hong Kong

15-10-07
18th Oct 2007

Global Trust Bank Scam
for KJP - Reply Post
This is my last post on this subject to save each others' time. Although we disagree on
certain points, our other interest is common.
I do remember the title which you had objected as objective. Here too, I do not believe
that the title was “abusive” – it aptly described certain elements who destroyed the GTB
shareholders’ value. This was Rs 4000 crore frauds imposed on GTB shareholders (I was
one of them who lost Rs 3 Lakhs) by the combined actions of RBI and SEBI.
You quoted:
- Your previous message, the titel itself was very much abusive.
' Crooks and.................). Hope you recollect the caption in your earlier message
My original message
QUOTE
Title of the message: Crooks & Scoundrels in RBI and SEBI...

Posted by: Kalidas on (18-Oct-07 14:31 )
Price : BSE: Rs 83.50 ( 2.33 % ), NSE: Rs. 83.50 ( 2.39 % )
for the Wall
When Newbridge Capital, shnshei bank wanted to take over global Trust Bank by
investing over Rs 1500 crores, RBI did not approve it, and instead asked Oriental Bank of
Commerce to take it over without any payment to the shareholders. Reason? RBI
Governor Reddy was from Andhra and he did not seem to see eye to eye to GTB
promotor Geli
RBI designed the scheme of take over with OBC and stated that shareholders will be paid
within 12 years. Out of 1200 crores of NPA, OBC realized over Rs 950 crores in very
first year, which should have been credited back to GTB, which would entitle GTB
shareholders to realise dues.
However, RBI and SEBI secretly engineered a scheme under which entire equity of
shareholders were written off from depository.
The question arises:

1. What happened to Rs 950 crores realized by the OBC
2. GTB's NPA were in the form of shares only of various companies. These shares have
multiplied since then to over 400%, which would have recovered not only NPA but would
have yielded profit of over 3600 crores or Rs 3o per share which in turn would have
propelled the GTB price to over Rs 200 to Rs 300 (even IFCI does not have EPS of Rs
30)
3. When Newbridge capital wanted to take over by subscribing Rs 1500 crores, which
would have written bank not only NPA but also added to positive capital (realziation of
Rs 900 crores from so called bad assets were extra), why did RBi deny them to take over
and handed over entire GTB free of cost to OBC?
4. Under the original scheme, GTB were to be taken over by OBC and surplus assets
were to be distributed amongst the shareholders of GTB, then why did SEBI asked
depositories to write off the entire share holding of the GTB. I had 36000 shares of GTB
which have been written off by HDFC and they do not even reply why did they do it.
5. If assets were to be distributed later within next 10 years (2 years are gone), what proof
we as current shareholders will be having to stake our claim before the appropriate
authorities at that time, when the shares have already been written off by SEBI without
our permission?
If you think that RBI and SEBI are not cheats, crooks and scoundrels, what will you call
them - Indra Dev or Kuber or Lord Rama or Lord Krishna?
And if RBI thought that GTB was worthless, inspite of Newbridge capital wanted to invest
Rs 1500 crores (plus more as required), why did it give it away to OBC free? Why did
not let it go to compulsory liquidation under the supervision of court which is the normal
procedure? At least, there would have been complete transparency.

I therefore maintain by original stance that Crooks and Scoundrels man and manage RBI
and SEBI. They want everyone to believe that 'Kings does no wrong'
Kalidas, Hong Kong

18-Oct-07
UNQUOTE
Let us end discussion on this subject.
9th Nov 2007

Markets may crash – US Slowdown
Ref: 07/208 Date: 09-11-2007 Original Post

Title: Get out of Brokerage stocks and major stock financing banks
------------------------------------------------------------------------------------------------------
The market is going to take a stiff turn for the worse. On Thursday, the market was down
at one time 285 points but rebounded in small volumes in USA – but the most important
thing was that the market clocked one of the heaviest turn over in several years in US
market. Possible Reason: - Smart investors have run out for EXIT selling and dumping
high quality liquid stocks to take out all serious money they can.
When US$ is slumping, the tech stocks, being export oriented, benefit. However,
NASDQ bore the brunt of the selling, meaning that large and smart investors were selling
everything, regardless of beneficial effect of slumping dollar, on the premise – sell first
and ask questions later.
Today, another bad news struck – Barclays Bank, one of the most venerable banks from
UK, reportedly lost GBP 10 Billions or US$ 21 Billions. Brokers like Goldman Sach,
Morgan Stanley, and Merrill Lynch have found their debt being closer to possible default,
if credit swaps were any guide. The most invisible and dangerous fallible giants are JP
Morgan Chase (with over USD 30 Trillion exposure in derivatives) and GE Capital. They
are champions of derivatives.
What we are witnessing now, is the complete melt down of derivatives. For the last 2
years, Spots are ruling the Future markets whereas all previous years derivatives were the
dominants.
World’s biggest derivative players are all major banks like Citibank, JP Morgan Chase
(who is known to be shorter of commodity currencies like ZAR (South African Rand) and
Silver, UBS, Deutsche Bank, BNP, Credit Lyon’s, Goldman Sach, Morgan Stanley, Merrill
Lynch, Barclays, HSBC (reportedly largest short seller of silver), GE Capital and major
insurance companies who have parked their money in these derivatives such as AIG.

Swiss Re, General Re, and some large German houses.
It is not the question of “whether” but when? That "when" is only days away.
It is time one gets out of brokerages and stock leverage financiers because they will be so
much hit and hardest below the belt, that some may even disappear. Lots of NPA will
result now, and there could be several suicides and shoot outs at major financial centers,
including Mumbai.
Brokerages however large have no physical assets which can be relied on for recovery.
Their assets are only its Sales People who will suffer deepest depression, and others like
Computer terminals have no real value at all. These brokers are used to taking large
proprietary positions in bull market, and they are so close to the market that they are
unable to see the extra ordinary risk they have taken, many of their leveraged customers
may fail and disappear.
The largest stock financing banks like UTI, ICICI Bank, HDFC Bank, Kotak and others
will find major defaults of their customers. These banks’ major profit growth is out of
interest earned on stock financing, and when the stock collapses, their earnings as well as
capital will disappear. They will be selling lots of margin stocks if their customers do not
pay up. ICICI is most vulnerable.
Of late, the investors have become complacent – last few falls and rapid recovery
immediately 2 or 3 times, have convinced them that any major fall is their buying
opportunity. Read everywhere, including money control, where headlines are –
Corrections are buy opportunity.
The money is disappearing very fast in sub-prime related losses. It was a trillion dollar
market, and derivatives have made them 20 times bigger. Any losses in overseas market
will invite margin calls to those investors, and very first thing they will do is to sell down
their emerging market portfolio like Brazil, India and China.
Do not be under impression that money will flow from NYSE/NASDQ to NSE/BSE.
There is no money – just disappeared. Optimism under these circumstances will be fatal.
Kalidas, Hong Kong

9-Nov-2007
13th Nov 2007

Essar Oil Compared with MRPL/RPL
Ref: 07/218 Date: 13-11-2007 Reply Post for Jamil150

Essar Oil Target very HIGH - READ THIS- 300,000 crores FRAUD
------------------------------------------------------------------------------------------------------
I have “qualified” target of Rs 2800 IF the company is NOT allowed to be delisted.

Reasons: (Compared with MRPL/RPL)
MRPL annual capacity is 9 Millions tones; operates at about 120% of rated

capacity. It has 175 Crores shares O/S; annual sales around Rs 30,000 crores. It
earns about Rs 1500 crores or about 5% PAT of revenue or Rs 8 per share. MRPL,
though only a refinery with no crude oil production (that part belongs to ONGC
only)
Essar Oil annual capacity is 12 MlnTons. With over capacity of 20%; it could refine
15 Million tones. It implies Essar Oil could have annual revenue 70% higher than
MRPL or say Rs 51000 crores.
Essar oil is also an oil producer (second largest after ONGC). It just started
production with capacity of 200,000 bpd. @USD 100, it can earn USD 20 Millions or
Rs 80 crores/day or Rs 2400 crores/month or Rs 28800 crores/year. Essar Oil has
only 110 crores share outstanding (that is also by cheating with collusion of SEBI
and RBI through FCCB routes – earlier it had only 38 crores shares.)
Now, potential earnings of Essar Oil could be worked out as under :
Oil Production …..Rs 28000 crores ….Profit 80% Rs 22,400 crores

Refinery …..Rs 51000 crores ….Profit 8% Rs 4,080 Crores (higher for Private Cos)
TOTAL Rs 26,080 crores
No. of Shares in issue (including shares issued
Out of cheating +72 crores new shares) ..110 crores
Potential EPS based on current price ..Rs 237 per share
Based on P/E 12 times. Possible Stock Price ..Rs 2,844 in 2 Years
OUTRAGEOUS, but it is a fact. Further, ESSAR OIL is expanding refinery

capacity by 18 Mln tones (150% more than current projections) so guess, where it
could go in 7 years?
This company is nearly 20 times more valuable than RPL having capital of Rs 4450
crores or 445 crore shares having NO CRUDE OIL PRODUCTION base. RPL has 4
times more shares with 50% of Essar Oil revenue. RPL @Rs 220 is 15 times more
expensive.
RPL can have EPS of Rs 6/shr (Revenue of 30,000 crores; profit Rs 2400 crores
(8%); 445 crores shares o/s; EPS below Rs 6; P/E of 38 times, against Essar future
P/E 0.33
The only difference between Essar and RPL/MRPL is - latter are only refineries.
Essar oil = Refinery + Crude Oil Production (like ONGC).
Now, CHEATING. ESSAR OIL had only 38 crore shares prior to FCCB - in deep

red – ICICI Advance of 7000 crores NPA. When it saw Refinery coming to
production, and oil prices rising, it issued US$ 750 Millions of FCCB last year
(recent reports are old news, NOT new) convertible @ Rs 11, when market price
was Rs 33. SEBI and RBI COLLUDED with Essar to allow them FCCB at heavily
discounted price.
FCCB were never available in Hong Kong. All were cornered by Essar. It then
converted into equity with the result that almost 72 crore more shares were issued to
promoters @ Rs 10 to Rs 12, so that they could raise their stake to 80% to DELIST
the company as per SEBI rule!
RUIA promoters’ wants whole pie – do not want to share with others who waited for
over 6 years.
As you can see, if Essar share goes to Rs 2800, and promoters can have entire 110
crores shares by delisting; They make Rs 308,000 crores (US$ 77 Billions), three
times market cap of RPL. RUIA will be richest in the world – higher than Bill Gate,
Buffet, forget Ambani/Mittal– because of cheating. How could SEBI/RBI allow
FCCB AT PAR and convertible into share @ 11 when share prices then Rs 33?
After Global Trust Bank, this is nearly 80 times larger “Fraud on Investors” in India
with full knowledge and participation of both SEBI and RBI officials. They should
be lined up before firing squad or stoned to death just as in Arab nations.
Kalidas, Hong Kong

13-Nov-2007
14th Nov 2007

Essar Group Ruias: Delisting Essar Oil
Ref: 07/220 Date: 14-11-2007 Reply Post for hhhrules
Thanks for your well reasoned post – any rational person would have thought same way –
and this is the reason that entire Essar Group is under-performing. Almost all leading
promoters from Ambanis to Jindals to even Tatas have performed similar acts at one time
or other.
In stock market, all promoters can not have their say all the time, regardless of their
ulterior move. When some large funds notice the opportunities, they deliberately invest in
those companies and thwart the promoters’ attempts to take the company private on
cheapest terms.
With stock markets at height, many large super funds and FII are in search of hidden

gems where they can make extra ordinary money by acquiring strategic stake through
open market purchases, then seeking a seat on the board, and forcing management change
or their policies. They know very well that “Minority Shareholders” are more powerful
than “Majority shareholders or original promoters”. They will come to this counter soon,
and may be they have acquired some stake here in entire group companies – Essar Steel,
Essar Oil and Essar Shipping.
Essar Steel made fortune through one of its associate holding stake in Essar Vodaphone,
However, huge cash received from Vodaphone is now sought to be siphoned off into
private vehicles in Mauritius, without giving any benefit to co-shareholders.
Essar Shipping was also sought to be privatized – but their attempt failed. There was
nothing to privatize Essar Shipping, but it was used as “Pilot” attempt to judge how
SEBI, RBI, FM and other investors react, so that they could privatize rest of the high
flying companies rolling in cash or about to roll in cash, by quoting Essar Shipping as
“precedent”. They failed however.
Essar Oil is also proposed to be delisted which had kept the lid on the stock price until
now.
Ruia have made so much of money in cash , out of Hutchison Essar deal that they can
afford to buy out all key officials in SEBI, RBI, Finance Ministry and some ministers
themselves. They have become super confident to eat away everything. This is first sign
of coming failure.
This is going to change. The privatization is not going to be that easy anymore. In fact,
we also propose to file “official objections” before SEBI, RBI and also Finance Ministry
for the proposed delisting of Essar Group of companies.
I originally invested in Essar Oil a few years back between Rs 13 to 21 and sold 90% of
holding at prices between Rs 48 to Rs 78, after which the stock collapsed and returned to
below 45 levels when I entered again. De-listing proposal came now. I am going to hold
far longer this time, because the company is coming to revenue stream with tremendous
prospects. SEBI/RBI will find it hard to allow the de-listing against official objections.
Once the spectrum of de-listing is removed, the stock will find amazing value.
We take chances at most uncertain times. In worst scenario, we will be making small
money, but we are not going to lose on this counter. If bet is 100:1, why not gamble it?
Giving up in desperation to Ruia is an act of cowardice in investment world. Being a

shareholder, voice the official objections by serving “Registered Notices” to
SEBI/RBI/Finance Ministry/ Registrar of Companies and Statutory Auditors and also
Ministry of Petroleum – some thing good will come about. You have to make efforts to
make really big money.
Although I do agree with all that you have said, the only point of discord between you

and me, is to allow suckers like Ruia to get away easily and make billions at our cost.
If you live in democracy, better make your voice heard. Even Gandhi made his voice
heard by British to quit India – so why get disheartened? Pick up the courage, buy some
stock to become a shareholder and say what you want to right forum That time is NOW.
When you are doing a good deed, nothing goes to waste.
Kalidas, Hong Kong

14-Nov-2007
Scams in Stocks Market

For SASSAS,
Disagreed. Even Ambani merged RPL with RIL and got it delisted just to take advantage
of huge losses of RPL during construction stage. This was done to save on taxes. It was
again relisted. Originally, RPL came out as FCD or Fully Convertible Debentures (in 2 or
3 stages) and the converted stock was dormant for a long period of time. Ambanis will do
anything to save on taxes - they are misers. All their fund raising is in the nature of
savings taxes or avoiding taxes or tax planning whatever you call.
Tata also cheated the investors - TATA FINANCE was privatized due to scandal and got it
delisted. Shareholders were offered paltry sum. It was again relisted. I lost some money
in Tata Finance, so I know about it.
I do not like companies, like Ambanis, who in the name of tax planning, never used to
pay any taxes. Tax payment involves physical movement of funds from the company to the
IT dept, so their balance sheet could be relied on. Many companies do not pay taxes but
show tremendous profits (via revaluation for example) to boost their share prices. When
Mr. Chidambaram introduced Minimum Alternative Tax (MAT) those reporting false
profits were caught off the guard, with the result that some companies making almost Rs
100 crore + profit suddenly started reporting heavy losses.
I also do not buy IT companies because their exports are intangible and tax exempt (at
that time) Many smaller IT companies were approaching Hong kong companies to issue a
contract for which they will transfer the money by 'havala' and the overseas Companies
will then send it back to them with the contract to show the profit for the purpose of stock
market by announcing contract to the press.
For real exporter, there is at least declaration in India like GR1 form prescribed by RBI -
but for the services, there were none.This is why the balance sheets of non-tax paying
companies are often not very reliable.
In India, even now, the companies make 4 balance sheets; One for themselves, One for IT

department, One for filing with Companies Registry and One for banks/stock markets to
boost the share prices.
This is the reason I never bought Reliance shares in my life (except Reliance Capital once
at Rs 60). May be I lost profit on this counter, but I made nearly 10 times in other stocks
like IOB (Rs 8.50 Rs 14), Bank of India (Rs 11 to 18), MRPL (Rs 6.80 to Rs 8.80), SAIL
from Rs 8.80 to Rs 14) Vijaya Bank (Rs 9 to Rs 12)om Rs 48 to Rs 64), ONGC At Rs
138, Syndicate Bank at Rs 11 to Rs 16...when the SENSEX was languishing at 2700 or
thereabout. When non one was talking about India, I issued recommendations to all
Indians in Hong Kong to buy aggressively bank stocks as above. However, many were
afraid of buying any bank stocks due to lots of NPA.
Of course I sold all of them when they reached nearly 8 to 10 times my original purchase
cost. I was the only stock broker in the world who projected then little known ONGC
would become largest company on BSE bourse and would become SENSEX stock.
Kalidas, Hong Kong

14-11-2007
15th Nov 2007

Essar Shipping
for Guest - Pramila
Sorry, I did not get your message. Sometime I find that many messages that appear under
reply, never get displayed after clicking.
Quickly, almost all Essar scrips were under pressure due to their attempt to privatize or
de-list the Essar group of companies, that is, Essar Shipping, Essar Steel and Essar Oil
The management failed in case of Essar Shipping privatization due to some opposition. In
any case, there was no reason to take this company private. In fact, it was a small pilot
project to assess how the things will go if they attempt for privatization of bigger
companies like Essar Steel and Essar Oil. Well, this was not your question, but I
advnaced it for poor performance of these scrips for over 9 months.
REASON FOR SELECTING ESSAR SHIPPING
Essar has already commissioned 12 Mton refinery in Gujarat. They are also building
another refinery for 18 MT nearby which may be ready by 2010 (count 2014 for Essar)
The world is having a shortage of refineries. India is well positoned in this sector for the

simple reason that Reliance and Essar were early movers 3 years back with the result that
their refineries are ready or almot ready (for RPL). By 2011, India will have surplus
capacity in refineries.
For some unknown reasons, not many are setting up refineries in USA, world's biggest
oil/gas consumer. So they have to rely upon friendly countries to fill in the gap. West
coast of India is close to oil production centres like Iraq, Qauatar, Iran and Saudi Arabia. US
will buy crude from these centers, and ship them to West Coast refineries like Essar and
Reliance from now onwards.
Each vessel carrying crude is 50000 dwt to 200000 dwt. Thus, US will require smaller
vessels to transport crude to Gujarat for refining and send it back to USA after refining.
Essar Shipping is the only company (one more is GE shipping) who has large tankers
capacity. They will have continuous business from now on from large Oil giants like
Chevron, Esso, Exxon, Royal Dutch Shell, BP etc with hefty margin.
Further, I have read that Essar Shipping is having the largest and also youngest fleet for
operational use. With oil disasters on rise, the buyers will prefer younger ships which
have modern management and less susceptible to oil spillage which have environmental
consequences.
No time here to discuss the financials. Suffice is here to say that the company is
profitable, and it will rise substantially over next 5 years to 7 years.
With larger volume, greater margin and dependable USA clients, Essar Shipping is very
well poised to benefit in years to come. This is the concept on which I suggested this
counter, which did have privatization risk once. Now it is almost NIL.
I bought a few thousands of late ar about Rs 39.50 to Rs 42 in last 3-4 working days.
Now the stock has started flying with no sellers at upper circuit at Rs 54 or about. Good
volume too. Short term I expect Rs 80 and over longer term, if Ruia management
improves its relations with Investors, the stock could get into big leagues like GE shipping.
I hope this satisfies your enquiries.
Kalida, Hong Kong

15-Nov-2007
16th Nov 2007

MRPL and UCO Bank: Analysis

Dear Guest (King Porus),
MRPL:
The stock has run ahead of its time by at least 6 months. It is fully priced, trading at
almost 17 times prospective P/E. ONGC owns 87% and in all probability, it will be taken
private at premium.
Institutions are usually not interested in this counter due to very poor float. (Only 13%
public float). This is therefore not a counter with lot of liquidity - main reason for the
recent surge in copycat move of Essar oil. It is sector specific, not individual strength of
its own.
Unless ONGC reduces its stake to 75% (which is mandatory under listing rules of
BSE/NSE), I do not see much future. Yes, it will be a good dividend paying company,
because most of the dividend will go to its parent ONGC. There are also no substantial
expansion plans that may add value.
Further, MRPL did not have benefit of Oil bonds as they were limited to IOC, BPCL,
HPCL which, in my opinion especially BPCL, will multiply 4 to 5 times (500%) in next 2
years.
BPCL has 36 crores of shares outstanding. It will receive about 12,000 crores of oil bonds
(8% coupon/5 years). BPCL does not want to keep these bonds on its books. To realize
the proceeds, LIC has offered to buy at 5% discount. BPCL will cash in 12,000 crores -
5% or Rs 11,400 crores.
This is their INCOME, so accounting for Tax @ 30%, they would earn this year 11,400
crores - 30% = Rs 8000 crores appx. or Rs 221 per share. ADD to it regular EPS of Rs
110 /shr (Rs 60 shown in published figure refer to only stand alone basis - On
consolidated basis, EPS is Rs 80. This year due to revision of price, the EPS may enhance
to Rs 4000 crores or Rs 110/shr. Thus prospective EPS is regular EPS Rs 110 + Oil Bond
related EPS Rs 220 = Rs 330 per share. With potential EPS of Rs 330, the stock is trading
at Rs 435 or just 1.3 times P/E.
It may be said that Oil Bond may be a one time off income. However, income is an
income, one time or recurrent. Oil bond is going to be a feature. GOI has to give oil bond
or allow company to raise Petrol prices, so the regular EPS is bound to go to Rs 150 per
share in 2007~8 and 2008~09. So the stock trading at Rs 435 discounts P/E of just 3 times
against MRPL's 16 times. I would rather sell MRPL and buy BPCL due to higher
earning quality, expansion and prospect of getting special dividend (Rs 60 per share
if they distribute 30% of such gains). This is in addition to regular dividend. Since
majority of stock is owned by GOI, most dividend goes to only GOI.
PLEASE NOTE that I have no idea how much oil bonds BPCL will be getting.
Further, whether LIC will buy entire Rs 12000 crores of bonds is a debatable
question - they do not have that resources. Further, to the extent of bonds sold to LIC

will get into BPCL book as Profit. Balance oil bonds will get them interest @ 8% which
add to its profit.
UCO BANK:
Four reasons. UCO is the cheapest banking stock. Also Kolkata based. The only state left
out in current economic boom is West Bengal. After Bangalore and Chennai, it is now
Kolkata's turn. So UCO being a regional bank strong in West Bengal, will benefit most.
SECOND is most important. It is a negative reason for others and positive for UCO.
Since we are sitting on major boom, and banks like UTI/ICICI/BOI/HDFC are relying on
interest income on stock advance. If the market corrects severely, these banks will suffer
most and result in millions of NPA. It happened when GTB failed. UCO's earning are not
that dependent on stock market, so it will escape the route and will not have too much
NPA.
THIRDLY, UCO has international presence. It has better face than other smaller banks.
and LASTLY, the management has changed for better. The stock has also not risen as
much as other peers - from original IPO at Rs 16, it is at Rs 50 or 3 times, whereas others
have multiplied 10 to 50 times (I used to buy Bank of India between Rs 11 to Rs 16 about
4 years back - now at Rs 370).
For DISH TV see another post.
Kalidas, Hong Kong

16-Nov-2007
Metal Stocks (Steel) and Oil and Gas
For Guest - Reply Post of 16-Nov-2007
Sorry, I do not follow Lloyd Steel. However, it is my general opinion that the metal
stocks have had their run, and may consolidate. There is also serious fear of recession,
which feeling directly hit the metal stocks. I will stay away from this sector for a few
days and let it consolidate.
If the market in US seriously contract, today being a heavy day, there will be home
coming of the currency - so that USD will flow out of overseas market to head home
(USA).
Although USD is in decline on fundamentals, temporary imbalance will strengthen the

dollar. Metal prices being inversely related to USD, they will contract too, which in turn
affect the metal stock prices.

I normally prefer top 3 or 5 names in respective industry. When the market is at height
and seriously oscillating between two extreme points, it is better to stay away from
second liners - because in the event of major correction, their prices will fall to
pieces very fast.
Oil, gas and shipping are the major sectors I would like to be in. Oil giants like
BPCL, HPCL and IOC will leap giant steps in months to come. I am extremely
bullish on these stocks. In heightened markets, better stay with Blue chips like above -
they are all 100,000 crores companies.
So, when you can make money in gold, why search in the pool of waste papers for some
lost diamond? Gold is always better than diamond.
Kalidas, Hong Kong

16-Nov-2007
17th Nov 2007
Effect of Delisting
Ref: 07/237 Date: 17-11-2007 REPLY POST for Guest

Title: Effect of Delisting
------------------------------------------------------------------------------------------------------
Following could be the effect of de-listing of shares from the stock exchange. (My view
will not be a complete reference)
1. The stock gets delisted from the stock exchange. It no longer trades.
a. Your holding in Demat account gets converted from “Dematerialized or Electronic
stock” to “Physical stock” or Printed stock certificate. You may ask the Registrar to issue
you a “Printed Share Certificate”. They may charge you for issuing official share
certificate (You can do it now for any listed company)
b. One remains as shareholder, albeit a “minority shareholder”. The company is required
to give you same benefits as other controlling shareholder. If something goes wrong, you
can voice your grievances before Registrar of Companies, instead of SEBI. As minority
shareholder, you enjoy more than ordinary rights as there are comprehensive regulations
to protect the interests of minority shareholders.
c. One may not be able to sell its holding to outsiders without the consent of the
controlling shareholders. This is debatable. Because, the transferability can still be
effected by way of “Assignment” and governed by “Transfer of Property Act” in India.
d. Alternatively, one can sell the stock back to the company. The company buys back the
shares at same value as per delisting (easy way out). Company will not pay any interest.
e. Minority shareholders can also derail some transactions under Companies Act by
voicing grievances direct to Company Law Board (Govt of India organization) through
Registrar of Companies. If “Minority shareholder’s rights” are severely affected, they can

seek “compulsory liquidation of the company” under Companies Act if proposed actions
of controlling shareholders are detrimental to the shareholders.
2. There is so much of legality is involved, and India is known to have one of the most
inefficient legal system in the world, although on face of it, we have well organized legal
system. It may take years to resolve the issue. Due to inefficient legal system, the
business of “supari” has prospered. If you were to get the justice quickly, why should you
go to “goondas” to resolve the matter?
3. Only very powerful shareholders will prefer to remain shareholder and force the
change in the company
4. Please note that holding of share is equivalent of holding property. No one can take
away shareholder’s rights. It will be more like a battle in the Board Room of Private
Limited company
5. With regard to your query whether the same share can be re-listed, my answer is YES.
Generally, the controlling shareholders eat away “cream of assets” and then get the shares
relisted.
6. Your capital does get locked up. You can create liquidity by giving such shares as
security to the bank by way of assignment, if bank does agree to give you loan. This is
remote possibility.
7. In all fairness, a common man can not afford to fight the giants. The company may
have lot of legal resources and harass the troublesome shareholder by creating lot of
nuisances such as not giving reply or otherwise.
Kalidas, Hong Kong

17-Nov-2007
Notice to BSE
Ref: 07/235 Date: 16-11-2007 Reply Post for Seacal
Mac Charles (India) Limited

No, I have not heard about Mac Charles (India) Ltd. However, the stock appears to be
listed on BSE. The scrip code is 507836. The stock last traded on 21 Sept 2005. Last
traded prices were 237.55 – Volume just 2050 shares. There are no current trading
records.
The company reported payment of dividend of Rs 10 per share with following release (as
posted on BSE)
QUOTE
Mac Charles India Ltd has informed BSE that the Board of Directors of the Company at
its Meeting held on March 27, 2007, has declared Interim Dividend of Rs 10/- (100%)
per share on equity share capital of Rs 6.55 crores divided into 65,50,526 equity shares of

Rs 10/— each, for the financial year 2006—07.
UNQUOTE
QUOTE
Mac Charles India Ltd has informed BSE that April 05, 2007 has been fixed as the
Record Date for the purpose of payment of interim dividend.
UNQUOTE
Write to BSE why the stock does not trade at all, when the company seems to be existing
and posting quarterly result right up to Sep 2007. Please visit BSE website –
bseindiaDOTcom, search the stock price under your desired name and then seek rest of
information. The company also changed its major business to Wind Power for which it
sought amendment.
If the company is subsisting, and you are registered as NRI holder, they are supposed to
send you printed Annual Report. If you are not getting it, check with their Company
Secretary.
If you are not getting suitable reply, serve a NOTICE on BSE/SEBI giving out full
information and seeking why the shares are not traded at all, when all other information
are given on regular basis.
OTHER ENQUIRIES
There are many prescribed authorities who give you stock reply. SEBI will send you
acknowledgement card but never follow up. You may take the following actions
depending on the reply you get from SEBI/BSE/Company Secretary:
Send NOTICE to the following:

1. BSE
2. SEBI
3. Registrar of Companies, seeking compulsory liquidation if the company does not reply
4. Company Secretary (at Company’s official address). If he does not reply, approach
Institute of Company Secretaries and also Institute of Chartered Accountants of India
seeking de-registration of the concerned Company Secretary
5. Company Law Board
6. Income Tax department that the company reportedly declares of having paid dividend
but you never got and the company making willful wrong disclosure before IT
department.
Formerly GUJARAT AMBUJA CEMENT LTD (name changed to AMBUJA CEMENT

LIMITED)
36% now owned by Holcem of Switzerland. They are 3rd largest cement manufacturers
in India and having one of the best plants. Good stock, good management, investor
friendly, EPS 14.1 stock at Rs 144 or about, there were some proposal from Holcem to
buy back shares – I do not know much about it – of late the stock underperforming. The
stock used to be a darling of investors until Holcem took over major stake. May be

Holcem wants to take it private of wants over 50% for equity accounting purpose?
(Meaning that if a company owns another company 50% or above, it can report its share
of profit as its own in its own book of accounts. Otherwise, they have to rely only on
dividend income as income)
Kalidas, Hong Kong

17-Nov-2007
19th Nov 2007

Hotel Leela and Fertilizer stocks
for DABU1 - reply to your post of 18-Nov-07
Hotel Leela is a good stock to own on the long term. There is dearth of 5 star hotels in
city like Mumbai, Goa and Bangalore where Leela operates. The stock has consolidated
enough for long time around 50 level. I also entered only last week and bought 4000
around 49.85 to 52.35. Bought a 1000 more at 62 level. Since my purchase, the stock has
suddenly taken off.
Leela has expressed intention to expand the capacity by almost 80% in next 2 years.
Hotel stocks are property price sensitive, and Leela's existing properties being in prime
area, it is well positioned, though any valuation is merely on paper.
Surely a good long term buy, not so cheap by any count, but the return could be steady.
Mt current target is just Rs 92. This hotel has lot of take over appeal from large
international hotel chains. This is why while its earnings may not be that adequate, its
assets will surely be.
Do not know much about FACT. Fertilizer stocks are not on my favoured list because
their product prices are controlled by GOI. However, I am taking a view that almost all
crops, from wheat, Soyabin to other oilseeds, are on massive rise in next 12 months.
Cotton may dounle too. Even then, political agenda will keep the prices under check. I do
not think something similar to oil may happen here, becayuse in this case, farmers are
involved which is high vote bank.. However, please study its financials to arrive at your
own decision. I am neutral on this sector.
Kalidas, Hong Kong

19-Nov-2007

21st Nov 2007
Tata Steel: Corus Acquisition
Ref: 07/243 Date: 21-11-2007 Original Post

Title: Tata Steel’s suicide with Corus acquisition….
------------------------------------------------------------------------------------------------------
Big people make big mistakes.
I amused myself when Rata Tata wanted to emulate Laxmi Mittal by acquiring overseas
giants in steel industry like Corus.
Having fattened by the success of TCS listing, Rata Tata went for the acquisition of Corus
steel in UK at the cost of US$ 7.6 Billion, valuing the company at US$ 10.6 Billions.
That is cool Rs 30,000 crores. From 2003 to 2007, in 5 long years, TISCO made Rs
14000 crores, less than 50% of acquisition cost.
He bought when the stock market was at highest in last 6 years, the steel commodity
prices highest over last 10 years, and interest rates lowest in last 7 years. He thought he
could easily raise billions of dollars, given his personal reputation and Investor’s interest
in India, at lowest cost. He also thought that steel prices which have trebled will continue
forever. In short, he bought at the height of the stock market paying top dollars.
When whole world wanted to invest in India, when even POSCO wanted to set up a plant
in India at the cost of billions of dollars in Orissa, Tata rushed out of India all the way to
UK to invest there. He did not realize that investors wanted to invest into India, not
Indians!
Then, sub-prime related credit crisis developed – raising his credit cost, almost all banks
supportive of his deal politely withdrew, even from bridge loan, forcing him to look
elsewhere for funding. Then, prospect of recession loomed large – with USA almost
certain to face recession – which will cause collapse of commodity prices – including
steel, and stock market turned negative for him overseas. His calculation on all 3 counts
turned upside down.
He is in hot soup now… Want to buy Corus, but there is no Chorus of Bankers lining up
to finance his deal overseas, so he is looking back at home where the market is buoyant
and ignorant of his difficulties, He also forgot that only 5 years ago, his TISCO went
down as low as Rs 61 and now trading at Rs 842 as per last count.
The best course for him is to cancel the deal and pay whatever penalty required, which
may be a small loss. But it hurts his ego, personal reputation and his credibility as steel
businessman.
He is therefore looking back home where SENSEX is at incredible height and IPO
market is extremely strong. He is now coming out Rs 10,000 crores issue @ Rs 300/shr

against CMP of Rs 842 (EPS Rs 72 and P/E 11.7). TISCO has 58 crores shares
outstanding, and with above issue, 33 crores new shares will be issued @ Rs 300/shr.
These shares will be highly dilutive – by 40% at least. Further, Rupee is rising, so his
overseas income will be reduced by rising rupee. If Rupee rises to Rs 31, his overseas
profit will be reduced by 30%. His steel exports too will be affected to that extent.
So, CORUS deal will be a millstone around TISCO neck who try to float in Thames
River with billions of dollars of debt (Corus’s own), cascading steel prices, rising interest
cost, poor stock markets, and falling demand for steel especially from USA due to
recession. Oil prices at US$ 100/brl are also highly negative for steel industry where oil is
major input cost.
So, Tata is reportedly selling TCS shares to fund his bridge loan – the stock having fallen
from Rs 1399 to current Rs 977 (by 30% from Peak) in spite of rising profit over last 3
years (almost Rs 3757 crores or Rs 38/shr due to dilution). More he sells, more the stock
goes down.
Should you buy SRPO at Rs 300/share? Yes, by all means because IPO market is red hot,
but get out in first 2 days of opening. The stock is a SCREAMING SELL now – but in
order to make big money in stock market, the ratio of speculators/investor should be 98:1.
BEWARE - if major US bank fails in between, Tata may sell TCS to fund Corus, and if
that is insufficient, may be Jamshedpur!
Kalidas, Hong Kong

21-Nov-2007
25th Nov 2007

Tata Steel: Corus Acquisition
Dear Kalidas (Continuation of previous message)
In view of the above facts it now leads me to nurtire a doubt about your intention of
putting this message on the Tata Steel board at this time. Did Tata Steel draw your
attention only now to necessitate this study of the Corus acquisition and other prospects
of the scrip? In that case it must have been after the initiation of the Rights issue and the

widely assumed bright post-issue future of the scrip. Otherwise, if you knew all these
adverse situations about Corus acquisition earlier then what made you keep quiet till
now? In any case it only makes it imperative to doubt that this (supposed to be cunningly
concocted ?) post of yours is only intended to negatively influence the scrip's post-issue
prospects to gain entry into it at as low a price as possible ..either for yourself or for
your high-value clients ..who have missed the bus and have now smelt the bright
prospects of the scrip.
I again re-iterate ... that I do have respect of the highest order for your money-market
related knowledge, information and analyzing skill/capabilities. But I do maintain that
such knowledge and skill is worse than not having any such capability if it is used for
malafide intentions. It may not be out-of-place here to mention that your highly
informative, educative and knowledge-based analysis on IFCI board on the stake sale
issue was simply superb by any standards. But some of your later posts on that board
smacked of an intention for pulling the price down for re-entry at lower levels. For your
information ..I have stored almost all of your messages on IFCI board for their shear
educative and informative values.
I would request you to kindly try to remove the misgivings created in minds of many (it
cannot be helped) after seeing this post of yours.
Dear deepak89
Most of Kalidas's postings do deserve even more than five stars for their inherent effect
to cast a convincing spell on most of the small investors. His messages ,in most cases, are
well composed and do have a stunningly educative ,informative and analytic value.
But the saying 'All that glitters is not gold' is also by no means any less important to be
ignored ... and much more so in the dangerous world of money markets. It is not
uncommon that with some vendors of pure gold you sometimes find articles that glitter
even better than gold. You may be awed at the wonderful glitter but it is upto you only to
judge whether they are actually gold or....
Regards, impatient.
impatient you brought out the facts very well. Kalidas failed to understand, it was wise
decision for Tatas to go for this time in liquidating the bridge loan instead later as the
Dollar is depreciating rapidly. It is prudent for them to liquidate the loan now instead of
converting the bridge loan in to permanent loan, thus saving good amount and
increasing the bottom line performance both on account of interest and exchange
flactuation. Kalidas argument may be good for fraud companies like Bellary steel or
jindal, but not for Tatas. The conservative approach of Tatas should be appreciated and it
is only Tatas which were rewarding the shareholder apart from Birlas in this country. I

would say even Ambani's are also fraud. The instance to prove that Ambanis are fraud is
the recent liquidation of 4% stake in RPL , though they said it was disposed at 223,
actually, ambanis played with market player and many fools who have bought the shares
of RNRL and RPL above 200 and 290 respectively are in real soup today .Neither Tatas
nor Birlas do ever play with such sentiments in the market. To me Kalidas appears to be
still immatured in the market like other brokers, who pass on rubbish messages to play
down the stock, which Tatas never bother about their nonsense talk
Dear treasureddhan
Thanks for the response and throwing more light on the Ambanis by exposing their
unethical activities. Somehow, I tend to have a repelling attitude towards Ambani group
scrips due to my impression that they are frauds in their core and can coolly betray the
un-suspecting investors at any time without even a blink though the elder brother
somehow manages to create a better impression. My conscience has, so far, not allowed
me to do anything with the Ambani stocks even if at times I have been allured by the
growth prospects of some of their scrips.
Regarding Mr. Kalidas' prowess in money market matters : please do not under-estimate
his knowledge,information and anlytical capabilities. Rating his calibre in this matter as
outstanding will not be an over-emphasis. But the thing is when he made his appearance
on the MMB boards he came with his views with an innocent and impartial hue and
naturally all the boarders with an appetite for informatiove and substantial analysis for
the scrip were bound to be highly impressed. But after achieving this credibility status on
the boards he is now ...as per my suspicion ...trying to bias the boards (negatively or
positively) as per his intention guided by the requirements of his own or of his clients. I
think you have already experienced this on the IFCI board. On IFCI board he was the
person who posted the information about the loans and debt bonds IFCI had from GOI,
LIC and other financial institutions and banks when no body else had any idea about this
(at least had not posted anything about this).He had also given a substantial analysis on
the expected effect of conversion of these debts and loans to equity shares on the
prospects of the scrip and a convincing assessment of the share price in different likely
situations. But after having sold his shares at 97 levels when he wanted a re-entry at
lower levels he started posting messages with a twisted presentation of the same facts
...albeit with a seemingly convincing analysis to bias the boarders to suit his intention. I
think he is wise enough to have now realized his failure in his attempt to negatively bias
the IFCI board which has been reflected in the price movement of the stock.
Thanks and Regards. impatient.
Dear Impatient.
I was just referring your reply post to another boarder. It seems that you are carrying the
impression that I was having a game plan to establish my credibility on MMB board first,

and then start using it for ulterior purpose to bring down the price of IFCI with a view to
re-entering at lower level. You seem to believe that I have no other works to do in Hong
Kong.
I am a small potato and do not think my one or two post or my sale of 10K or 20K is
going to make difference to a counter like IFCI where daily turnover is over 40 Million
shares, nearly 4000 times.
What I mean to say is that in investment world, one buys with a view to sell. If I find the
IFCI opportunity more valuable than others, I will buy even at Rs 120, not necessarily
well below 97 levels, if I feel that it has more upside than downside. The Stock sale level
or entry/re-entry level is always relative - there is no absoluteness.
An open minded investor is one who read, hears and watches everything, and takes his
own decision after deliberating with himself. He does not care others nor does he allow
others to influence his decision.
By sharing our thoughts we are not benefited or lose anything. We share our thoughts
with like minded people. We may be right or wrong. And everyone benefits or loses
according to his divine luck.
When I wrote a post on Essar Oil, the stock rocketed from Rs 88 to Rs 250 in matter of
days, and even forced Ruia to defer their de-listing proposal because they were fully
exposed. I received number of calls from India complementing me - but was it due to my
post or some other events - how do I know?
Similarly, when I wrote a post on TATA STEEL, it was meant to be discussing FUTURE
(not Past) as one boarder Deepak89 rightly said.
Some other boarders got agitated by nationalistic flavor. They read everything except first
line that 'Big People make Big Mistake' and last line 'Kalidas, Hong Kong'. One boarder
stated that I was writing from Singapore, but he did not read last line that I was from
Hong Kong.
Past successes do not necessarily guarantee future actions. Where was TATA when SAIL
was available in India itself for Rs 5 per share a few years back? If he had made attempt
in India itself to buy one of the SAIL plant or SAIL itself, He could have thousands of
crores of rupees (Compare then SAIL MP of Rs 5 and now Rs 240)and TISCO would
have been trading at nearly 10 times than now.
But TATA was not visionary. When he had to use binocular within India, he was using
Microscope, so as to miss out on golden opportunity of SAIL. Rising rupee would not
have hurt him. So also domestic demand spurred by growth in infrastructure would have
helped him. When POSCO of Korea was setting up plant in his neighborhood in India,
why does he venture outside India to exploit saturated markets in Europe incurring
heaviest debt cost in an era of rapidly rising interest rate and rising rupee?

He is also trying to buy a company 5 times its size. You normally buy a rival company
smaller than your size so that you can manage and dictate your values, not company 5
times bigger where the majority will simply drown you.
He is certainly not looking at Corus, but at Mittal. It hurts him how a person like Mittal
having experience of just a few years in steel industry could become world's richest and
biggest in Steel King, when he could not capitalize on the 150 years experience legacy of
his father and forefathers in Jamshedpur? He feels that 'Yeh kalka chhora Mittal, mera
baap ban gaya. Main bhi kuchh dikha doon ke Hum kisise kam nahin'
Kalidas, Hong Kong

25 Nov 07
Dear Kalidas
I have highest respect for your educative,informative and substantial analysis postings on
various boards.But I do not agree on many aspects of your this post regarding Tata Steel
for obvious reasons which are clearly understandable by many boarders and have
already been pointed out justifiably in their response to your message.A few points I
would like to make about your post:
Firstly,Tatas are Tatas for the whole world business community now. Tata brand has
created such a spell that any body will think ten times before doubting their business
acumen, ethics, or the product quality. Tatas are in the field of steel making for the last
century and know the best about what they are doing.It is not for nothing that cost of
steel production by Tatas is the lowest in the world in spite of the hi-fi technologies and
management theories of esteemed western world in steel making.
Tatas knew pretty well what they were doing when they went for acquisition of Corus
steel .It was not to 'emulate Laxmi Mittal' as you have stated (I am sure you know the fact
,but for some reason are painting it differently), but for some very valid reasons. I don't
think this is the proper forum to discuss about the reasons. But it will suffice to mention
that any industry of Tatas stature would have invariably taken same steps as Tatas have
rightly done in the prevailing situation (in which Tatas went to acquire Corus).
Regarding the figures of 'cool Rs 30,000 crores' for difference between 'cost of US$ 7.6
Billion' and 'valuation of the company at US$ 10.6 Billions' I fail to understand how you
have arrived at Rs 30,000 crores. As per my arithmetic knowledge, the difference
between valuation price of US$ 10.6 Billion and cost of US$ 7.6 Billion comes to US$
3.0 Billion. Right ? Then this amount translates to US$ 3.0 Billion = US$ 300 Crores =
Rs 300x45 Crores = Rs 13500 Crores (not Rs 30000 crores as you have put). Please
correct me if I am wrong. But if I am correct then .. what is the reason for such error ? It
can't be lack of arithmetic knowledge for a banker in international ield. Is it simply a
typo error or something else is to be read into it ?

Regarding your mentioned adverse situations after acquisition of Corus ..none of the
points hold good except the unfortunate fact of sub-prime related credit crisis which no
body on earth had known or anticipated till it surfaced. You can only blame Tatas not to
be aware of this situation at the time of Corus acquisition only if you assume them to be
gods (supposed to know the future) and not mortals of this earth. LOL. (Continued in
next message) impatient.
REJOINDER:
I have seen many boarders’ comments for which I decided to write this rejoinder instead
of replying individually:
For Impatient: You contest purchase price of Rs 30,000 crores which you disagreed (and
even read some other motive if this figure was incorrect). Well, these are statement of
facts and not fictions. Not entire shareholding is purchased - only controlling interest.
Following is gist: Source: Reuter report “FACTBOX-Key points of Tata's final offer for
Corus Wed Jan 31, 2007” + other sources
1. Price 608 pence /share, values Corus at around 9 x EBITDA in the year to Sept 2006.
(double the rate Mittal paid for Arcelor)
2. Transaction value is GBP 6.2 Billion (USD 12.83 Billion on 25/11/07) or Rs 52,000
crores at today’s price.
3. Tata promoters to contribute $4.1 billion in Tata Steel UK. Nearly $1.3 billion will be
funded from Tata Steel's cash reserves.
4. Tata Steel UK would raise nearly $6 to 9 billion through a mix of senior bank debts
and high-yield debts.
5. In an unusual move, Tata Steel has picked a different group of banks to arrange the
refinancing.
6. Citigroup, ABN AMRO and Standard Chartered Bank are arranging the refinancing,
Tata Steel said. The original bridge financing for the purchase was arranged by Credit
Suisse, ABN AMRO and Deutsche Bank. (Who backed out)
7. SBI agreed to provide up to $1 billion to Tata Steel's special purpose vehicle, Tata Steel
UK, to refinance $7.2 billion of bridge loans.
8. Tata Steel had to turn to the SBI after some foreign banks backed out, thanks to the
sub-prime crisis in the US and the credit squeeze that followed. According to reports,
about $500 billion of fund-raising has been caught in a global credit logjam caused by
risk aversion among banks and other investors.
9. Moody and S&P reduced credit rating of Tata Steel to BB from BBB (that is non-
investment or Junk status.
10. Standard Chartered Bank, who arranged for USD 2.5 Billions of transitory debt, sold
out immediately to other banks, including SBI, to avoid exposure to non-investment
grade.
11. Credit terms are higher by 200 bp or 2% due to junk status.

12. Tata Steel has offered to pay up front the deficit on the Corus Engineering Steels
Pension Scheme and to increase the contribution rate on the British Steel Pension Scheme
from 10 to 12 percent until March 31, 2009. (This is a huge unknown liability, because
most steel mills have defaulted in making their contributions to Pension or Provident
fund liability.)
13. No foreign bank wants to finance the deal. Rest of Indian banks who felt left out,
want to buy this debt from secondary market. In short, all Indian banks that have ridden
of NPA in the past will again have them on their books again with vengeance. If TATA
fails, the Indian banks’ NPA will rise by 400% from current level (In all over Rs 32000
crores.
14. Some benefits – If rupee is allowed to rise, then both Tata and Indian banks will have
some benefits to the extent of rise in rupee.
This is the reason that Tata Steel has gone for the Right Issue. Most Indian banks, having
been attracted by the name and fame of TATA will realize after 3 years that they made
biggest mistake in their lifetime.
Tata was ranked 55th in world steel majors and amongst profitable. With CORUS
purchase, it will catapult into 5th position, but financially, it will degrade itself into last
few steel majors.
Ratan Tata may or may not be around. He ruled Tata single-handed – there are no leading
successors who can take over in his absence. Thus, with almost Rs 50,000 crores of debts
and no distinctive person to head, as CEO after Ratan Tata, there will be huge
management void.
Had TATA been professional, there would have been secondary leadership. Who can step
in when RT is not around.
Tata is still a private enterprise like Marwari Pedhi. Today only he talks and there is no
other voice in the background.
Kalidas, Hong Kong

25-Nov-07
26th Nov 2007

Government policy: Appreciating rupee
for Dragonbhat (reply to your post of 26-11-2007)
I fully agree with you. For almost 10 years, I have been telling everyone that 'Stronger

Rupee is the only Solution for India's problems' but the export lobby is so strong that they
prefer to keep rupee undeservedly weak. Chief architect of such disastrous policy is RBI
whose heads have virtually no brains. They do not have sufficient exposure to overseas
market and clever monetary management.
Look at this.. When Rupert Rubin, the former Treasury Secretary and former Vice
President of Goldman Sach and now Chairman of Citicorp, advocated 'Strong Dollar
Policy' in spite of trillions of dollars in debt and billions of dollars of trade deficit and
budget deficit, our RBI fellows still placed enormous amount of FOREX in US$ treasury.
As of today, out of India's total Forex holding of $271 Billions, nearly 85% is in US$
only or about US$ 230 Billions. Presuming that RBI through intervention or
manipulation (called 'sterilization operation' in suave terms) and lost 15% (Rs 48 at
maximum and now Rs 39.50), the national exchequer lost US$ 35 Billions or Rs 140,000
crores, nearly twice of Oil/Fertilizer subsidy combined. Still RBI is worshipped like an
idol by III (3I =Intelligent Indian Idiots.)
To earn Rs 144,000 crores, and presuming 10% Net Profit, India needs to export 10 x
144,000 = Rs 1,440,000 crores worth of goods. Does India have such large
manufacturing base or exportable goods? We are also presuming that not even s single
dollar goes bad in such huge trade.
But no one thinks this way. Ministry of Finance, RBI, Economic Panels are all manned
by people of very poor intellect, although they are qualified as IAS, MBA, CA, AICS,
AICWA with lot of theoratical sense but grossly lacking common sense, are advising our
Finance Minister to conduct a disastrous policy.
Nothing wrong in giving subsidy when Rupee was sliding all the time, and poor people
were relying on essential commodities like Oil and Fertilizer. However, read the
following report just published in 'MyIris DOT com' of latest divestment of Government
of India.
QUOTE
The total realization from the strategic sale transactions was Rs 63.44 billion i.e. around
1/10 of the total amount of Rs 516.09 billion raised from disinvestments till Jul. 31, 2007,
according to a ``White Paper`` tabled in Parliament on Friday by the ministry of finance.
The market capitalisation of 40 CPSEs, whose shares are listed and traded on stock
exchanges, was worth Rs 7.76 trillion as on Jul. 31, 2007, with ONGC leading the chart
with almost Rs 2 trillion.
Currently, the total market capitalization of 44 listed public sector undertakings, part of
the BSE-PSU index, stands at about Rs 14.55 trillion, as per the latest data available with
stock exchanges.
UNQUOTE
The Finance Minister should, instead of printing more money, as you have rightly pointed

out in the form of Oil bonds, deficit financing, other form of debts, should sell some of its
holding in PSU at the height of this market, realizing almost Rs 2 Trillions (33% of total
market value now), that will realize Rs 8,00,000 crores from which it can write of not
only Rs 53000 crores of subsidy, but also reduce Indian Income Tax rate from 30% now
to 15% for a period of next 10 years!
When the market is so high, it is time for Government of India to act, not to sit tight with
hand and legs tied. THIS IS THE TIME TO SELL OR DIVEST GOI HOLDING in PSU,
that can lock in the profit for next 10 years! There is no more need to print more notes
and increasing inflation as you have feared.
If you divide Rs 8,00,000 crores by Indian population of 100 crores, the Per Capita profit
realized by GOI is staggering Rs 8000/capita which is nearly twice the per capita income.
India need to have 'Think Tank' where it should have classic thinkers and philosophers
who can prepare the blue print for future. Their job is only to 'Think'
27th Nov 2007

Tata Steel: SAIL instead of Corus
You are absolutely right. SAIL was not placed on 'SALE' board officially. However, in
M&A, it is the buyer who takes the initiative. TATA, being no.2, could have accumulated
the shares in SAIL and then sought a seat on Board and then initiating buy out.
Just look out of the window. BHP wants to buy Rio Tinto for US$ 128 billions and they
made a bid for this company. Chinese government wants to pay even USD 200 Billions
( with so much of FOREX reserve they have)
Similarly, Britain's Northern Rock (largest British Mortgage lender) was approached by
Virgin Airways's boss - Richard Bronson- for take over when the company is an Airline
company. British government has accepted the Virgin Air's participation in bidding
process.
whereas TATA in India had opportunity to buy the established steel making plants in
Bhilai, Durgapur, Rourkela, Bokaro near its home base Jamshedpur. But he missed it. He
could not see what was near right under his eyes and went out of India with binocular to
find only CORUS (formerly known as British Steel)
At the time, SAIL was at Rs 5 (it was very short time, most of the time it was around Rs 7
to 8 where I used to buy). There could not have been better informed person than TATA
to judge the attractiveness of SAIL as target. The company was having so much pressure
that Government of India doled out Rs 8000 crores as outright grant to write off the

accumulated losses. If TATA has offered to buy one of the plant for Rs 2000 crores, to say
the least, it could have had tremendous appeal to GOI who were having problem with
budget defict and every incoming Rupee would have counted.
SAIL's another unit, Salem Stainless Steel unit, was proposed to be sold and Jindal
Stainless wanted to buy cheap - for just Rs 100 crores, for one of the best Stainless Steel
coil/plate making plant with over 10000 acres of land. Fortunately, Jindal failed in its
attempt. Today, SAIL Salem Plant alone would be worth over Rs 3000 crores!
It is the question of identifying profitable opportunities. This is why every large company
should have a 'Think Tank' whose business is to only 'think' and propose best investment
opportunities, leaving details to other well qualified officials.
Kalidas, Hong Kong

27-Nov-07
IFCI: Conversion of Debt to Equity
For all IFCI investors and Guest
Quote
FCI Chief Executive Officer Atul Kumar Rai, who took voluntary retirement from
government service and was recently appointed to head the term lender for five years
Unquote
Why persons who took Voluntary Retirement and considered themselves as 'Useless'
should have been appointed at Apex institution for 5 long years, and allow him to destroy
the institution at his will? The above news confirms my earlier posts that present CEO
Mr. Atul Kumar Rai is totally useless and devastative for the IFCI shareholders.
Study the following SEBI Guidelines:
CHAPTER X
GUIDELINES FOR ISSUE OF DEBT INSTRUMENTS (from SEBI - updated till June
10,2007)
10.0 A company offering Convertible/ Non Convertible debt instruments

through an offer document, shall comply with the following provisions in addition to the
relevant provisions contained in other chapter of these guidelines.
10.1 Requirement of credit rating
10.1.1 189(No company shall make a public issue or rights issue of debt instruments
(whether convertible or not), unless credit rating of not less than investment grade is
obtained from not less than two registered credit rating agencies and disclosed in the offer
document.) COMMENTS: No such rating was obtained by IFCI - so issue of debt is

illegal. These are non rated bonds
(VERY IMPORTANT)
10.7.1.2 In case of conversion of instruments (PCDs/FCDs,etc.) into equity capital
i) In case, the convertible portion of any instrument such as PCDs, FCDs etc. issued by a
listed company, value of which exceeds Rs.50 Lacs and 'whose conversion price was
NOT fixed at the time of issue, holders of such instruments shall be given a compulsory
option of NOT converting into equity capital.'
Read this again, Holders of such instruments (where conversion price is not set)to be
given 'Compulsory option' of NOT converting into equity capital.
Now this CEO Mr.Atul Kumar Rai is GIVING Public Sector banks and FI like LIC an
OPTION TO CONVERT THE DEBT INTO EQUITY - against the provision of SEBI
rules.
He is therefore deliberately and willfully DILUTING the interests of all equity

shareholders like you and me when the SEBI guidelines clearly state that such options of
converting into equity should not be given at all.
With this action of the Voluntary Retired Government Official, that is, Mr atul Kumar
Rai, to act against the interests of all investors who are cramming this IFCI board, day in
and out, figuring out who will take over this institution to enhance their value after so
many years of waiting, was I wrong when I harshly criticized this hopeless CEO that
agitated some boarders' minds that I was 'abusing Government of India officials from
cushy locale of Hong Kong'?
Judge yourself - what this CEO is upto? you do not have to be a rocket scientist to figure
it out.
And,this CEO is going to remain at the helm for 5 long years. He is not only 'Voluntarily
Retired GOI Bureaucrat' but also a 'Mentally Retarded Patient' in charge of the only Term
Lending Institution left behind, which can be sold at huge profit to prospective FII
making all investors who are following this board, very rich and satisfied for their
prolonged wait!
However, it is not going to be. I have highlighted number of times about this joker's
antics and wishy washy, topsy turvy behaviour' of this damaging CEO who has no
business to remain on top. He deserves a good kick on his ass to drive him out of IFCI
tower for the better.
If you still like him, it is your choice. Will this stock work for you - may be it will - but
by accident.
This reminds me the famous song of Manna Dey in Shammi Kapoor movie on mental
asylum - 'Pagla Kahin ka' where he sings - 'Meri Bhains (Buffalo) ko danda kyun mara,

woh khet bichara charti thi, tera baap ko kya kuchh karthi thi...Hann haan haan ha...
Here the bhainsa are IFCI investors, and 'danda' martaa hai, CEO Atul Kumar Rai.
This is my last post on IFCI
Kalidas, Hong Kong

26-Nov-2007
28th Nov 2007

Tata Steel: SAIL vs. Corus and PSU Oil companies
Dear Kalidas, Let me put a question to you, Isn’t Oil Companies like HPCL, BPCL, IOC
making losses now and these losses are being funded by the Government and we still
have a budget deficit. Now tell me if the Reliance goes to buy even one of them. Will the
Government of India sell it to them...................................? THE ANSWER IS NO more
over if you read what Ratan Tata said before the CORUS buy is that the Chairman of
Corus approached Tata Steel to buy them out.
Secondl,y Tata Steel cost of production of Steel is $210 lower to any Chinese or
European Mills. This is for normal steel the advantage is more when Value is added and
this difference will increase as the Cost of raw material is surging day by day .
P.S --- We should not forget how Tata Tea bought Tetley in 2000 and in spite of all critics
turned it around in Five years.
For Guest (Reply Post)
WRONG, totally disagree with your viewpoint.
HPCL, BPCL, IOC are not losing money - they are profitable - only subsidy being
promised were not paid in cash, so that portion of profit was not taken into account. Now
that Oil Bonds are paid to these very companies, who are eager to discount them in the
market at 5% discount for which LIC was interested, the relative profit will be booked in
this quarter or latest by next quarter. Then all these stocks will be chased by every one,
and companies like RPL, Reliance will look very small relative to them.
Further, oil is an essential commodity - steel is not. Price of oil determined the price of
household natural gas and kerosene which is used by poor people. Private enterprises will
not be charitable enough to support low price of such products - for them profit or bottom
line is more important than some service to the society.

However, given the right price and some undertaking to look after the general populace,
GOI will be certainly interested to sell these oil giants. Right now, these Oil giants are
trading at 80% discount to peers like Reliance. When that discount disappears, then it
may be eligible for sale. However, GOI never thinks that way. So it is in the interest of
the private companies, local or overseas, to bid for these assets. Do you know, what is the
value of land or fixed assets being held by these oil giants? They bought for one anna (6
paise) per square yard.
If Tata's cost of production is just $ 210 and lowest by world standard, then why is he
going out of India to buy companies having higher cost of production in high cost centers
like UK, Europe? That concept is non-sense for me.
Comparing Tetley comparison is also out of place. Tetley was not a losing company. It
was agro-marketing company having brand image. There is no brand image in steel.
Tetley was in consumer business whereas steel is an industrial business. Cost of Tetley
was not in billions, just a few hundred millions. Further, and most important, Tetley was
bought when GBP (British Pound was around 1.50 or near the lowest); today GBP is
nearly 2.10. There were no credit crisis then, it is there now. Stock markets were not at
the height, they are at peak now, so you are paying top dollars. Please do not compare
Apples with Oranges.
Look, I am not against Tata. I have very high respect for him. However, when I said in
my original post that 'Big People make Big Mistakes' in the opening lines, that is what
Tata's misadventure on Corus is. He is going to acquire very large company, 5 times its
size, in an alien country where the currency risk is very high, credit costs are very high
and still rising, commodity market is at the height and risk of recession is almost 80%,
and stock market is near collapse due to credit derivative fiasco.
Further, he has not nurtured secondary leadership - which is the biggest risk. A great
corporate leader is one who creates a system which works even in his absence.
When the final price of commodity falls, then the price of raw material prices fall even
faster. Further, Corus is not significant Iron Ore mine owner. They are producers of steel
and converter. And they produce these materials in high cost centers. This is why steel
giants like POSCO did not reach out for Corus, but they came to India from high cost
production center to lower cost production center. Ratan Tata did just opposite.
The very purpose of my write up was to discuss future and present, not past. Ratan Tata
in spite of decent gentleman and a great entrepreneur is making a serious mistake in his
life after so many successful years. He deserves a better retirement and be content with
what he leaves behind a successful legacy - not such big potential failure at fag end of his
life.
May be future will prove whether Mr. Tata was right in his move. There is thin line
between 'Suicide' or 'Kill'.

Strengthening Rupee
Dear Kalidas,
I read with interest your views on a strong rupee. While no one can question the logic of
your argument, the climbing up of the rupee has given a lot of pain to the real economy
(not the stock markets of course!!!) and all export oriented sectors are already reeling
severely under this impact. You will agree with me that most of the export oriented
industries with the exception of IT sector used to work with 5-10 % net margins last year
and are now taking it on the chin.
Value addition, brand development, product differentiation and export markets
diversification are all ok, but what about the short and medium term for these sectors.
I personally think there is another possibility of export sectors becoming slowly
uncompetitive by the relentless rise of the rupee and stock markets reflecting (that likely
happening) & leading to FII outflows to again bring back the rupee down to 42-43 levels
( a sort of equilibrium to be established ) However this may be a two to three year
process.
What do you think ? Share your thoughts
Equityace Nov 26 ,2007
For equityace - Reply Post
I do agree with some of your points with some qualifications, and some I beg to disagree.
Currency strength is always the best indicator of a Country's economy. Further, currency
is not the only element to help promote or demote a country's exports. If that was so, a
country like Europe could have suffered most for Euro's appreciation of nearly 70%
(against Indian Rupee's just 20%). Even within India, same product is sold at different
prices depending on where it is sold - in posh places in Nepean Sea Road/Pedder Road or
some poor suburbs in Mumbai. It all depends on the product quality. Further, competition
brings out the best of the value. If rupee is strong, the labor could be cheap or product
quality could be upgraded for market acceptance.
If Rupee weakness is the only solution, make it Rs 100/Rs 200/Rs 1000 against the dollar
and see the devastation it would cause?. India has been devaluing the currency for over
60 years from Rs 4/$ to Rs 48/$ - did it help increase exports in real terms? The oil
import bill today is 20% cheaper only due to rising rupee - otherwise
Petrol/Diesel/Natural Gas or LPG prices would have been Rs 80/70 per litre and Rs
600/LPG bottle.
Similarly, India has been appeasing Scheduled Cast/Tribe for over 60 years and has been

giving them lots of benefits, including Reservation in jobs/education/Medical
schools/Engineering Collages - has it really helped them to become independent? It has
only bred inefficiency amongst those poor sectors who have taken it all but granted. They
never improved for better themselves but merely depending on external aids. Rupee and
Scheduled Cast/Tribe are in same category. More you support them, more they weaken
and more they lose self esteem. Ignore them and they will wake up from slumber and
bring out their best in no time.
Export sector need not be dependent only on currency factor to improve its performance.
They need to become sharp, innovative, aggressive and active and become self indulgent
to improve themselves. They are all adults now, so let them survive on their own. If they
can not export, let them sell in domestic market. The whole world want to sell in India, so
why the domestic producers do not sell within their own country? Is it because our
products are shabby compared to rest of the world? If that was so, the solution is product
quality and internal competitiveness rather than element rupee.
Further, interest rates are inverse proportion to currency strength. If the currency is
strong, the Interest rate support is not necessary, so the rates in natural course fall. When
the currency becomes very weak, then interest rates rise. Remember FOREX crisis in
1991/92 when the rupee fell very low and interest rates rose to as high as 23%? If Rupee
is allowed to fall again and Interest rates are allowed to rise over 23%, what will happen
to thriving property market? What will happen to budding Mortgage market? The banks
like HDFC/ICICI/UTI will doom and crisis similar to 'Sub Prime Crisis in USA' will
come to Indian shore with vengeance. Today's sub prime crisis is accompanied by weaker
dollar or weaker currency in USA - do not forget that.
Kalidas, Hong Kong

28-Nov-07
Strengthening Rupee
dear Kalidas,
that was a nice way of looking at numbers ( 10200 ,10800 etc)
coming back to dow / indian markets do you think
- USA bull market is ending
- India has / is getting decoupled from US economy
My own opinion is yes for the first one (USA bear market started in Oct 2007 silently, as
bear markets normally do ) and no for the second one( you find software stocks refusing
to go up inspite of resonable valuations because of fear of lesser allocations next year
from USA MNCs ).
What is your take?
In case USA goes into bear market what is the six months to one year target for sensex?

Some chartists are talking of sensex 11900 but I think it may do down to 15000 levels and
no more. What is your take again?
If you feel this is too controversial you can skip a reply to this one and it can be
understood.
equityace nov 27 ,2007
for equityace,
Normally, I do not correspond much, because it takes away much of my business time.
This being short, I will reply as special case.
My answer are:
1. agreed with you, that bull market is ending not only in US but also everywhere in the
world, including India
2. agreed with you again, Indian market is not decoupled from USA. Software industry is
not a measure.
When the whole world is integrated in the name of globalization, WTO and otherwise by
Internet, where is the question of decoupling. If Indian market rises on its own, without
any FII capital, then I would say yes, but India does not have capital - whatever you have
is only borrowing (including FOREX reserve - which is more like your bank current
account. If you take a loan and deposit in current account and show your current account
statement to others as your own money - is it true capital of yours?)
FII exit gate has not opened yet. The flood is about to be waiting.
Look at the Citibank - Abudhabi Arabs gave them US$ 7.8 billion as convertible bond
(not straight equity) with conversion option and interest rate as high as 11% - I repeat
11%. That means that Citibank is unable to raise cheaper finance even from within USA
Citibank is virtually insolvent. It may not file for Chapter 11 because finance brokers or
banks are not allowed to use Chapter 11, but they have to use Chapter 7 or compulsory
liquidation. To avoid this, there will be merger between Citicorp and JP Morgan Chase
soon, because their inter-bank cross obligations can set off each other.
Bank collapses are in the waiting. Indians have become overconfident that the country is
on very strong growth path - but that path will be abruptly ended by severest form of
credit crisis, and catastrophic bank failures.
Look at our HSBC. They brought on their balance sheet USD 45 Billions of liabilities
and assets when their two SIV funds experienced severe difficulties. Why did they do
that? This means that 'Offshore' entities were not shown in balance sheet at all. Their
income was taken into profit, but not their real assets and liabilities.
We are going to witness the colossal collapse of derivative products. By latest count, BIS

(Bank of International Settlement, Switzerland) who has recently started tracking
derivatives volume, mentioned that total derivative exposure is US$ 560 Trillions or US$
560,000 Billions. If you divide it by 6 Billion world population, per capital derivative
exposure is US$ 92,000. If there is a family of 4, then we have derivative exposure of
US$ 368,000 or Rs 1.46 crores per family worldwide, which include people living in
slum, Africa, Sudan, Rwanda, Bihar and poorest places in the world.
Derivatives are likely to hit like 'Tsunami Wave'. If you can predict when Tsunami will
hit, we can predict timing the timing of derivative collapse.
Best investment in the world over is 'Agriculture Land'. Buy as much as you can,
anywhere, because Agro prices are likely to shoot beyond imagination. Don't think that
money will flow like water from higher level to lower level. Water has two options - to
move down or move up (in the form of vapor). Yes, money has vaporized in such
derivative fiasco.
Kalidas, Hong Kong

28-11-2007
Tata SAIL: Better preposition?
Mr. Kalidas, you are actually a Kalidas but before he got enlightened i.e. cutting branch
of the tree in which he was sitting.
Would bring to your kind attention that in SAIL, government of India's holding is 90%
and the rest is the free float. So how can some one acquire the Company.
for Guest - reply post
When your neighbor is sick or in the hospital, don't you visit him at home or hospital, and
ask him whether he needs any help?
Was CORUS on sale-block officially? How did TATA go there for bidding? TATA could
have approached Government of India to help SAIL by taking over some stake or entire
company.
You do not have to buy even a single share to make bidding. People often buy first so as
to generate interest in the company that this company, like a dead elephant, is more
valuable than alive.
When IFCI was in trouble, did not GOI come to its rescue? GOI did not have direct stake
in IFCI. Similarly, when one of the GOI unit is in trouble, is it not the social function of
competitor to come to the help in any form whatever. Instead of helping British by taking

over CORUS, why did not TATA become more charitable when the SAIL was in trouble?
This is a matter of perception, not obligation. TATA was not obliged to help SAIL, just as
you are not obliged to visit your ailing neighbor. It is what you feel or Perception. Help
never goes to waste, never ever, believe me, I experienced it in my long life of 60 years,
and in spite of set back at times, I was finally vindicated.
If you still have doubt - approach anyone in trouble with small help. The kind of sleep
you will get on that night is most valuable bliss you ever got in your life.
Kalidas, Hong Kong

28-Nov-07
6th Dec 2007

Tata Steel: Leveraged Buyout
REJOINDER for krshah
I missed your last point concerning 'lack of financial pressure on TATA after Corus
acquisition.'
Financial pressure is more like water in a pressure cooker. It takes time to boil after the
fire started. When it comes to boiling point, the pressure cooker goes on blowing
whistles. If you do not rush to stop the gas stove (fire), it goes on whistling on greater
frequency. And if you still do not rush to switched off the fire (Gas stove), the vessel
bursts spreading dabris all around up.
Ratan Tata just ignited the fire. His takeover was supposed to be a LBO or Leveraged
Buy Outs. Under LBO, the banks arrange for financing for take over against margin
capital, the way you borrow against the stock from the banks. However, due to severity of
crisis, all banks backed out including India experienced banks like Citibank and Standard
Chartered Bank. Credit Suisse and Deutsche Bank also backed out. They knew Tata too
well. They still did not come to help.
What was supposed to be 'LBO' but it became normal transaction. Similar to when your
banker make a margin call against your home taken on mortgage. You bought home
presuming you have to pay only Rs 10 lakhs and banks pay remaining Rs 30 lakhs. When
you paid Rs 10 lakhs to the seller, and the banker backs out, what is your position? You
sell your best assets to meet the shortfall. This is why I said, when TATA runs into
trouble, and finds huge shortfall, he may have to sell TCS or dilute holdings in other
ventures like TELCO, Tata Power which are easily salable.

State Bank of India came in as a Fireman, on presumption 'TATA can do no wrong'
dictum. Having found no loan givers, TATA had to approach Indian capital market which
still adulate him, and offered them 'rights at Rs 300 per share' against CMP Rs 824. It is
the first whistle from the financial pressure cooker. Aage aage dekho hota hai kya.
Oridinary investors jumped with joy. They thought Rs 800 share is given to them for just
Rs 300 - wow, what a benefector TATA is. They did not ask why the hell he is offering
such deep discount to Rs 300 when the CMP is Rs 824?
Reminds me of a beautiful philosophical song from Mera Naam Joker.
Rajkapoor (Joker) sang:
Ai bhai (Tata), jara dekh ke chalo,

Aage bhi nahin pichhe bhi
Baaye bhi nahin daaye bhi
Upar bhi nahin, niche bhi
Ai Bhai (Tata)
.... baar baar yahan jana padta hai

upar se niche se niche se uper aana jaana padta hai...
HERO SE..........HERO SE JOKER PAD JANA PADTA HAI...
Will Tata remains a 'Hero' or degenerates into Joker is future alone will tell you within
next 2 years. I do wish Tata remains a Hero and proves me wrong at least once.
Kalidas, Hong Kong

06-Dec-2007
Ref: 07/262 Date: 6-Dec-07 Reply Post for krshah

Title: Tata’s Troubles ahead
------------------------------------------------------------------------------------------------------
Thanks for your post.
When we love somebody or adore someone, we tend to develop of so much affinity that
we tend to ignore Idol’s misgivings and give them benefit of doubt. Tata is shining
example, Ambani, both MDAG AND ADAG, will be the next.
Tata never had experience to take over or manage a company nearly 5 times its size.
Corus will be his first experience – and perhaps a deadly one. Everyone has certain level
of experience, and Ratan Tata had one. Hid lower level experience does not entitle him to

go for such costly acquisitions as Corus. I therefore disagree.
It is a common psychology that one tries to rehearse the same action to justify the
previous one. His attempt to take over Jaguar is not comparable with Tisco’s
misadventure on Corus. Further, on one hand, Tata Motor is spinning out cheapest car
costing just Rs 100,000 in West Bengal, and on the other, he goes for one of the most
expensive brand – Jaguar which reflect the highest lifestyle. Jaguar is also a drain. I think
Ford bought it and now wants to sell it off, having seen it to be misfit for its mass market
consumer base. There is no cohesive strategy. He may be trying to have every type of
model, for poor, middle class, upper class and luxury class – but it hardly pays off.
Have you ever seen BMW, Mercedes, Ferrari, and Lamborghini coming out with low end
models for masses? Luxury brand have distinct image – they want to be known for their
unique names and prestigious manufacturers. How could they buy Tata name when that
name is also making dirt cheap models that everyone owns? Toyota makes every type of
models, but its image is only maker of mass consumer models. Honda has distanced from
Toyota strategy and is more up market car maker than Toyota.
When you go for expensive models, you first take up the marketing and if successful, you
go for manufacturing. Is it not a fact that after years of cooperating with marketing of
Mercedes, a status symbol in India, they broke off the relationship?
Tata may have bought a coal mine in South Africa, but it is a pollutive energy source.
People are shying away from coal and getting into electric, oil or gas fired melt shops. He
is therefore receding into past and not treading future.
On all counts, the thinking of Ratan Tata has changed for the worse. He is inconsistent,
incoherent, double minded, multi focused and does not seem to know what he is doing;
and being a person of tremendous stature, he is surrounded by “Yes Boss” advisers and
sycophants rather than creative thinkers.
Kalidas, Hong Kong

6-Dec-2007
Tata Steel has clarified that the Sub Prime lending crisis of U.S.A. has not, in any way,
affected its takeover of Corus. The current Rights Issue of Equity and CCP was part of
the original financing pattern. When the Rights Equity rate was worked out at Rs.300,the
market rate of Tata Steel was Rs.600,which makes the Rights rate reasonable .Every
Rights Issue is also a sort of mini bonus. The longer positive steel cycle has proven the
Corus deal correct. Further, the Labour Unions of Jaguar-Landrover of U.K. have
favoured Tatas over all other bidders.This is a clear vindication in U.K.of Tatas and their
business ethics.

for aka1035 - Reply Post
Why are you taking Tata at face value. When sub-Prime crisis is not affecting him at all,
and his deal financing was as per original plan, then he need to remain silent and no
clarification or amplication was necessary. The fact that he did speak about the possible
effect of sub-Prime crisis means that he was indeed affected. The facts are that all banks
backed out and credit rating agencies like Moody and S& P downgraded rating of Tata's
bonds to 'Junk status'. Just because he is Ratan Tata you do not have to believe him like a
'gospel of God'. He will do everything to justify his action.
I also do not buy your view that 'Right Issue is a Mini Bonus'. In bonus issue, the
company gives you shares without any payment. Under right issue, you pay the 'right
price' or part with your own money, and then get the shares.
Supposing you bought the shares at Rs 860 today, and did not subscribe to the rights
issue, then your original cost remains and after the right issue is over, you will suffer
huge loss, because the share price will propel downward towards 'right issue' price or
even lower. So, in this case, you are obliged to subscribe to rights. In bonus issue, you
will be getting free bonus shares, so if the price does go down, you have more quantity on
hand to offset any loss.
We are presuming that Rights Issue are not subscribed and Rights were not sold in the
market ( I do not know whether Rights are tradeable on the stock exchange - in Hong
Kong they are, in India I have no idea)
Kalidas, Hong Kong

06-Dec-2007
pls give us ur views on ifci.we respect ur opinion.ifc has taken 20% stake in ifci. my
calculation is 300 target in 2 years
for Guest (Reply Post)
IFC has not taken any stake at all. IFC normally never takes partial stakle - they take full
control and manage by themselves.
IFC talk is latest stunt of IFCI CEO AK Rai. He knows pretty well no other FII is
interested any more, so he is trying to hold the price of IFCI by churning out one after the
other fictitious stories.
Look at his statement - IFCI said that out of 8 short listed bidders, only 4 had bid and 4
did not conduct any due diligence.. Then, instead of giving names of 4 FII who has
agreed to bid or conduct due diligence or giving names of other FII who did not do any
due diligence, it gives out all 8 names again, leaving you to speculate who did and who

did not conduct due diligence.
Entire plan was to support the stock price so that FIs could be asked to convert their Bonds
into equity at possibly higher price.
IFCI has not specifically stated how FIs have decided to convert their ZCOD into equity,
what was the specific conversion price etc etc. there was just heresay that about 14 crores
new shares might be issued.
If there is agreement with PSU banks or FI, why the hell IFCI CEO does not come
forward and make very clear statement that these institutions have agreed to convert Rs
....worth of bonds into Equity at conversion price of Rs... . But he is vague and continues
to confuse the genuine investors.
Forget IFC, Forget FII; IFCI will continue a GOI owned institution and should be
evaluated like any other nationalized bank.
Yes, IFCI is relatively cheaper stock compared to other nationalized banks which have
run over 50% in last 2 months. Compared to IFCI earnings, even on fully diluted basis ( I
take almost 50% dilution) is higher than other banks.
So your question is IFCI is a good buy now...my answer is YES - it will go higher very
smartly in next few days - may be towards Rs 150.
Kalidas, Hong Kong

06-Dec-2007
11th Dec 2007

IFCI Rocky – NSE lot size reduced
Posted by: ifci_rocky on ( 09-Dec-07 17:23 )

Price : BSE: Rs 100.95 ( -4.58 % ), NSE: Rs. 101.00 ( -4.58 % )
NSE to revise lot size for 106 F&O contracts
8 Dec, 2007, 0004 hrs IST, TNN
MUMBAI: In a bid to boost investor activity in the world’s fastest-growing equity
derivatives market, NSE is all set to revise the lot size for 106 futures and options (F&O)
contracts. As part of the revision, the lot size for 92 contracts will be cut and will be
raised for 14 contracts from December 28.

Analysts said the cut in the lot-size structure was overdue. This is because, of late, retail
investors were finding it uneconomical to trade in several stock futures due to their sharp
appreciation.
The lot size, which refers to the number of underlying securities in an equity derivatives
contract, is multiplied with the share price to determine the contract size (value). The
minimum value for a derivatives contract has to be at least Rs 2 lakh at the time of its
introduction.
In a circular, the NSE has specified that for derivatives contracts, which have a contract
value of over Rs 8 lakh, the revised market lot size would be arrived at by dividing the
existing market lot by four. For instance, the market lot for Bhel, which is 300 at present,
will be 75 (300/4) from December 28. So, Bhel’s contract value will be reduced to Rs
2.07 lakh (75 multiplied with Bhel December futures closing price of Rs 2,760.90 on
Friday) from Rs 8.28 lakh currently.
For derivatives contracts that have a contract size of over Rs 4 lakh, the new market lot
size would be arrived at by dividing the existing market lot by two. Contracts with a size
of over Rs 8 lakh, but that are not divisible by four, the revised market lot size can be
reached by dividing the existing market lot by four and rounded off to the nearest integer.
Where derivatives have a value of less than Rs 2 lakh, the lot size would be arrived at by
multiplying the existing market lot in multiples of two.
UNQUOTE:
IFCI may be one of the stocks for lot changing as on todays (last traded price) the market
lot of ifci is worth 795375. hence Future market lot size will be 2400 shares to comply
with the 200000 limit.
Good Luck & Happy Investing.
CAPITAL MARKET OPERATIONS

CIRCULAR
Circular No.: NSE/SURV/21/2007
Download No.: NSE/SURV/9825
November 27, 2007
Dear Members,
In continuance of surveillance review and pursuant to the meeting at SEBI, with a view to
ensure market safety and safeguard the interest of investors, the Exchange has decided to
take the following actions:
1. In pursuance of Capital Market Segment Trading Regulations Part - A, 2.6, the

securities as given at Annexure -1 will be shifted from rolling segment (series: EQ) to
trade for trade segment (series: BE) with a price band of 5% with effect from December

03, 2007 (Monday). However, if the securities are in No-Delivery period, then such
securities will be transferred to trade for trade segment after the expiry of the No-
Delivery period.
2. Members may note that the securities as given at Annexure -2A shall continue to be
available for trading in Trade for Trade segment with a price band of 5% or lower as
applicable (series: BE). Further, please note that the securities as given at Annexure -2B
shall be shifted from rolling segment (series: EQ) to trade for trade segment (series: BE)
with a price band of 5% with effect from November 30, 2007 (Friday) as per our circular
download no. NSE/SURV/9822 dated November 26, 2007.
3. Members may note that the securities as given at Annexure -3 shall be shifted back
from Trade for Trade segment (series: BE) to rolling segment (series: EQ) with effect
from December 03, 2007 (Monday) at the existing price bands. However, if the securities
are in No-Delivery period, then such securities will be transferred to rolling segment after
the expiry of the No-Delivery period.
Members are requested to take adequate precaution while trading in the above securities,
as the settlement will be done on trade-to-trade basis and no netting off will be allowed.
Members should note that the transfer of securities for trading and settlement on a trade-
to-trade basis is purely a market surveillance measure and it should not be construed as
an adverse action against the concerned companies. Further, this measure will be
periodically reviewed depending on the market conditions.
For any clarifications, members are advised to contact Ms. Anita Fernandes or Ms. Seema
Nayak on 26598129 or 26598166.
For National Stock Exchange of India Ltd.
Sonali Karnik
Manager
Annexure – 1
Sr. No. Symbol Security Name

1 AGRODUTCH Agro Dutch Industries Limited
2 BCCL Bihar Caustics and Chemicals Ltd
3 CANFINHOME Can Fin Homes Ltd
4 CELESTIAL Celestial Labs Limited
5 EVEREADY Eveready Industries India Limited
6 FACT Fertilizers and Chemicals Travancore Ltd.
7 KANORICHEM Kanoria Chemicals & Industries Ltd
8 KECINFRA KEC Infrastructures Limited
9 MANALIPETC Manali Petrochemical Ltd
10 MANGCHEFER Mangalore Chemicals & Fertilizers Limited
11 MINDAIND Minda Industries Limited
12 NOCIL National Organic Chemical Industries Ltd.

13 NSIL Nalwa Sons Investments Limited
14 ORIENTPRES Orient Press Ltd
15 PDUMJEPULP Pudumjee Pulp & Paper Mills Ltd.
16 RPGCABLES RPG Cables Ltd
17 SONASTEER Sona Koyo Steering Systems Ltd.
18 TIL TIL Ltd
19 XPROINDIA Xpro India Limited
20 ZENITHBIR Zenith Birla (India) Limited
Annexure – 2A

1 ASHIMASYN Ashima Limited
2 AXIS-IT&T Axis-IT&T Limited
3 BIRLAPOWER Birla Power Solutions Limited
4 COREEMBLG Core Emballage Ltd.
5 CREATIVEYE Creative Eye Ltd.
6 GLFL Gujarat Lease Financing Ltd
7 GOLDTECH Goldstone Technologies Ltd.
8 GPELECT GP Electronics Ltd.
9 INDIANHUME Indian Hume Pipe Co. Ltd
10 JDORGO JD Orgochem Limited
11 KESARENT Kesar Enterprises Ltd.
12 KHAITANLTD Khaitan (India) Ltd.
13 KSERAPRO K Sera Sera Productions Limited
14 LCCINFOTEC LCC Infotech Limited
15 LLOYDFIN Lloyds Finance Ltd.
16 LYKALABS Lyka Labs Ltd
17 MARKSANS Marksans Pharma Limited
18 NISSAN Nissan Copper Limited
19 NUCHEM Nuchem Ltd
20 POLYPLEX Polyplex Corporation Ltd.
21 SHREERAMA Shree Rama Multi-Tech Limited
22 SOFTPRO Softpro Systems Limited
23 SRGINFOTEC SRG Infotec (India) Ltd.
24 TCIFINANCE TCI Finance Limited
Annexure – 2B

1 BELCERAMIC Bell Ceramics Ltd
2 BHAGWATIHO Bhagwati Banquets and Hotels Limited
3 BIRLAERIC Birla Ericsson Optical Ltd
4 DHARSUGAR Dharani Sugars & Chemicals Ltd
5 GINNIFILA Ginni Filaments Ltd

6 GMRINDS GMR Industries Limited
7 HINDSYNTEX Hind Syntex Ltd.
8 INDIAFOILS India Foils Ltd
9 KOPRAN Kopran Ltd.
10 MANGALAM Mangalam Drugs And Organics Limited
11 NRC NRC Ltd.
12 ORIENTINFO Orient Information Technology Limited
13 PTL PTL Enterprises Limited
14 SHAHALLOYS Shah Alloys Limited
15 SUDARSCHEM Sudarshan Chemical Industries Ltd
16 TIMESGTY Times Guaranty Limited
17 TOKYOPLAST Tokyo Plast International Ltd
18 WILLAMAGOR Williamson Magor & Co Ltd
19 ZENITHEXPO Zenith Exports Ltd.
Annexure – 3

1 ADVANIHOTR Advani Hotels & Resorts (India) Limited
2 AICHAMP AI Champdany Industries Limited
3 AKSHOPTFBR Aksh Optifibre Limited
4 ANTGRAPHIC Antarctica Ltd
5 ASSAMCO Assam Company Limited
6 ATNINTER ATN International Limited
7 BPL BPL Limited
8 BPLENGG BPL Engineering Ltd
9 BVXL Birla VXL Limited
10 DCMFINSERV DCM Financial Services Limited
11 DHANBANK The Dhanalakshmi Bank Ltd.
12 DUNCANSIND Duncans Industries Ltd
13 DYNACONS Dynacons Systems & Solutions Ltd.
14 EMKAY Emkay Share and Stock Brokers Limited
15 ETCNET ETC Networks Limited
16 GENESYS Genesys International Corporation Limited
17 GKW GKW Ltd
18 GUFICBIO Gufic Biosciences Limited
19 HOTELRUGBY Hotel Rugby Ltd.
20 HOVS HOV Services Limited
21 IFBIND IFB Industries Ltd.
22 ITDCEM ITD Cementation India Limited
23 JAICORPLTD Jai Corp Limited
24 JAYPEEHOT Jaypee Hotels Ltd
25 JENSONICOL Jenson & Nicholson (India) Ltd
26 JIK JIK Industries Limited
27 JINDALPOLY Jindal Poly Films Limited
28 KERNEX Kernex Microsystems (India) Limited

29 KINETICMOT Kinetic Motor Company Limited
30 KOPDRUGS KDL Biotech Limited
31 KOTHARIPET Kothari Petrochemicals Ltd
32 KRISHNAENG Krishna Engineering Works Ltd
33 LML LML Ltd.
34 MAARSOFTW Maars Software International Ltd.
35 MADRASFERT Madras Fertilizers Ltd
36 MELSTAR Melstar Information Technologies Ltd.
37 MSKPROJ MSK Projects (India) Limited
38 NEOCURTHER Neocure Therapeutics Ltd
39 NOVAPETRO Nova Petrochemicals Limited
40 OILCOUNTUB Oil Country Tubular Ltd
41 PAREKHPLAT Parekh Platinum Ltd
42 PEACOCKIND Peacock Industries Ltd
43 PEPL Pearl Engineering Polymers Limited
44 POLARIND Polar Industries Ltd
45 REMSONSIND Remsons Industries Ltd
46 RKFORGE Ramkrishna Forgings Limited
47 RUCHIRA Ruchira Papers Limited
48 SAMTEL Samtel Color Ltd.
49 SAREGAMA Saregama India Limited
50 SGFL Shree Ganesh Forgings Limited
51 SIGROUPIND SI Group - India Limited
52 SIL Standard Industries Limited
53 SIMBHSUGAR Simbhaoli Sugars Limited
54 SMZSCHEM SMZS Chemicals Ltd.
55 SOFTSOLINT SSI Ltd.
56 SOFTTECHGR Software Technology Group International Limited
57 SPIC Southern Petrochemicals Industries Corporation Ltd.
58 SRHHLINDST SRHHL Industries Limited
59 STEELTUBES Steel Tubes of India Limited
60 TIDEWATER Tide Water Oil Co. (India) Limited
61 TNPETRO Tamilnadu PetroProducts Ltd.
62 TNTELE Tamilnadu Telecommunication Ltd
63 UMITL Usha Martin Infotech Limited
64 UNIENTER Uniphos Enterprises Limited
65 VINTAGE Vintage Cards & Creations Limited
66 VISHALEXPO Vishal Exports Overseas Limited
67 WEIZMANIND Weizmann Ltd
68 WINDSOR Windsor Machines Limited
69 WSI W S Industries (I) Ltd
As you may already be aware, there are two types of option contracts - Call options
and Put options. A Call option gives the buyer the right to buy the underlying asset,

while a Put option gives the buyer the right to sell the underlying asset at a
particular value called the Strike Price or Exercise Price. For this privilege, the buyer
pays a one time premium to the seller.
A simple example: 'A' buys a Call option contract from 'B'. The contract states that
A will buy 100 Reliance shares from B for Rs.1700/- each (the strike price) .The
Current Market Price (CMP) may be above or below this value. Note here that this is
an example of a Call option as it gives A the right to buy the underlying asset at a
fixed strike value on or before a particular date. The premium for this is market
determined.(In this case lets say Rs 100/-) The date (Last Thursday of each month
and in this case, 26th July) is known as the Expiry (or Maturity) Date. This date is
the deadline for the option contract. At this date, the option buyer is to decide if a
transaction of the underlying asset is to occur. The 1700 value, which is stated in the
agreement, is referred to as the Exercise (or Strike) Price. This is the price at which
the asset will be exchanged.
Outcomes :
1. At any time before the Expiry, A may decide to sell his contract at a profit or
loss (above Rs 100/- or below Rs 100/-) and square up the transaction.
2. At expiry, if the share closes at Rs 1700/- A loses his premium of Rs 100/-
3. At expiry, if the share closes between Rs 1700/- and 1800/- A stands to get
the difference between the strike of 1700 and the value of CMP above
1700(strike price). Hence at Rs 1800/- CMP, he would be in a no-profit-no
loss situation.
4. At expiry above Rs 1800/- (1700 + premium), A would start getting his
profits which would be limitless depending on the CMP. Let's imagine that at
the expiration date, Reliance is trading at Rs.1825/-, then notionally A will
buy the shares from B at the agreed price of Rs.1700/- each and then he can
sell them back on the open market for 1825/- and make an instant Rs.125/-
(actual profit is Rs 125/- minus Rs 100/- premium paid). But in actual
practice, he just gets Rs 125/- into his account as the final settlement on the
deal.
5. At expiry, if the share is trading at less than Rs 1700/-, the option expires
worthless and A accepts the premium paid as the maximum loss. But there
will be no further liability for A.
In the real world of stock market options trading transactions don't really take place
between two people as discreetly as we have illustrated above. The process of
Novation actually removes the identity of who is on the other side of the trade. You
simply Buy or Sell an option contract from the exchange without knowing who is on
the other side.
Why Trade Options ?
Option trading provides many advantages over other investment operatives.

Leverage, limited risk, insurance, profiting in both bull & bear market scenarios, and
sometimes, through the application of specific option strategies, even in relatively
static markets.
Leverage

One thing to note before we go on is that the buyer of an options contract pays an
amount, known as the premium, to the option seller. An option seller, if he is the
first seller (initiating a sale that is, without having FIRST bought those
options), is also known as the writer of the option. The option premium is simply
the amount paid for the option - but there is more about this under the Pricing link.
When you buy an option contract from an option seller, you aren't actually buying
anything - no asset is actually transferred until the buyer chooses to exercise. It is
just an agreement where the buyer has the option to decide if the transfer is to take
place. But the option contracts value is determined by the underlying asset - Reliance
shares as an example.
Each option contract contains a specified number of notional shares as fixed by the
exchanges. For Reliance it is 150, Infosys 100, IFCI 7875 etc.This means that every
1 option contract gives buyer the right to buy 150, 100 or 7875 shares from the
option seller as per the above examples. The amount paid is only the premium
multiplied by number of notional shares.(and of course multiplied by the number of
options). It is precisely for the reason stated above that option trading is very
attractive for the small investor as it gives him/her the opportunity to trade a very
large exposure while only incurring a small initial capital investment.
Limited Risk and Unlimited upside
One of the biggest advantages option trading has over outright stock trading is to be
able to take a view on market direction with limited risk while at the same time
having unlimited profit potential. This is because the maximum loss the option buyer
takes is limited to the initial premium paid. But the profits are unlimited- If the CMP
continues to rise above strike plus premium in case of a Call option or if the CMP
continues to fall below strike minus premium in case of a Put option.
Insurance
Another reason investors may use options is for portfolio insurance. Option contracts
can give the risk averse investor a method to protect his/her downside risk in the
event of a stock market crash. A put option purchased protects against a fall in
portfolio value of cash shares and a Call option purchased protects against a sale of
futures.
Who Trades Options?
Two broad categories of players exist in the option markets: risk seekers and risk
avoiders.
A risk seeker, also known as a speculator, is the type of trader that is trying to profit
from a prediction in market direction. A speculator will have his or her own method
of analyzing the market and then use the options market to make a bet on his/her
analysis.
A risk avoider, also known as a hedger is in the market because he/she is trying to
transfer risk to the speculator. A hedger will use the option market to create
insurance for his/her physical position against an adverse market movement.

Hedgers will almost always engage in option spread trading, which is something we
haven't covered yet. But it is basically simultaneously buying and/or selling different
options/shares together to provide an ideal risk/reward profile.
Problems with options
A) Time decay factor : Winning in options is a race against time, since by their very
nature, their value starts falling with time towards expiry, in relation to the cash
market price. For example, at the beginning of the month, if the cash market price of
Reliance is 1700/-, the near month Call option may be available at a premium of say
Rs 100/-.1 day before expiry, if the cash market price remains at 1700/-, the
premium would have come down to Rs 10/- or if the cash market price is Rs 1750/-
the premium would be about Rs 60/-(that is Rs 10/- above CMP). Whatever money is
to be made, must be made by booking profits well in advance, unless the CMP is well
above strike value plus premium as we approach expiry.
B) Tendency to over leverage : The ease of leverage also acts as a double edged
sword in inciting the options newbie to utilize his entire capital for options investing.
This indiscrimination may lead to total wipe-out of capital.
C) Intermittent Ban : When the Open Interest Positions (this term will be dealt with
in detail subsequently) reach above a certain limit, the exchanges impose a
temporary ban on the trading of derivatives. This is a feature limited to Indian
Exchanges. It effectively paralyses the options holder and invariably, the option
values fall during the ban period leading to losses. This is presently common with
scrips like Arvind Mills, JPHYDRO, IFCI, Nagarjuna Ferilizer, BRPL, Parsvanath and
some others).
14th Dec 2007

Kalidas: Stock Picks for King Porus
for Guest-King Porus
Relax a bit now. IFCI is taking off most probably from tomorrow (Friday), seeing upside
to Rs 180 at least.
Also buying Air Deccan, Spicejet (which may take off from tomorrow), GV Films
(highly speculative but rewarding - not for faint hearted), and accumulating Hindustan
Petrolium (HPCL), BPCL and IOC on 2 years haul basis. seeing their upside by 400%
UCO bank is another solid buy. I like the stocks that move up in increment of Rs 1 or two
on continuous basis. When these stocks rise suddenly, gains are almost 15% per day.
Seeing upside upto Rs 80 short term but retained for long haul. I have fairly large
position on this counter.

Hotel Leela is sedate and teasing the investors for hide and seek game, but it is a solid
stock to hold.
I am still accumulating NOCIL. Looks like 5% limit has been imposed by regulators to
help promoters to accumulate stocks at lower level. There was nothing to suggest or force
5% circuit limit.
Also bought TV Today at about 152 and bought Mid Day Multi Media at about Rs 59.50.
However, at Rs 60, the immediate prospect of Spicejet is high.
Above selection is enough. I never allow my portfolio to have more than 12 stocks at any
time. I still prefer to have only 8 stocks rather than 12.
I am fairly busy in my own business, so unable to devote more time except above
selection at your request.
Kalidas, Hong Kong

14 Dec 07
Kalidas: Essar Oil
for Sagraa,
Essar Oil is most valuable stock in oil sector, because of factors already stated. However,
the promoters are constantly issuing shares to themselves in larger proportion at heavily
discounted rates. The uncertainly of delisting is for the time being away.
I was looking at EPS of Rs 50 to almost Rs 200 per share earlier. Depending on dilution,
the EPS could water down by 50% - or Rs 25 to Rs 100. My target for this stock is still
very high - almost Rs 900 minimum to Rs 2400 maximum, provided it is not delisted, and
no more equities are issued by promoters to enrich themselves.
HPCL, BPCL and IOC are all more solid than Essar and being in GOI owned, a chance of
share manipulation is very low. this is why for long term investors, these are solid buys
and are almost certain to give investors 400% return in less than 2 years. Their earnings
are about to shoot up from December onwards, when they recognize income from
thousands of crores of bond (8% Coupon) issued by Government of India. It is also likely
that Oil Prices may be allowed to rise for the first time to avoid heavy burden of subsidy.
Only Kerosene may be spared, not Petrol or Diesel.
Kalidas, Hong Kong

14-Dec-2007

Kalidas: Metal Stocks Out
for Guest,
I am out of Metal stocks. the Metal prices have reached their peak and it will take another
3 years or more to reach same level again.
Banking crisis is very acute now. I am in metal business, and I was told by a Mill that
many of their customers are delaying payments too long. The banks are cutting off limits
in flash. One of my close friend and colleague was amazed to see his credit limit of US$
2 Millions withdrawn without notice by UBS Singapore.
BBC also reported that banks have begun to distrust each other. This is most dangerous
situation because inter bank market is drying up. Interest rates in LIBOR is rising in
contrast to domestic rates in US where they are falling.
My inner sense says that interest rates on US$ may rise into double digits soon and may
go as high as 21% in less than 18 months, if solution is not found for current credit crisis.
Equity market is rising because bond market which is nearly 10 to 20 times larger than
equity market is shunned by investors. They also do not trust banks because of unknown
sub prime exposure. this is why the money is finding outlet into equity. This is by far
most dangerous development. Bonds are key to growth and stability. Because bonds carry
interest, it has value. in equity one has to depend on wishes of company board to pay
dividend, whereas in Bonds they have no option but to pay the interest.
One of the World's best bond is floated by Government of India very recently which are
carrying 8.25% interest coupon and have long maturity of 15 to 20 years. However, we
doubt much of the bonds may come to the market, and lot size will be high enough to
appeal only to large scale investors.
I do not recommend any metal stocks to anyone. The fears of recession is very high in
USA which will drag down the metal stocks very fast. The commodity market investors
will run for exit very soon.
None of the metal stock has therefore been appealing to me, except to some extent
Copper stocks. However, when the metal sector falls, all will go down. Only those who
want to get slaughtered.
So to be specific about Essar Steel - answer is NO, because the promoters are siphoning
off large chunk of cash it earned in Telecom sale business (Essar Steel held 13% stake)
through its Mauritius subsidiary, if press reports are any indication.
When you can make money 4 to 5 times in HPCL, BPCL, IOC, and in Gas stocks like
GAIL, Petronet, GSPL by about 200% from current level, why go for Essar Steel or for
that matter any steel stock including SAIL or TATA, when the metal market is going to

enter recessionary period in USA?
Kalidas, Hong Kong

14-Dec-2007
Kalidas: Troubled banks
When the banks in a country runs into trouble, the central bank and concerned
governments rush to help that bank and measure like bail out or nationalization results.
For the first time ever, we are witnessing "Internationalization of the Global banks like
Citicorp, UBS" at the hands of sovereign funds like Abu Dhabi or Singaporean
governments.
Money also blinds a religion, and that too, one of the most powerful religion - ISLAM -
where the people die as suicide bombers to uphold the prestige of Islam.
But Abu Dhabi government - hailing from staunchest of Islamic religion, forgets the basic
tenets of Islam and adopts Christianity with full embrace.
Islam does not permit earning or charging of interest. Bond market is virtually non-
existent in any Moslem country.
But Sheikhs of Abu Dhabi invested in almost US$ 9 Billions of convertible bonds
carrying interest rate of 11%. Moslems and Islam religion is saving Citicorp from
disaster. In 1992, it was Prince Abdullah who saved the Citicorp from bankruptcy, and
now it is Abu Dhabi government trying to rescue same Citicorp from almost bankruptcy
with 11% CPN Convertible Bonds.
I used to get lot of calls from Citibank, Singapore offering free remittance facility from
anywhere to anywhere, be it in India or overseas.
When the banks offer free facility like this to depositors, it is first sign of their imminent
disaster. Citicorp is not known for over 10 years to grant major loans to Corporate clients
outside America, because their pockets are as empty as those of urchins outside
Mahalakshmi temples in Mumbai.
George Bush has to learn from this primer. Why do you hate Islam when they save your
prized banks? They are not hurling planes on World Trade Center or Pentagon, but
showering money or Oil Dollars on Citicorp tpwers everywhere.
Singapore government is one of the most opportunist government I have ever seen - and
to their credit - they have always made smart move. Saving UBS is to save their regional

Head Quarters which is a status symbol. They will learn the lesson hard way that " Never
ever rush too soon to help big Banks - their troubles are more like floating Iceberg - 9
parts not seen only 1 part visible. And such iceberg causes disaster like Titanic. History
always repeats itself.
UBS is still nursing wounds of LTCM when the sub prime hit them very hard - right
below its belt. The funny part is both Citicorp and UBS have some of the largest
investment banking arm in the world, advises everyone how to invest, where to invest,
how much to invest etc. but THEY DO NOT KNOW THEMSELVES WHERE TO
INVEST, HOW TO INVEST, WHERE TO INVEST.
So when the Sovereign funds have become active, like Private Equity funds like
Blackstone, KKR etc., we are almost certain to enter into big black hole of money. Once
the money goes inside, it never returns.
Cheers
Kalidas, Hong Kong

14-Dec-2007
Kalidas: Stock picks
for jmsr
Looks like you are in for quick return. I suggested you SpiceJet and Nocil, both of whom
hit upper circuit once and then came down. The momentum has picked up for Spicejet, so
I prefer that one.
NOCIL is about to move up - at 49.10 there were no buyers.
One interesting observation: looks to me that BSE/NSE officials appear to be cooperating

the promoters or main market makers. There was no activity in NOCIL - then why did
they impose 5% circuit limit? When the circuit limit is 5%, people lose the patience.
Volatility makes money. So by restricting the rise by 5%, chance was given to
promoters/market makers to accumulate the stock at lower levels. When they have
reached mid-point, they raise the limit to 10% and when they are full with the stock, they
allow 20% so that market-makers sell at hefty profit.
UCO bank is tending to rise higher - may soon burst through. But I am going to hold it
for a longer time. This is the better stock to own. They are likely to come out with right
issue at higher price, so the price of the stock might move to reflect that mood. It is a
lousy bank but good stock at good price.

Spicejet is the one where there are many mutual funds own the stock. This company may
turn to profit soon - and in all likely hood, it may be taken over by Kingfisher/Air Deccan
combine to make them still bigger or JET AIRWAYS may buy them to regain top spot. I
expect this stock to double from current levels in short time. The rally points are 66, 71,
73.50, 75, 81. Once it crosses 81 the price rise will be very fast - 88, 92, 103, 108 and 120
On the face of it there is nothing exciting about this stock. However, looks like they are
curbing the real news, so undercurrent is very strong. When I was in Standard Chemicals
at Belapur, NOCIL was very next door, belonging to same Mafatlal group. I therefore had
some affinity to that stock (I was also Chemistry graduate). NOCIL may announce some
really good news after it hits 72. It is all set to double and within 12 months, may hit 150
as originally planned. LET ME TELL YOU - there are no specific events which may
justify even the current stock price, but this stock is sexy.
GV Films which I suggested elsewhere is seeing up circuit for the last 3 days. It may go
lot higher than where it is now.
I was glad to see that out of my 10 holdings, almost 4 saw upward circuit. It happens
rarely - like some good planets getting into same house to give benevolent effect.
Do not ask me any more. I am still strong, very strong on Oil Majors like HPCL, BPCL,
and IOC. These stocks will report tremendous earnings this quarter which may come out
in 3rd week of January. Right now they are in accumulation stage. These very best stocks
of Indian market will blossom into over 400% return in next 2 years.
IFCI is going to have field day. When any stock is about to go very high, they come down
for a brief spell - the main market makers suppress them to buy trading lot to make good
profit in 2 or 3 sessions.
Did you see a Fast Bowler in action? Before he bowls, he retraces a few steps and then
runs. So is true in stock market - the stock before major run retraces for a short while, and
then it hardly visits the same level again.
Cheers
Kalidas, Hong Kong

14-Dec-2007
Ifci Rocky: Loans
Some products help you repay your loan amount much faster with a lower interest
outflow as compared to a normal home loan. Reduce the burden of your other loans to
enhance loan eligibility. In case you are currently availing high-interest loans for other
purposes, you can reduce the burden by availing a “Loan Against Property” (LAP) at
attractive rates of interest and repaying the high-cost loans. This loan will not only reduce

the interest burden but also lower the installments, as LAP loans are offered for higher
tenures. LAP loans can be availed for up to Rs 3 crores against your existing property —
residential or commercial. The loan can be used for multiple purposes like repaying high
cost loans, funding your business plans, sponsoring your child’s education or for your
child’s marriage. On account of transferring your loans to LAP, your EMI would come
down leading to a higher disposable income available for taking a fresh home loan.
Hence your eligibility automatically increases. In case, your gross monthly income is Rs
50,000 and you are servicing a high interest loan at an EMI of Rs 25,000, your home loan
eligibility will be Rs 14.74 lakh. In case the existing high cost loans are closed and a loan
against property is taken wherein the EMI becomes Rs 20,000 (indicative), then on your
balance income of Rs 30,000 your home loan eligibility will become Rs 17.68 lakh,
approximately. The writer is Head - Mortgages & Real Estate, ICICI Bank.
Switch the right way when moving home

Interest rates on home loans are showing some sign of softening. But, the salutary impact
of this is being witnessed on the fresh borrowers. The interest rates for old borrowers still
remain unchanged. In some cases, the difference in the interest rates between old
(existing) borrowers and that of the fresh borrowers is around two percentage points.
While banks are lending to new borrowers at around 10% to 10.25%, the old borrowers
are paying 11.75% to 12.25% on their loan amount. Such huge variation in interest rates
for the existing and new borrowers accord opportunities to old borrowers to shift to the
new schemes of loan leading to substantial reduction in their interest liability. Why the
difference in the rate? Despite the fact that you and your friend have borrowed under
floating rate home loan system from the same bank, your interest rate may vary with that
of your friend. The change in the interest rate can happen because of the perception of
the quality of the borrowers. If your friend’s creditworthiness is better than yours, bank
will lend your friend at lower rate than that of yours. The issue is how a bank
differentiates in the interest rate while giving loan. All the floating interest rates on a
loan are fixed against a benchmark rate, which are called floating reference rate, retail
prime lending rate or home prime lending rate. The floating interest rate is fixed against
these benchmark rates. Suppose a bank has fixed its benchmark rate at 14% - if the
prevailing interest rate in the market is 12%, it will lend to a borrower at two percentage
points below its benchmark rate. But at the same time, it can give large-ticket loan to a
high net worth borrower at 2.5% point below the benchmark rate. This will bring down
his rate to 11.5%. There is other reason also when the difference in the rates between two
borrowers crop in. Normally, in the case of floating home loan rate, the major change in
the interest rate should be done by changing the benchmark rate. Suppose the interest
rate in the system falls by one percentage point. Bank and finance companies should
bring down their benchmark rate by one percentage point. This will result in the fall in
interest rates of the existing customer, as well as for the new borrowers also. At the same
time, if the interest rate in the market firms up, the lending institute should resort to
increase in the interest rates. This would result in increase in interest rate for both the
existing, as well as the new customers. The difference in the interest rates between two
borrowers in the system should have remained just due to the quality of the borrowers.
With this, the maximum gap between two borrowers would have remained in the range of

0.25% point to 0.50% point. But in real practice, this does not happen. When the interest
rate goes up, banks promptly increase the benchmark rate, making the loan costlier for
all the old borrowers. But in the competitive home loan market, to attract the new
customers, lending institutes increase the discount on the benchmark rates. Even if the
discount is increased by half a percentage points the difference between new and old
customer becomes half a percentage point. If the interest rate is increased three times in
one year, it has been found that interest rate between the old borrowers, who borrowed at
the beginning of the year and the new borrower, who borrowed at the end of the year,
when the rate has been slashed for the third time, is almost one percentage point.
Continued...
But, when the interest rate falls, finance companies do not decrease the benchmark rate
immediately. They wait for a few months, before they decrease the rate. But, meanwhile,
they increase the discount to benchmark rate to attract the new customers. For instance,
at present the new borrowers get home loan at around 10%, but many customers who
had borrowed at 7.5% in 2004 are paying 11.75% to 12.50%. This is mainly because,
since 2004, benchmark rates have increased by around 8 times. But, it has not declined
even once. However, there are occasions when finance companies decreased the rates for
new customers.
Interestingly, when the benchmark rate is lowered, the discount to the new customers also
reduced by the same amount. Therefore, just before the benchmark rate is reduced, the
discount for the new customer is the maximum.
Because of these practices, the gap between the interest rates for the existing borrowers
and new borrowers widens.
If the gap widens to 1.5% point and still a long repayment period is left, it is advisable
for the existing borrowers to approach the lending institute to switch the loan from
existing rate at which you have borrowed to the new rates.
Suppose your rate is two percentage points below the benchmark rate. But the latest
going rate 3.5% points below the benchmark rate. You can approach the bank to switch
your loan
FOCAL POINT
Change in the interest rate can happen because of the perception of the quality of
borrowers. If your friend’s creditworthiness is better than yours, bank will lend him at a
lower rate
All the floating interest rates on a loan are fixed against a benchmark rate, which are
called floating reference rate, retail prime lending rate or home prime lending rate.
For this, they will charge switch fees, which vary between 0.5% and 1.5% of the
outstanding amount. But, this will lead to lowering of your rate by 1.5% point. Therefore,
you will recover the cost of the switch fees in the first year itself. Switching of the loan is
beneficial, if the difference between your rate and the new customer’s rate is at least one

percentage point. If the difference is lower than one percentage point, you should wait for
some time till the difference goes up to around 1.5% point
Fixed or Floating
As inflation has been tamed by the government and brought down to around 3%, there
are possibilities that the interest rate would soften further, though the RBI is still not very
comfortable with low interest rate regime as this leads to appreciation in the asset prices.
Interest rate continues its softening trend because of increased money supply in the
market. Therefore, if you want to take advantage of future decline in the interest rate, you
should continue with the floating interest rate regime.
Ifci Rocky: TFCI
Tourism Fin betting on QIP price

Tourism Finance Corporation has been gaining on the bourses ever since it announced
qualified institutional placement proposals. The company’s board is meeting on
December 19 to consider a proposal for enhancing the paid-up capital through the issue
of further equity through preferential allotment and/or qualified institutional placement in
accordance with the relevant SEBI Guidelines.
According to market rumour, traders are expecting that the placement could be at higher
price. According to analysts, the pricing would be decided keeping in mind the future
growth prospects of the company, as the current price does not reflect its true growth
potential. Besides, the general buoyancy and capacity expansion planned in hotel and
tourism sectors for the next couple of years also bode well for the company, said market
participants. The stock has jumped 19.85 per cent during the week and scored a gain of
28 per cent over a month’s period.
K. S. Badrinarayanan
Tourism Finance Corporation of India Ltd

Background
The Government of India had, pursuant to the recommendations of the National
Committee on Tourism viz. Yunus Committee set up under the aegis of Planning
Commission, decided in 1988, to promote a separate All-India Financial Institution for
providing financial assistance to tourism-related activities/projects. In accordance with
the above decision, the IFCI Ltd. along with other All-India Financial/Investment
Institutions and Nationalised Banks promoted a Public Limited Company under the name
of 'Tourism Finance Corporation of India Ltd. (TFCI)' to function as a specialised All-
India Development Financial Institution to cater to the financial needs of tourism
industry.
TFCI was incorporated as a Public Limited Company under the Companies Act, 1956 on
27th January 1989 and became operational with effect from 1st February 1989 on receipt
of Certificate of the Commencement of Business from the Registrar of Companies.

TFCI has been notified as a Public Financial Institution under section 4A of the
Companies Act, 1956, vide Notification No S.O 7(E) dated the 3rd January 1990 issued
by the Ministry of Industry, Department of Company Affairs.
TFCI's Registered office is situated at IFCI Towers, 61 Nehru Place, New Delhi - 110 019
Share-Holding Pattern
The share-holding pattern of TFCI is as follows;

(as on 30th September 2007)
Name of shareholders HOLDINGS(No of Shares in akhs) Percentage
IFCI 135.50 20.10
SBI 50.0 7.42
Canara Bank 3.0 0.44
Bank of India 25.6 3.80
Other FIs/Banks 17.61 2.61
LIC 41.89 6.22
National Insurance
Co. Ltd. 5.0 0.74
United India Insurance
Co. Ltd 9.50 1.41
The Oriental Insurance
Co. Ltd. 7.17 1.06
Bodies Corporate 92.07 13.66
Mutual Funds/ UTI 0.03 0.00
Foreign Institutional
Investor/ NRI 59.51 8.83
General Public 222.98 33.08
Other (NRI/ Trusts) 4.35 0.65
Total 674.2 100.0
WHY? TFCI at this point BCOZ IFCI is the promoter os this Company along with LIC &
BANKS. Any positive NEWS FLOW or ANY +VE Development on part of its
Subsidiaries will RERATE the STOCK. The stock is bound to be RERATED.
16th Dec 2007

Kalidas: Defend IFCI Comments

For Master Tito,
You better read all posts rather than reading a few out of context. IFCI is a stock, and you
have to read it from time to time with reference to IFCI itself, Indian stock market, global
stock market and certain management events, which were all dynamic,
I was never wrong. I know and follow the stock or over 5 years now on continuous basis.
I was the first to point out hidden value of IFCI; again first to show the existance of
convertible bonds and their possible dilutive effects on the stock, when most of the
boarders were simply ignorant; first to point out the disastrous course set by IFCI CEO
Rai who was constantly changing the tune and was hurting the stock price by not
redeeming convertible bonds when IFCI had right to do so; first to predict that this wishy
washy CEO of IFCI will make the FII run away from the counter; first to point out the
disastrous effect of sub prime crisis when almost all US based FII would be forced to
drop their bid one by one (and that is what happened) and again first to point out here
now that Government of India's Rs 400 crores of bonds which entitle it to massive stake
of additional 40 crores of shares at conversion price of Rs 10 per share and what not.
you still do not realize what damage is caused to the stock price by the present CEO
because you are in bull market as whole, and current stock price is more supported by
market strength than other factors.
My assessment was 100% right due to which the stock remained under pressure for over
3 months. Now that the famous stock market principal that the stock reverses the trend
once the news is out, is happening to IFCI. The banking stocks like IOB rose over 50% in
lastt one month and other banking stocks also rose very high, which make IFCI relatively
cheap.
I nver mentioned that earnings of IFCI were ever in doubt. In my most bullish scenario I
worked out at length how the IFCI EPS will rise, and projected at Rs 31 to Rs 60
depending on 'If and But' scenario of certain events, and I was again proved right.
Were you there when I bought IFCI at Rs 6.80 to 8.80? And again, when I projected that
IFCI will fall to RS 70/80, it did fall and I did buy small position at that time.
You are in dynamic market - where the stock moves up and down every minute. So if you
are trying to suggest that I was 'double talking' then you are sadly mistaken.
For your information, when I sold out IFCI at highest at that time of Rs 97, I switched my
positions to Essar Oil ( which rose from Rs 56 to Rs 300 now), Essar Shipping ( rose
from Rs 40 to Rs 105 now) and also RNRL which I bought from mid 30s to over Rs 190
now (6 times) when the IFCI from my original sale level of Rs 97 rose to Rs 113 or by
15%
Most boarders on IFCI were blindly in love of IFCI which did not permit them to switch
to other opportunities. Such blind love should have been displayed when they should

have seen the potential when the stock was tithering below Rs 10 for several years, and as
recent as beginning of this year.
Now you view whatever way you want to just to prove yourself right. All boarders who
follow me for a long time, know pretty well what i said and when and also Why? I am not
loose talk boarder who just churn out figures without substantiating facts. Write at least
one post the way I wrote, and I will start following you.
Kalidas, Hong Kong

16-Dec-2007
contd.
Actually, when I first came on to this board, I thought the same about you(blind love for
IFCI) seeing your posts with the most famous caption of this board - 'If Goldman Sachs
takes over...'
The reason why I was infuriated was the speculative nature of that caption. My complaint
was when an event has not happened, how can you blindly keep on talking the same
subject. And you did not say anything about what if Goldman does not take over. Your
analysis was calling for speculative buying of IFCI shares though you never made a such
recommendation. I am not a speculative buyer of stocks. I was telling myself that if IFCI
is destined to go to Rs.700(after Goldman getting stake), then I would wait until the news
is confirmed. But by that time IFCI may be quoting around Rs.300-350. Never mind. A
100% almost assured return is definitely good. That was my way of thinking. But I did
not wait because Goldman or not, it doesn't matter to me and bought at Rs.63 with a long
term target of Rs.200.
Later I had an argument with Indradev regarding the book value of IFCI stock. My
argument with him was that when the stock has almost no book value as of 31st March,
2007(though the first quarter's eps was Rs.15), The price of Rs.60 is very good for those
already bought. The more good news comes out of IFCI, the more the stock would rise. At
that time IFCI valued itself at rs.70 per share. Indradev did not understand the difference
between book value and intrinsic value. Later I stopped arguing with boarders.
Now moving to the most exciting times of Indian stock markets - October 2007 to be
precise. I am one of the few who started to think that IFCI had missed the (boom)bus
because of stakesale process. I, even now, storngly believe that hasn't the stakesale
proposal is not there, IFCI would have touched at least Rs.200 in october itself. I also
believe even now that a foreign partner is not necessary for IFCI to restructure its
operations unless it is interested in the premium and the glamour(better pe multiple) the
foreign partner would bring. I dealt with only IFCI even in those days also. I bought
ceratin number of shares of IFCI for long term investment. But I had no doubt that IFCI
was a speculative stock. I started selling(that long term investment!) almost every day
and bought at lower levels of that day. At the end of the day i have my shares intact. The
problem was that though i made profit on daily basis, the value of my portfolio was
shrinking. Because when i sold at Rs.102, i did not wait for IFCI to fall by maximum
levels. Most of the times, the selling price of the day was less than previous day's buying

price. But sometime on the same day, i was buying at a lower price. Yes, in a way, I was
bullish and bearish on the same day but my long term bullishness remained intact. I knew
that it wont be too long to touch the high again. In that way I have reduced my average
price of IFCI from Rs.63 ro Rs.22.60. I knew my way of trading was very dangerous. But
I believed in IFCI. And the belief was not blind. I always had the sell trigger in my hand.
The reason for this post is to let you know that I am the one of those who sticked to IFCI
and made some money on it too. I also made few bucks on stocks like TTML, Hotel Leela
and even idea cellular. But I still rue the fact that I bought Ispat Industries with all my
money at 14.90 and slod it at 15.15 because of lack of belief in the promoters of the
company. If I sticked to Ispat, it would have made a life of difference to me!
I am not a great writer like you but I hope you understand my points. You can ask for any
clarifications on my post. After all, I consider this as a debate, not a fight.
PS: If I was very upset with your prediction of Rs.700, what should I do to the prediction
of Rs.3000 by ShahConsultant! No offence please Mr.shah. Now that my entire holdings
are in IFCI, somehow, I am not getting upset with that prediction!
17th Dec 2007

Kalidas: Offline Orders
for Guest - King Porus
Unable to help you. I do have account with HDFC but off and on they mess up with my
password, so I can not use them online.
I never tried to place the order off line, outside market hours. But it may not be workable,
with all nasty circuits of 5%,10%, 20% suddenly imposed by BSE/NSE without proper
parameters. For example, if you place the order to sell at 10% higher price, and the order
is accepted online, what will happen if the upper circuit is just 5%? The orders placed
online immediately go to the respective exchange, so there is no way HDFC can control
the flow of orders with glaring limitation rules of regulators.
In market like USA, one can place the order as GTD (Good Till Day) or GTC (or Good
Till Cancelled) which remain valid upto 30 days maximum. If the limit is not hit, they get
themselves reentered on following day automatically.
Unless the Circuit breakers are removed, there is no way any broker will be in position to
accept your orders which may or may not violate the trading restrictions imposed by

SEBI/BSE/NSE
These regulators are immature. Markets should never remain closed. An investor should
have right to buy or sell the stock at any time at any price during market hours.
This is why in markets like USA where over 20000 scrips trade everyday, you will some
stocks rising or falling 60% to 80% in one day or rise that much on good news. That can
happen only in USA.
We are still in bullock cart age with the only difference that roads are no longer stony or
dirty, but asphalt laid or cement concreted.
The cart remains same, bullocks still remain same, the medium somewhat changed.
Indian markets have lot of potential to equal any western market or even surpass them.
The system is in place now - regulators too are in mood to reform themselves, but
something is holding them back - which forces them not to allow you to place off line
trade at night.
Kalidas, Hong Kong

17-Dec-2007
18th Dec 2007

IFCI – Rogue CEO & Sterlite/Morgan winner
This is written ahead of formal announcement relating to 26% stake sale.
Finally I am about to be vindicated. I predicted long ago that Sterlite/Morgan Stanley

combine would emerge a likely winner. Also that Morgan Stanley’s name was merely
used to lend credibility to Sterlite group, who never had any experience in providing
upscale financial services. Morgan Stanley was the lead for Sterlite’s Vedanta group, so
their proxy was sought. Finally Sterlite Industry has emerged as solo winner in “benami
transaction”. After a few months, when the stake sale process is over, Morgan Stanley
will quietly withdraw or resign.
The whole failure was expected, and in fact, I did mention in one post, that FII will drop
out one by one until no one was left. I would now call CEO Atul Kumar Rai as “Rogue
CEO of IFCI “. He willfully and deliberately, stage-managed a situation where almost
everyone would leave except the Sterlite.
He had been fingering everyone by obliquely suggesting that PU banks have agreed to
subscribe by converting their Zero Coupon Bonds into equity. He had been clamoring for
some time without naming a precise price at which the bonds were to be converted into

equity. There was absolutely no reason for this Rogue CEO to approach the nationalized
banks to convert their debt into equity which did not carry any interest; so there was
never to be interest burden until maturity for about next 13 years. It was free money.
Further, since no conversion terms were set in the bonds, these bonds were to be treated
as if they were “Non Convertible”. So why did he finger these banks to rake up this issue
and make them subscribe to equity? The obvious strategy was to make the life of genuine
bidder miserable by causing unexpected dilution and derail the entire process.
Sterlite will complement CEO Rai – “Good job done, buddy. You played cards very well
and no one could guess (except this bloody Kalidas) that you gave us the company.”
The most regrettable part is that of all firms, Morgan Stanley, one of the most venerable
Wall Street firm, agreed to play second fiddle and help Sterlite gain indirect control of
IFCI. Most of the other shareholders are only Government of India employees one way or
other, buy whatever name they are called- LIC, UTI, GIC, PU banks, IDBI etc. because
they are all lineage of Government of India. And everyone knows how to win over these
officials.
Having seen the value of properties rising, Agarwal of Sterlite thought why not grab this
apex institution, which have acres and acres of valuable properties of defaulting
borrowers? Sterlite will get first hand information by taking a seat on the board and
knowing everything to orchestrate the actions in such a way that those borrowers and
their properties fall into his or his associates’ hand. He will make all other officials rich.
When I brought up the “Convertibility issue” every IFCI boarder found jilted and accused
me to bring down the stock price (and that too from Hong Kong, silly you all are). What I
cautioned came out exactly true. I was proved 100% correct again to the displeasure of
some boarders who say that I have been harboring ego by writing flowery language; and
they objected my observation, clinical analysis, and diagnosis with their rhetoric and
verbal abuse.
How IFCI scrip will behave?
Well, when you are in a company of crooked people, you have to live with them or leave
them. Of course, the stake sale fiasco will be heart breaking. The stock is a piece of paper.
You may call yourself a shareholder, but how many of you have actually gone to the
AGM and objected to the management on the floor in what you really believed in?
So all IFCI lovers have learnt hard way. As I said before, Never ever fall in love with any
stock. Stock is nothing but a book entry in your books. You bought A one-day and sold it
next month and bought B instead. The musical chair runs until some one like Kalidas
blows a whistle.
And if I am wrong in assuming or presuming, go to the Hanuman Temple and burst the
coconut in celebrations of the defeat of Kalidas.

Kalidas, Hong Kong
18-Dec-2007
For jmsr,
While I avoid giving direct advice to fellow boarders, I want to say that regardless of
outcome of stake sale, there is no need to rush to market for distressed sale of this
otherwise valuable counter. May be IFCI go down to double punch of its own less than
expected bullish news and fall of Dow by 172 points.
Your purchase price is far away from yesterday's closing price of Rs 108. In the opening
trade, may be the stock might be marked down but it will jump up again, because Sterlite
group if a winner may have to buy 20% more shares at same price at which they are
buying the stake.
The market rumours suggest that other bidders had put in bid of Rs 85 or so, and IFCI's
rumour monger CEO has given fillers that PU Banks converted into equity @ 107 ( We
do not know the real truth, because this CEO uses the language of Mahabharata - 'Naro
va Kunj Rova'). In this case, the Sterlite/MS group may have to buy 20% more shares at
their bid price which may be between Rs 108 and Rs 125 at the most.
If the stock falls far enough, the sterlite/MS will rush to buy at cheaper price, lending
support to the stock price.
Learn not to panic and avoid blaming yourself for not selling earlier. Remember you are
your best friend and you are your worst enemy. Even I re-entered this counter at Rs
100.50/108/ and 114 with just 2000 shares in my kitty, and I am not worried at all. Of
course, what I have put in is only part of my floating profit.
The stock will go to Rs 180 with or without Sterlite (unless there is stock market crash
due to tremendously weak US market and FII's fierce selling of Indian equities yesterday)
and that too within few months.
Kalidas, Hong Kong

18-Dec-2007

19th Dec 2007
IFCI – Stake sale called off
for Guest
The debenture trust deed (bond related document) has never been made public. However,
authentic source so far was Annual Report narration and subsequent affirmations, it was
revealed that PSU banks did not have any conversion clause (which made these bonds as
strictly Non Convertible). Further, in case of Bonds issued to LIC and also to
Government of India, IFCI also had right to redeem the bonds at par, which right was not
exercised by the current CEO in spite of such trade being highly profitable and non
dilutive.
This CEO is master of misinformation, so I do not want to listen to him. He is a liar. He

never says clearly and always double talks.
If we go by Moneycontrol reports, the gray market prices is around Rs 75 to 80 (there

will be no circuit). So all nationalized banks who subscribed the equity at Rs 107 will
find their value gone overnight by 30%. So PSU banks will lose 30% of 1500 crores OR
Rs 500 crores within one day of conversion.
They must be cursing this CEO Rai who will be ultimately dethroned within next 3
months. He is the most hatred CEO because almost all investors, after losing so much of
money, will go on cursing him.
Only those betray whom you trust most. IFCI is a shining example. Many boarders will
learn very hard way.
However, I am going to buy this scrip if it does fall to Rs 75. It may happen in first 15
minutes of trades. so I will sell my other scrips and pick up this one. Worst news is out,
there can not be any further bad news which is positive for the stock
Kalidas, Hong Kong

20-Dec-07
20th Dec 2007

IFCI – Discussions post stake sale was called off
Dear Kalidas,
As per the CEO Interview during last quater results, those bonds which are held by PSU

Banks and FIs has the right to convert their bonds if IFCI post continues profit for six
quaters (don't know exact period). This concern was raised by all bidders that if these
bonds are converted to equity after issuing 26% of present equity structure(64 crore) then
26% shall get reduced. Please go through the interview given by Mr. Rai for the last
quater result. I think this shall be the best ever can happen to IFCI present scenrio.
Nowonwards IFCI shall start with new journey.please share your views after going
through the interview details.
for Guest
The debenture trust deed (bond related document) has never been made public. However,
authentic source so far was Annual Report narration and subsequent affirmations, it was
revealed that PSU banks did not have any conversion clause (which made these bonds as
strictly Non Convertible). Further, in case of Bonds issued to LIC and also to
Government of India, IFCI also had right to redeem the bonds at par, which right was not
exercised by the current CEO in spite of such trade being highly profitable and non
dilutive.
This CEO is master of misinformation, so I do not want to listen to him. He is a liar. He

never says clearly and always double talks.
If we go by Moneycontrol reports, the gray market prices is around Rs 75 to 80 (there

will be no circuit). So all nationalized banks who subscribed the equity at Rs 107 will
find their value gone overnight by 30%. So PSU banks will lose 30% of 1500 crores OR
Rs 500 crores within one day of conversion.
They must be cursing this CEO Rai who will be ultimately dethroned within next 3
months. He is the most hatred CEO because almost all investors, after losing so much of
money, will go on cursing him.
Only those betray whom you trust most. IFCI is a shining example. Many boarders will
learn very hard way.
However, I am going to buy this scrip if it does fall to Rs 75. It may happen in first 15
minutes of trades. so I will sell my other scrips and pick up this one. Worst news is out,
there can not be any further bad news which is positive for the stock
Kalidas, Hong Kong

20-Dec-07
For Mangalorebull,
Look, I do not get pleasure in pointing finger at some body. It is a thankless job and
someone has to do it.

If Mr. Rai is a CEO, he has to act like one, not as puppet. IFCI is a listed company and he
has to be answerable to shareholders, not a few in finance ministry. He has to tell them
upfront that their directives if any were dangerous for the company and its shareholders.
Over 50% were public shareholders, and he was not listening to them.
I do not think Finance Ministry was giving him any dictate. Usually, the ministry officials
go by the recommendations of the the CEO or the Board of Directors.
I have always maintained in this column that no sane FII or investor will pump in
thousands of crores if they do not have control or major say in guiding company's policy.
Read the reality which is from Business Standard (20-12-2007)
QUOTE:
There have been ample indications from IFCI and government quarters that the strategic
investor, which would have had to make an offer to acquire an additional 20 per cent in
the company, would not be allowed to take management control. UNQUOTE
Are they idiots? If someone spends thousands of crores for 26% stake and again 20% for
mandatory offer, they will not get control or major say in the company they invest in?
What is the incentive for them to pump in thousands of crores - they are not charitable
organizations!
Further, I also mentioned in one post, that IFCI CEO was creating environment so that
bidders are scared off and their job is protected in the company. He also appointed over
45 middle level executive only a day before stake sale was announced. When someone
was going to take over, it was his privilege to decide who to fire and who to appoint. This
RAI was exactly conducting steps to defeat the stake sale process in August itself.
Now, read what Business Standard says in the same story:
QUOTE
ources said management control to a private player would have created uncertainties
about the fate of top functionaries of IFCI. This caused the deadlock.UNQUOTE
Yes, that's it. I am again vindicated in my assessment and also reading CEO Rai like a
book. He was trying to save his job.
The real story for Sterlite/Morgan Stanley appears to be the Morgan Stanley is in deep
trouble and obviously informed Sterlite that debt market crisis is so acute that even they
had to rush to Chinese government for US$ 6 Billion stake sale as announced today. MS
must have informed Sterlite management - forget raising money overseas - you won't get
even a dollar for take over.
Kalidas, Hong Kong

20-Dec-2007

for spillai,
Well said but out of context and misquoting or incomplete quoting.
Yes, I did say that IFCI may go to Rs 180 since the scenario surrounding stake sale would
be nearly over, so the stock will be re-evaluated on the basis of IFCI alone. When the
uncertainty is over, investors begin to focus on core fundamentals of the IFCI, and the
stock gets re-rated on value basis. Also the trend reverses once the news is out. It is
classic stock market syndrome - Buy/sell on rumors and sell/buy on facts
Almost 95% of boarders were focusing on who was going to take over. They are
obviously disappointed, and for a while the stock may fall sharply in spite of the fact that
entire recovery story and earning momentum of the IFCI remain intact.
If the stock does fall to Rs 70 or Rs 75, I have already instructed my broker to buy more.
I will be buying in two stages; one in first 15 minutes if the stock falls below Rs 80 and
one more time when the stock stabilized after initial selling is taken care of.
REMEMBER, if the stock falls to Rs 75/80/90. it means that there will be Cash buyers at
that level, who were eagerly waiting for steep connection to make an entry. These buyers
are generally long term buyers who know the intrinsic value of the company.
Today's fall will be more due to sudden marking down by operators on the exchange who
wanted to cover their shorts at lower prices. They were busy yesterday spreading rumor
of the sharply lower price in the gray market. This is the market for the manipulators and
for a very few, and meant to spread scare, so that they could buy back. If they do not
succeed, they turn buyers at higher prices because they have no time to cover the short
position otherwise. These are day and night operators. During day, they execute, during
night or evening in the Dalal Street, they plan for the following day. They always have
press reporters on their pay roll or entertainment list who become their mouthpiece.
Such abnormal slump in the prices gives us best buy opportunity. If Sterlite-Morgan
Stanley could not win, so what? Does it change IFCI's earning model or earning
momentum? No. as I have said before 'EPS is the basis of the stock price'. This will speak
for itself.
With regard to GV Films, less said is better. I entered the company by chance and never
gave any target or assessment. This company has merged another company in itself for
which it is writing off Rs 30 crores with High Court Approval. What was the motive
behind this?
I have therefore maintained that it is a stock not for the faint hearted because it is taking
wild swings between two extremes. I am making really good money, but it is more out of
accident than careful planning. I am selling off in rally. I never stay with a stock which I
do not understand or can not understand. This stock is the Arbitrators' paradise with BNP

as major participant. (there is GDR also) There is no question of my bearishness or
bullishness of this stock, because I never made or presented detailed analysis. At the
moment, it is punter's stock, story teller's stock; I will be out of this stock completely
retaining just a few thousands as a tracer.
Kalidas, Hong Kong

20-Dec-2007
21th Dec 2007

IFCI – Discussions Sterlite Industries IFCI
Kalidas ji
You remember this Anil Agrawal wnated sterlite to delist and run away from india but
this beiman bihari appears every now and then whenever some govt. company is on sale.
Be it balco, hindustan zinc and IFCI.
He is perfect in the art of manging govt. babus to takeway booty to london. he is a traitor.
Atul Rai could be packing his bag to join one of vedanta company. What is needed to be
known is that who made killing in todays carnage. He could be definitely an insider or
working as front for these guys.
For Madan,
You are right. In fact he managed to de-list old Sterlite Industries by artifically causing
steel fall in its prices. He also ran into rough weather for his Copper project due to
environmental reasons.
Later, he made some adjustments and floated Vedanta. Meanwhile, metal markets turned
the corner, and he rode the wave of success. He then got Sterlite re-listed as your are
seeing in present form.
I have not researched his full history, but I do remember one of my client making huge
money in relisted company in short period of time.
Agarwal/Ruia brand of businessmen will not reserve everything for themselves. To be

honest, quality of Indian corporates is very poor, They are passively supported by the
Government of various states and centre. These busineemen have special art of
manipulating Governments and their officials.
You may be right about insider trading. While I do not have verifiable information, I was

told by one broker that some IFCI director sold large chunk of shares at Rs 116 and was
busy accumulating at about Rs 77. The quantity mentioned was unbelievably large. I
therefore avoid attaching much credence to such heresay, but there could be something in
this smoke.
The carnage was no doubt brutal. The CEOs of PSU banks may suffer constipation and
sit on toilet seat for a long time for having lost 33% overnight. About Rs 1473 croes were
subscribed into IFCI shares @ Rs 107, and with stock closing at Rs 77, the loss to PSU
banks is massive Rs 500 crores.
I do not know why these banks did not step in to turn heavy buyers at Rs 77. When they
can invest @ Rs 107 only a day before, why should not they buy more equity at Rs 77?.
IFCI's fundamentals are as solid as ever (although CNBC's Mukherji gave his funniest
assessment of IFCI valuations and made a fool of himself to serious investors who know
what is the true value of IFCI). These PSU banks are just STUPID in their investment
behavior.
One F&O contract of IFCI was close to 7800 shares, If someone who bought the shares at
Rs 107, will be losing almost Rs 2 lakhs in just under one day. Many will go into deep
depression and I would not be surprised if you hear many suicides within next 15 days or
so. Some brokers may go busted which may cause the SENSEX to fall heavily. Christmas
this time is no good.
IFCI has 640 Millions shares outstanding of which 40% with the general public. Thus,
real public float was about 256 Millions. NSE recorded volume of 148 Millions and BSE
over 60 Millions; so in all 200 Millions shares traded at lower price, that is whopping
80% of real public float.
This means that those who wanted to sell, have sold. Tomorrow, that is on 21/12, the
stock might be marked down due to CNBC's belligerant market talks, which may give
best buying opportunity. I believe that after initial fall the stock will recoup almost 18%
to 20% of last day's losses and might go back to Rs 92 level soon.
I bought today 2000 @ 77.50 and may buy twice its size if the stock does get marked
down (I feel that the stock might rebound in opening trades and will recover very fast)
It is also my years of experience that once a stock get hammered and investors lose tons
of money, the confidence crisis result and the stock finds difficult to rise fast. At that
time, the institutional buyers step in and make most money.
I am therefore bullish on the stock from now on. The stock is back in my accumulation
list. It may have wild gyrations due to margin calls and otherwise, but after a day or two
when the Auction subsides, that we see the stock again stepping up on the ladder to go
higher.
Kalidas, Hong Kong'

21-Dec-2007
PS: I will not call anyone a Traitor. It is a pretty strong word and should be used very
sparingly. Money is one thing, patrioism is another. One may be a crook but he may still
be a nationalist.
Short Selling SEBI
Sebi has allowed the short selling for all classes of investors, reports CNBC-TV18. The short
selling will be based on secondary market advisory committee recommendations.
They will put in place a full-fledged lending and borrowing scheme. Stock exchanges will issue
guidelines for stock lending and borrowing.
The date of implementation will be communicated by Sebi subsequently.
Sebi has, on the recommendations of the secondary market advisory committee, allowed short
selling for all market participants at this point of time.
The guidelines will be laid forward by the stock exchanges and to facilitate short selling. There
will also be a full-fledged mechanism for stock lending and borrowing, that would be set up under
the overall framework of the Securities Lending Scheme of 1997. So, on the face of it, the
reaction is going to be very positive though the date is not out yet on when this would be
implemented. This is just a circular that has been put out and this will be taken hugely as a
positive for the markets.
There are multiple facets to this, because if you are a positional trader and an arbitrage trader,
you didn’t have this. This was only available to institutional players. Now, arbitragers can actually
come in and play this game and actually play a reverse arbitrage game wherein they buy the
futures and sell the cash. So, it deepens the market.
It makes the short selling side of the market a lot more liquid. To give an example- if I was an
investor and if you had 5 investors who basically go long and five of them go short net-net, today
if you were not allowed to short sell and you only went long, it would practically take the market
up. At some stage, of course, the people who took that short position would be right and then the
market would fall.
What this does is it deepens the short side of the market. It allows more players to come in
(specifically arbitrage players) and it reduces the overall volatility of the market. Some people that
we spoke to said that it could come in line with the mature markets and the volatility could come
down quite sharply from 6.6% or thereabouts to about 6% overtime. So, that should be taken as
a huge positive for the markets.
Another aspect to look at is the margin cost of these transactions. Now, a lot of people believe
that it will depend on the volatility of the stocks. But on an average, the margin cost should be
about 20% or thereabouts. Some people think that if it is as high as about 30-35%, it could
relatively become an unviable option. But I do not think that will be the reason behind introducing
such an instrument, because its been introduced to improve the liquidity. Remember, this was
always coming and market always expected it.

It was just the timing of this issue that was relatively important, as we understand. So, it is a huge
positive for the market: it increases the liquidity, reduces the volatility and it was something that
was always coming. So, we will just have to wait and see how arbitragers will react to this news.
It should be a huge positive for that fraternity as well.
21st Dec 2007

IFCI – Post Actions
For Victorjunior,
Sorry to note that you have sold your entire holding at 78 when I actually bought again. I
had recently reentered at 100.50, 108 and then at 114 and when the stock dropped like a
stone, I bought 2000 again. I also intend to buy more if it opens lower.
No, if you have paid Rs 100 and sold at 78, causing you a loss of Rs 22. If the stock drops
to Rs 65 as many are suggesting, you may buy back same quantity again so that your
original cost comes down to (100-78+ 65 = Rs 87). In taxes also you are benefitted,
because your immediate losses can be set off to short term profit.
I understand that you are hurt or disappointed. Seven months of stock experience is not
enough. I was stock broker for 16 years and for 5 years I have turned investor, having left
broker's field due to my new business. In these 21 years I have seen many situations
similar to the present one, and then improved my return year by year. My original entry in
IFCI was at Rs 12.60 or thereabout and I used to hold 65000 shares in all. I sold 21000 at
just 13 when I lost Rs 3 lakhs in Global Trust Bank when RBI/SEBI/BSE/NSE/MOF
colluded to cheat the investors. Rest of 44000 shares were sold from Rs 57 to 97 with
average selling price of about Rs 75 (not calculated).
Nothing has changed a day before and after. The recovery story is intact, and all those
guys in Moneycontrol, press have either hidden agenda or simply idiots who do not know
how to analyse the stock. You are nursing your loss of profit - what about PSU banks who
only on 17/12 subscribed to IFCI equity at Rs 107 spending over Rs 1500 crores and now
find losing Rs 500 crores in just under 2 days? The executives of those banks can not
even sit on their toilet seats comfortably.
Book value have no significance in financial stocks, whereas BV is trumpeted on by all

bear cartel to force the stock lower. EPS or Earnings is the key for the stock prices - how
many times I have to reiterate in this forum. EPS of IFCI is intact and many equity
holdings are going to boost the EPS to great extent. Read my original post of my target
Rs 712 if Goldman takes over or Rs 300 if he did not. I still maintain my target of Rs 300.
I give analysis only in this forum and never give any advise to anyone to buy or sell, but

today only for you for the first time and last time, I am telling you to buy back when it
drops again or buy back even at current level or higher. Do not count that you bought at
Rs 100 and sold at 78 lopsing Rs 22.
Presume that you are buying back to correct your error in selling at Rs 81 (if the stock
does not drop) then your loss is only Rs 81 - Rs 78 and not Rs 22 as you originally
booked. Yes, there may be book loss of Rs 100 - Revised entry of Rs 81 = Rs 19, but you
have valuable stock in hand. Suppose it goes back to Rs 131, then you are cheerful,
having made Rs 28 profit (Rs 100-Rs 78 +Rs 81 = Rs 103 your cost and selling price of
Rs 131, so gain is Rs 28. If you did not buy back, then you have no stock in hand and you
lose permanently.
I still tell you regardless of gyrations in the IFCI, the stock is a screaming buy. If you do
not make decent money in next 18 months, you can come and shoot me to death and I
will leave a note in your favour pardoning your action.
Don't think that you are IT graduate and therefore did not understand finance. I am also
B.Sc.(Hons) in Chemistry + LL.B + CAIIB (Banking diploma) + ICWA (Intermediate of
Cost Accountancy) + 19 years of bank experience + 16 years in stock/bond market in one
of the dynaminc financial center in Hong Kong + 5 years of own investment experience
where I have made over 800% in last 6 years as long term investor.
If you are still perturbed, take a holiday for 5 days with your wife and children to some
hill station - I will pay Rs 10000 as special gesture to regain your confidence. No
repayment is necessary - outright grant for you.
Kalidas, Hong Kong

21-Dec-2007
for Nagesha,
You have taken absolutely right actions. Hold it for 12 months, and you will see the
handsome gain. Why 12 months, just see this stock by March 2008.
Do not pay any attention to some view that IFCI had no right to demand preimum of Rs
75. Even at Rs 110 or Rs 145, IFCI will be selling itself cheap. Where you can find a
stock with improving earnings and potential earning of nearly Rs 30/shr? It is one of the
cheapest finance stocks anywhere in the world. Nothing has changed and whatever is
going to change, it is going to be better, not worse.
Even PSU banks might try to buy the stock again to average down their price, UNLESS
they are downright stupid to sell at huge loss. They will never do that because CEO of
these banks ask for permission for a pee from the Finance Minister when they are called
for a meeting.
My grudge was against its CEO Atul Kumar Rai who from the day one he joined IFCI,

started making mess out of it by constantly flip-flopping and changing rules of the game
half way down. By the time his one gimmic is over, he reinvents another one. He was a
curse on IFCI and sooner that Idiot goes, better it is for IFCI and its investors.
The only worrysome factor is today's SEBI announcement that it would permit short
selling in F&O segment. Some may use this opportunity to force it down, but the short
recovery will be so swift that the current downfall may look insignificant.
All investors were made 'Goats' on the eve of 'Bakri Id' . Innocent investors like goats get
killed or sacrificed whichever way you look at on this Holy Day or Holiday.
Kalidas, Hong Kong

21-Dec-2007
24th Dec 2007

Kalidas: Investing principles ***
07362 for Guest - King Porus Dated 12/24/2007

I normally pick up the stocks which can multiply 5 times (because the market is high) or
at least 10 times over a period of 5 years. Because the stock value
now have higher base, to get that kind of return (10 times) is too good to come true. So I
have scaled down return to modest by my standard to just 4 to 5 times from current base.
However, I sell some when the rise is too fast, and the stock has nearly trepled. I sale
1/3rd of the stock so that my capital is fully recovered and what I
have is only floating profit. Further, I reserve that cash only for that stock and do not use
for any other stock. If the stock does come down by 20% from sa
le price, I buy back and hold it until it reaches within 20% of my original sales target.
To help you understand better, I bought IFCI at Rs 12.60 when my original target was Rs
120. At that time, there was no talk of any stake sale. I set the target at that time based on
earnings and recovery. Further, I never invest more than Rs 15 lakhs (Original
Investment) in one stock at one time, howsover good
it may be. I hold maximum 10 stocks and in very rare cases, I go upto 12 stocks,
In case of IFCI, I intended to sell when it reached Rs 60 or about, so I sold 10% at Rs 57,
and then went on selling another 15% upto Rs 77. Then suddenly when it went upto 97, I
disposed off all holdings only due to presence of its CEO who was constantly flipping
around.
The logic was, when the stock had trepled or quadrupled, and if you sell 25% to 33% of
your original holding, your capital is realized and protected, and wha

t you have is only floating profit. Further, when the stock drops over 30% and
fundamentals are intact, I buy back same stock with same realized capital I ne
ver use that capital to buy any other stock until my first stock has reached nearly 80% of
my original target.
By holding long term, at least 12 months, the resultant gain is Long term gain which is
Tax free. I rarely trade in beween unless market picture locally and
overseas has deterioated so much that one has to keep more cash than scrips. For
example, currently local conditions may be good but overseas situation is ve
ry scary. I do not buy that silly idea that local market is 'immune' to global market.
Globalization means everything is intertwined, and if one link is brok
en, entire chain is affected.
Once I had liquidated almost 80% of my total holdings (except UCO bank, Essar OIl and
Essar shipping) but again started buying when I took the view that some
opportunities like NOCIL (25 to 40) , Air Deccan (near 142) , Hotel Leela (near 56),
Spicejet (53 to 56) and some speculative scrips like GV Films (Rs 6.05
to 7.28) were too alluring to miss.
Now, again I am taking a view that market is entering dangerous face from 26/12 to 23/1
because most banks and insurance companies will start reporting their
Dec quarter after second week. So many skeletons will be shown with the result that
market may not go higher or may collapse like a thud. (which is more lik
ely)
So, I am in liquidating mode now (Sell over 80%) and keeping only those scrips which
can outperform overall market by yards. I will keep some IFCI, very few
Hotel Leela, Sell over 70% of GV Films in sharp rally, sell Essar Shipping in small
increments even at upper circuit prices, buy some more IFCI (no buying ta
rget - even current is the good one), sell Spicejet steadily, sold AirDeccan completely,
Sold TV Today completely (selling higher value stocks realize more c
apital), Sold Mid Day also completely (I had only 1000), hold Nocil, hold UCO bank and
also hold HPCL (for 24 months at least).
I will not buy back for at least a month, because I will be also traveling to India in
January for business tour and I may not have time to focus on stock ma
rket.
I will reassess the situation after 26/1 when the most of the Dec result overseas is out (not
worried about India Inc result)
I will reassess the situation after 26/1 when the most of the Dec result overseas is out (not
worried about India Inc result)
Kalidas, Hong Kong

07363-for Victorjunior - 12/24/2007
See my Post 07362 under this thead marked for Guest - King Porus. I avoid duplication
for many posers.
Following comments are made only only once and will not be repeated. I focus on those
stocks where I see value on long term basis. For short terms, there are many
knowledgeable boarders - you may pick and chose.
HOTEL LEELA
Good to own. Target 92 on up side, Getting stronger everyday, Hotel Industry will
prosper in future. Leela and Taj GVK are premier stocks to own in Hotel sector.
NOCIL:
Visited 3 times upper circuits. 5% circuit is imposed by regulators to help operators to
accumulate this scrip. When the stock has been accumulated enough, upper circuit may
change to 10% and then 20% that will be time to sale. I will buy until 50, but will not add
position now until 26/1 because of market risk (See my post 07362 under this thread)
GV FILMS
A difficult stock. No news, feedback but just rumours drive this stock. I do own about
48K shares. In sudden rally, I am selling and in correction, I am buying back ensuring my
position does not exceed 36K. Sold 6K recently at 11.85 and bought back on Friday at
10.85 - I deal in lots of 6000 or 12000 at one time because Company will distribute new
shares of other two companies @ 1 share for every 3 shares held. Low prices of this stock
is gone. (Rs 6 to Rs 8 range). Recent volume suggest the stock might triple from recent
level. This is risky stock. I am making money by accident.
UCO Bank
I am still a buyer below 60. I like the stock that moves slowly in small steps at a time.
This is one of them. Immediate target is 80, over 120 in 12 months time if there is no
market upheaval.
SPICEJET
Air travel industry will boom in India, almost quadrupling in next 5 years. Over 30 new
airports will be built in medium cities. This stock is owned by many funds and I am quite
bullish. It may double or triple, may be more times due to it’s seksy takeover appeal.
Follow its earnings. Airline stocks incur heavy debts and their breakeven point is very
high - usually 65%. I did sell some to supplement cash reserve but I still hold good size.
My entry point is low 52 to 57. Stay with it.
HPCL/BPCL/IOC
These trio are gem. I hold HPCL about 2K but my favored one is BPCL that I sold
because selling BPCL gave me 33% more shares in same industry via HPCL with same
valuation. All these stocks will quadruple in next 3 years. The Dec Quarter should be

good, depending on how Oil bonds income accounted. These are the stocks for
retirements. Oil price policy may change soon. Better than MRPL or RPL, though Essar
Oil is in different category (like ONGC - Oil production + Refinery combined)
TV Today/Mid day
After buying at 149 to 152, about 2K, I sold all of them to realize more cash because this
is Rs 180 stocks. The media stocks always have take over appeal. TV today is expensive
but less risky. I will renter after my cooling period ends on 26/1.
Midday is in same category. Its tie up with Times of India group may help it steady
growth. It’s appeal as Tabloid does not offer much advertising scope. Inspite of its
popularity, the management is staid. They have not capitalized into its popularity. Runs
like a family owned business. I will buy it in steep market correction. TV today is better
than Midday.
Please that I am selling to raise cash due to steep market correction fear. I read a lot,
really a lot. The real effect of sub-prime is not felt by world market. It is just scary.
Apocalypse may happen at any time in financial market.
Sometime, 'Knowledge is a crime and ignorance is a Bliss'. So my knowledge makes me

a coward rather than a cowboy. The market risk is so much today that if it does collapse,
it will take another 10 years to recover 70% of amount invested. Better stay with the
stocks with less debt as interest rates will flare up beyond imagination in overseas
market.
Kalidas, Hong Kong

24-Dec-2007
for Guest
My reply to others already answer your queries. I just show you part of that reply.
HPCL/BPCL/IOC
These trio are gem. I hold HPCL about 2K but my favored one is BPCL that I sold
because selling BPCL gave me 33% more shares in same industry via HPCL with same
valuation. All these stocks will quadruple in next 3 years. The Dec Quarter should be
good, depending on how Oil bonds income accounted. These are the stocks for
retirements. Oil price policy may change soon. Better than MRPL or RPL, though Essar
Oil is in different category (like ONGC - Oil production + Refinery combined)
For UCO bank also you can see the comments there (Ref: 07363 under this trhead). I also
hold 30K shares. Please avoid questions which are already answered here or elsewhere by
me.

Kalidas, Hong kong
24-12-2007
For jmsr
Do not chase this stock (NOCIL). This is not the time to pay top rupees. You have better
bargain in IFCI - see it did not fall to Rs 65, not even below 70. I bought some at 76.23.
When you can make money in liquid counter (over 68 Mln traded on NSE and more on
BSE) so those panicking speculators who wanted to sell, have sold. In last two days,
almost entire public float have turned over. Not many sellers are left.
If PSU Banks rush to buy to average down their price, then the stock will jump up like
anything - but not sure - these banks will approach FM for permission.
If PSU banks turn buyers, they may buy at least 60 Millions shares (50% of their original
size in shares) which may lend not only support to IFCI prices, but the stock may get into
nineties again. We do not know yet whether PSU banks are business minded or babu
minded.
Kalidas, Hong Kong

24-12-2007
Kalidas: Airlines business – Capital intensive; IDA
Dear Mr.Kalidas, Your messages are very informative and to the point with clarity. I am
happy to be associated with this kind of boarders. I was also living at Hongkong
(Kowloon - whampow fa yun) for three years (1994-97). Any how I will take a close look
into your msgs hereafter. I am surprised to see that you are a little bit bullish on Indian
aviation Industry. I am not convinced. See the accumulated loss of Kingfisher / deccan
avi - but how come they are valued so high, inspite raising direct / indirect costs. Spice
jet also sailing on the same boat. But, I wish to view them from different angle, with
healthy discussion / different opinions - view points / alternative options & analysis. Best
Regards.
07364- dated 12/24/2007 4:39:01 PM - for Lion & Tiger
Capital intensive industries always have start up losses. Further, we have to identify
whether they are cash losses or book losses. The Indian Tax laws allow double or triple
depreciation charge, in addition to Initial Depreciation Allowance (IDA), that makes
losses larger than they are. These are no cash losses, and in fact they are income earner.
When these companies start generating operating income, the past losses are allowed to
set off, saving 30% of corporate taxes. Thus current losses of Deccan and Kingfisher of

1000 crores combined, will save 300 crores of taxes in future when operating income
turns positive.
Entire Reliance was built on Tax Planning or Tax Evasion whatever you call. Even
companies like RPL (Reliance Petroleum Ltd) incur losses now, and still the stock tripled
in last 6 moths, in spite of the fact that the unit will come into production only in Sep
2008 or even later.
Amongst all sectors, Airlines and Hotels have brilliant prospects. Software industry is a
history, meaning that they have seen their peak and at the most they can have stable
growth.
For 5 star hotels and Air Travel to generate profits, more wealthy people and
business/government sector employees are needed. The pay scales of mid-level executive
is touching the sky. Almost all mid level to top level executives have perks in the form of
Leave Travel Concession for their entire family. However, main driver for growth is the
Business Travel segment. Those who travel by Air also live in higher end hotels.
Therefore, Air Travel and Hotels are like brothers and sisters. Both are capital intensive,
and therefore have little competition; because new entrants have to have deeper pockets
and over 3 years to start the new project. This is why Airlines + Hotels are being victim
of Merger and Acquisition where new investors are willing to buy out the companies
already on losses but have little lag time to generate profits.
Glad that you are a Hongkonger. I hope above will clarify your doubts.
Always remember, stock market looks to the future, not present or the past. And people
always paint futures bright, like astrologers.
Kalidas, Hong Kong

24-Dec-2007
27th Dec 2007

General talk
Dear Mickey17,
There is absolutely no doubt in my mind that IFCI is one of the most valuable stock in the
market. Now that all stories and fan fare are out, disappointed investors will take some
respite. There will be a confidence crisis in IFCI for short time. But it will soon be over,
when the funds will start looking at it when January starts, when the funds get the extra
allotment.

May be you sold at Rs 78. May be you should buy back even at Rs 80 because you lose
only Rs 2 instead of Rs 22 before (100-78). I also bought at 76+ a day before and 80+
yesterday. Will buy more if there is correction. I am now going to hold for over 2 years to
realize the full potential.
Right now, my focus is on NOCIL, Spicejet, Hotel Leela and HPCL (which has begun
moving up in strong volume). My other holdings Essar Shipping, NOCIL and Hindustan
Copper are just going up in upper circuits of 5% and doing so well that I am placing order
to sell only in daily Auction (except NOCIL which has just begun its journey) where one
can get much higher price (sometime 20%) even if the circuit is only 5%. That circuit
does not apply in auction. My broker advises me the stocks in auction by 10:00 AM India
Time. Delivery has to be made on same day.
I am waiting this circuit band to get into double digits (10% to 20%) when I will start
taking profits. I intend to buy back DISH TV agains if there is more correction.Looks like
it has consolidated enough to go higher.
Kalidas, Hong kong

27-Dec-2007
for shia
They are good for long term holds. When I said that LICHF and GE Shipping have target
of over 1200 and 2000 respectively, there is no need to write again and again. I do not
change my opinion frequently.
Did I sell some of them? Answer is yes just to swap into some other counters where I saw
immediate rising potential in short period. Still my core holding is intact.
When I want to raise cash, I sell large value stocks so that my cash holding is larger than
selling other Mid cap stocks. I still maintain we are sitting on Volcano in the form of
severest form of financial crisis in the aftermath of sub prime fiasco. You may read only
local market, but I study all markets especially US, HK and bond markets where I also
have significant exposures.
Kalidas, Hong Kong

27-Dec-2007

for Guest-King Porus
NOCIL is not listed on NSE but it is well traded on BSE. There is nothing unscientific
about BSE. You must get out of this phobia. Look at the stock, not the stock exchange
where they are traded. Agreed NSE better than BSE, but what to do if the stock is not
listed there - like Hindustan Copper which I picked up between 36 to 71, giving average
price of Rs 46.50 and now over Rs 440?
UCO will require patience. Once it exceed 61 this time, it will begin to trade higher in
another 40% range on upside.
GV is a flicker - I own over 42K having reduced from 72K as I do not wish to exceed my
self imposed limit of Rs 300,000 in small cap stocks.
IFCI will consolidate for a while. Even good stories may be ignored, as the credibility is
tested. Still, it is one of the best financial stock one should have in their portfolio at this
price and lower. Once it stays above 80 for next 3 days consecutively, it will start rising.
PSU banks may turn buyers - they have no choices.
I am still buying HPCL in every dip and wish to accumulate along with BPCL. These
stocks will fly from January onwards - stocks are already on runway with engine running.
Kalida, Hong Kong

27-Dec-2007
for Kichen - Reply Post (Ref: 07-368 of 27-Dec-2007)
I really do not believe that IFCI has dearth of capital anymore. Every quarterly profit
reduces its debt (because losses have been already provided for) in leaps and bound.
Further, if it really needs to augment its capital, it can come out with Secondary IPO or
private placement straightaway, instead of going through all these drama of inviting EOI,
then short listing, then due diligence, then selection, then negotiation etc. This procedure
is more like 'Swayamvar' in historical days like inviting brave soldiers to Swayamvar and
then asking them to lift 'dhanush' (similar to submitting bids). Whoever lifts the dhanush
or gives highest bids, get the beautiful bride. (Due diligence was not required at the
'Swayamvar ' time, because almost all invitees knew the attractiveness of the bride)
If IFCI throws open the IPO now, when everyone knows its real value, it will be
oversubscribed several times, and even PSU banks who are stuck with higher prices stock
at Rs 107, may have chance to subscribe at lower price for large chunk of the shares.
Even if the Right Issue coincides with the IPO where the existing shareholders are given
chance to subscribe to the Right Shares at substantial discount to current market price

(the way Ratan Tata did for TISCO), then huge capital could be raised in days, rather than
following 6 or 9 months long procedures, which yield nothing. It is more like pregnant
lady suffers trauma and delivers premature baby, like the Morgan-Sterlite bids, which
could not survive.
Like all other IPO's, this would be taken up like a hot cake, because in IPO the publicity
campaign focuses on only one thing - Earnings and IFCI's holding of unlisted and listed
stocks/bonds/debentures. If IPO is 10 times oversubscribed, then the price could open at
Rs 150 to Rs 180 instantly.
IFCI guys or their Financial advisers have no imagination at all. They are all duds.
Kalidas, Hong Kong

27-Dec-2007
28th Dec 2007

General talk
Kalidas Ji as you replied to jmsr, can you specifically advice on NTPC. Do you think
NTPC is over priced and a sell at current prices?
Cos, i was waiting for some funds to invest in IFCI but if you do think that NTPC is over
priced then i might as well considering exiting it partially and put the same monies in
IFCI or HPCL.
FYI i added some more HPCL today @ 343 levels intending to keep it for long term.
I hope and do believe that your guidance and 'marg darshan' i shall be able to come to
the same stage where i was when IFCI was @ 110 levels as you would recall i had almost
all my monies in this counter before exiting completely @ 78.
I read all your posts with great interest each day, so please keep posting.
I sincerely wish you lots and lots of happiness this coming new year!
for Victorjunior,
There is unwritten saying that those who do not know the art of investing, invest in power
and utility stocks. Most investors in this kind of stocks are Insurance companies looking

for steady yield.
In India, where power could be stolen by any villager or person or where the employees
of the Power Grid teach you how to reduce your power bill by placing magnet near the
meter so as to slow it down, the monay can not be made in such highly capital intensive
and low return industry.
I did tell you to buy back the IFCI but you did not. It has just started upward climb. You
knew the movement of the stock for so long, what made you exit in search of another in
wilderness?
Further, I do not follow every stock. Stock market is like at big restaurant where 500 items
may be on menu. We can select only a few to our likings and we stick to it almost every
day.
If I follow any stock, I will write it here. If I don't, it means that it is not being followed
by me at all. You have to go to the respective counter and read other boarders to form any
opinion.
When I told you that the stocks were overprices, because there has been lot of hypes in
power stocks. I avoid these hypes. If I have to invest into energy, there are several plays,
and I did mention at one time, to invest in Gas related stock which will have brightest
future. However, when I say that they are better investment, you have to place them on
your radar list, watch them, study them and then determine the entry level.
It looks like you are guided more by news in the media or TV. If you too close to the
market, you will lose your discerning ability. Look at the market from the distance. You
will make less mistakes.
Kindly therefore do not ask me questions relating to some other stocks - there are over
7000 stocks - and I hardly follow 15 to 20.
Kalidas, Hong Kong

29-Dec-2007
for Vistrojunior (continuing)
You mentioned that you invested entire money into just one stock - IFCI. You should
never invest more than 10% in any stock if your budget is high or more than 20% if your
budget is low.
You can have one wife but 4 or 5 children. 'Stocks' are NOT similar to 'wife', where you
spend whole life with here.
They are more like children where you invest into them, to let them grow in the hope that

in advancing age they will be your support. But you know very well, not all children take
care of their parents in old age - they are treated more like disposable napkins.
The stocks are also like that. If they work, fine, and if they don't, part their company,
same way you let your children live separately if you can not stay together.
Kalidas, Hong Kong

29-Dec-07
for Guest (Reply Post Ref: 07371 of 28-12-07)
It is my established position that I do not give any buy or sell recommendation because I
do not know the focus, status and risk profile of the concerned Boarders. I can only show
you my analysis how good the stock is and where it is going with some targets. I am not
very short term operator generally, and in very exceptional movements, I do trade short
term when the market is considered at very high point.
You mentioned that you entered at 111 which means that you were fence sitting for a
long. Even then, I do not treat your entry point very high, although short term the stock
corrected out of more disappointments in superfluous developments like stake sale.
I am currently buying having bought almost 4K between 76.11 to 81.50. My target is Rs

180 over 12 months. I can not therefore advise you to sell at current level. I had also
bought at 108 and 114 level in small lots, but bought more on correction. Will buy more
about 4K if it does come down to less than 70 (which is unlikely except in market crash).
It is my experience that before any stock makes a major move on upside, it comes down a
bit for a day or two so that market-makers can get hold of the trading stock. This has what
happened by yesterday's negative closing. It is the first bullish sign for me. These players
never speak or talk to the market nor give any opinion. Their best strength is 'Silence'.
Kalidas, Hong Kong

28-Dec-2007
31th Dec 2007

Bonus issue, EPS, RONW
Dear Kalidasji :
You are absolutely right when you say that ' And before I go, no one thinks this way that
Rs 10 FV share is at Rs 1200. Only Indians in India think this way, no where in the
world. The world over the criteria is only EPS.' However for BETTER CLARITY only I
add the following :
Say A, B, and C companies have SAME EPS of Rs.5 for the year 2007. Their P/E multiple
is also the SAME, of say, 20. However, the face value of each company, respectively is A-

Rs.1, B-Rs.10, and C-Rs.100. So UNTIL you use your EPS data IN CONJUNCTION with
Face Value your conclusion about a company will not be accurate. Face Value, Market
Value and Book Value have some connections. Further, in my view, all over the world
RONW is given more importance than EPS as RONW ( Return On Net Worth ) is the true
barometer of the earnings on shareholders funds.
for JaNNak (Reply Post 31-Dec-07)
Disagreed. What is Net Worth? Net Worth = Capital (Amount) + Free Reserve. If Bonus
is issued, reserve is converted into capital. So the reserve is reduced, and capital is
increased by same amount. Net Worth remains same, but number of shares increases to
the extent of bonus shares (numbers) issued. In stock split too, the number of shares get
divided, so number of shares are increased. For instance, If IFCI has 64 crores of shares
outstanding, and if shares are split 1:2, so that number of shares are now 128 crores, but
the share capital amount remain same. Return on Net Worth also remain same, because
RONW is counted on value, not on number of shares. Book value per share changes, but
it has no special significance.
RONW is also misleading. If the company is heavily leveraged (more debt than equity),
the capital base being shallow, the return on capital increases. That does not mean that the
company is healthy. It is treated as 'debt ridden' which ultimately lead to the condition of
'bed ridden'. Often promoters resort to debt to increase the EPS which in turn raises
Market Price of the share, which is entirely based on EPS, regardless of underlying
quality of the earnings.
Book values are always relative. You value the Net Assets value too high if the property
market is buoyant as it is now. If the underlying value deflates, just has it has happened in
USA mortgage market, the debt suddenly raises its head like a demon. In poor markets, it
is difficult to raise money by way of equity. (like IPO)
The promoters always try to increase the EPS by debt leveraging. Because, if the share
price improves, they have their own printing press to issue the shares to themselves, just
as Essar Oil management did very recently.
Theory and Practice differs. Just as Ideal and Practicality differ. Rework your numbers in
above light, and you will know the truth.
Kalidas, Hong Kong

31-Dec-07
NTPC valuations seem to be much more stressed as compared, the rate of eps growth in
next 3-4 years (though wonderful development/growth in power sector) would hardly be
anything. NTPC's turn-over (sales revenues) would definitely grow at fantastic rate, but

its eps would not grow at fantastic rate, it would hardly grow. Have you ever seen the
annual report of NTPC. What is the salary of a (regular employee) truck/car driver (with
say 15 yrs experience)? Definitely more than Rs 20K per month. It might be interesting to
compute the cost of (specially manpower cost) of one million units of power generated in
NTPC. Compare it with Surat Elec supply CESC etc. You would realize a huge difference
of cost of generation (though the main ingredient Coal would be available at the same
price, or may be slightly cheaper to NTPC. The only advantage in case of NTPC is it is
govt organization. Govt organizations when running in huge losses, the govt changes the
policies in their favor. But govt can not change the policies in such a way that despite
their deficiencies, they make huge profit growths. If it happens, it would be very clearly
visible to the competing private sector and they would raise a voice.
The story of IFCI is the story of Indian economics. One can see tremendous growth for
next 10-20 years. Though IFCI also has govt stake in it, what we have understood that
ultimately some competent hands would be taking the control, and plan the business
operations in a way to maximize on returns. The assets which were bad a few quarters
back, have started to turn good, and the trend would continue. The rate it which mid-cap
shares are surging, might probably get reflected into the asset valuation of IFCI with
some time lag.
Considering all the factors, I think one should go for IFCI if one is willing to take some
minor risk for good appreciation. NTPC would be a story of consistent slow growth in
share price, but you will feel more secure. Any share price appreciation beyond its
performance would probably mean re-rating of the company based on its huge size,
consistent growth in volumes, and re-rating of india for the visible growth.
Kalidas on IPO and market
for King Porus,
If there were no FM, no AK Rai, no CNBC, no Udayn Mukherji, no bear or bull cartel,
then there would not have been any market, and all players would have been sitting in
Hair Cutting Salon instead of BSE/NSE terminals. Accept what it is, rather than what it
should be. That is what is called market.
Kalidas, Hong Kong

31-Dec-2007
for GuestKingPorus,
I never invested in IPO in my life never pay any attention to such issues. 16 years and no

IPOs. I stay away from hypes. I am basically a secondary market player where volume,
turnover, realism guide you properly.
Kalidas, Hong Kong

31-Dec-2007
01th Jan 2008

2007: The year of crazy bull run
2007: The year of crazy bull run

2007-12-31 11:40:38 Source : moneycontrol.com
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By--Varindar Bansal, Anichya Shah and Shravan Sreenivasula
CNBC-TV18
The year 2007 was outstanding for Indian equity markets as both the benchmark indices Sensex
and Nifty conquered new peak with hefty gains -----47% and 53% respectively for the
period December 29, 2006 -December 30, 2007. The BSE Sensex added six thousand points
during the year, which was better than the five thousand points it added in 2005.
Index Changes
Indices Returns
(%)
Sensex 47%
Nifty 53%
Small-Cap 87%
Mid Cap Index 74%
BSEDollex-30 65%

Synopsis of 6000 points
2000029th Oct 2007

1900015th Oct 2007
180009th Oct 2007
1700026th Sep 2007
1600019th Sep 2007
15000July 6, 07: 15000
FIIs Flows
The Foreign Institutional Investors (FIIs) have also shown enormous interest in the Indian
markets by making record investment of USD 17 billion in a single year. FII investment of USD
10.7 billion in 2005 was the previous high.
FIIs Flow
Year
(USD bn)
2007 17.00
2006 7.99
2005 10.70
2004 8.52
2003 6.59
2002 0.75
2001 2.84
2000 1.38
Sectoral Indices
Sectorally, BSE metal, capital goods, oil & gas, consumer durable and bankex have outperformed
the Sensex. However, FMCG, healthcare and auto sectors remained underperformers. IT was the
only sector that has given negative return for the year.
Indices Returns (%)
Metal Index 121%
Capital Goods Index 116%
Oil & Gas Index 114%
Consumer Durables 85%
Nifty Junior 74%
PSU Index 70%
Bankex 61%
FMCG Index 18%
Healthcare Index 14%
Auto Index 1%
IT Index -14%

Top 2007 F&O Stocks:
In the F&O segment, a few stocks gave hefty returns. Stocks like RNRL gained over 700%, Ispat
Industries surged over 600%, IFCI, Jindal Steel & Power and Nagarjuna Fertilisers & Chemicals
rose over 500% in one year.
2007
Stock Returs
(%)
Reliance Natural Resources 701%
Ispat Industries 635%
IFCI 574%
Jindal Steel & Power 569%
Nagarjuna Fertilizers & Chemicals 545%
Essar Oil 487%
India Infoline 481%
Welspun-Gujarat Stahl Rohren 391%
Educomp Solutions 390%
Gujarat N R E Coke 364%
Jaiprakash Hydro Power 359%
Neyveli Lignite Corpn. 341%
Reliance Capital 331%
Bhushan Steel 318%
Reliance Energy 315%
Reliance Petroleum 253%
G M R Infrastructure 250%
Aban Offshore 248%
J S W Steel 241%
Lanco Infratech 233%
MRPL 230%
Reliance pack Chg (%) in 2007

Notably, the Reliance pack offered great returns to its shareholders. ADAG stocks like RNRL rose 600%,
Reliance Capital increased 326% and Reliance Energy shot up 311%. On other hand, Reliance stocks
belonging to Mukesh Ambani--- like Reliance Infra , RPL and Reliance Industries surged 300%, 249% and
128%, respectively for the year.
Chg in
2007 Chg
Company Name 2006 Price M-cap
price (%)
(Rs cr)
Reliance Capital 606 2581.1 326 49821
Reliance Comm 471 730.8 55 54341
Reliance Energy 520 2134.55 311 39352
Reliance Ind 1270.35 2894.35 128 243712
Reliance Infra 528.7 2067.95 291 2324
Reliance Petroleum 62.95 219.6 249 70493
Adlabs Films 433.65 1458.65 236 4560
RNRL 22.2 168.65 660 24561
Wealth Creator and Destroyer
There were few astonishing wealth creator stocks for the year. MMTC gained over Rs 135752 crore, Cals
Rs 6902 crore and Jindal South West soared Rs 2324 crore. However, there were few stocks which were
wealth destroyer like Hexaware Tech (lost Rs 1463 crore), Atlanta (lost 1089 crore ) and Subex (lost 1122
crore.)
Wealth Creator
Chg in
2006 2007 Chg
Company Name M-cap
Price price (%)
(Rs cr)
Shristi Infra 26.51 806.5 2942 1761
Cals 3.23 86.95 2592 6902
Lloyds Metals 5.18 129.9 2408 1326
Innovative Foods 4.16 90.4 2073 41
Orissa Sponge 26.6 529.35 1890 1497
Sahara Housing 45.5 865.55 1802 574
Jindal South West 155.3 2248.9 1349 2324
MMTC 2206 29356.3 1231 135752
Wealth Destroyer
Chg in
2007 Chg
Company Name 2006 Price M-cap
price (%)
(Rs cr)
Tripex Overseas 162.25 24.4 -85 -111

Atlanta 982.7 314.9 -68 -1089
Hexaware Tech 199.65 81.6 -59 -1463
Allsec Tech 287.55 142.2 -51 -221
Crew
Top ofBOS
the Document 228.35 123.45 -46 -134 98
Sasken Comm 535.8 333.25 -38 -560
GMR Ind 320.3 153.55 -52 -725
Subex 650 325.3 -50 -1122
Non-Index Gainers in 2007
From the non-index pack, some stocks, especially from steel and oil, have given phenomenal
returns. From the steel pack, stocks like Ispat Industries has given a return of over 630% in one-
year. Jindal Steel has gained over 530%.
Essar Oil, from the oil refinery space, has done phenomenally well giving a return of almost
460%; Neyveli Lignite gained 338%; and GMR Infra, which is in the construction space, is up
about 240% in the non-index space.
Chg in
2006 2007
Company Name Chg (%) M-cap
Price price
(Rs cr)
Ispat Industries 10.98 80.65 635 8517
Jindal Steel & Power 2267.8 14404 535 37370
Essar Oil 54.55 308.9 466 28984
India Infoline 305.4 1692.75 454 7642
Neyveli Lignite 56.35 246.65 338 31927
G M R Infra 71.09 242.7 241 32419
Aban Offshore 1382.65 4712.15 241 12723
J S W Steel 386.9 1303.8 237 15306
Mangalore Refinery 40.8 133.6 227 16267
Large/Non-Index Losers in 2007
Among the non-index losers in the tech space, Tech Mahindra lost almost 32% over the last one
year. i-Flex lost about 22% of its market share while Infosys lost about 19%, and TCS 10%.
Tata Motors lost about 18% from the auto space. Cipla was down about 14%. From the
construction space, stocks like Sobha Developers has seen about 10% reduction. Ultratech from
the cement space lost about 10%.
Chg in
Company Name 2006 Price 2007 priceChg (%) M-cap
(Rs cr)
Tech Mahindra 1670.15 1136.4 -32 -5611
I-Flex Solutions 1947.7 1514.45 -22 -3167
Patni Computer 417.75 327.95 -21 -1218
Infosys 2240.5 1804.3 -19 -21460
Tata Motors 900.25 736.7 -18 -6284
Cipla 250.7 215.7 -14 -2721
Sobha Developers 995.7 892.1 -10 -755
Ultratech Cement
Top of the Document 1096.9 982.95 -10 -1419 99
TCS 1218.6 1100.2 -10 -11587
Large Cap Change in 2007
2007 Chg in M-
Company Name 2006 Price Chg (%)
price cap (Rs cr)
Reliance Ind 1270.35 2894.35 128 243712
ONGC 870.05 1240.8 43 79299
NTPC 136.4 239.95 76 85382
Bharti Airtel 628.85 966.3 54 64174
Reliance Comm 471.3 730.8 55 54341
ICICI Bank 890.4 1242 39 58586
State Bank Of India 1245.9 2382.7 91 59830
BHEL 1149.08 2557.45 123 68943
Larsen & Toubro 1442.95 4160.7 188 80900
SAIL 89.2 273.2 206 75999
TCS 1218.6 1100.2 -10 -11587
Infosys 2240.5 1804.3 -19 -21460
70493
Reliance Petroleum 62.95 219.6 249

02nd Jan 2008
IFCI: Inside news and crash
Price : BSE: Rs 96.00 ( 3.23 % ), NSE: Rs. 96.05 ( 3.11 % )Re: Reported Inside Info of
IFCI revised stake sale
for Guest - King Porus (Ref: 08-001 of 2-Jan-08)
In this part of the world, revealing this kind of info is considered 'Insider Trading' and
punishable crime. As such, one should have careful choice of the words.
I do not give credence to such here say. While Shah consult has been a knowledgeable
boarder, his past records have proved to be rather in accurate at times.
If it is a question of speculative judgement, and considering the recent statement of the

Finance Minister, I would say (1) and (3) is a possibility. (4) have no real significance on
the stock prices - it is a neutral event. Offering 31% stake to others as a controlling stake
is not attractive enough, because for equity accounting purpose, any FII would demand
51% majority stake, and to demand the price of Rs 250 is a virtual impossible target
because nothing has changed substantially from what happened only in late December,
when the bidders were unwilling to bid even Rs 120 against Rs 145 demanded by the
IFCI.
Further, credit market is extremely bad, and in my personal judgement, we are steadily
heading towards massive equity crash. A leading American bank and a large Investment
bank in USA are near collapse and may wind up before January 2008 in spite of massive
investment promised by Abu Dhabi and Singapore government by way of Convertible
Bonds at very very high interest rate.
With this collapse, there may be collateral damage to other banks directly involved with
these bankrupt banks. Please note that 'there is no Chapter 11 remedy applicable to Banks
and Investment Banks, including Brokers. For them compulsory winding up is the only
possibility under Chapter 7'

How bad the situation is from the fact that leading Private Equity firm - Blackstone group
very actively involved in Indian stock market and potential large FII investor in rumored
stocks like Shiva Cement, Hotel Leela and many others, have found themselves in very
tight corner. They are unable to raise cash or borrowings in the credit market in spite of
offering high interest rates. Read the following Bloomberg Report which appeared only
yesterday
QUOTE (Source Bloomberg 1/Jan/2008)

Heading: PHH Scraps $1.8 Billion Sale as Blackstone Fails to Get Funding for Deal PHH
Corp.,
Part Details: the New Jersey-based mortgage and auto-leasing company, scrapped a $1.8
billion sale to General Electric Co. and Blackstone Group LP after the buyout firm said
banks reneged on an agreement to lend the money....
UNQUOTE
You are merely looking at Indian markets, ignoring the tremendous risk developing at
very fast pace in the world market, especially USA which will have immediate fall out in
Europe and also arrive at India with full tsunami like force. Remember, while FED
pumped in only USD 40 Billion in the system, ECB (European Central Bank) pumped in
US$ 360 Billions and massive subsequent US$ 460 Billions in two trenches (Total US$
820 Billions) clearly reveals that derivative risk has traveled outside Europe with massive
force and wreck the whole banking system.
Very soon, Indian banks will find their credit lines withdrawn suddenly overseas,
affecting many credit deals like Tata's Corus take over and his proposed take over of
Jaguar in early January. Banks like SBI, BOI, IOB and ICICI in particular are so
vulnerable that Finance Minister and RBI will devote energy on saving Indian banking
system from catastrophic crisis.
The situation is extremely scary, and any rally now will be a good opportunity to raise the
cash. Stay invested only up to 25% of your Cash in Indian equities. Do that before
26/1/08 as advised earlier.
Forget Shah consult, forget Kalidas, forget Udyan or CNBC, and host of tipsters; and
forget what FM,PM, RBI will say about IFCI and India's prospects - we are heading
towards massive equity crash. I for one am reducing my position from high flyers and
will more aggressively before 10 Jan 08
Kalidas, Hong Kong

2-Jan-2008
What to sell and what to hold

for shia,
It is your choice. Yes, HPCL/BPCL/IOC are very safe, even until 26/1 and I suggest you
may hold. I am holding for a long haul. If there is too rapid rise, over 50% in next 15
days, I may sell 50%.
I would sell Essar Oil slowly in small lots until 26/1, selling some every 3 or 4 days so
that my average sale price is higher.However, my profit is huge, so I do not care whether
I made Rs 20 or Rs 30 less.
UCo is just on move from yesterday. I also bought additional 3K at 59.20. However, my
very large position on this counter has very low entry point from Rs 16 to Rs 39 (Average
Rs 25). I may sell some in next 5 to 7 days because my tax liability is also NIL due to my
holding for over 2 years by now. You may however, stay with it for next 7 days and see
where it goes. If it falters and loses the volume, then sell it. However, it is your money
and do what you think best.
LIC Housing is relatively safe stock, but equity market crash may hurt its mortgage
business in future. I do not have any. If I were you, I would sell some in rally until 26/1
and retain for a long haul. I would buy back if the markets do not crash in next 2 months
or any bank does not fail in USA
I can only tell you the perceived risk in the market. May be I am wrong or too
pessimistic. It is world market that scares me to death. If you believe that Indian market
will remain insulated, take your own protective decision.
By the time you decide to sell, your gains would be 70% in short time. Take some profits
from the table at that time.
Kalidas, Hong Kong

02-Jan-08
Rejoinder - Correction (Post 08-001 today)
Read Sagar Cement instead of Shiva Cement.
Rejoinder: Correction + Amplifications (Original Post 08001)
for Guest - King Porus (Ref: 08-003 of 2-Jan-08)
CORRECTION:
Read 'Outside USA' instead of 'Outside Europe'
AMPLIFICIATION:
1. Preservation of capital should be more important than Earnings at least until March
2008

2. f you are a coward like me, reduce your position by 75% on or before 17/1/08 ( I am
reducing before 10/1 because I am traveling from 11/1)
3. If you are a cowboy, stay invested until 26/1` and go on selling slowly.
4. If you are a suicide bomber, want to destroy you and also your family in collateral
damage, stay invested beyond 26/1 without hedging
I5. f you do not want to miss the rising market at all, take some hedge position by at least
30% of your current investment by buying put option on the market (Nifty/SENSEX) if
they are available. Buy distant puts such as 19000 so that it may be cheaper.
Alternatively, short the NIFTY/SENSEX futures to that extent, if options are not
available. I do not know how this hedging system works in India, but better consult some
experts soon.
6. Watch your investments carefully, paying more attention to overseas rather than India
alone,. If you are traveling, sell before you travel
7. Avoid any property deals until April 08. This market may crash in collateral damage
once the equity drops massively. Sell if you want, but do not buy until April 08
8. Remain optimistic only with caution. If you don't, you will find your life's savings
gone in minutes. Indian capital market regulators have nasty habits of restricting market
fall or suspending the market altogether at a time, when the world equity market may
slump like a pack of cards. This is the main reason for me to sell every day from now on
so that I am not taken off guard by market suspension.
If you believe that I am spreading scare rather than caution, take a print out and flush it
down the toilet. Never read me again.
Kalidas, Hong Kong

02-Jan-08
Why Spice jet (Go Air takeover)?
for Victorjunior, (Ref: 08-004)
I know that you are my ardent follower, so I do not want to disappoint you, but please
redirect your questions/queries to appropriate board.
Spicejet is a good stock - I have commented earlier that it has number of mutual fund
investors. Earlier, it was known as Mody-Lufthansa.
It is a good buy, but to be quite honest, I am selling some just to raise the cash. My core
holding will remain intact. My entry point was low, between 52 to 59. The stock is really
strong, but it is a 'baporia' stock, moves only in afternoon.
I understand that Nusli Wadia of Bombay Dyeing group, who also owns a small airline
GO AIR (I do not know - just heard from somewhere) who is interested in taking over
this airline.

However, I do not buy the stock on such rumors. Following were the reasons for my
buying of Spicejet.
1. Airline is a capital intensive industry. The early promoters usually give up after
laboring for 3 or 4 years of start ups. The real Airline players allow these kind of
promoters to do the slog work and wait for the time when the most of the troubles are
nearly over.
2. The losses of such airlines are usually over inflated, due to double or triple
depreciation charge allowed under Indian Income Tax laws. So take their losses with
pinch of salt. Consider their cash losses, not the absolute one or book losses.
3. This type of start up Airlines are always pray to the wily predators, who want to
advance by M&A route. Their time lag is reduced.
4. My view is oil prices are near peak and will come down to US$ 70. because in market
correction, the money will flow back to US, that will result strengthen the currency,
regardless of the state of economy. If the $ rises, the oil will fall. Commodity like
Aluminum which goes into Airplane will also fall. Also perceptionof recession will
reduce the demand for oil.
5. So, lower prices of oil will benefit the Airlines where 60% of operating cost relate to
jet fuel or kerosene whatever you call. (It is in fact superfine Kerosene).
6. India is also witnessing rise in tourism. Even local people love to learn other state's
culture (that will integrate India better)
7. Business Travel is on rise, Govt tax collection is also on rise which will allow more
Leave Fare concession to the GOI employees by way of Air Travel. Hotel industry will
prosper which directly helps the Airline industry. They are more like Brothers and Sisters.
8. Rupee may or may not drop so much, though initially it may fall due to home coming
of various currencies.
9. Thus, Airline which has greater visibility in India, will have higher tourist and business
travelers' traffic, lower oil prices, lower interest cost, higher capital raising avenues due to
pulsating stock markets - so this industry will have one of the brightest prospects.
Now count the industry fundamentals as above, plus Airline's own statistics, the entire
sector is poised for magnificent growth. Government is also going to commission 30
more Airports that will make Airlines more viable than ever before.
So to be stock specific, rumor mill says GO AIR may merge with Spice Jet. I still believe
that Jet Air will be more inclined to take it over, because Kingfisher/AirDeccan merger
has relegated it to No. 2 position. Jet Air has deep pocket, very ably managed, one of the

best management in the world.
Do not look at book value or book losses. This is certainly a Rs 240 target stock which
may be speculative. Near term target is Rs 125 a price GO AIR is rumored to be
interested in paying.
Near term target Rs 120 and longer term Rs 240 on take over appeal. Watch its quarterly
numbers, especially market share and number of passengers flown, which is major
attraction for any target pursuing airline. This is also the reason for buying Hotel Leela
which is still at relatively low level at Rs 73.
Kalidas, Hong Kong

2-1-2008
03rd Jan 2008

Analysis of expected market crash in January ***
for Guest - King Porus, (Ref: 08-005)
There is nothing to be confusing about. I have said very clearly that I do fear that massive
equity crash is coming soon. This is the reason I said that one should raise cash to 75% by
selling progressively on or before 26/1.
The reason was the acute credit crisis for which I gave ample examples. Many banks and
investment banks will be reporting their December quarterly numbers from 3rd week of
January that will be devastating. Severe losses may be reported. I feared that one major
US bank and a leading Investment Bank, that have seen Government of Abu Dhabi and
Singapore investing over USD 17 Billions collectively, may report even larger losses, and
possibly they could close the doors.
You can understand what happens if some major bank fails. In today's world, almost all
banks are inter-dependent. Failure of major bank can have cascading effect. This is why I
said that major Indian banks operating abroad like SBI, BOI, IOB, ICICI may find their
credit lines suddenly withdrawn.
When I said raise the cash up to 75% and keep only 25% in the equity - the message is
very clear. SELL most of the high flyers and stay with valuable equity (at reduced
holding level ) which have not yet seen their value reflected. Everything will fall - be it
your favorite or mine. Whichever stock has gone up by 30% to 300% are likely to suffer
severe downfall.
ADD to it the recent permission (from January 1) by RBI and SEBI, these two idiots, to

permit short selling at such most vulnerable time. There will be computerized selling
where at the touch of the button, massive selling wave will cause the stock prices to drop
severely, On one hand they permit short selling and on the other they introduce 'circuit
breakers' at 5%,10% and 20% at their whims and fancies. Such measure should be
introduced when the markets are in very stable mood, not at the time when the market
takes the swoon by 200 points to 1000 points in a day.
Earlier, money used to flow from bonds to equity and vice versa. If bonds dropped, the
money traveled to equity; and if equity dropped, the money will return to bonds or banks.
But today, there is only one way street. The bond market is at its worst (not in India) and
almost scary where no one trust the other lender or borrower. If bonds dropped, the
equities rose because of money flew from bonds to equity; but when the equities drop,
where the money will go?
They do not get into bonds because of sub prime mess. People do not want to place the
money into banks because banks are falling into pieces - look at Citicorp, Bank of
America, HSBC, UBS, Northern rock in England etc - all are in serious trouble. This is
why GOLD is rising - today up 2.3% to US$ 860 - but gold can not absorb trillions of
dollars/euros/pounds/rupees/yeans or yens.
Most of liquidity you are seeing today are all paper money created out of thin air(by
practice of deficit financing, trade deficits, budget deficits and Derivatives), and they will
vanish into thin air with even higher speed.
Look at water. The rain brings down the water, but the heat reverts into vapor and throws
back into thin air. This is why the money will disappear into thin air from where it came
in at first place. This is going to happen for the first time in last 70 years. This is why the
kind of crash that may come will be horrific.
WE ARE ENTERING INTO THE PERIOD OF DERIVATIVE COLLAPSE. What you

see options, futures, LBO, CDO, structured deposits or advances are nothing but
derivatives. They are collapsing.
And what happens if the equities crashed and FII start short selling highly expensive
Indian stocks like Reliance trading at 33 times PE, RNRL trading at 100 times and other
equities like Hindustan copper at 300 times PE and stocks like MMTC trading at 3000
times PE? It will not take more than 7 days for the market to crash from 20000 to 12000.
Read further Part-II
PART II Continuing...
And when the US economy is in so bad shape and US dollar slumping, the natural
expectation is USD will go down further and oil to go even higher - BUT THAT WILL

NOT HAPPEN. Because, when equities crash, almost all FII - mainly from USA in the
form of hedge funds and Pension funds - will sell Euro/Pounds/Rupee/Yen/Yuan by
selling the stock and bring back the money home - USA - by buying dollars. If dollar
goes higher against all expectations, Oil and Commodity prices (metals, steel, copper,
aluminum, iron ore prices) will tumble and the worst suffers in India will be Reliance,
ONGC, TISCO, Jindal, SAIL and host of other metal stocks which were just rising
beyond belief. They will all come down to earth. Refinery stocks will rise, because if the
Oil falls, the oil producers like ONGC falls, and refinery stocks like HPCL/BPCL/IOC
will rise. they are already very cheap by any standard.
In India, the banks may not suffer much because most of them are owned by Government
of India. So the cash will flow back into them. Not so in other countries where banks are
in private hands. There will be simply 'chaos' in the world monetary market. We are
entering into possible situation where there will be no more 'foreign money or FII money'
in any economy.
Only local money will circulate within local economy, and that will not be enough to
support DOW at 13200, FTSE over 6000, Nikkei 15800, SENSEX at 20000 and HANG
SENG at 30000 level.
Look down, not up in future.
Kalidas, Hong Kong

3/1/2008
Kalidasji
I was just reading the entire subprime crisis in detail and ur 1000% right. Time to get out
of the mkts. Looking at the 1929 and this coming one I find uncanny similarities between
the way the crash happened in the 1930's and the way its happening now. LBO, CDO,
Debt all in their worst positions. Another $500 billion of ARM's to be reset soon infact it
may happen anytime now. I have been progressively pruning my holdings over the last
couple of weeks. Initially I had my money locked in abt 35-40 stocks at any point in time
and now its down to 5-10. Infact I would prune it further down to 3-5 max into quality
stocks like u have mentioned over on the MMB a while ago. In my view I see the sensex
crashing to about 16000 levels soon. Ur figure of 12000 would totally damage the retail
investor faith in the mkts. I hope we dont come to that.
Request ur further inference on the possible consequences over the next couple of weeks
before ur Indian holiday. I hope u have resonably ensured ur stocks are insured while ur
travelling.
Btw I have sent u a private message. Pls check ur private message box on ur user ID
home page. Do write to me when u have the time.

Regards
Advice from Kalidas ***
Kalidas Ji,
Thank you for your response, yes i am an ardent admirer of yours so much so that i have
saved all your posts to me and to others and read them over a number of times to make
sure i absorb your write ups completely.
In fact yesterday (2nd Jan) after reading your posts i have sold many of the penny stocks
which i bought for quick gains and was sitting on small profits. I also sold about 40% of
my NTPC and want to sell more.
I sold 25% of my best stock in terms of ROI so far; RNRL bought at 28 and sold 25% at
189, retained the balance 75%. Not sure whether to hold or exit, i know the PE is
ridiculous.
Similarly sold 50% Petronet LNG (was sittin on 100% profit)
Sitting on decent profits on UCO (40%), NOCIL(40%), Leela(14%) and HPCL(10%). I

will hold HPCL as per your suggestion, shall i hold other three or sell now to re-enter
later?
Also, i want to buy IFCI now that i have enough funds, also want to buy SpiceJET but
after reading about your posts on the possible Equity market crash that we are heading
towards shall one wait till January end. I am confused because if the markets crash IFCI
, SpiceJet and all others will tank.
Lastly, i am confused whether to completely exit the market selling all my holdings
gradually by 16/1 or Hold?
I sold some of my holdings today thus raising about 20% cash.
I still hold about 15 stocks.
I know you do not advice one to buy or sell directly, but i just want to know what would
you have done had you been in my shoes?
I just want your opinion and use my discretion thereafter.
Kind regards,
VictorJuniour

for Victorjunior and others (Ref: 08-006)
You know that I do not give Buy or Sell advice. You know your affairs very well. This is
really last time I am telling you what I would do if I were in your place. Never ask me
such questions again:
RNRL
Sell 2/3rd of current holding more. This is still pregnant lady's unborn child. Let the
Court Judgement come in their favor and then reassess. At the moment, it is extremely
overpriced and I would not hesitate to sell entire lot at the market.
PETRONET LNG
Sell all. Fully prices in my opinion. Will buy back only in 70s
HPCL
No need to sell. Buy more. Buy up to 450, so don't ask whether you should sell at 420
UCOBANK
Sell 50% and swap to IFCI. You are selling UCO with perhaps Rs 5/shr to IFCI with
almost Rs 30/shr. IFCI may declare dividend of Rs 10 per share to compensate PSU
Banks who were sitting on ZEROOCD for number of years without any income and now
sitting on duck at Rs 107. This is best financial stock ever. Sell banks like ICICI (over
1200) and HDFC Bank (over 1800), SBI and buy nearly 12 to 18 times IFCI shares with
decent earnings. Sit on it like a hen hatching an egg.
NOCIL
Ride the rally. Do not even think of selling before Rs 100. Do not buy more because it is
operators driven at the moment
LEELA
Buy more even at current level. There could be a bad news that Blackstone may not be
able to subscribe to Leela's shares due to credit crisis in USA which prohibits him to raise
cash from the market. However, Leela is a hotel which will be chased by other major
hotel chains in the world. Some are disrespectful of the management, however. But I
ignore their opinions. The earnings will quadruple in 2 years time, so also the stock ,
unless they raise more money by FPO route.
SPICEJET
Valuable but I sold almost all and waiting for correction to buy back. Good to own even
at this price in normal circumstances, but fears of crash forced me to raise cash. I have
only a few thousands left but they represent my floating profit. Capital is already returned
to me by good appreciation.
RPL

You can not say because it is at Rs 220 compared to HPCL at Rs 380/BPCL at 530 and
IOC at 700 +, so it is cheap. NO, NO, NO. RPL is still in mother's womb. Its earnings are
ZERO whereas other oil giants have EPS over Rs 40 to Rs 120 trading at just 4 to 5 times
PE. Just SELL and switch to other three trios.
Never ever make a mistake that stock A is at Rs 20 and B at Rs 200, so A is cheaper than
B. When B is trading at Rs 200 with earning back up, there is a reason for it to trade
higher. Compare the stock price relative to earnings.
For Instance, UCO is trading at Rs 85 with Rs 5 as EPS whereas IFCI is trading at Rs 92

with EPS at about Rs 31 ( per my estimate). So IFCI is nearly 10 times cheaper than
UCO bank, although UCO at 83 is cheaper in absolute terms than IFCI at 95.
Kalidas, Hong Kong

03-01-2008
Kalidas Decision Making ***
for Guest - King Porus.
In stock market, never regret your decision. If you think you made a wrong decision,
reverse it on following day.
Bad decision never loses money - but indecision or lack of decision does cost lot of
money.
In a war, a Soldier fires a bullet, regardless of whether it hits the target. His job is to fire a
bullet and hurt the enemy, that's all.
Even Lord Krishna told Arjuna - you have right to actions, not its result (that is my
prerogative, the Lord says)
You should be glad that -right or wrong- you made a decision. This is your ability, not
drawback. Remember this for lifetime.
Kalidas, Hong Kong

03-Jan-2008
Kalidas Life experiences

Dear Old Man,
It is almost impossible for me to advise on individual basis. I can suggest you tools which
one can apply in myriad of circumstances. Further, each investor has a profile, and I may
not know after buying or selling what will be his net position. If the circumstances
change, I may not have means to catch up with the person who sought my advice casually
and I had given.
When I was a stockbroker, my Jewish American Boss taught me a principle that 'do not
advise any body unless he is your customer and deals mostly with you’. I have known
over years many of my customers took advice from me and bought or sold bonds/scrips
through other banks or borkerage house just to save my commission which was higher
than others, without realizing that I was not a discount broker, but full fledged adviser.
I used to tell them that - if I charge you 35 cents commission, 15 cents go to my employer
partner, 5 cents for doing research for him, 5 cents for executing his trades, 5 cents for
making money for him but not giving me credit, and final 5 cents for taking his abuse
when he loses the money - telling the world - Mere broker ne mujhe fasa diya'
At one time, when my kids were having expensive education in USA, I worked for every
day, doing finer research even on Sunday, and that too for 6 full years without having a
single holiday or even visiting India. I never got tired, but enriched my knowledge with
this 'bhakti'
Ultimately, one fine day I was rewarded. It solidified my belief that no good work goes to
waste. In one month, I could research such a wonderful situation that I made over HK$ 3
Millions in Gross Commission. (Rs 1.80 crores per exchange rate then). When I was not
fully rewarded per agreement by my Taiwanese employer, (I lost 20% or Rs 20 lakhs in
commission), I left the stock market field for good with my Children's education over and
they becoming MBAs. My wife was magnanimous and asked me to focus on new found
business instead of chasing my dues. She used to tell me - 'Some one will take it from
your hands, but not from your unalterable fate'
Even today, my oldest employer in India, a leading nationalized bank has not settled my
PF and gratuity dues for over 20 years and the amount has swelled to well over Rs 1.6
crores with interest. Lousy Indian courts posed a question to my brother who was
representing me - why do you want to expedite the judgment - your brother is making
enough money in Hong Kong!. What the hell - it is none of his business whether or not I
make money or not. The judge has to do his job and deliver the judgment.
Provident Fund and Gratuity is terminal benefits not attachable even by Supreme Court,
to be paid in just 60 days, and yet these lousy High Courts are delaying my dues for over
20 years! My children asked me to write it off and never think about it - but how can you
- when for 19 years your salary was deducted with PF and gave you the hope that one day
that money will come back to you during your retirement days, and they never did. This
is why I never want to return to India. Democracy, rights are only on paper - the judicial

system just sucks.
It is said that whatever happens, happens for good. There may be secret intention of
'uperwallah' by delaying the present and rewarding the future. If my dues were settled
then, I would have got only Rs 8 lakhs, so may be, he wants me to make crores rather
than a few lakhs. Such ordeals made me more sharper than ever before, and you know by
now what I am.
Knowledge increases when you distribute them - says an old adage in Hindu vedanta, that
I faintly read in my childhood but did not understand then. Now that I know what it
means, I have chosen Moneycontrol to share what I know.
However, please note that I really do not have time to address to individual boarders'
inquiries. I read and collate them, and finally comment in one go for the benefit of all, not
just a few.
Kalidas, Hong Kong

03-Jan-2008
04th Jan 2008
IPO Fundas
for affy,
Sorry for replying late. Many message appear in my Inbox but many do not open up upon
clicking. Even today over 4 messages could not be opened.
Reg; Reliance Power, I have no opinion. I am not IPO player. Judging from public
opinion, it is likely to be oversubscribed a few times, considering large size of the issue.
However, do not apply for too much shares as the issue size is very large, and if the
market drops as I have feared, you may get full allotment. Do not apply by borrowing
from bank (on margin basis)
One very important point for IPO and how do they open on first day. This happens
everywhere.
In bull market, the banks are ever willing to lend the speculator because lot of funds
remain with the bank interest free.
If the stock is likely to be 20 times oversubscribed, an applicant makes application for

10,000 shares of say Rs 100 each, in the hope that he will get ultimately just 200 shares

(worth Rs 20,000)
He borrows from banks like HDFC who may charge 15% interest or 1.25% per month or
0.80% for 20 days during which the IPO result may be announced, shares allotted and
amount refunded ( I may be wrong here because in India, I was told that the amount is
not debited to your account until shares are allocated - not in Hong kong where the entire
amount is debited to investor's savings or loan account and re-credited with the refund
orders when received.
So, look at the following:
IPO Price ..............................say Rs 100

Cost of 10,000 shares applied...............Rs 1,000,000 (1 Million)
Your own margin contribution (10%)..........Rs 100,000 (1 Lakh)
Borrowing from Bank.........................Rs 900,000 (9 lakh)
Interest @ 15% for 20 days at least.........Rs 8,219
Suppose you got only 200 shares @ 100.......Rs 20,000
You paid off the bank - your cost is .......Rs 28,219
Your Average Cost of shares.................Rs 141.10
IPO Price...................................Rs 100.00
You paid premium............................Rs 41.10 (interest)
All investors will be in same boat with average cost ranging from Rs 141 to Rs 181
depending on the leverage they had and allotment they received.
The IPO may ultimately open in the market at 10% above average cost as above, that is
Rs 165 to Rs 200, and there will be celebration that the IPO got a return of over 65% to
100% which is a myth, not reality. This return is only for those who never leveraged and
placed their own funds so that their cost was just Rs 100
Many small investors are guided by superlative returns as advertised in the press, CNBC,
Broker's research report etc. The real return for most investor is just Rs 165 - 141 - Rs 24
or 24/141 = 17% or he may lose 181 - 165 = 16 - divided by 181 = 8.84% Loss
We are presuming that the leveraged investor sells on the opening of the market, which is
usually the case, because he has to pay to the bank the amount borrowed. If he does not
pay the bank, the bank sells his allotment under margin call and he ultimately loses a lot.
Understand this mechanism. You may fine tune it having regard to practice in Mumbai.
Above is only hypothetical example.
This is why I never have fancy for IPO. Just because it opened at Rs 200 does not mean
the stock is in great demand and commanding premium - it is just opposite - it is interest
cost which is built in the stock price - not the real demand. You will know real demand
only after 2 months when the stock levels down to realism.

Kalidas, Hong Kong
04-01-
Judiciary System
for kichen, (Ref: 08-008)
I am myself a lawyer too. I know the rules, law, regulations, statutes and constitution. I
do not buy your view that top guys or so called professionals ( I call them villagers) do
not have discretion to decide.
No one can hold back PF and Gratuity - period. The law is very specific. But in India, the
judiciary is so pathetic, that it has given rise to street justice - Supari.
In India, you can criticize any body - MLA, MP, Government Officials, Prime Minister,
President of India, Lord Rama, Lord Krishna or Shiva , except a judge in any damn court.
If you say anything against him or his system, he condemns you for Contempt of Court.
These judges are above law - they are unanswerable to anyone. They criticize often
government officials or even leaders - but they themselves never look in the mirror.
They do not work at all. They do not even advise you when your case will be heard - you
have to check personally every day or place Court Clerk in your pay roll to inform you
when you case will come up for hearing.
They also spend entire morning hours just to postpone the case to some other date. They
get more holidays than our own young children - Summer vacation, diwali vacation,
Christmas vacation etc. These judicial officials enjoy more holidays than any other
citizen in India.
If a factory received very large order, it starts working in double shift or treble shift or
even sub sontracts with other factories.
But these courts in India - they have huge pile of cases over millions - and they do not
work even for half a day. And adding insult to injury, they even take holidays.
And the Educated Illiterates of India - Editors of TOI, ET, FE, BS, HT etc go on
showering praise to highly classified Black Coated judicial officials, and millions of
Indian take pride that 'Our judiciary is independent' - Yes, they are. They are not
answerable to any one including President of India who appoints them.
Millions of Indians, most of them well qualified Middle class, do not understand basics of
life - Give credit where it is due, and discredit those who are not even worth the name'
When the country develops, billions of dollars come in the hope that if something

happens, there is a judicial system. They are sadly mistaken and there will be late
awakening after a few years that Indian judiciary is good only on paper. They will then
slowly retreat and withdraw all investments.
More money means more disputes, and it needs an efficient judicial apparatus so that
disputes are resolved efficiently. When my non attachable Provident Fund and Gratuity is
not paid even after 20 years, give me a good reason why should I come back to India? I
am not Mahatma Gandhi.
Kalidas, Hong Kong

4-Jan-2008
Selling Strategy
for katy19,
Anything you buy in stock market is meant for a sale one day. Never hesitate to sell when
you receive inner call - your money is always loyal to you, unless you betray them.
I normally allow my stocks to multiply to several fold, and if they are not near my top
target, I begin to sell them in rally and buying back in correction, keeping at least 30% as
core untouchable investment. When my target is within 20%, I only sell and never buy
back...Gone for ever.
Do what suits you best. If some strategy works for you best, stick to it. That is your
expertise, never borrow others'.
Kalidas, Hong Kong

04-Jan-2008
Your post almost tempt me to keep my holding of 1.3 lakh shares bought progressively
since June 2006. I was planning to sell at least 30-50% of it the moment it hit 100s.
for Katy19,
This is the right way of handling it. If one wants higher price, he does not go to the
market and shout 'Hey, Buy me - I am up for sale'
It seems that FM has taken over from present CEO Rai. He would not spoil his name.
There will be no via, via , via. Looks like FM is in search of new competent guy - may be
Damodaran of SEBI - who was in charge of IDBI before. He has better credentials than
others, though I do not like this fatso for his 'irrational exuberance' to borrow this quote
from Alan Greenspan in his heydays.

But these are still government organization, which in the name of transparency expose
everything to the world, without realizing that the word 'transparency' is fine, but not
useful. Use it where you do not lose.
I have been buying IFCI of late, realizing profits from high flyers like Essar Shipping
which I entered in good size at Rs 39 to Rs 53.
Look at NOCIL - was going up in up circuit for last 20 days - and now make an
announcement they have nothing to do with MDAG group nor do they own any land?
Where it has gone? In 1968, when I was working for its neighboring associate - Standard
Chemicals - part of Mafatlal group - NOCIL was at its peak and used to own several
acres of land for just 10 paise per square feet. Where all these lands gone? If that was sold
to MDAG group, then current shareholders should get something out of it - by way of
new shares or special dividend. Looks like promoters have pocketed the huge sum under
the table.
Although it is at lower circuit, my friend in Hong Kong could sell 20,000 shares at lower
circuit within 30 seconds. What does it mean? Are there real sellers or just an eye wash?
Reverting to IFCI, stay put with this counter. It has 3 times more upside and just 15%
downside, Have your take - you want to be with them or without them. I will prefer
former.
Kalidas, Hong Kong

4-Jan-08
05th Jan 2008
Tata Jaguar acquisition
I would like to express my opinion about JLR(especaially Jaguar) possible acquisition by

Tatas having lived in Europe for 7 yeas and following closely European automobile
industry for over 20 years. There is no one in the world that could turn around Jaguar
car company except the tatas. But I have very serious concerns about the tatas success
because of Mr. Ratan Tata's imminent retirement in the near future and the reality of the
around $100 petroleum prices that could diminish demand for luxury cars. I just hope
Mr. Ratan Tata knows what he is doing and takes into consideration the risks he is taking
the shareholders of Tata Motors and also the image of India while venturing into JLR
acquisition. If he succeeds it is going to be the best case study in mergers acquisitions of
21st century. I just don't want to imagine the implications of a failure. I only wish Mr.
Ratan Tata a big success in this venture.

for rgundapa
There are two ways of looking at it. Firstly, this is no time for any major acquisition.
Secondly, one should be very careful in buying some US company's assets due to creative
accounting methods they use.
I have firm belief that if you want to lose billions, you take over companies in USA or
China. You are guaranteed to lose in short time, maximum in 2 or 3 years.
Examples - Panasonic (Universal studio, USA), Sony (Columbia, USA), British Airways
(US Air-USA), Mercedes (Chrysler-USA), Vtech, Hong Kong (Lucent-USA), Philip
Morris- Marlboro brand (China), Dairy Farm Hong Kong (China), Occidental Petroleum
(China), Johnson Electric, micro motor manufacturer, Hong Kong (USA), HSBC (House
hold finance), Budweiser - Beer (in China) and host of others.
In case of Tata, he looks only at car and not global financial scene as he has proved in
Corus acquisition. One should indulge into Merger and Acquisition only when stock
market is at lowest point, and guest country's currency is also at lowest point. Tata's
foray at this point of time does not seem to justify his actions. His financial advisers are
mainly from India who is not sufficiently exposed to intricacies of global financial scene.
Even in case of Corus, where the ink has not even dried, he lost banker's support for debt
due to debt related crisis with the result that SBI had to lend USD 1 Billion in bridge
financing.
However, recession or higher oil prices tend to benefit Jaguar or his low cost Car project
(US$ 2500 car). Recession does not hurt rich people, who tend to show off buying
expensive car; and higher oil prices encourage purchase of low cost car. This seems
to be thinking of Tata that both Jaguar (Cheetah) and his Goat (low cost car can co-exist.
Yes, his low cost car can wreck havoc to scooter manufacturers like Bajaj, Honda, TVS,
etc and second hand car market can simply collapse for other cars like Maruti, Indigo,
Indica, Safari, SUV, Toyota, etc which 5 years old models are sold for Rs 130000 to Rs
250000. Who will buy them second hand if new one is available for just Rs 100,000.
Many car garages may simply close down. It will be battle between a Cigarette and Bidi -
let us see who wins.
However, image is against Tata. If he makes Rs 1,00,000 car, that is Poor Man's car, how
can he sell Jaguar to rich people who want to have brand associated with only Rich and
Famous. They want some brand very exclusive.
Further, Jaguar is a white elephant. It does not stand a chance to compete with BMW,
Mercedes, VW, Rolls Royce, in terms of status and Toyota, Honda in terms of
performance. Ford could not find any other buyer in developed world. But may be fast
developing country like India might change direction.

Cheap is not expensive enough and expensive is not cheap enough. Tata may learn hit
hard way before he goes back to Himalayas for quiet retirement. He can afford, other
investors can not.
Kalidas, Hong Kong

05-01-2008
Kalidas Book
for feltra
Re: your PS in the message.
I was to write a book 'Mystical Numbers' by Kalidas. But it may take some time due to
my preoccupation.
Instead, I have decided to write a book on most current subject 'Sub prime crisis' for
which I believe I do have perfect solution. I have to make this eBook so convincing that it
is taking time.
Further, this kind of book will come under severe scrutiny which encourages me to write
in very convincing, logical and simple style with corroborative evidence which I am in
process of gathering.
I am a very fast writer - can write whole article of 5000 characters in few minutes -
because my thought process is always ongoing. My style is that unless I convince myself
what I have written, I do not publish it for larger view. In short, I do not like to convince
others if I am not convinced.
Kalidas, Hong Kong

05-01-2008
06th Jan 2008

Tata Jaguar acquisition
for Firozkhan20

No idea. Do google search. the best course is to Contact BSE website and press Investors
Desk which leads you to the Complaints scheme. Go by their requirements.
If you do not get any reply, Serve a NOTICE on your letterhead clearly marking NOTICE
under Rights to Information Act, seeking the current listing status, why was it delisted,
and how Investors interest was taken care of or compensated. If you still do not get reply,
Serve a LEGAL NOTICE on BSE and also SEBI seeking the damage caused by their
action and the amount lost by you as result of their actions.
Also do a search with Company Registry. Being a public limited company, you can have
access to all information from shareholding to balance sheets (This is a public company).
You may also conduct ONLINE search at Ministry of Corporate Affairs website (w w w
DOT mca DOT gov DOT in/) for this company.
If nothing works, send a Registered Notice to the Registrar of Companies, Ministry of

Corporate Affairs, SEBI/BSE/NSE and also RBI, seeking compulsory liquidation of the
said company describing all circumstances. It will cost you over Rs 200 just to send
notices. See what these guys are doing
It is a hard work. So take a cup of strong coffee before you start.
Kalidas, Hong kong

06-Jan-08
09th Jan 2008

Advises on Trading
Dear impatient
U'r Query
Dear ifci_rocky
Would you kindly clarify doubt for me ?
Quote
...... do the profit booking as soon as U'r levels are reached.
Unquote
Supposing my target for return in a scrip is 200 % in a year and it has reached that level
within that time or even before. But the scrip movement still continues with almost the

same pace with good prospects of good future returns. In that case should I (or any body
else) go for profit booking just because my target has been reached and find another
scrip with similar or better prospects? What is the harm in leaving the investment in the
running scrip as long as the prospect remains good?
My answer
there is no harm in keeping the shares intact after the profit level is reached whenever it
corrects then only one thing will be left with us only regrets. hence at our levels we
should do the profit booking to cover our investment first then whatever is left is our
profit only hence we can keep it for further growth and at an opportune time sell another
lot so that reinvestment in the same share when it corrects or other share which we think
can be invested can be done to multiply our hard earned profits.
I will give my example only here on IFCI I am bullish on IFCI since 1994 purchased at
Rs.64 then when it started falling I had not done the (negative) profit booking to at least
save some part of investment then it went down to Rs.3 still I was holding this share then
it went up to 10 down to 3 up to 20 down to 5 up to 24 down to 6.6 then it went up to 13
& story is in front of all of us from jan2007. I had invested at 20 in 2004. again invested
at 38.5 & 52.2 in 2007. My first target was 102 it went up to that level in September I had
not done the profit booking as Greed overtook me by seeing the financials of IFCI & its
turnaround story. My second target was 120 it went up & my broke gave me the call at
the right time still could not do the profit booking due to My pre occupation or Laziness
then it went down to 73( my target was 80) My next target is 144 let's see what will
happen next. You can judge yourself from this example this happens generally with 90%
of the investors.
U'r Query
In fact I am facing this puzzle in a no. of scrip of my portfolio and cannot really decide
when to exit from the scrip. That means I really get confused as to whether my set target
and time to exit the scrip was correct. And, naturally, the greed gets better of me to
continue with the scrip.
Kindly advise as to how to fix a reasonable target and time period. Basically I prefer to
be a LT investor. Thanks & Regards.
impatient.
My Answer please do at least partial profit booking because market movement is not in
our control take IFCI's case it went up to 121.2 then corrected to 73 levels had I have
done profit booking at that levels then i Would have been holding at least 75% more
share of IFCI. as reentry between 73-75 levels was very good. OUR main AIM should be
FIRST to SAFEGUARD the investment. it's like a tree. Profits are like flowers & Fruits.
Hence primary Aim should be to save the tree first then smell the FRAGRANCE of
Flowers & then have the TASTE of Fruits.

for KingPorus,
You know and will know better today that you did the right thing.
IFCI is a non-index (market) stock. Some time, if the market goes higher, it goes down,
and if the market goes down, it goes up.
When the market takes a cue from Dow, the trading players buy index stocks and sell non
index stock to swap the cash resources. When the market starts going down, they reverse
the position, selling index stock and buying back non index stocks like IFCI.
Dow is really weak, having broker support of 12800 several time. This time around, the
correction may be more lasting - but there are so many optimists sitting there, that they
start pushing it higher than 12800.
Do not call yourself a long term player if you see your stocks every day. Patience is a
virtue for long term investors. IFCI is strong on its own, as seen from last 3 days of
upside volume, but the weak market pushes it down. You can not time it on minute to
minute basis.
Kalidas, Hong Kong

9-Jan-2008
This is why FII have been a Net Sellers in Indian market (if I am right)
for IFCI rocky and others,
You gave really good analogy of tree, flowers and fragrance.
Targets, Targets and Targets. Everyone has a target but in reality no fixed target - just a
moving target. As result, they become indecisive. I have mentioned a few times here that
'Indecision costs more money on long run than Decision making'
If you start making decision, it will become your habit and later your strong character, not
only in stock market, but in every phase of your life as well. You will be a different
person altogether and begin to respect yourself. And when you start respecting yourself,
people will begin to respect you. No one respect other guy if he does not respect himself -
that is a cardinal rule.
May be initially, you feel that you made a wrong or bad decision. However, after making
a series of decisions, you will start feeling that right decisions were slowly overtaking
wrong decisions.
Follow 80:20 rule. When 8 out of 10 decisions were found to be correct, you have proved
yourself to be a Warrior. You are now fully focused. Nothing stands in your way
thereafter.

When you are below this target, just sit before a lighted candle at 11:30 PM and 5:00 AM
for just 15 minutes. Do deep breathing exercise at the same time. Watch only at the tip of
the flame, and let any thoughts pass by you. After about 7 days, you will find that you
sleep well, have mental piece and your own self guiding you to better decisions.
However, when you find that more decisions are going against you, stop trading the
market for a while, take a break and try to return after regaining your focus and logical
power. Do a simple trick during this period - sit before a lighted candle at 11:30 PM and
at 5:30 AM for about 10 minutes and watch only tip of the flame. Increase the time if you
have, and do it for 1 hour on Friday night only.
Most investors allow losses to continue and cut the profits, whereas the motto should be
to 'Cut the losses and let the profit run'. Whenever someone came to me and say that he
has very large portfolio, say Rs 10 lakh or more, I know for sure that he is losing in 80%
situation and gains only in rest.
When your target is reached, and you still feel that the stock, market and economy are
still in favor of continuing rally, sell at least 70% and retain 30%. Do not use up the
released money for other stocks - use same money for same stock at lower level with the
result that you now have more shares with same money as before. Your average cost is
always below the market. You are NET plus.
Other mistakes investors make is in trying to make money in every trade. Also they
consider 'Average Price' as their cost. This is the terrible mistake they make all the time.
Treat every trade as individual trade. For instance, if you have bought IFCI at Rs 104 and
later it came down to Rs 78, and nothing unfavorable except bad news about failure of
stake sale, buy some at 78, 86, 92 etc if the stock is in rising trend. After hitting at say, Rs
97 yesterday, it did drop to Rs 91, sell the quantity you bought at Rs 78, without relating
to other higher price trade. If it does go higher, say Rs 98, again sell the one you bought
at Rs 86, without relating to higher price trade at Rs 92 and Rs 104 (oldest trade).
If you try to consider average price of the stock, you will never be able to make selling
decision. And when you do not make selling decision, you never make money. Money is
yours if it is back in your pocket; otherwise it is just on paper.
You do not have to be very intelligent - just common sense will do. My father used to say
- Never use or trust your intelligence, if common sense serves the purpose.
In stock market only decision makers make money. Just in a cricket match, only players
make runs, hits fours and sixes, take wickets and win prizes. Over 50000 bystander
spectators merely spend money to watch the game in the stadium or on TV.
Kalidas, Hong Kong

9-Jan-2007

for Guest (Reply Post)
Death, Accidents, Stock Market Crash and New Customer can come at any time, once I
said.
Even if there is crash or severe contraction to use better word, one need not be
completely out of the market. I always keep some position in the stocks I like, because if
I sell them out completely, I will never be able to follow them in future.
I do not know much about your stocks, so it will not be prudent to advise you on the
referred stocks. However, if you believe that Ispat will be reporting better quarter than the
past, and the stock has already moved up in anticipation already, then good news when
out will depress the stock, because good news effect was already built into the stock.
BUY/SELL on RUMOURS AND SELL/BUY BACK (reversing the bet) on NEWS or

FACTS. You have to see whether Ispat will continue to report better quarter for March or
June also.
Right now, commodity prices are rising only due to weak dollar. There is also fear of real
recession in USA. If the stock prices correct severely, US fund managers will sell
everything and go back to their own home - USA. In that case, US dollar will become
strong against all expectation, and recession will reduce demand for commodities, like
steel. So future does not hold out well, but the good quarter you are looking at is a
history. Look at the future, not the past.
Unless the stocks referred to, are not on my tracking or investment list, I do not give
opinion. Yes, you can use the above tool.
Kalidas, Hong Kong

09-01-2008
19th Jan 2008

Sir John Templeton: Interview – Future of Stock Market
Reproduced is his interview which I had posted in May/June last year and was throughly
trashed by some of the boarders as crap. I followed his advice to the hilt. – Bubbu64
Sir John Templeton

Reveals the Future of the Stock Market, Real Estate and Life

Recently, NewsMax and Financial Intelligence Report publisher Christopher Ruddy
visited with Sir John Templeton in Lyford Cay in the Bahamas - the place Sir John has
called home for the past 32 years. His interview with Sir John follows:
At 92 years of age, Sir John Templeton is one of the world's most successful investors, a
legend in his own time.
Money magazine calls him 'arguably the greatest global stock picker of the century.'
Templeton's pioneering concept was to take the old adage 'buy low, sell high’ and apply it
to global investing.
Templeton sought out the best opportunities anywhere in the world he could find them.
When he began investing globally in the 1930s, Templeton was truly a pioneer. Many
Americans thought it unwise to invest outside the United States and therefore forfeited a
world of opportunities. John Templeton's results, however, is the stuff of legend.
When he sold his Templeton Funds in the early 1990s, they were worth an incredible
$800 million. Templeton personally walked away with over $900 million.
Sir John's all-consuming goal was to never just make money for himself, but to earn for
others. As he told Philanthropy magazine:
'At Yale I was investigating what talents God gave me, and where I thought I could be
most beneficial to people was to help them make fewer stupid mistakes in selecting their
investments.'
'At age 27, I formed my own investment firm, working with just five wealthy people.
Eventually, when I sold out, we were helping over a million people with some part of
their investments. And I felt that was a ministry, that I was doing a useful job, that I was
not wasting the life God gave me. But all during that time, over 50 years, I felt that my
benefit to people was not as great as if I were trying to help them get spiritual wealth.'
Sir John now works full-time as a philanthropist. His John Templeton Foundation in
Radnor, Pa., and his two offshore trusts have a total of $800 million dedicated to
philanthropy.
The foundation - run by his son Dr. John Templeton, a retired medical doctor - is one of
the few dedicated to discovering how religion can influence the physical world. Though
he spends most of his time on his philanthropy, Sir John remains dedicated to his first
vocation: the study of investments.
He cannot even utter the 'R' word…retirement. In fact, he has thought of writing a book
called 'Never Retire.'
'I have observed in 92 years that the people who are most diligent in working do live
many years longer than those who are lazy,' Sir John says.
A few years back, he told me he was exercising by walking against the ocean current
every day for almost an hour. Today he has cut back his exercise, he says, to just 25
minutes a day.
He is not only physically active, but his mental examinations of the market are sharp.
And his timing has been impeccable. He sold short the dot-com and NASDAQ tech stocks

at the very height of the '90s boom, making another small fortune.
During the past few years, Sir John has been very concerned about the lack of quality
investments available in the market, and he has repeatedly warned of the possibility of a
major collapse in housing prices - and even a '30s-style run on the stock markets.
Here are some of Sir John Templeton's current insights:
Do the Opposite of the Crowd
My job was being paid by wealthy families to help them choose stocks and bonds. And
my results were much better when I was working from here than from Manhattan, Radio
City and Rockefeller Center. I had good results in New York. But when I came here, I had
better results. The secret, I think, is that in order to buy stocks at a bargain price, you
have to do the opposite of the crowd. When you're going to the same meetings with the
other people in Manhattan, it's hard to be different.
Finding a Spiritual Way
About 12 years ago, I sold out. I had been helping a few thousand wealthy families and I
did a lot of thinking that if I could tell you the rest of my life, I might help a few thousand
wealthy families to become somewhat wealthier. But by selling out to my strongest
competitor [Franklin Resources], I can now devote 100% of my time to trying to help
people grow in a spiritual way. And that's a wide-open field - very few people who have
any substantial amount of money contribute to helping people grow spiritually.
The Study of Religion
We are tying to persuade people that no human has yet grasped 1% of what can be known
about spiritual realities. So we are encouraging people to start using the same methods of
science that have been so productive in other areas, in order to discover spiritual realities.
For example, to clarify, my grandfather was a medical doctor. But he had never heard of a
germ. That was only 140 years ago. The medical doctors began to use that as a science,
and now we know a thousand times as much about your body as my grandfather knew as
a medical doctor.
Or take the field of communications. As recently as, when Abraham Lincoln was
assassinated only 140 years ago, nobody in Europe heard about it for 17 days, because
communications was so inadequate. Now we have this enormous communication system
around us all the time. There's 1,000 times as much communication as there was 140
years ago.
Again, this is due to applying methods of science to discover new modes of
communication. So what my foundation is focused on more than anything else is to
encourage people to donate to scientific research to help discover aspects of spiritual
reality.
Managing My Own Money
I've spent 45 years inviting wealthy families to pay me a fee to help them pick the right
investments. We didn't have any salesmen, so it was a slow process to grow.
But we got up to the stage where we were helping with about $23 billion worth of other
people's money. Twelve years ago, I sold that entire operation - including this building -
to a strong competitor in California called Franklin Resources, which was on the NYSE.
Now they're helping with $88 billion in assets.
I don't have any connection with that forever. So my main activity now is just managing
my own money. Because I think I'm going to do more good by using my wealth to

encourage others to use scientific methods to find the answers to spiritual questions.
Finding Stock Bargains Never More Difficult
I do think it's interesting that in all my 92 years, I've never seen a time when it was so
hard to find a bargain. I aided wealthy families by helping them find stocks that were
selling at a small fraction of what the company was worth. But now, it's very difficult to
find companies where you can buy the stock at a fraction of its value.
In all my experience, I don't remember a time when you had to search so diligently to
find anything that was a bargain.
Bargain Stock Pick: KIA Is a Future GM

You always find some bargains, but just less than usual.
The last one I bought for myself is a company called Kia Motors. I bought one of their
automobiles and it gives me better value than any other car I have ever owned.
They are now growing better than any other major automobile company, selling a great
majority of cars outside South Korea in America and Europe and so forth, but they
manufacture them in India, China and South Korea.
And yet I bought that stock recently at less than five times earnings. I think there's a
chance - maybe not a probability, but a chance - that KIA Motors will be larger than
General Motors 30 years from now.
Assess the Risks
In judging the value of the company, you have to consider: What is the risk that
somebody might do something stupid? I think there's less risk in South Korea than there
would be in China. There are some stocks selling at bargain prices - but the risk is greater.
Are Any American Stocks Undervalued?

I haven't bought any recently. I'd like to. I just buy where the bargains are.
Another Bargain in China
I guess the second one I would suggest is something that I invested in a few months ago.
It's called Value Partners and is managed by a Chinese man in Hong Kong. It's a large
organization - I have about $100 million in it. It's about five times that big all together.
They specialize in finding ways to buy stocks that are not well known in China and the
region, and they invest in about 100 different companies in that area. They invest mainly
in things I've never heard of.
Problems with China
It's difficult. The best Chinese companies don't have a public market and are not listed in
America. Those that are listed in America are no longer cheap.
All that's true. But still, the rate of growth is so strong in China that I recently guessed
that within a short period of 20 years, the gross national product of China will be larger
than America's.
With four times the U.S. population, that is definitely achievable within 20 years.
The Dot-Com Crash and the Crash of '29.
In 1929, the Dow Jones Industrial went down to 1/9 of where it had been. In this recent
decline, it only went down 30%. The NASDAQ went down by 50%.
I am worried about exuberance. Like you just said - you'd like to have a house at Lyford
Cay, but you have to pay four times what it costs to build. It's not the values - the prices

are high.
Will There Be Another Crash?

Yes, but I've never been able to tell you when. If you find a way, let me know.
Well, I wouldn't use the word 'crash.' There will be cycles. I do think economics has
developed a lot since 1932, so you shouldn't ever expect American prices to go down
almost 90%, but I do believe there will be cycles where American prices go down 50%.
Factors Undermining the Market:
American Debt Is Highest Ever
American debt is the highest the nation's ever had. The federal deficit, the federal
debt are the largest in history. But that's just the beginning.
Also, the unfavorable trade balance is the largest the nation's ever had.
And the national deficit - the shortage of taxes collected over what's spent - is the
largest in the nation's history.
Americans were famous 30 years ago for being so thrifty. They were saving over 20 cents
out of every dollar they earned. Last year, Americans saved less than 2 cents on every
dollar.
All those things add up to the fact that there is almost sure to be a period of pessimism - a
bear market. Not a crash, but a bear market.
The old rule of thumb for brokers was: The bear is about half as long as the bull. If I
had to say when this bull market started, I would say 1990. So it's 14 years old.
The immediate future is that there are more dangers than I've ever known before. It's just
more dangerous.
More Factors: The Weakening
Dollar and What Are Good Currencies?
Let's not use the word 'good.' Let's say 'less risky' currency. The less risky currencies are
probably South Korea, Singapore, India and New Zealand.
A couple of years ago, I bought Canadian strip bonds.
I haven't sold them yet, but I've stopped buying them, because they are up 25% from
when I first got them.
And just within the last week, I made what is called a 'straddle' - I sold short $25 million
worth of Japanese money and bought long $25 million worth of South Korean money.
Why Currencies Are in Danger
The psychology all over the world is that people will not re-elect leaders who want
them to be thrifty. The voters will elect the government that spends more money. And
consequently, all money is risky. So I'm just taking the currency I think is especially risky
and putting it into one that's less of a gamble.
In the United States, President Bush was the better of the two choices. Offhand, I can't
say that there's a single nation where you can depend on the voters to want to be thrifty.
There is tremendous risk in Russia. But inflation is not a problem in Russia so much as it
is elsewhere.
One emerging country is Singapore, which doesn't have a real democracy. So the
government can afford to have a balanced budget.
The nation of Brazil has share prices that are quite low in relation to earnings. So I
wouldn't rule out investing in Brazil. Although there's a lot of risk that goes with it, it

always pays to buy bargains. Brazil is at bargain prices.
Bearish on Gold
Gold is too popular, and prices have already gone up. I remember when a British pound
would buy an ounce of gold.
There's been a tremendous inflation in gold prices.
On Warren Buffett
I'm a great admirer of Warren Buffett. But he has been focused primarily on U.S
investments. That is strange. To that extent, I think he's short-sighted - or small-sighted.
Small-sighted, I think. If he had spent more time in foreign nations, he would be better
off.
Housing Prices
Now the U.S. has this extraordinary thing - I think in some places we see 50% to 100%
gains on the housing market. Other places across the country might be up 25% to 30% in
just a matter of three to four years. Incredible gains.
When you invest in stocks, you get the same value all over. The same stock sells at the
same value, no matter what nation you're in. But that's impossible in real estate. Real
estate value depends on locality. If you're going to be a real estate investor, focus on
location, location, location.
So when you're trying to invest in real estate, you have to do a lot of serious research on
whether this location is likely to be popular in the long run.
That's why I wound up believing beachfront property is a good investment. I don't think
there's ever going to be any more beach-front than there is now. Now people are getting
bigger and the amount of money is getting bigger. So beachfront is pretty sure to go up in
value.
Owning a home on the ocean is better than owning one that's not on the water.
But there are large tracts of oceanfront property still available in South and Central
America in countries where there is a rule of law. You used to be able to buy land at very
low prices. But still there are some good deals.
A 50% drop off in prices is quite possible.
I've never, never ever had a mortgage on any house. I learned that long before you were
born. When I was a child in Tennessee, I watched so many people lose their farms
because they had tiny mortgages, but they got to the end of their years, when it was
impossible to earn a profit on the farm. They couldn't meet their payments and their
mortgage was sold at auction in the courthouse.
I don't rule out borrowing money. But I think it's risky.
Positive Mental Attitude

Positive mental attitude helps in every way. It helps you physically, mentally, financially -
in every way. In fact, I think you ought to focus on that, write articles on it.
As I said - when Abraham Lincoln was assassinated, nobody in Europe heard about it for
17 days. So there were more bad things happening 140 years ago than there are now. But
today, communication is so enormous that we're flooded with news and there's a fault in
human nature, even with you. If you're passing a newsstand and a stack of newspapers,
one of which says 100,000 airplanes landed safely today and one that says one airplane
crashed, you'll buy the newspaper that says the one airplane crashed.

Terrorism warps your thinking. It makes people think that there are a lot more troubles
than there are. But there are less troubles than ever, and we don't realize, because we read
about all the problems.
Pharmaceutical Stocks
I think they will continue to grow, but they're not cheap. They're one of the highest
groups of stock.
Baby Boomers Retiring

This is enormous. But the adjustment is so easy. You just don't start pensions until 10
years later. That solves it all. It will happen. Nation after nation - not only America,
but other countries - will just have to declare that pensions are going to start 10
years later.
I think it's inevitable. I don't know when, but within the next 20 years, almost every
nation will have to change the law to say you can't get your pension as soon as you retire.
The Coming Health Crisis

I don't have answers to everything. I have thought about your big question here. And I
think the answer is to say that no health insurance should cover the total cost of
insurance. Health insurance should cover maybe 2/3, but not all. That would give people
an incentive not to use health insurance excessively.
SIR JOHN TEMPLETON
My greatest guru of the stock markets is still alive and kicking at 96 in the Bahamas.
Time we traders and investors took a realistic view of how to live, trade and make money.
Life is too valuable to be wasted. I hope you guys enjoyed reading his view on life,
money and hope in general.
Goodluck to all
Equity payback longest for Indians
Equity payback longest for Indians

20 Jan, 2008, 0000 hrs IST,Aman Dhall & Sanjeev Sharma, TNN
NEW DELHI: Based on current dividend streams ,investors get their money back in a
mere 21 years in the case of Taiwan, 30 years in the case of Malaysia and 52 years in the
case of China. In case of India, however, investors would need to wait a full 113 years for
their payback. This itself is an all-time high, beating the 1994 and 2000 peaks by 18 and
6 years, respectively.
The equity duration looks at how long an investor would have to wait until the dividends
received equal the current share price. It also highlights how far ahead investors are
looking in order to get “their money back” in terms of future dividend flows. Long term

investing may be a virtue but waiting more than 100 years to get your current outlay
back in terms of dividends as in the case of India seems to be beyond the call of virtue
and fast approaching sainthood in terms of patience, says a Citigroup study.
Sanjay Aggarwal, national industry director, financial services, KPMG India believes
that the high dividend tax imposed on India Inc. is responsible for a long payback period.
“India being in a growth mode, the thrust is on re-investing the surpluses rather than on
paying high dividends. Though if you look at the top-200 companies, the dividend payout
may not be that high but is consistent. Considering the high dividend tax imposed, it
leaves companies with no option but to re-invest the surpluses, if any. Since, raising
funds from outside is also expensive,” he points out.
Even in Asia, periods of long duration (in excess of 70 years or one lifetime) are very
rare. Duration in excess of 100 years is even rarer and seldom sustained. As investors
become more realistic about what the region and equities can deliver, so their investment
horizon will begin to shift from the distant horizon back towards the present. In that
environment being short duration or stocks where a high percentage of value lies closer
to the present will be preferred. As uncertainty rises, investors will choose more imminent
cash flow over capital appreciation, says Citigroup.
However, Mr Aggarwal doesn’t agree with that point. “From the investors perspective,
there is nothing to worry about. But from the government perspective, it clearly indicates
the fact that it is time they should have a re-look at the dividend tax policy,” he says.
The average life expectancy for the world is 67.2 years and those living in Asia get an
extra six years to enjoy life at 73. In markets like India, valuations have gone completely
out of the window and has now taken over the mantle of China of being the most
expensive market in the region.
A director with a consulting firm, who didn’t wish to be identified, puts the onus on lack
of ‘dividend culture’ in India Inc. as the reason for longer payback period. “Companies
in India don’t focus much on dividend policy. For the investors, it has always been
capital appreciation as the sole reason behind investing in any particular stock. On the
macro front, it does points out that Indian companies are not mature as far as their
dividend policy is concerned,” he explains.
Further, he feels that dividend has never been the criteria for investment in India, rather
it’s a overseas phenomenon, mainly of the West. He gives the example of Citibank in
USA, which has given consistently strong dividend payouts during the last 12 years,
except this year owing to the sub-prime lending crisis.
In terms of duration analysis, India is the market that is currently at its most extreme.
Given the current dividend stream, it would take an investor 113 years to get the current
value of the index back in the form of dividends. This means 1.5 generations of investors
at this stage just to get the original outlay back in the form of dividends. Even in a
growth market scenario, such durations have not sustained. Taiwan used to have in
excess of 100 year duration but could not sustain.
Nor, has this kind of duration ever proven to be sustainable even within the Indian

context. In boom scenarios in 1994 and 2000, the same thing happened with the market
falling by 41.6 % and 57.8 %, respectively.
Indian Economy: Total Convertible rupee
Nobel Laureate Friederich Hayek wrote The Road to Serfdom in 1944. This classic is a
must-read for those that have very big stakes in the equity, robustness and growth of the
Indian economy. It explains how controls on foreign exchange convertibility are the
decisive step to totalitarianism. Controls on convertibility suppress equity, enterprise and
economic growth.
Hayek was awarded the world's top prize in economics in 1974. He taught at London and
Chicago, and lived until 1992.
If Hayek were alive, he would compliment the Prime Minister for announcing that the
Indian rupee is on the road to full convertibility. The announcement is a decisive step
towards deriving the best from the enterprise of Indians living anywhere in the world.
But Hayek would be candid to say that circumstances have forced India's hand. Full
convertibility has become a necessity. It is no longer negotiable. Managing the rupee's
dirty float within a system of limited convertibility and full interest rate autonomy has
become a nightmare. The Reserve Bank of India (RBI) has had a torrid time balancing
capital inflows against the nation's policy on money supply, interest rates, inflation, price
stability and growth.
Full convertibility and freely floating exchange rates are not joint policy issues.
But a combination of the two will restore India's full autonomy over money supply,
interest rates and growth. It would not be surprising if the Finance Ministry and the RBI
are soaked in joy.
THE THREE TASKS
They have onerous tasks ahead. First, full convertibility will require a system of
monitoring and deterrence aimed at flows related to terrorism, crime and money
laundering. Second, the roadmap to convertibility will have to address how India will
integrate itself into the global currency markets. They will set the spot price of the rupee
after reckoning with its supply and demand. They will also set the rupee's forward price
after reckoning with rupee interest rates. The road map will have to address how the price
of domestic credit will flow into the global currency markets.

Third, the road map to convertibility will have to address how India will put in place a
fair and free market for domestic credit. India has come a long way since July 1991 when
it deregulated interest rates on corporate debentures. But there is some more distance to
go in the context of other borrowers.
A DOZEN COMBINATIONS
Convertibility, interest rate autonomy and exchange rate systems are tightly related policy
issues. Convertibility or capital mobility offers two courses of action. Interest rate policy
offers two. And exchange rate policy three. There are in all a dozen theoretical
combinations. Many are sustainable; at least one is impossible.
First, India can choose to control convertibility or have no control. Second, India can
choose autonomous money supply and interest rates or slavishly allow these to be set by
the central bank of a foreign country.
Third, India can choose to follow one of three types of exchange rate regimes for the
rupee. They are freely floating, fixed and pegged rates. Fixed rates are not the same as
pegged though many think they are. Though floating and fixed rates appear to be
dissimilar, they are members of the same family. Pegged rates are the odd men out.
THE DARLING PAIR
Floating and fixed rates are free-market mechanisms for international payments in the
current and capital accounts. With a floating rate, the RBI chooses monetary policy, but
cedes control over the exchange rate policy. The rupee is on autopilot. As a desirable
result, the RBI wholly determines India's monetary base and interest rates.
With a fixed rate, the RBI sets the exchange rate but has no monetary policy. The
monetary policy is on autopilot. The monetary base is determined by the balance of
payments. When foreign exchange reserves increase, the monetary base expands. Interest
rates could fall; inflation could rise. When reserves decrease, the monetary base contracts.
Interest rates could rise. Growth could be undermined.
Growth is good for India. That is not negotiable. Price stability is good for India. That too
is not negotiable. Therefore, it is wholly inadvisable to cede control over monetary policy
and interest rates to the central bank of a foreign country. So, full interest rate autonomy
and freely floating exchange rates are possible, compatible and desirable. Full interest
rate autonomy and fixed exchange rates are impossible.
IMPOSSIBLE TRINITY
India's economy and governance style, unlike China's, does not make pegging the rupee a
viable choice (see Business Line, June 4, 2005). India has to work with fully floating
exchange rates. But they pose significant problems to exporters and importers.

Exporters may be very uncomfortable if the rupee strengthened from Rs 44 to 40 per US
dollar in response to strong inflows of global capital. Importers may be wrecked if the
rupee weakened from Rs 44 to 48 per dollar in response to strong capital outflows.
This explains why nations abhor capital mobility. They control convertibility in the
capital account because capital mobility, freely floating exchange rates and full interest
rate autonomy cannot coexist. Any two — but not three — can coexist.
BADGE OF DISHONOUR
India's current account deficit is the result of growth. Capital account surplus is necessary
to fund this deficit. It would be disastrous to staunch capital inflows. It would be wholly
foolish too because they bring technology and employment with them. Hence, India has a
seemingly respectable mixture of partial capital account convertibility, managed or dirty
float of the rupee and bulging foreign exchange reserves.
The RBI creates foreign exchange reserves when capital inflows threaten to strengthen
the rupee, say, from Rs 44 to 40 per dollar. It involuntarily expands the domestic
monetary base by injecting rupee funds to soak up capital inflows. Exporters may reap
rich rewards but bulging reserves are a badge of dishonour. Bulging reserves suppress the
purchasing power of ordinary Indians. They make the rupee prices of imported crude oil,
petrol, diesel, edible oils, metals and fertilisers costly. They hurt growth (see Business
Line, April 2, 2004). Hayek would have denounced this.
The RBI draws from the foreign exchange reserves when capital outflows threaten to
weaken the rupee, say, from Rs 44 to 48 per dollar. It involuntarily contracts the domestic
monetary base by sucking out rupee funds and raising interest rates. These hurt
consumption, investments and growth. Hayek would have denounced this too.
NECESSITY IS MOTHER...
India has been playing a dysfunctional game for long despite its earnest focus on growth.
This game has its worshippers who consider foreign exchange reserves a badge of honour
and a source of resources (see Business Line, January 21, 2005). What these worshippers
have not disclosed is that reserves are iniquitous and detrimental to future growth.
Full convertibility is a necessity that injects high-octane fuel into the economy. It secures
the autonomy of the RBI in monetary policy and interest rates but only when the rupee
can float freely. It pushes India into the possible trinity of equity, enterprise and economic
growth.

23th Jan 2008
Market crash
We dont need them. They have torn the lives of the small investors to shreds. Couple of
months ago all these so called great economists from heavy weights like Morgan Stanley
were tooting the India story as if there was no tomorrow. Today all of these have
retreated, slinked away like rats in the sewers back to the US with their falling dollars
trying to prop up their economy. It wont work. Maybe to an extent it will but in the long
term they will have to pay for their sins.
Over the past two days we have lost almost a quater of the valuations in the stock prices.
Investor were carried away by the so called paid analysts of these very FII rats to up the
ante and pull out theor money. It will take a very long long time for the small retial
investors to come back to the market. They were the ones who had been driving the mkts
so far with their savings now completely eroded. I am hearing tales from broker friends in
Gujarat having to sell their houses to cover up their losses. What a tragedy. We are back
to square one circa May 2006 revisited. It took a long time for the faith to be restored and
the bull run to start again. This time it was a double whammy which in my opinion was
too much to endure. Add to that SEBI's stupid idea of short selling for the FII's will add
more pain to the mkt. Mkts will get more and more volatile so much so that no clear
trends will emerge for the next few months. I feel we are headed into a long consolidation
phase and period of retrospection. Those in notional losses will have to endure a long
period of waiting to cover up. Trader stocks like NAGFERT, ISPATIND, IFCI, ARVMIL,
BONREF, TTML, RELNAT, RELPET will have to wait. It will take sometime before
previous levels before the tank down will be achieved. But yes this I would expect the
retail investors to respond decisively and invest. Time to show the FII's that WE DONT
NEED THEM ANYMORE.
Hi Bubbu64,
You and some others are also telling that FIIs from US will take their money back home
and hence sensex can come down. But the doubt I have is why should they take money
back home? When they can get good amount of appreciation in the emerging markets like
India what will they do by taking money back to US, which is going to be under recession
and hence there wont be much appreciation rather depreciation, right? I dont understand
the logic of getting their money out of India. May be this is temporary after some time
they will definitely come back to invest in India right? Please let me know your views on
the same.
Thanks,
Prashanth

Margin Trading ******
Dear ethereal
In margin trading you can do trading in two ways, first you buy and then sell at a
higher price making a profit (long). In a short sell anticipating that the stock may
tank down you sell the stock and then buy the stock when it tanks down (short). In
both cases its not necessary you should possess the stock in your kitty. When u do
margin trading u borrow the stock from your broker by paying a margin deposit
lets say 25% of the total stock value as a sort of security for having loaned you the
stock to do margin trading.
However the basic diff is in the risk involved.
In the first case when you went long by buying the stock at a lower price and selling it at
a higher price, suppose a scenario emerges that u made a wrong move and instead of
going up the stock tanks down. Now you’re making losses so say u made a loss of Rs
1000 by squaring of the trade to avoid any further losses. You end up paying only the
brokerage plus Rs 1000 from your deposit which was blocked when u first bought the
stock. However sometimes traders r greedy and don’t sell thinking the stock will rebound
and keep watching the losses piling up, a situation emerges that your margin deposit will
not cover your loss and the broker will ask for additional margin and if your unable to
provide additional margin it will be auctioned the next day. Depending on how the
markets behave the next day one may end up making huge losses. Unless you already
have the stock in your equity cash account which will can be traded in lieu of the loss.
Now in the second case shorting means you sell the stock first and buy it later at a lower
price. Now again it goes the other way round and it starts going up, u made a loss of Rs
1000 and the same action is done i.e. brokerage plus the loss and rest money is returned
to you. Now as above the stock takes the opposite direction and u start making losses
either u let the broker auction the stock or u cover it up with stock lying in your account.
However short sell is dangerous since in the first case (long) if u have adequate funds u
can fully buy the stock at the price u entered (called convert to delivery) to avoid the loss,
But in the second case U have sold the stock in the first place so how can u convert to
avoid losses. Hence short selling is a dangerous play, and unless u know the market
dynamics and movements closely its better to play long i.e. buy and sell and convert to
delivery if in losses. The stock comes in your kitty. Of course now that u have
bought/converted the stock to delivery at a higher price U will have to wait for further
upside to get your previous losses covered up and make further profits. So avoid short
selling unless u have full confidence in what your doing.
I hope it explains your query. Ask me for clarification if you haven’t understood any
point I have written so far.

Regards
Hi, great...!
Just to add one more point, like you use cash to do convert to delivery in case long going
averse, you can also use stocks in your DP while going short to do convert to delivery.
This way, if you have a particular stock in your DP and if you feel its going to be down
but you dont want to sell the stock for delivery brokerage, you can short the same stock,
buy back later for day trade brokerage and if suppose the stock goes up and you dont
want to bear that loss from your cash you can do the convert to delivery of your existing
shares.
KingPorus
Nice to know ur from KGP too.
My advice to you will be as shown in the eg below
Tgt 10000 shares
Today u bought 2000 shares at 95 and suddenly mkt tanks down and ur in notional loss
what will u do?U will hold on and see if the stock is in a bear grip ie going down all the
way.
In such a case having known the future excellent prospects of IFCI I would start buying
in small qty's at 90-500 shares
85-500 shares, 80-500 shares, 75-500 shares, 70-500 shares, 65-500 shares and so on. I
would do it since I am NOT trying to avg down my price, but since one can never find
out the true bottom at which the stock might start making its upward journey eventually.
Suppose eventually it touches 50 and starts moving up and U have purchased 10000
shares at a avg much below ur initial buy price. Lets say the avg comes to 68 odd or even
70 odd. U asked should I wait, My advise would be dont wait. Keep buying in small qty's
and then somewhere u will get the feeling the stock will move up then at that point buy a
large qty. This way u reduce ur loss margin and get to buy the shares at the supposed
lowest price level. I have done this hundreds of times and now my avg is close to 65-67. I
am not worried at all if the price tanks down further. I believe in the long term scenario of
this scrip but I also time to time indulge in BTST and Intraday margin trading to meet my
monthly earnings target. This way my core holding remains intact for the long term.
Regards
Bubbu

25th Jan 2008
Trading Strategy Bubbu***
Guest
Let me tell u at one time when the stake sale didnt take place in Dec 2007 and the stock
tanked the next day from 100 to 75 odd I lost almost a crore in notional losses (stock not
yet sold), and I had to sell other blue chip stocks to buy again at 76 to avg and sell off to
cover my losses. If u see my entire msg history nowhere have I told anyone to sell at a
loss but wait for the stock to fall a bit, buy , avg and then sell at some profit. Why did u
guys sell ur stock. That was a utterly foolish thing to do. In May 2006 when the mkt
crashed I had 5000 shares of TISCO at the highest price of 650 odd and I waited for more
than a year to sell it off when it finally retraced its previous highs somewhere in Oct/Nov
2007. I had exhibited that much patience to wait to recover my losses. Of course I could
have bought more at lower prices when the stock tanked But unfortunately that day I lost
almost 16 lakhs in a single future margin call and I was completely broken. It took me 2
months to recover from that shocking loss in a single day. I learnt the hard way about
stock trading and I am still learning. In future please don’t sell in such a situation. Never
do that.
Who has run away? Did I?
Do you know amt of blood pressure and the mental tension on me for the last two days.
No I wasnt in a loss but yes the extreme volatility has created enough havoc. No trends
are emerging. I would be the last to slink away. Fact is IFCI remains my No 1 choice in
my portfolio. I sold coz I decided to take a break from this hectic volatile mkt. In my
view right now the mkt have gone into a tailspin. No set patterns/ directions are visible. I
apologise if u think I have deserted u guys. No way. Thats not my style. Its just that I
have taken a short break for a week to recoup and plan my next strategy to tackle the
mkts, since I feel for the next few months we are headed into a period of uncertainity. It
could be a period of consolidation. None of the world mkts have shown even a single
sign of what direction the mkts wish to take.
Let me tell you once again. IFCI is should I say AAA grade stock. Whether u buy it at 50
levels or 40 or 80 or even at 100 it doesnt matter. What matters right now is the
uncertanity about the stake sale. Unless the govt clears up the whole stake sale imbroglio
its pointless to lock ur money in the scrip while opportunities pass by in other scrips.
After all I am here to make money in the mkts. lets just say I would lock 10% of my total
cash reserves into this scrip for now and this what I have done. My core holdings in IFCI
still remain intact. The rest of the money will be invested in other scrips after the mkts
stabilize. Once a clear picture emerges I would be the first to reinvest into IFCI again.
Why should my money be locked up when it took almost a year to wait for triple digit
levels to be achieved only to see it tanking down again when the stake sale was cancelled.

I had waited for more than a year with my money locked up for IFCI to begin its upward
journey. I am still bullish and waiting but yes this time I decided that I would be foolish
to lock my cash reserves in one scrip for more than a month. This recent heavy tank down
has given me a lifetime opportunity to invest in other scrips at rock bottom levels with a
long term view and this what I have been doing over the last three days. So my long term
investment in IFCI still remains. Goodluck
KingPorus
I don’t track Auto stocks at all. Not even Auto ancillaries. So I won’t be able to tell u
about TVS. If u want me to analyze it I will do it for u, but I will do that after I download
the Bhavcopy in the evening from the NSE server. U should have bought IFCI at 63 or
below since I think it will shoot up on Monday. I purchased them to average out further.
Now I am done and I will wait next week to offload everything close to expiry. My
objective will be to get out of the market completely save for a few 100's shares in the
various stocks pruning it to 90% cash in hand. Sure today we saw a good upside but the
point to note is ' will the mkt take off on a upward trajectory from today's close next
week'? That is the question. Hence I am not bothered if I get in IFCI later at even 100. I
would like to see how the mkt moves when short selling starts. That is my biggest worry
since FII's have very deep pockets and the mkt will very extremely volatile when the
short selling starts. ISPATIND showed a good move today hence will shoot up next week
close to expiry. TTML hmmm I wasn’t impressed with today's performance. Hence I am
a bit skeptical. SAIL moved well today. RELIND moved well at day close. ICICIBANK,
SAIL, POWGRI, ISPATIND, IFCI moved well today. More volumes were generated
shows money is coming via HNI's and DII's in these counters. But still I would be
cautious and hence I repeat My earlier objective to cash out to the tune of 90%. I don’t
track real estate, auto, media, IT and Telecom. I track only financial, banking, power,
power equipment, steel and some capital goods. That’s it.
Regards
When Warren Buffett speaks the world listens. When he calls you answer and when he invites
you to join him on a world wind tour of Asia one goes.
Buffet is all business, charming yes, but all business. And right now he has plans for conquering
Asia. On this trip, he heads from Omaha to China to South Korea and back all in under 56 hours.
At 77, Warren Buffett is working as hard as ever, circling the globe to see first hand the progress
his companies have made and to rally his troupes. The Chairman and CEO of Berkshire
Hathaway since 1964, Buffet sits over an enviable cornucopia, household names including Dairy
Queen, GEICO, Netjets, See’s Candies and Fruit of the Loom. He also owns major stakes in
American icons including Coca-Cola and The Washington Post.
It all began over 65 years ago. The legendary investor buys his first stock, Citi Services preferred,
at age 11. He liquidates his entire portfolio of just 3 shares, just three years later.
Buffett: I bought at USD 38 and sold at USD 40 and went to school with them.

As Buffet watches the gains he missed out on; he learns that investing is much like his favourite
sport, baseball.
Buffett: Ted Williams in ‘The science of hitting’, talks about waiting for the right pitch, and that is
what investing is. There are a lot of parallels. If you swing at bad pitchers and feel you have to
swing at every pitch, then you are going to have a terrible batting average. But if you wait for the
right pitch; in baseball once you get two strikes on you - you have to swing at a bad pitcher in the
strike zone. In investing you wait till you get the right pitch.
A skill that this investor who claims he was destined for a career in asset allocation has certainly
mastered.
Buffett: I tap dance to the office every morning and the reason I am tap dancing is because
something may happen. I may get a phone call, there could be a letter there and when it does, it
is a lot of fun.
In 1956, at just 25 years old, Buffett starts a limited partnership. The seed money, a USD 100 of
his own cash and investments from family and friends totaling just over USD 100,000. In less
than a decade, Buffet grows that sum to a whopping USD 26 million. Investing in farm equipment
manufacturers and textile companies including one called Berkshire Hathaway.
By 1969, Buffet amasses a controlling stake in Berkshire. In the 4 decades since he has built it
into one of the largest holding companies in the world. The world’s third richest man with a
networth of over USD 52 billion is a person of simple pleasures.
He has no entourage, no cell phone or Blackberry. In fact, he rarely emails anyone and lives in
the same home he bought almost 50 years ago in Omaha, Nebraska.
Buffett makes his deals much the same way he manages his life. He buys what he understands.
Buffet: Through looking for companies with durable competitive advantage, run by able and
honest people. We are looking for businesses that we can acquire at a price that makes sense for
Berkshire Hathaway.
That is why Berkshire Hathaway has always only owned American companies; those Buffet could
get his hands and his head around. That is until May of 2006. That is when Buffet surprises
shareholders at his annual meeting with news that he is shifting gears, plunking down USD 4
billion to buy a controlling stake in ISCAR, a metalworking company based in Israel. It is a total
change in direction for Buffet and one that starts with a simple letter.
Buffett: I got a letter in October of 2005 from a man I didn’t know, about a company I had never
heard of. It was a page and a quarter long and it just jumped off the page that these were the kind
of people that I would wanted to be associated with and the kind of company. So, he said he
would come over if I was interested. I e-mailed him. He and two of his associates were over a
little while later and we just hit it off like that and I gave him a cheque for USD 4 billion without
even seeing the plan for 80%.
How do you read a page and quarter letter that jumps off the page and grabs your
attention?
Buffett: It doesn’t happen very often. But I could tell the kind of person who was on the other end
and I could tell from the few figures and little description of the business that it was exactly our

kind of business. It is a gem. I have never bought a manufacturing operation that looks as good
as this one.
But his first look at ISCAR’s operation doesn’t come in until after he closes on the deal. Berkshire
actually bought ISCAR, which was founded by Stefan Wertheimer, sight unseen. But since then
billionaire next door has gained plenty of frequent flyer miles touring his new operations.
Buffet visits ISCAR headquarters in Tefen, Israel, which is home to about a third of ISCAR’s more
than 6,000 employees. Shortly after buying the cutting tool business, he and long time friend,
Berkshire’s Vice Chairman Charlie Monger tour the plant in September of 2006. CNBC’s Carl
Quintanilla is there.
Buffet: What you have here is a remarkable group of people doing remarkable things in their
field, achieving terrific results all over the world, but based right here, 8 miles from the Lebanese
border.
Does that mean that the risk premium in Israel is no greater than it is in the US?
Buffet: I would say that in terms of any short period of time, you could have an event break out.
But over the long-term in the US and Israel, that is exactly the same risk. We live in a dangerous
world. It is our job to make it less dangerous.
The trip leaves a lasting impression on Buffet.
Buffett: We will never find another one like ISCAR. If we find something that is 80% of ISCAR,
we will be very happy.
Now on this trip he will get a chance to see ISCAR’s Asian operations up close and Asia is key to
the company’s growth.
Buffet: We are opening a plant in Dalian for ISCAR and it is an important business operation for
us. ISCAR is in 61 countries around the world, but based in Israel. But China will probably be the
largest market eventually for ISCAR. We make all kinds of little carbide cutting tools and they find
a way through odd industries. So, as Chinese industries boom, the steel industry, the car industry,
whatever, they use these little tools.
The interesting thing about it is that carbide comes from tungsten, and tungsten by and large is
mined in China. But here was a company in Israel, halfway across the world and they figured out
the best way to use this tungsten and carbide tools. Although they have been selling in China
before, this was the first time they have had a plant back there. So, the raw material originally
went from China to Israel and now the technology is going from Israel to China.
Does he expect China to be the biggest market for ISCAR by what year?
Buffett: I wouldn’t be surprised if it is within less than 10 years, China could be the largest
market.
Already ISCAR’s newest factory is setting records. Fresh off a tour in the facility, Buffett says
things in China seem to happen on double time.
Buffett: The factory went up in six months. That is 250,000 square feet or so. And in six months it
was done. Now, they are good. But they couldn’t have done it any place else in the world. It only
might be there, in China.

Why could you do it in China?
Buffett: You would have to ask the people at ISCAR. But there were no roadblocks of any kind
whatsoever there, and people worked hard, they got it done fast and the customers want the
product and we are going to be supplying it to them.
What kind of potential does this place have?
Buffett: This place has just that plant right now on its present site. It will have several hundred
million dollars in potential. But we have got room to expand and our customers will be expanding.
I think you will be amazed at what happens.
How big is the market going to be down the road?
Buffett: It will be huge. I don’t know how big it will be. But it will have all of these companies that
use our type of product - cutting tools, and we would be crazy not to be here.
Even though Buffett’s first international investment wasn’t until 2006, he says he has been
thinking globally his entire life, learning the lessons of globalisation early on. Starting with his
investment company’s namesake, the Berkshire Hathaway Textile Mills.
Buffett: About more than a century ago, if you lived in New England, you measured your wealth
by looms and bobbins, just like people in the Midwest measured by acres of land. And it just
turned to dust appreciably.
Do you think it is continuing to do that in other industries today?
Buffett: All of the world is always evolving. I mean the job of somebody that allocates capital is to
look out and see. Not so much in my case. We like what we call durable competitive advantage.
What industries do you think today are disappearing in that way?
Buffett: We have to think about any industry that has a high labour cost, because we are at a
competitive disadvantage in the US, in industries with high labour costs. There are probably
exceptions.
But you are not going to print Wall Street Journal from China or India or something of the sort. But
when you have got a business with a high labour content, that is churning a basic product, you
have to think twice about what is going to happen to them.
I was wrong in shoes - the domestic shoes business. I was dead wrong, because it was moved
and then in the textile business. We were buying our furniture over there. Now we retail, we don’t
manufacture but domestic manufacturing was a terrible phenomenon about 10 years ago. There
is a lot of labour there and they are good.
Q: In China now, they are losing some of their factories. They are now going offshore to
Vietnam, because it is cheaper labour there.
Buffett: Because it is capitalism. You have got a communist country that has capitalism. The
world will seek low-cost production, as long as quality was thought to be more in hand. We would
want to be more careful when we are looking at the business that has got a 40% labour content.
Why is it here and what will keep it here because it won’t be because we know something that
they don’t know. I mean in Internet and all kinds of things, the world has gone flat in that
perspective. So, we are looking for durable competitive advantage. We are always looking for

chinks in the armour, something that can cause a business that is good today might not be good
to have 10-20 years from now.
It is an event worthy of fireworks and elaborate celebrations. There is a new factory opening in
Dalian, China less than 300 miles east of Beijing. But the real cause for celebration is a guest of
honour. The oracle of Omaha, the world’s third richest man who would rarely leave the US has
come to town. He is making only his second trip to China ever and it is his first in more than a
decade. And it is all because of Eitan Wertheimer, the Chairman of ISCAR, the Israeli
metalworking company that built this factory. He managed to convince Buffett to buy his company.
Buffet at a press briefing: About two years ago, Eitan sent me a letter, on October 15, 2005 and
talked about the situation with his business and was looking for a partner and I was 10,000 miles
away. And the letter was just a bit more than one page. But I could tell that this was something
that was very interesting. It was a marvelous company and was run by marvelous people.
The father and son team of Stefan and Eitan Wertheimer wanted to prepare their company for
life, long after their own leadership ended. They debated taking the company public, leveraged
buyouts and mergers. But no solutions seemed right for their employees and their customers until
they found Warren Buffet.
Eitan Wertheimer, Chairman & CEO, ISCAR: We were not in a hurry. It took us three years to
find that there is actually a different model than the rest of the world and that is Warren Buffet.
Warren Buffet and Berkshire Hathaway are very well known in the States. They are less known
around Europe or in other parts of the world. And for us once we understood that that’s the right
solution or it looks like the right solution, I wrote him a letter.
I wrote him a letter saying what is the story and what we are looking for, and would he be
interested to have coffee together? And I got the answer couple of hours after the letter reached
him telling that sounds like an interesting, very fascinating company and if by any chance we can
come over to Omaha and have coffee? And I said of course, we happen to be by the way and we
love to come.
You were just in town and you were just in the neighborhood and you stopped by?
Eitan Wertheimer: No, we took our luggage and went to the airport. We were so happy to go and
talk to Warren. We did not know what to expect. We were expecting a chain of secretaries and big
buildings but then we found a very modest man, very lovely and it clicked from the first minute.
Omaha is a long way from Wertheimer home in Israel. But if you want to borrow Buffet’s ear, the
surest and sometimes only way to do that is through Nebraska. In fact, “Piccolos” right here in
South Omaha is Buffet’s favourite place to bring out-of-towners for dinner.
Buffet: I love the food. The two sisters that run it are just terrific. But it just couldn’t be a better
place So, I take, if A-Rod 's in town (Alex Rodriguez), Jeff Immelt (General Electric Chairman &
CEO) is coming into town tomorrow, we'll have dinner there, whomever, and they always like it
and we always finish with a root beer float.
Like many of Buffett's favorite things, Piccolo's is family-owned and operated. Prime ribs are their
specialty. Co-owner Donna Sheehan says its not always what the Oracle eats.

06th Feb 2008
Markets are crashing
for Guest and Others,
I have just returned Hong Kong. After catching up with my pending matters, I will post
new messages again within a day or two.
for the time being, I am extremely negative on the market. The situation is worsening day
by day. The worse is yet to come.
I do not buy the story appearing in the print that recession fears are driving down the
market. Recession fears while real are not the main reason for the market downfall. Such
fears change day by day depending on the numbers released on weekly basis.
The crux of the problem is that derivatives are collapsing. It does look to me that some
major banks may collapse soon, and with that, the entire markets world over may have
cascading effect.
Most vulnerable banks to fall are Citibank, Bank of America, Wacovia, JP Morgan Chase,
Wells Fargo; banks on operating table are some German banks, UBS, HSBC, SocGen,
Mortgage lenders like Countrywide Financials in USA, Northern Rock in UK, investment
banks like Merrill Lynch, Morgan Stanley, even Goldman Sach.
In India, most vulnerable banks are ICICI followed by SBI, HDFC, Axis Bank and Bank
of India. While in Mumbai, I came across serious defaults by borrowers. Some large
brokerage firms, who have come out with IPO recently, are also having serious financial
troubles.
SBI is raising over Rs 16000 crores, when the banks are flush with funds - why? did they
lose in Sub-prime investments? More likely. They may disclose their troubles only after
raising capital to recfoup the losses.
Do not be under impression that Indian market will be insulated. 3000 points fall on the
back of Wall Street troubles clearly indicate the Indian markets are well connected with
the overseas markets. Domestic money is not enough to counter the heavy withdrawals
by FIIS from cash segments.
Kalidas, Hong Kong

6-Feb-2008

08th Feb 2008
IFCI Earnings
for Guest- KingPorus,
How did you get the idea that IFCI's earnings are not real, and that they made money out
of property sale? Was the property sold belonged to IFCI (as their own) or its borrowers?
IFCI is in lending business. If any property came to its hold by defaulting borrowers is
sold, it is considered to be in 'normal course of business'. Further, it can not take the profit
under the Indian law. It can only appropriate the proceeds to adjust the borrower's dues. If
there results an excess after adjusting borrower's dues, such excess have to be returned to
the concerned borrowers.
By all means, IFCI is considered to be the best financial stock one can own, be it short
term or long term. At current prices, I prefer to own IFCI at Rs 63.85 rather than UCO
bank at Rs 59.60, because IFCI earnings are far superior to UCO bank in terms of quality
and also the quantity (EPS). If you own both, better sell UCO bank in rally and then
focus on using those proceeds to buy IFCI in correction.
Currently, the market conditions are so bad that almost all stocks will find even lower
level than what you see now. When the market falls steeply, every counter will come
down, regardless of quality.
FORGET THE RULE OF AVERAGES

from now on, treat each purchase as separate deal and do not bother to count the averages
or average cost.
DO NOT even sit on existing stock like a chicken hatching an egg. Be a trader for a
while. Use 70% of your current stock position as 'floating stock'. Whenever there is a
rally where the stock has gone up by 10% to 15%, sell some, regardless of your original
cost. If the stock still goes higher, sell some more. When the stock corrects by over 10%
on downside, buy back original position sold +10% (that is if you sold 10000 shares
earlier, buy back 11000 shares now with same money.
If it goes higher again, sell it again. By selling now, for IT purposes, your old cost will be
considered on First In First Out (FIFO) basis. So, technically, you will be booking losses
which can save you 30% of taxes, if you have also booked short term gains for some
other trades.
Therefore, count each trade as independent. If the stock goes higher, do not hesitate to
sell. Do not be under impression that the stock once sold may not come down again. All
stocks will come down to even lower level than the one you saw on 3000 points fall.
Also keep at least 2 or 3 brokers, one of them a bank like ICICI or HDFC. Because, when

the market falls steeply, the private brokers (non-bank) refuse to accept new orders
without advance cash deposit. You will therefore lose profitable opportunity. If the broker
is a bank, you will not have problem in getting the trade executed at such opportune level.
for the time being, I would keep at least 3 brokers (one of them, a bank). While I was in
Amravati and Bhilai, I saw sub-brokers finding their lines completely withdrawn by their
principal brokers with the result that some investors could not buy IFCI at Rs 42 or about
level. They had shut down operation for all practical purposes.
Do not be a 'macho' by calling yourself a 'Long Term Investor'. This is not the time to
take long term position. You take long term position only when the market has corrected
over 60% and remain there for about 15 to 20 days. It is only when the market settles
down at much lower level (50% to 60% from current level) for about 2 weeks, you may
take a long term position.
Now, do not ask me whether the market will come down to that scary level - yes, it will.
If the market can come up from that level to current lofty level, it can also go back to
same level.
You as human have sentiment. Market does not have sentiment. The market is a dumb
animal - It never talks, laughs, cries or hears anything. It just behaves on its own.
Kalidas, Hong Kong

7-2-2008
for Karthikn
When you throw the ball up, it takes long to reach its peak but is descent is rather quick.
Similarly, when you throw the ball down from the cliff, it does not take much time to
reach the bottom of the valley.
Your question is similar to how long it would take for heart patient to revive after he got
massive heart attack, not once, twice but three times.
3000 point fall in 2 days is answer to your question. When the market crashes, it just
cascades down the Dalal Street. Blood, blood everywhere. In emergency, there can not be
any planning. You just deal with the situation as it comes.
Will it come down to 10000? Anything is possible in stock market. Every fool makes
money in bull market. A smart investor is one who makes most money in bear phase of
the market.
Right now, there are no new ideas how to resolve the increasing credit crisis and bond
insurers' default. Until such time some real solution is found and implemented, all

investors will remain in murky water.
Kalidas, Hong Kong

8/2/2008
11th Feb 2008

IFCI
When the market falls 50% from current level, it has to rise 100% from lower level to
reach same level as of now. For instance, if the market falls 50% or say to 9000, it has to
rise 100% from 9000 to regain current level of 18000
Forget 21000 for a very very long long time. When old bull dies, new bull arrives only
after 7 years at least.
Let us therefore focus on how to survive the downfall and retrieve ramnant from the
burning house. Talking of a new house, when the present one is burning fiercely, is not a
sign of wisdom to me.
Kalidas, Hong Kong

11-Feb-2008
for Raju55
Disagreed. IFCI is great institution now, not in the past. It is seeing heydays now, never in
the past.
Market and individual stocks like IFCI have different behavior in bad days. Markets may
fall steeply, not necessarily stocks. There are always two strength - Moon and Sun. Moon
carry secondary effects - that of market. Sun carries only individual strength.
IFCI may be afected due to market fall. However, its own strength will survive it from
total disaster. Its own inner strength will carry it through bad phases more admirably than
other stocks.
Right now. margin calls on Reliance Power issue will have dominating effect. More
margin calls will follow from tomorrow. As I have correctly guessed in earlier post this
morning. Anil Ambani may be facing serious margin calls from its bankers who financed
his equity in Reliance Power by letting him borrow from his other companies stocks such
as Reliance Energy (down 21%), Reliance Capital (down 14%), RNRL (down 18%). The
financing banks like ICICI, UTI, BOI, SBI must be pissing in pants.
Today was a just beginning. Next two days are very crucial for Reliance Power. On its

own, Reliance Power will be better positioned because it received cash and it is Cash
Rich company now. But it is of no use, because it all depends whether its controlling
management, who is facing severe cash shortage, will let Reliance Power to remain Cash
Rich or divert its cash resources to other ADAG companies, remains to be seen.
Reliance Capital will have acute nightmares. Its all investments in ADAG stable will be
down by over 60% in next 3 days from level only 3 days ago. It may find its credit lines
from banks seriously withdrawn or constrained.
Look at Society General who lost over USD 7.2 billions due to fraud committed by its
employee. It raised USD 8 Billions in sheer despsration by selling its stock at steel 35%
discount from previous day's clause. Compared to SocGen, Anil Ambani is still a spoon
feeding child. He still needs maternal care to wipe his ass.
Kalidas, Hong Kong

11-Feb-2008
12th Feb 2008

IFCI
for Guest,
Yes, it will. Valuations are always relative and very dynamic. One should always discount
about 30% from any valuation. I never rely on valuations in bull market especially, where
everything is valued on upside up to incredulous level. Same thing happens on downside.
It is then the valuations are more important.
However, share prices go by EPS or Earning per Share. They do not go by book value.
Book Value concept is for academicians or for those who do not know the art of
investing. Whenever you invest into a stock, you have to rely upon the earning capability
of the company or EPS.
Book value concept is valid if the company is to be liquidated and remnant is distributed
amongst the shareholders after satisfying all debt and statutory liabilities. If a company is
to be liquidated later, why invest into it at first place?
It is like thinking of a 'divorce' before marrying, and speculating how valuable the bride
will be. A person marries a bride with a view to producing children who might be of help
in retirement days. Similarly, a person buys the stock to rely on EPS (similar to Children)
to have better stock value to help him in retirement days.
Like all children not so dependable to parents in retirement days, all stocks may not be

that good in similar fashion. Some stocks may do wonders just as some children might
excel over others.
If you can understand this simple science of life, you will do better in stock market.
Kalidas, Hong Kong

12-Feb-2008
13th Feb 2008

IFCI – Trading Strategy ***
Kalidas ji my portfolio is now in red after having lost all of my notional gains.
Currently i am almost at breakeven and losing about Rs.1 lac if i liquidated all my
holdings.
If you remember i has bought back all of my IFCI (11.5k @ 96), then i added further 2k
@ 61, now i have 13.5k of IFCI, also as per your advice i had bought HPCL, UCO,
NOCIL and Hotel Leela. I also own NTPC, JPhydro, PetLng, SREI Infra, RNRL, etc.
I know I did not heed your sell advice but now I need your advice badly, shall I liquidate
all my holdings. I cannot afford to lose my capital. Because after having read all your
messages I am inclined to believe that there will be lot of downside from current levels
too.
Pls advice Sir, you know I follow i you like God. Pls respond
for Victorjunior,
Market is like an ocean. Whatever you throw in ultimately comes back. Those who get
out, never get their money back. However, survival strategy is very important. Even in
this phase, you can make money.
I do not know most of other stocks. I know only about IFCI, Hotel Leela, NOCIL,
Petronet, UCO Bank etc.
The market is still going to go down, not in straight line, but 2 steps back and one step
forward. What I am doing is to sell first - in a rally - and when it retraces, I buy back
same stock, with intention to sell them again in some sort of rally (about 5% to 7%)
Use your existing holding as 'floating stock'. Trade with 80% as under (I am giving you
my own example - real life) Sell first about 50% and if it goes higher sell more 30%. If it

falls back, buy back same with more quantity with extra profit.
When the market has sufficiently consolidated, and does not go down further for about 15
days, then only put in fresh money. Otherwise use only rotational money.
During sudden slump, I bought IFCI at 56.25 (2K)) + 42.85 (3K). As soon as the stock
moved to 48, I sold the lot bought at 42.85.
The stock suddenly recovered in 1200 point rally, and at one time went up to 69.85 and
71.35 when I sold 5K. When it dropped to 63.50, I again sold 3K.
Later IFCI dropped to 55.20 when I bought back (3K) and again sold at 58.85 to 61.35
In short, be a seller in rally and buy back again with same money either same quantity or
n% (where n= % dropped after your sale at higher price). For instance, when I sold 5000
at about 59.35 and stock dropped to 54.85 (down 7%), I placed buy back order for 5400
shares (7% of 5000 shares sold). However, I could buy back only 2000 on same day at
54.85. So I am still short by 3000 shares from my original sale level of 5000.
I made gain of almost 120000 by following strategy as above. (did not give you all
trades) Though I am still down, but the losses were reduced by Rs 120,000. If I did not do
anything, my losses would have been higher.
Same strategy was followed for Hotel Leela which I used to sell at about 69 to 73 and
buy back for Rs 63.50 and below. However, it dropped much lower later when I bought at
Rs 41 or about. Sold again at Rs 44 to Rs 49 and some even at Rs 52.35 (though original
cost was higher at Rs 63.50)
In short, I am not keeping the stock as it is. Right now, the market is choppy, and
investors tend to book profit with just 5% to 7% gain. I am not putting in new money
(except when the stock melt down by over 40% in just under 2 days)
By selling at higher price and then buying back at lower price at increased quantity, I am
averaging down by overall cost. Further, my tax liability is lower due to setting off higher
cost purchase with lower cost sale.
Hotel Leela is also traded but it is a weak stock at the moment, compared to IFCI. So I
sell more first and then seek to buy back at lower level (by at least 8% to 10%)
UCO bank was sold by me at Rs 59.35 to 61.50 (5000 sold - I still have 10000 with
average cost of Rs 22). I have not bought back UCO for simple reason that it is very
weak and broken all support level. I will buy back only after some more corrections. I am
not putting new money. I also sold UCO bank over 18000 from 81 to 89 level. but not
bought back yet. My target was above Rs 120 but it seems unlikely, because many banks
will have lot of bad debts in financing stocks which may come to NPA within another 3
months.

Kalidas, Hong Kong
13-Feb-2008
Kalidas Sir,
you think that AA will fall soon. Since he made a huge hipe of this IPO, he allowed
scription to his IPO even to those people who didnt even know about market, do
according to you, this reaction to his company's issue is justified
Personally i feel that, AA or any group of reliance is not at fault. The American Bank
quarterly result phenomenon is majorly the culprit of this situation and , AA's finicial
advisor didnot see it well in advance
for gurmeetgujral
AA will not fall but will suffer severe monetary crisis. His own investment in RelPower
at IPO stage was reportedly US$ 1.6 billion or Rs 6400 crores which is down by 20% or
Rs 1200 crores in one day.
Also, I believe that he must have raised this sum of Rs 6400 crores by pledging other
shares of his own group such as Reliance Communication ( less quantity), Reliance
Energy (much higher quantity) and Reliance Capital (lower quantity). All these stocks
also tanked by over 35%. The bankers or brokers financing them will ask AA to meet the
margin call or face the compulsory sale to meet his liability. If the stocks fall further,
(today it might recoup some loss), he will have higher margin calls.
The simple fact to believe tha above scenario was that he simply did not have Rs 6400
crores in his personal name. It is almost impossible to have so much of cash in personal
name. This led me to believe that he might have raised money by loans from other
banks/brokers against the shares of his other group companies.
He thought of making quick buck by selling the personal holding at hefty profit, but it
was not to be.
In my estimate, he would have lost over Rs 4000 crores in just under 10 days. No one
makes so much of money especially in bear market as it is now.
I disagree that his bankers/advisers did not see this to happen. If I could see that happen
( I had told my broker in Mumbai around 13 January that Rel Power will be the greatest
failure in Indian corporate history)

The advisers work for money or their commission or fees from IPO. They never give real
advice because they lose business by such actions.
Kalidas, Hong Kong

13 Feb 2008
14th Feb 2008

IFCI
With all due respect to Mr. Kalidas, I would just like to express a few of my views. I read
a place where you say being a long term investor is 'macho' and not so smart.
I would just like to clarify that if you have invested in a fundamentally strong company it
makes much more sense to be long term bullish. Corrections will come and go, but let us
say you look down 5 years from today. Today's volatile times won't matter.
Instead of speculating on things like if AA is bankrupt or not, we should make the use of
every correction to buy quality stocks. It is very hard to trade but if we allocate a small
part of our income into quality stocks like Hotel Leela, we will get good returns after a
few years.
for Guest,
It is not for Intra-day transactions. It is delivery based. If you are lucky, then after selling
if the stock drops down by 5% to 8%, then yoiu may call it intra-day trade. It is more by
luck than design.
If you are a new investor, you should study the market now and do paper trade, that is,
you write on paper what you bought and what you sold. Mark the time also with date.
Often time is very important. I normally sell in first 15 minutes if the market is to open
very high based on opening of Asian markets.
Weather is also playing important role in the market. In heavy weather or severe cold
weather, when the people do not feel like working, the market goes down. So also, in
cloudy weather, the market goes down.
In bright and sunny weather, markets usually go higher.
Looks silly, but it is incredibly true. This is my experience of over 16 years which is
telling me.

Kalidas, Hong Kong
14-Feb-2008
Dear kalidas sir,
Please give some advice...
In U.S. many problems are existing with many big companies. I really don't know what's
all those problems are but there are some serious problems, crisis. Yesterday U.S. Market
rallied due to the fact that some 7 lenders have come up to solve the Sub prime crisis and
Govt will give some Helping package or something as such.
Will this news help the global markets to go up???
Is it the real end of Bear market now?
Awaiting for your valuable reply...........
Thanks
TVM
TVzmonly,
Crows are same everywhere, be they from Kashmir or Kanyakumari, be they from New
Delhi or New York.
Markets are also alike. However, US market has its own identity. The American investors
never rely on world events because they are the leaders, not followers. Rest of world
markets are known as 'Monkey markets' because all look up to what is happening to
Australia, Japan, Hong Kong, China markets before taking any position. And those markets
depend more on what happened in New York previous nights.
The problems in America are extremelyt serious. They were serios before but used to get
deflected due to derivatives. Now, the derivatives are exploding, but the effects are felt
more overseas, especially in Europe, because Americans sold most of the derivative
products to Europeans. This is why, although epicenter of the crisis was USA, the FED
pumped in just less than US$ 90 Billions to the system whereas Europeans pumped in
over US$ 800 Billions into its monetary system.
The get-together of 7 banks will not solve anything. Nor President Bush's plan to dole out
US$ 800 to US$ 1200 to individuals which will take up over US$ 168 billions as treasury
expenses will not solve the problem, on the contrary, it will worsen them. They are not
addressing the real problem. If you give $800 to 1200 to some individuals without their
working, it is more like charitable money, and they will not value the money. They will
drink them up or go to Las Vegas to gamble them out. The entire money will go down the
drain. President Bush tried this before, and he failed at that time (he gave away tax refund

orders earlier). He is the most idiotic President Americans ever found. He has no idea
what is he doing nor does he have any imagination.
Instead of giving $800~1200 as a beggary, he should have made serious efforts to

increase their income. If income increases, one would not mind paying for Petrol Rs 50
or even Rs 60, but if he loses the money and does not have repeat income, he will find
difficult to pay even Rs 30 for the same item.
Since most people are losing money, there is surfeit of hopes everywhere. Everyone
wants to see the market higher. This is why TV, Print and other media drum up the
support and make the people dream even more.
I am still extremely negative for the market. Next two days may be better, but we are
waiting for some major disastrous event to happen which may originate not from USA
but from Europe or Japan.
Let us watch and see. If you are a new investor, better focus on your core job of making
your living. This is not the time for a person like you to immerse in hot oil water bath.
Take care
Kalidas, Hong Kong

14-Feb-2008
19th Feb 2008

IFCI
Hello Kalidasji,
I was very much hesistant to ask a person of your calibre. But the fact is I precisely want
to know regarding the market timing so that I can pull out my money from the market.
Actually i invested my money in oct07 in lot of penny stocks and multiplied my returns to
3-4 times and this crash snatched off all my profit and presently i am in a no profit no
loss situation. Many TAs are predicting level of 12000 back on sensex but do you think
that budget rally will give us the chance to exit safely or it's better to exit now. I also hear
a global meltdown during May 08. I would be really honoured if you reply to my post.
Should i wait till March or not?
for jaimin B
There is nothing like 'Perfect Timing' in the stock market. One can do best to time the entry
and exit, but it is imperfect science.
When you quadrupled the investment, why did not you sell at least 50% or 75%? These
pennnies can go up or down with almost same speed. If you have sold at lest 2/3rd of
your investment, what you would have had by now is the remaining floating profit. Your

Original investment would have been recovered with 150% realized profits.
If you are sitting on some really large cap stocks, you can afford to wait even longer.
However, in stock market, whenever you get the chance to retrieve your original
investment capital, you should always do that.
It is anybody's guess whether the market comes down to 12000 or not. If it does go down
to that level, people will start talking about 8000 and so on...there is no end to it. Same
goes for upswing when some large brokerage houses predicted over 60,000 for SENSEX.
Right now, the situation in the world is very fluid. The credit crisis is deepening, and
many banks even said they did not know how much they have lost (these banks analyse
others' balance sheets for lending purpose, and they do not know about their own)
At the moment, the markets are choppy at the best. It is more of a trader's market. Buy on
deeps and they throw the stock back into the market in some good rally. The volatility
does afford you greater return if you do not chase the stock but instead buy it strongly on
sudden dip.
Rely only on liquid stocks now. At least here you can get out quickly. Second or third
liners are good for smaller quantity trading - not large amount.
Kalidas, Hong Kong

19-Feb-2008
03rd Mar 2008

Warren Buffet – US recession
Warren Buffett, Chairman, Berkshire Hathaway, said the US is indeed in a recession. "However, it
is perhaps not as bad as the 1970s."
In a special interview to CNBC, billionaire Warren Buffett says that the US is indeed in a
recession. But he also says that it is perhaps not as bad as it was in the 1970s.
“It is nothing like 1973-74 yet. That doesn’t mean it couldn’t be. But in 1973-74, we had this
stagflation situation and really had a meltdown in equity prices. Really good companies got down
to 3 and 4 times earnings. So, nothing like that has happened in this situation. But in 1973-74, at
some point, it didn’t look like it had happened either. So, everyday is a new day and we are
seeing more fixed income type forced liquidations. We are seeing more indigestion; banks with a
lot of loans they don’t want to have. You are seeing a time of easy money in terms of price, but
not so easy money in terms of availability,” said Buffett.
Excerpts from an exlusive interview with Warreen Buffet:

Q: Let us move on to David from Defiance, Ohio. He asks, 'How would you define a
recession?' This is something we talk an awful lot about on the show, but he says, 'I have
been listening to a lot of discussions on CNBC, some of which can be very annoying
because they tend to be so outrageously vocal and the experts believe two quarters of
negative growth qualifies as a recession.' Is that the surest definition of it? Or do you think
it's broader than just that?
A: It is the standard definition, but if you think about it, population grows at 1% a year. So you
could have growth of GDP at 0.5%, but GDP per capita would be going down. The very definition
you might say is a little bit flawed if it doesn’t allow for the fact that GDP per capita can go down
while gross GDP is going up. Beyond that, I would say by any common sense definition we are in
a recession. We haven’t had two consecutive quarters of GDP growth. But on balance, most
people's net worth is heading south now for a considerable period of time. And if you owned a
house, and you had an 80 per cent mortgage on it, and so you had 20 per cent equity a year ago,
you might not have any equity now. And millions of people are in positions somewhat similar to
that, and people that own municipal bonds feel poorer today than they did a few months ago. So
business is slowing down. We have retail stores in candy and home furnishings and jewelry;
across the board I'm seeing a significant slowdown.
Q: That is the first time I have heard you say you think we are actually in a recession right
now.
A: Yeah, I think, when we talked earlier, I said we might be. But when I say we are in a recession,
it doesn't meet the technical definition. We are not in the second quarter because we do not know
what the fourth quarter of last year was. But I think that, from a commonsense standpoint, we are
in a recession now.
Q: You have made some negative comments about the dollar in the past. You see where it
trades right now. What do you think?
A: For five years we have talked about it. We were following policies which were, in my view, five
years ago, were certain to produce a weaker dollar over time. I never know what it is going to do
in a month or a year, and maybe I do not know what it is going to do in five years, but I think I
know what it is going to do in five years.
And as long as we force-feed a couple of billion dollars a day to the rest of the world, they take it
whether they like it or not, because we buy goods, buy two billion a day more than we sell goods
to the rest of the world. The dollar is going to get weaker over time. And the government can talk
about how it is in our interest to have a strong dollar, but we are not following policies that lead to
that, and it is just a consequence and it will just continue to be. If you do the same thing over and
over again, you are going to get the same result and we are doing the same thing now that we
were doing two, three, five years ago, and the dollar will weaken on an irregular basis, in my view,
for some time to come.
Q: Obviously we are consumers to the rest of the world because we have a lot of
prosperity here. And I am trying to figure out how we should reverse the policies that
caused us to consume so much and send all this money abroad. Do you think that free
trade is a hindrance to what we are doing? Is NAFTA, has that been a negative for us? It
seems like we are going to consume no matter what, and that is good for the rest of the
world, and we are not going to export as much. How should we change our policy? What
would make sense?
A: Actually, in the last 30-plus years, we have increased our exports from 5% of GDP to about
11.5% of GDP. We exported a trillion, six hundred billion dollars worth of goods last year, but the

problem is that over the last 35 years our imports have also gone from 5% of GDP up to about
16.5% of GDP. So we have been prosperous ever since World War II and the trade deficit only
has become really significant with the current account deficit in the last six or seven years.
I wrote an article for Fortune about three years ago where I suggested one solution in terms of
import certificates. I believe in free trade, in fact, I would have no barriers to countries or products
or anything of the sort.
But I do think the only true trade we had last year was the USD 1.6 trillion, which we imported and
exported and then on top of that we imported USD 700 billion more, and that was unreciprocated
trade. So that creates problems over time because we do hand these little pieces of paper over to
other countries, and we keep force-feeding those countries, and after a while they are not so
enthusiastic about getting the money.
Q: Let us get to one from Don in Atlanta, Georgia. 'If Ben Bernanke is a company, would
you be interested in owning it?'
A: I think that Bernanke is very able, and I am not sure I would want to own any company that an
economist was running, though, so he gets disqualified by profession, but not personally at all.
05th Mar 2008

Stocks to Pick/Play
For Arshia,
I have been engaged in my business recently and travelling a lot. This is the reason I am
unable to post anything right now.
I do not know about your two stocks - What is their full name?
Current market conditions are extremely bad. My broker told me many of his customers
have not settled in full after the steep fall of 3000 points around 23 January, 2008
It is more like a choppy market where you will make money a couple of times. However,
the market risk is tremendous. There will be severe fall after the failure of almost 4 to 6
leading banks in the world. I will not be surprised, if the market tanks to 8000. There is
no limit to when the market falls globally or called Crash. The best you can do it to buy
on dips and sell it on two rallies. Play only with the most liquid stocks. After a long time,
I bought UCO (below 45), Abhishek Industries, NOCIL and GV Films. I have sold most
of IFCI upto 65 level and have not bought back because finance sector is very weak. I
have bought not because I am bullish, but to sell them within next two days to book the
losses before 31/03/08 so that I do not have tax liability.

Oil Refinery stocks will perform better. ONGC should do better. I am holding them well.
Other cash rich companies like Hindustan Lever, MTNL, ITC, and high tech companies
like Infosys and Ranbaxy might do well. PLEASE NOTE that if the market falls steeply,
all stocks will fall without exception. I still suggest holding 80% of cash level and wait
silently for massive fall to re-enter again.
US Administration and also FED are in a Fix. They have no idea the extent of damage
and how to come out of it. This is the reason the USD is sinking.
I commented earlier in this column that ICICI had very large exposure to the sub-prime
related derivatives, They call it CDO or CLN (Collateralized Debt Obligations or Credit
Linked Notes which is same.
These notes had basis of sub-prime only. These are highly leveraged instruments. If basic
losses in sub prime increases just by 1%, these derivatives will lose over 10% to 20%.
ICICI Bank did not provide for it fully. further their losses were as at 31/01/2008 since
when the losses have multiplied several times. This is the main reason that ICICI bank
had been raising large amount of debt and Capital by right issue for over 6 months. This
was done to conceal the losses. While they were losing money, and came out with right
issue without disclosing their substantial losses, the investors in India were buying this
counter left and right.
This is the reason that I mentioned in this column in January that ICICI bank is the most
susceptible bank to fall in India. Although it is a private bank, not nationalized one, it
should have on its own come out with full statement. There was no need for Minister to
disclose their losses in the parliament belatedly - it was not their business. Thus, for all
practical purposes, ICICI bank is actiong more like a nationalized bank.
There is no market for CDO or CLN now. Since ICICI ADR is listed on NYSE, they will
be forced to provide fully according to US regulations, not according to Indian law of
convenience. These are off balance sheet items - no one knows their real exposure (they
pretend that they do not know - all these banks do know everything)
The fact that State Bank of India was forced to come out with rights issue for Rs 16000
crores (more than even Reliance Energy), it is obvious that they too have very large
exposure to sub prime or related instruments - they just do not tell you because their big
father Finance Ministry have asked them to keep their mouth shut until crisis is over. This
crisis will not be over. After raising money, they will probably disclose their losses. SBI
is also forced to fund the Corus deal of Tata Steel Ltd where almost all banks have
dropped out - leaving big stone around the neck of SBI.
Kalidas, Hong Kong

5/3/08

05th Mar 2008
Stocks to Pick/Play
Kalidas,
Why do you think SBI is in trouble because of Corus deal? Steel prices are rising and
Tata Steel/Corus is profitable, and steel industry is in good shape. On ICICI bank -
management has made it clear they do NOT have any foreign exposure to subprime and
they have provisioned for any losses (although notional) on investments and they expect
to make profit. Why do you unnecessarily associate subprime problems in US and Europe
to Indian markets and their financial institutions?
for Chriskb
The problems with you is that you believe the news at their face value. When the capital
markets in the world, which are nearly 200 times bigger than India, begin to melt down,
even India will be washed out in downpour.
Regarding SBI - ask this question to yourself - when the domestic loan demands are
faltering and interest rates are reduced to increase the stagnating growth in loans, why the
hell they wanted to raise as much as Rs 16000 crores? There are two reasons - they lost
heavily in derivatives which is not yet disclosed like ICICI, and they were forced to
finance Corus deal because TATA does not get money from anywhere else. Today's news
indicate that even legendary investor Warren Buffet had to end up paying over 2% higher
interest cost to fund his deal - what is TATA against Buffet?
Yes, steel prices are rising, but the interest cost is rising faster than steel prices which are
now poised to fall steeply due to recessionary fears in USA. He bought 5 times its size -
Corus - and he now faces a situation where there is no money, there is no raw material
like Iron ore in the world market place and there will be no more finished steel because
there is no raw material. Under these circumstances, SBI financed this deal which is well
known to all international bankers. They will withdraw their limits or make credit far
costly to SBI which will be forced to pass it on to Tata. In myt opinion, TATA's buying of
Corus will lead him to severe financial difficulties.
Reg ICICI, I disclosed it more than 2 months ago. Why do you believe their
mangagement's assertions at their face value? They are goddamned liars. They mentioned
about 2 months ago, that they will not make provisions because they will treat it as Long
term investments. In my opinion, ICICI bank has lost over Rs 6000 crores minimum and
12000 crores maximum. They have not earned this kind of profit in last 10 years - so
losing them now will lead them to bankruptcy in India, although there are strong chances
that it may be eventually nationallized by Government of India.

Further, both ICICI and SBI are listed as ADR in USA and they have to go by their
accounting standard. If they do not want to go by their standard, they will have to de-list
their securities from NYSE - which will be strong indication that they suffered huge
losses that they are trying to conceal.
So my friend, when someone loses heavily, he will do his best to keep his face smiling
and make statement which will be easily believed.
Very soon, ICICI Chairman Mr. Kamath, whom I regard it as 'Great Gambler' will be on
way out. All these problems are due to his overpowering influence over its professional
staff to perform his way - not the right way. There will be many enquiries, including
Parliamentary committee, and what do they call? - hmm CBI
Kalidas, Hong Kong

07-03-2008
Sir
One more clarification. Related with farmers loan writing off around 60000 crores. Can
FM do it by using bank fund? If he uses, banking industry will suffer. What will happen if
he uses from future collection of taxes? As most of our people in our country are
agriculture based, FM should do a lot to them. How could he better do other than writing
off their loans? I request you to present your in depth suggestions to be followed by
budget makers.
Stock-interest
Madurai
for stock interest,
Writing off huge loans to farmers will not be at the expense of the bank. Government will
provide funds or bonds to the bank. It is not bank's decision to write off - it is government
of India's.
Further, Rs 60,000 crores though very large amount is miniscule for GOI. The only
foolishness is that they did not dilute its stake in almost 200 companies and booked heavy
gains over US$ 100 Billions in time. Rs 60000 crores is just US$ 15 Billions which GOI
can afford to lose, because they also gain their votes. It is an investment for them.
I do not think that the nationalized banks will suffer at all. On paper, YES, because GOI
has not indicated how it proposed to write them off, so in short run, it may give
impression that banks will lose. This will be an error in reading this way. Look at the
Refineries which were subsidizing Petrol prices and were losing heavily, but they were
compensated 100% in form of Oil Bond by GOI.

However, published news matter most, especially when they have negative implications
in down market. That creates opportunity at later stage. Allow such news to be digested
by the market and then enter boldly.
Kalidas, Hong Kong

7-3-08
Dear kalidasji,
Subj: Your opinion/advise on my long portfolio.
Thanks a lot for your prompt general reply. I would be waiting for your detailed reply. I
would take some action on the basis of your general response. Thanks once more.
for Guest,
You have a long message and portfolio. I will revert to it on Sunday evening. My short
message is SELL 70% of portfolio, especially in commodities like Steel, Cement,
Finance (Banks), and try to buy deft free companies like ITC, large 5 star hotels (not
three stars because common men will cut down travel due to huge losses in stock
markets), pharmaceuticals like Ranbaxy (who make more generic drugs now in great
demand in USA), leading software makers like Infosys, Wipro who have little debt.
Stay away from banks like ICICI, HDFC, SBI, UTI, BOI who have lost or may lose
massive amount in overseas operations (ICICI, SBI, BOI) in derivatives, and also may
lose more in Indian equities.
First sell those counters where you have losses because that will save you on taxes by at
least 10% to 30%, and then sell long term holdings to book tax free gains.
It was announced yesterday that UBS sold out over 24 Billions (Rs 100,000 crores) of
Bonds at very cheap price, indicating that they may have to book heavy losses and in fact
it may be up for sale. There are no other banks who have money or guts to buy them. so
some state help from Swiss government or other sovereign funds may be of some little
help. In my opinion, UBS is bankrupt, so also Citibank, Bank of America, Wacovia and J
P Morgan. Even GE has extremely and almost unimaginable derivative exposures.
Some banks like JP Morgan, HSBC and Deutsche bank have reportedly large exposure in
short side of Silver futures and options and also in currencies like South African Rand
(which has slided down instead of going up). I expect Silver price to triple from current
level which may ultimately force these banks to cover their short at huge losses or get out
of business altogether.

Banks like HSBC may soon have to raise capital or book long term profit to set off huge
losses on derivatives. Their sale of stake in UTI Bank (now Axis Bank) and Hang Seng
Bank in Hong Kong will be first indication of severity of their crises. In recent report,
they appear to have concealed everything.
Kalidas, Hong Kong

7-03-2008
11th Mar 2008

Stocks to Pick/Play
for Mehtamihir786,
Most of boarders follow me here, so I write more on IFCI because it is still most worthy
stock to invest.
I do not write on other counters, However, I do follow and invest in Essar Oil, HPCL,
BPCL, Hotel Leela, Hotel Taj GVK, Dish TV, UCO Bank, IFCI, Air Deccan, Spicejet,
MTNL, ITC, GSPL, Petronet, IGL, etc.
Due to severe market fall, I am looking at situations where the good stocks have come
down more for investing - but I would patiently wait for steep market fall for 3 to 5 days
in a row. At that time, I will see which quality stocks have come down most, and then
invest into them.
Kalidas, Hong Kong

11-03-2008
Kalidas, Hong Kong

11-03-2008
Govt will borrow Rs 15K cr for waiver

11 Mar, 2008, 0104 hrs IST,Priti Patnaik, TNN
NEW DELHI: The Centre is planning to fund the farm loan waiver package over the next
24 months and at least 25% of the total Rs 60,000 crore package will be met through
government borrowings.
The waiver package will be a part of the supplementary budget that will be presented
later this week. Finance minister P Chidambaram has said he will tell Parliament on
Friday how the government would compensate banks for the losses incurred on account of

the farm loan waiver worth Rs 60,000 crore.
“There is enough headroom for the government to raise Rs 15,000 crore,” a source said.
The government expects a higher revenue collection by the close of the current financial
year. The size of the expenditure budget of the government is more than Rs 7 lakh crore.
Sources in finance ministry have hinted that the both tax and non-tax revenues, and even
proceeds from disinvestment may be some of the options for funding the scheme. State
governments will also have a share of the burden.
The finance ministry is at present finalising the modalities of the scheme. The RBI has
already sought details of NPAs and overdue from all banks by March 14. The scheme will
be rolled out before July 2008.
Sources said that the advances from the rabi season in July 2006 amounted to Rs 48,000
crore. With 75% of the total advances being repaid, the government expects at least Rs
12,000 crore to be in the form of an overdue. A short term crop loan becomes overdue
within a six month cycle. Other kinds of loans have a longer repayment period. Over Rs
20,000 crore worth of loans were rescheduled in 2004 due top a natural calamity.
Another Rs 10,000 crore is on account of outstanding from the Vidarbha package when
loans where restructured and rescheduled in 2006. Under the Vidarbha package, loans
were rescheduled in 2006, interest payments were waived off. Till April 2008, no
repayment was required, and repayment would be due over the next three years.
Interestingly, since these rescheduled loan accounts are standard assets as on February
29, 2008, they become eligible for the one-time settlement scheme which is being offered
to large farmers, a banker said.
Of the Rs 60,000 crore, co-operative banks account for over Rs 35,000 crore, scheduled
commercial banks and their RRBs account for another Rs 20,000 crore.
Under the scheme, marginal farmers holding up to 1 hectare and small farmers holding
up to 2 hectares, are eligible for a complete waiver of all loans that were overdue on
December 31, 2007, and which remained unpaid until February 29, 2008. Other farmers,
are eligible for a one time settlement (OTS) scheme for all loans that were overdue on
December 31, 2007, and which remained unpaid until February 29, 2008. Under OTS, a
rebate of 25% will be given on payment of 75% of the loan.
The government has said that the fiscal deficit target for 2007-08 will be met. As against
a budgeted estimate of 3.3%, the government expects to close the year at 3.1%. After
presenting the Union Budget, finance minister P Chidambaram had said that it gives him
enough headroom.
Ifci_Rocky
Dear Kalidas
I came at this article in Yahoo hence reproduced here. it's not the case of SBI or ICICI as

per me even IT Stocks like infosys Satyam, wipro even RIL or any other corporate who is
doing business globally & parking monies globally are prone to sub prime in one form or
the other directly or indirectly.
hence it is better to sell on rallies & buy on declines.
Ifci_Rocky
for IFCI Rocky,(Reply Post)
I doubt whether corporates are investing in Sub-Prime related derivatives. Banks do

because they are always interest rate conscious, dealing in them almost day and night.
Corporates are other type of breed.
If Corporates are investing overseas in risky markets, RBI is to blame. The fellows in
RBI are so conscious and apprehensive of Rupee rise, that they take every measure to
ensure that borrowed dollars do not come to India for sale which would result in demand
for rupee.
To me, this is self defeating exercise. When whole world wants to invest into India and
lend dollars to Corporates to invest in their own companies or for expansion, RBI is
permitting the same corporates not to bring in those dollars to India for eventual sale
against rupee. The corporates are therefore spoiled into keeping those dollars abroad, and
in order to earn something out of it, they invest into risky derivative instruments and
ultimately lose out.
Why should RBI and FM should focus only on currency? USA was and heavily indebted
country, and still they always wanted to maintain strong dollar policy under the era of
Rupert Rubin, former Treasury Secretary under Clinton Administration, also from
Goldman Sach. If currency was the only factor for promoting exports, why not devalue it
straight away to Rs 100 and then let the exports prosper? It is just ridiculous.
It should be noted that Stronger currency always dictate lower interest rate which
ultimately benefit the economy in multiple ways. India is not only exporting but also
importing - with 80% of import bill dedicated to Oil Imports. If Rupee is stronger, the
cost of oil will be lower, subsidy too will be lower, cost of electricity generation,
transportation through Railways will all be lower that would ultimately lower the food
and other prices.
Look at Euro - which rose from low of 0.84 to 1.55 now - or rise of nearly 90%. If the oil
prices rose 400%, its effect is muted by 200% due to stronger euro. Have you heard
Eurozone complaining about stronger Euro as hindrance to their growth? Then, why in
third world country like India, Indonesia, Pakistan, Sri Lanka, Bangladesh we bother
more about stronger currency as hindrance to growth?

Kalidas, Hong Kong
11-03-2008
Regrettably, neither RBI nor FM have any imagination as to how to conduct economy.
Yes, I did suffer some losses because my re-entry price was 85 to 114 although I sold
50% of them at profit. When the market fell very steeply, I bought back IFCI between 43
to 51.70 level which were ultimately sold between 59 to 65 (only 1000 was sold at
around 71). This minimized my losses.
However, my loss, though much less, were only loss of profit only. My original purchase
price was 12.60 for a large quantity which I sold progressively from 59 to 97 - I was
selling to buy some Farm related property.
No one can be perfect. Even the best expert or experienced investor do lose money.
Investing is more like participating in a war where you got to lose something - if not
head, a few limbs
Kalidas, Hong Kong

11-03-2008
Reply Post for Shia

Ref: 08R161- Date: 10-03-2008
Even if we are unwell or seriously sick, we do take some sort of meals. Present market
conditions are exactly same. REMEMBER FOR LIFE that in stock market, regardless of
its state, there are always opportunities.
Yes, stay away from the market for a while, but do not retire. When you have cash on
hand, you always get the urge to spend it or invest it. A good investor has to have
discipline to manage and hold cash.
Keep about Rs 100 in your pocket and decide in the morning that you will not spend it for
Tea, meal or some other items. When you return home and see for yourself whether you
have Rs 100 intact or less. Surely, it will be less. So, when you can not manage Rs 100
cash, what happens when you have Rs 100,000 in bank account?
Trust and trade only those stocks which you know of. Do not digress into others. I do not
have specific recommendations except some sectors.
Right now, cash is king. Debt is a big stone around one's neck. IT sector is relatively debt
free because their investment in fixed asset is negligible. Their debt level is very low
compared to others. Whether Rupee rises or falls is unimportant. Because almost all
currencies will rise against USD, so overall effect of stronger rupee is less. Further,
stronger rupee is good for India especially when Oil is trading at 108 levels. Imagine
rupee weakening to say Rs 50 and Oil rising to $120, what will happen to India? Stronger

rupee is a most valuable asset. I started investing in India when Rupee went down to almost
48 level and bank stocks were trading between Rs 9 to Rs 15 (IOB, BOI and Syndicate
bank). I gain on stock appreciation and also in currency.
So do not read KamalNath's statement that stronger rupee is harmful to India and its
export sector. He is III or India's Intelligent Idiot.
Kalidas, Hong Kong

11-03-2008
You better read more and more before writing. I am not 'information distribution
business' I do not want to reproduce news which is a public knowledge. That is the only
reply I can give you.
In bad market everyone loses money. In bull market every fool also makes money. I do
not know whether my writing has cause heavy losses to others because I was away and
could not read every mail. However, I did see mails in february that my advice of selling
stocks before 16/1/08 was followed by many and some of them even saved their lifetime
or retirement money.
You must know my established position that I do not give specific advise to anybody. I
follow at the most 30 to 40 stocks - it is impossible for me to advise other boarders
seeking my advice on their holding which I may not know at all. There are about 5000
stocks in Indian market - it is like a big hardware warehouse. Pick and Chose
One point - SBI is not listed as ADR but listed as GDR. Not much of a difference,
because most governing regulations are same. GDRs are generally trades OTC but some
of them are even listed on London exchange in special section which force them to
follow international norms.
Kalidas, Hong Kong

11-03-2008
for stock-interest,
I am amused. Where did you get the idea or dream that SENSEX will reach 40000 in
2008-09?
Talk to me when it is at 8000 to 10000 region.
Further, when your investment is huge, you have to sell them in strong rally. You can not
offload even US$ 5 Billion that easily even in bull market, where is the question of
offloading US$ 100 Billions? Even India's total turnover in cash segment (F&O not
counted) is hardly US$ 3 Billions. It will take 30 days to sell the entire $100 Billion

portfolio with no one else selling.
Further, Investment means that you buy something one day with intention to sell it some
other day. If there is no selling at any time, it is not an investment at all. Life is too short
to have investment beyond certain definable period.
Kalidas, Hong Kong

11-03-2008
for Zapata
Tata's acquisition cost was over USD 11 Billions or Rs 44000 crores. Did TISCO raise
that much money from the market when even Anil Ambani found difficult to raise Rs
12000 crores?
Theoratical completion of right issue or acquisition is not enough. There should be

practical completion of any capital raising exercise.
Even Anil Ambani camp was singing a song far too long that their issue was
oversubscribed by 100 times, when the reality was 400,000 applications were rejected.
Are we to believe that India's learned investors were more illiterate than kisans in villages
that they did not know how to fill in the new issue application forms?
Moneycontrol shows that there were only 58 crores shares in issue. To raise the money of
Rs 44000 crores via rights issue at about Rs 350 per share, the right shares have to be 125
crores additional or there should be at least 2 Rights shares for every one share currently
in issue. You know what is the fact.
No one has raised Rs 44000 crores from Indian market to my knowledge by way of rights
issue or even as IPO. Pardon my ignorance if there is or was or will be such a company.
Do your numbers - you would not need any guidance.
Kalidas, Hong Kong

11-03-2008
for Zapata
No more comments on the article produced. Japan always wanted to keep YEN low to
help its export. It will simply prinot more YEN, sell them in the market, and then Buy
dollars. It has been doing so for over 12 years - right from Yen 142 level all way down to
103
They have reserve of over US$ 1 Trillion or 1000 Billions. Since they lost on an average
25% over 12 years, they lost US$ 250 Billions due to wrong bets on dollar vs yen.

Japanese make money hard way (by producing best physical goods) and lose easy way
(by investing in paper securities like equity, bonds etc). They are good in real production
and utter stupid in any form of paper investments.
Nothing new in Yen carry trades. Peoples always borrow in low interest carrying
currency, but what they forget that currency appreciation is lot faster than interest
rates.What if you can save on interest by 3% and lost 18% in same currency in
appreciation?
Not many understand this essence of life. They eventually get butchered.
Kalidas, Hong Kong
12th Mar 2008

FED can’t save
for Shia
Negative. FED is not GOD. They can not solve the US$ 5 Trillion (US$ 5000 Billions)
problem with just US$ 200 Billions. European Central Bank two months ago pumped in
over US$ 900 Billion equivalent - did it solve the crisis? No, on the contrary it (crisis)
expanded.
What is happening now is 'Derivative Collapse'. Derivatives are instrument which can
deflect or postpone the crisis.
For instance, about 5 years ago, when Oil was trading at US$ 28, its 2 years options and
futures were trading at US$ 18 or about 33% less. People used to sell forward, buy the
spot and then sell them at discount, creating impression that futures being at discount,
spot prices will fall. If they do, they buy back the spot and show it as earnings.
When the contract matures after two years, and spot price then is say US$ 45, they will
buy back the options at $ 45 and sell them again at US$ 38 two years forward.
Technically, they lost only US$7 (difference between 45 and 38) but in reality they lost
US$ 20 (38-18). So they roll over the contract by paying just $ 7 as margin money.
This works when the roll over continues. Right now, Roll overs do not happen. The banks
and brokers do not allow 'roll overs' but ask their clients to close out the position. So they
have to book the losses of $ 20 and not $7
Swap Market or Roll over market is near dead end. Earlier, Swap was possible because
cost of roll over depended on Interest factor. Since interest rates have risen in
international market to over 8% ( do not go by FED rates), the cost of roll over has

greatly increased. For instance, if you want to take 2 years position, then you have to 2 x8
= 16% as price difference to cover ths swap.
This is highly complex game and it is beyond the knowledge of even so called
Professional how to react when the music stops.
Yes, roll over or new swap position or music has stopped. The player who is caught when
the music stops has to get out, and that is the trouble. US$ 200 Billions is peanut for the
massive problem.
May be the market may rise for a day or two - but then again it will drop. The US
government does not want market to drop below 11800. When it did, they came out with
US$ 200 Billions - from where they are brining the money? They lower interest rates,
they have budget deficit, Iraq war is still on consuming $ 500 Billion a year, Trade deficit
is still surging, and President Bush is doling out Tax Benefits Cheques by using
Government Printing Press, printing more and more moeny which will bring down $
lower and lower. This will stir up the inflation beyond imagination.
In Hong Kong, where we were paying 12 Liters of UHT Milk just $108 in late November
(Brand Master - PURA) now cost us $134 or almost 24% increase.
So best investment is buying Agricultural properties, because farmers in India do not

have to pay their debt - Government KUBER has pardoned off their 60,000 crores of
debts - and farm prices from What, Soyabin, Rice, Pulses, Vegetables are rising, which
enrich them. So land prices in village area will rise whereas Urban properties may fall.
This is what is happening in my opinion. Check it out.
Kalidas, Hong Kong

12-03-2008
For Mr. Kalidas,
Sir can you pl. explain what does tighten of liquidity means? I have read that rbi sucks
money from the banks. How do banks run? If people don't have enough money to keep in
banks? I am little confused.
for Guest
Well this is not forum for education. If you want to know what it means, you have to do
internet search.

However, for your information, I will explain in short para. When the banks are having
Rs 10,000 crores as deposits, they are required to keep say, 5% cash deposits in the form
of Government of India bonds. so 5% of 10000 = Rs 500 crores. When RBI raises this
ratio to say 6%, the concerned bank has to pay or buy more bonds by paying cash about
Rs 100 Crores.So the banks lose cash in favour of bonds. Money supply in the market
reduces, and banks no longer lend money to borrowers to that extent.
Liquidity means floating money in the market. When the supply reduces, the liquidity has
tightened, and market may fall, because cost of borrowings has increased.
Cash investors are not affected. However, margin oriented investors suffer. For instance,
if you are buying Reliance 1000 shares @ Rs 2300 at about 90% margin, that is, you pay
only Rs 230/shr and borrow the rest at say 14%. If liquidity tightened, the interest rate
may go up to say 16% or by extra 2% per year. You have to pay 2% of Rs 23 Lakhs (1000
x 2300) which is Rs 46000 per year or Rs 126 per day of extra interest. Insignificant
increase? Yes on Rs 23 lakhs but on your investment money of Just Rs 2.3 Lakh it is a lot.
This is per day interest.
In reality, one pays interest of Rs 907 per day (16% of (Rs 23 lakhs stock value - Rs
230000 margin money)
Since the investor's leverage is 90% or 9 times, the effective interest on his margin money
is 9 x 16% or 144% per year.
Kalidas, Hong Kong

12-03-2008
14th Mar 2008

Forex Derivatives
How forex derivatives work
BS Reporter / Mumbai March 12, 2008
Companies entered into derivatives structures to reduce their interest costs. Many
companies had gone for dollar loans.
The appreciation of the rupee eroded the revenues and profits of exporters as they made
fewer rupees for every dollar earned abroad. On the other hand, they had to service the
dollar loans, on which they incurred a higher interest outflow.

To offset the losses due to the rupee appreciation, corporates did derivatives trade,
hoping to make money through them. One popular option was a currency swap in the
Japanese yen or the Swiss franc, with embedded option protection.
The option protection was structured in such a way that the option protection knocked
out (disappeared) if the dollar depreciated beyond a point against the franc/yen.
The Japanese yen or the Swiss franc was a natural choice, considered the most stable
currencies against the dollar. In the last 25 years, for instance, the Swiss franc has never
moved below 1.11 to the dollar and hence corporates hedged the swap by buying options,
where the knock-out will get activated if the Swiss franc moved below 1.10 to a dollar.
The strategy worked well for companies.
Corporates made money on these positions last fiscal, boosting their other income and
profits. The problem began when the dollar began to depreciate against all currencies,
including the yen and the franc.
Once the frank broke below 1.10-level against the dollar, the option protection got
knocked out. So, corporates had to repay an equivalent of the franc on maturity of these
swaps.
When the yen was trading at 120 to a dollar, a lot of trades were done with a knock-out of
105-102 yen to a dollar. Similarly, when the franc was trading at 1.20 to a dollar, many
trades were struck with a knock-out of 1.10-1.05 franc to a dollar.
‘’Now, all these options have got knocked off. A lot of corporates are sitting on these
swaps, where they have to incur huge losses unless the dollar regains strength before
these swaps mature,’’ said an expert.
Corporates have to buy the Swiss franc or the yen at market rates and unwind these
trades. ‘’Corporates have done a lot of trade in swaps with knock-outs. A lot of
knockouts have happened. When a yen/franc trade is knocked out, they will have to bear
a loss of 10-15 per cent of the notional swap,’’ said a forex expert.
For instance, on a swap amount of $5 million, the loss could be $0.5 million to $0.75
million. A knock-out happens when the currency appreciates beyond a point and the
option protection disappears. ‘’Now, if the clients (corporates) do not pay for these
losses, the banks will be in trouble,’’ said a forex expert.
for IFCI Rocky,(Reply Post)
I was a banker for 19 years - 16 years in India and 3 years in Hong Kong. I learnt hard
way that bankers are the worst type of Investment Advisers. They know nothing about
investment.

They normally advise the customer what is already in print. They do so because it is in
print and verifiable by the customer, and do not go beyond it because they have no vision
beyond it.
This is why in large December or early January, I had forewarned about the banks like
ICICI, SBI, HDFC, UTI, BOI, Kotak Mahindra as hot trouble spots. I do not know about
Yes Bank - the name itself so funny that I would not even go anywhere near it.
Whether the customers who lost money in derivatives will be paid or compensated by
those banks, I am doubtful. Indian banks never pay up - it is their culture. Go to court (or
Go to hell, so to say) and you will end up losing more and more. They do not care for
reputation as well, because they know pretty well that 'Customers' memory is always
shot'.
Ask any modern bank like UTI, ICICI, HDFC etc about your complaints, and they would
simply ignore it on the ground of bank's internal policy.
Kalidas, Hong Kong

14-03-2008
Dear Kalidas Sir,
AA did failed to raise the money, he projected. But whats the story behind giving out
Bonus Shares.
Wouldnt it create more Voliatality in market. When these shares would be credited, i think
more selling will uccur in the market.
eg: i have 16 shares at issue price of 430, so total is 6880/-

now when i would be having 9 more bonus shares then my avg cost reduces frm 430 to Rs
275.20
Since now i m having loss in this share group.... after i get my bonus share i would start
having proifts. It will tempt me to sell my holdings.
what is AA trying to gain by such act????
For Gurmeetgujral - Reply Post
I am amazed that in India, investors consider 'Bonus' as reason for buying stock of the
concerned company. World over, it is neutral event. I have commented at length in the
past, so avoid repetition.
'Bonus' is a neutral event. It merely increases the number of shares. For instance, if a

company is making Rs 5 per share and it issues bonus shares in the ratio of 1:1, the shares
doubled in quantity but the EPS goes down by 50%.
AA knows the weakness of the Indian investors and their appetite for bonus shares. He
learnt it from his illustrious father - Dhirubhai Ambani. His company Reliance Power has
just gone public - where is the question of issuing bonus shares when it does not make
even single paisa as profit?
What he seems to do is to utilize 'Share Premium Account' and convert into capital by
issuing more shares. While doubling your shares, he managed to raise the price of
Reliance Power from Rs 350 to Rs 450 - he knows that most of the investors are
goddamn fools.
When the extra shares come to the market, the price of the share will be halved in few
days, or even more, considering today's choppy market conditions.
When you lose Rs 80 on original price of Rs 430/share, it looks large. However, when the
cost of share is brought down to say Rs 275 and the market price comes down to say Rs
224 proportionately, you will say that I am losing only Rs 51 on my share, instead of Rs
80 - Effect is same. Your quantifiable loss is still same.
In stock market there is a cardinal principle. If one wants to make big money, he has to
have thousands of fools around him. This is what AA is doing and practicing the art of his
illustrious father. The only difference is that his father distributed 'Bonus shares' out of
profit whereas his MBA son is doing elm out of share premium account. American
education, huh! This is the difference between 'Dhoti' and 'Trouser'.
Kalidas, Hong Kong

14-03-2008
For Satheesh Nair,
Your poser is too general. In recession, usually market interest rates go high, though
concerned government tend to lower the interest rate and rarely succeed. Market is
supreme - never fight the market.
Valuation takes back seat when major bad news strike the market. For instance, Bear
Stearns' near bankruptcy and FED/JP Morgan's rescue package caused so much of panic
that President Bush had to address the people, and FED Chief Bernanke had to speak out
at length the depth of the problem and measures taken to tackle the crisis.
Valuation is always relative term. You may be reacher than A, equal to B and poorer to C.
Further, valuation is generally debated in public places in crisis or high level of

bullishness - that is both extremes.
Rupee is a manipulated currency. Until it is freely floated, real value will not be reflected.
For instance, if it is freely floated, anyone can buy it in overseas centre, whereas outsiders
have to come to India to buy or sell the currency now.
Left to itself, and in free floating regime, Rupee could have gone to 31 instead of
languishing at 40+. Example - when Asian crisis occurred, Thai Baht (THB)went all the
way down from 25 to 54, when Rupee dropped from 39 to 48. Recently, Thai Baht rose
from 54 to 31 whereas Rupee has recovered from 48 to 40 only against US dollar.
Value speaks for itself in long run. This is why it is my considered opinion that true value
of Rupee is around Rs 26/dollar under depressed dollar regine.
If Rupee is allowed to go freely to 26, from Rs 40 level now, import costs will fall, oil
cheaper, LPG and Electricity price will be cheaper, entire cost of travel and goods
transporatation will come down, and as result even interest rate will also fall. All such
good things are not going to happen due to Government of India's export phobia and
unwillingness to let the rupee find its own level.
Although USA is in great distress only now, I had correctly predicted the present event in
my 100 page report in 1999 after Asian Crisis which was titled 'Bankrupt US$' where
almost all events happening now were forecast, including Gold price projected at 1200
level when it was just at $257. This report was sent only to Prime Ministers and finance
Ministers of Asian countries, India, UK and Russia.
Right now, the situation is so critical that some more brokerages like Merril Lynch,
Goldman Sach , Lehman brothers may run into serious problem from Monday onwards.
Banks like Citibank, UBS, Bank of Amrica have all credential to fall
Only yesterday, Lehman Brothers after many months could manage to renew credit lines
of US$ 2 Billions or US$ 2000 Millions from 40 Banks. earlier, Lehman Bros could raise
so much money within few days from 1 or 2 banks, whereas now almost 40 Banks were
required, that is, no bank wanted to have exposure of US$ 50 Million or more.(US$ 2000
Million divided by 40 Banks)
No one knows at the moment who has lost how much and level of counter party's
exposure. Only 2 days before Bear Stearn's CEO told CNBC that they have no liquidity
problem and just within 2 days same CEO said that in past day (24 hours) the situation at
the firm had become so critical that liquidity has just disappeared. Almost all major
clients withdrew money en masse and financing banks withdrew the credit lines
overnight.
It may look like that JP Morgan had done good job, and that it is a very strong bank. The
fact of the matter is that J P Morgan Chase is one of the weakest bank in USA, with over
US$ 30 trillions exposure to derivatives 5 years ago. They reportedly have biggest short

position in South African Rand and also in Silver/Gold.
Now consider, how one bankrupt could save another bankrupt?
Be prepared for major market fall in next 28 days - use rally to get out completely out of
the market. Act now and think later. My call is JUST SELL everything.
Kalidas, Hong Kong

15-03-08
18th Mar 2008

Reply to C. P. Sahay
Dear sir,
I have been going through your messages for the past 3-4
months and really appreciate depth of your knowledge and
have learnt a little bit about the stock market. But the
recent volatility in the market has shaken my confidence
and am a bit confused as regards to the strategy to be
adopted now.
With respect to your sell call for the entire stock of shares,
I would like to have your valuable recommendation with respect
to my portfolio created over a period of 9-10 months.I have
IFCI(Rs.71),BOI(Rs.286),GAIL(Rs.353),UNITECH(Rs.309),
RNRL(Rs.91),RPL(Rs.160),RCOMM(Rs.600),UCO Bank(Rs.77),
Power Grid(Rs.104),Prism Cement(Rs.55),shiva Cement(Rs.19),ISPAT(Rs.41),GUJ
NRE(Rs.141),HCL Tech(Rs.336),WIPRO(Rs.576),NIIT Tech(Rs.357),CBOP(Rs.39),
Apollo Tyres(Rs.43),Praj Ind(Rs.240),Sujana Metal(Rs.44),
GV Films(Rs.14),Nandan Exim(Rs.3.68),Facor Steel(Rs.6).
The problem is that value as on 14-03-08 of my portfolio is

about 17%(increased to 20% loss today) less of my original
investment. If I sell my entire portfolio, I am going to
loose between 15-20% of my hard earned money, depending
upon the market situation.
Basically I am a medium/long term investor and am ready to

wait for 1/2 years.Just because of this long term investor
phobia, I could not muster the courage to sell my entire

portfolio in January as per your call. Now I feel it was
a blunder, as I was with 42% profit at that time. Whatever
small quantity I sold, I earned some profit.Anyway, what
is gone is gone.
I shall be thankful, if you can suggest what startegy I

should adopt now. Should I remain long term investor or
by adopting short term trading I can recover my loss
(owing to sale of entire portfolio) or should I adopt a
mixture of both long term and short term or should I go
on booking profits without selling the stocks in red and
buying them/other quality stocks on low to average the
purcahse price?
I am very confused with the contradictory claims of the

bulls and the bears.There is lack of interest for buying
due to fear spread among investors. What is the future
of Indian Stock Market? Are we going to see reasonable
and sustained growth ( not manipulated skyward
bullishness ) or we are doomed / stuck at prices not
going to be achieved in near future? Can't we free
ourselves a bit of our dependancy upon United States/
foreign investors in our equity markets? Can't the
mutual fund and pension fund managers and other
financial institutions give support to the market
and instill confidence in the hearts of small
investors like me?
Warm regards.
C.P.Sahay
Reply Post for C P Sahay 08R073-Date: 17-03-2008
You are not the only one whose confidence is shaken. I had sold nearly 73% of my
portfolio earlier and switched to mainly HPCL which fell relatively less from average
price of 318 for 3000 shares. I also sold 23000 shares of UCO (out of 35000) from 80 to
89 and lost lot of profits for the remaining. I have sold them recently around 53 down to
49 and today I sold at about 36.90 about 5000. My purchase cost was between Rs 16 to
Rs 25 though, so what I lost was my decent profit.
Your list is too long to comment individually.I do not know all the stocks you own - but
my general advice is whereever you are in money or losing about 15%, just sell them out
completely and do not employ the funds immediately. for the remaining, do the
following:
Sell High Value stock by at least 80% with intent to buy the following stocks

- the stock where you lose over 60% . Watch them and buy only those stocks. The idea is
that by selling 1 share of say Rs 300 priced share to buy 30 shares of say, Shiva Cement
or GV Films This way you are using existing fund to average down the higher cost
shares. Your portfolio is nothing but book entry of various names.
for instance, I bought GV at Rs 5.60 (having bought them recently at Rs 5.07 & 5.80 and
sold a day before at Rs 6.60. I placed order to buy them at 4.95 but did not succeed).
DO NOT put new money at the moment. Book your losses as much as you can before
31/March if you are having short term profit and have to pay taxes from 10% to 30% on
them. By booking losses, you avoid paying taxes by 30% which is indirectly a gain. If
you do nothing, you will still end up paying taxes and lose 30% on short term gain.
I do not believe the theory of short, medium and long term investors. When the people
gain in short term, they forget medium and long term goal, book the short term gain and
show them as 'Smart Investor'. When something does not work out, they say - we are
medium or long term investors. it is like slapping oneself and keeping his cheeks red. I
am not hinting at you - it is general psychology of all investors - me included.
Never count average cost. Treat each trade as separate trade. So after buying some stock
cheaper at Rs 5.10 for say GV film, just Sell it to book gain when it reaches in rally to Rs
6.60, even if your earliest purchse was at Rs 14.
Market is in very bad shape and getting from bad to worse. Next to fall is Lehman
Brothers, followed by Citibank and UBS. Goldman sach predicted that Oil will reach
soon to 175 level. They know something we do not know as yet. They are closest to FED
and US administration.
DO NOT ever believe that Indian market is insulated from US market - it is not - in fact
none of the overseas market - from Australia to Argentina- can detach itself from USA.
You have to suffer the consequences of bad events there, beause all markets are
intertwined. That is the essence of 'globalization' A sense of Indian nationalism will help
you make only wrong decisions. This is not war with Pakistan where you have to show
nationalistic spirit. Be a practical investor.
Further, pension funds, mutual funds, hedge funds are investing to make money. They do
not have philanthropic vision to help the market. That is the function of idiots -
Government, RBI and SEBI included. When you are in trouble, how many come to your
rescue, including your own closest family members?
Right now,. the time is to remain liquid and have patience to let the market fall steeply.
Then look at the rubble and see which quality stocks have fallen much. Pick the leaders
amongst them. Do not pick second liners. When the market recovers, the stocks that have
fallen most recover fast.
The stocks that have not fallen now and may look strong, will fall when the market

recovers. People sell them to buy greater potential stocks at that time. So do not get into
so called stronger stocks.
I think this should help.
Kalidas, Hong Kong

17-03-2008
Bears and Stern
Dear Kalidas anywhere near 2 billion dollars is the guesstimate for ICICI Bank losing in
the american markets, still yen hedging & other currencies hedging risk are very much in
the books? that are to be seen.
Good Luck & Happy
Reply Post for IFCI_Rocky
When ICICI provided just US$ 240 Million or about, it was considered about 10% of its
exposure (Once the news appeared and then disappeared). Thus, their total exposure is
US$ 2.4 Billions or Rs 9600 crores.
Exposure to Yen and other similar bonds do not count as they are not derivatives but
direct instruments.
Wait for few days and when they file 3Q before SEC, we will know what they provided
and what level of exposure they have. They have to follow US accounting standard under
ADR listing rules.
Kalidas, Hong Kong

Ref: 08075R of 18-03-08
Dear KaliDas,
These Gora's are very smart people. They have lived above their means and will continue
to do so. The monkey from Texas will ask The beared gorrila to print more and more
$$$$s and give it to all of the world and transfer America's problems to the rest of the
world. $$$$$$$ is the currency of the world till then AMERICA is safe. Let rest of the
world take care of itself. But India economy is not a issue for PC, MANU, or Sonia. So
Kalidas Ram bhalla karanenge.
Regards.
for Kissanbhai
Read the following excellent utterance from venerable Henry Kissinger:

QUOTE:
'Who controls the food supply controls the people; who controls the energy can control
whole continents; who controls money can control the world.'
Henry Kissinger
UNQUOTE
This is what AMERICA is all about.
Kalidas, Hong Kong

18-03-08
Dear Kalidas Ji
There is an excellent sequence in Jurassic Park.

After a nightmare encounter with the Dinosaur,
the kids are at the breakfast table.
Just as one of them holds a spoon up to his mouth,
a small piece of crockery on the
table goes trinning.
The frightened little nervous mind is alert.
It has figured it out right.
The slight trinning is a result of the vibrations
generated by the heavy footfall of the Dinosaur
on the ground round the corner.
The 2 dollar a share FABLE stank of 'too true to be good'.

I wondered whats up, and who's next, and how big!
Thanks for the deatiled technical post and the unveiling.
REGARDS KM
for Kalyanmitta - reply Compliments
Great comparison with Dinosaur.Epicenter is USA, tremours felt all around. When you
stick your neck out, you see not only one Dinosaur but hosts of many.
Lehman, Merril, UBS, Morgan Stanley, Goldman etc etc. Each dinosaur is causing a
range of terror. If collapse of Bear Stearns could result in selling of 900 crores of Indian
equities, what if any or few of above names fall. How many points SENSEX will lose?
What SEBI will do now? Stop outflow of dollars?
Who says that India is decoupled from USA? If anyone believes that India is less

dependent on USA and our economy is strong, just reassess in the light of above.
Patriotism is a good thing - in war times - but realism is excellent virtues at all times.
Kalidas, Hong Kong

18-03-08
19th Mar 2008

'Same banks were involved - Citibank, JP Morgan chase, UBS, Merrill Lynch, Morgan
Stanley, Goldman Sach, Deutsche Bank, Barclays etc. They simply manipulated the books
and passed on those dubious derivatives to their unsuspecting clients, mostly Insurance
companies.
'
I must say KalidasJi .. that i am really scared after reading your post on the losses
remaining in the system .. Can you please describe in details the above lines in Quotes.
How can they be transferred to Insurance companies.
Regards,
Again thanks for your updates.
Vivek
P.s I will liquidate my all positions if i get any more of These Investment banks bankrupt.
Reply to Vivek Dhariwal
How do the insurance companies earn? They collect premium from everyone and insure
them against some future contingent event. They know that out of 1000 persons insured,
the claim will be from hardly 1 person or less than 0.10%.
That is their payout and premium is their income. Their other expenses are only Agents
commission and employees' salary. The surplus amount is huge and they need investment
outlet.
There was a time, when the interest rates, especially long term rates, were high at 12% to
15% in India. They were all from Govt securities so the income was secured.
However, when the interest rates started going down, and such companies found that they
no longer earn what they should, they appealed Government to allow them to invest into
equities, instead of only bonds as prescribed earlier.
in order to earn more they started buying equities and also started buying derivatives

which will yield them more than bank or Govt Bond interest, without knowing anything
about derivatives and tremendous risk involved. Such derivatives were promoted by
leading banks like Citicorp, HSBC, Bank of America, J P Morgan Chase, Deutsche Bank,
Barclays etc, and in India, so called modern banks like ICICI Bank, HDFC Bank etc.
Bankers are generally regarded as 'Professionals' and 99 out 100 customer trust them for
their expert advice. In fact, they are worst form of advisers - they are rats. They know
nothing about investments. They earn salary and know that they are transferred from one
place to another after about 3 years. So they do not have any sense of loyalty.
Now these relatively smaller banks receive proposals from giants like Merrill, Morgan
Stanley, Goldman Sach, Citicorp etc. they get elated because they feel that they are given
importance by such large institutions. They do not ask themselves why?
Same applies to Insurance companies. When they receive the derivative proposals from
such giants, they accept them at face value and buy riskiest securities like CDO, Sub-
Prime etc. When they lose money, those original sellers ask them to 'roll over' the
contracts. The seniors in such insurance companies, who are eligible for VRS or
otherwise are about to retire in 3 years, go on rolling over so that losses are not disclosed
during their tenure.
Example, Alan Greenspan's deeds of over 20 years are now being exploded and the sufferer
is Bernanke who I consider one of the most forthright FED governor I have ever seen.
Most insurance companies operating in other countries are outfits of their offshore entity.
I have taken out insurance from one leading company in 1992 and since then its parents
have changed 6 times. If something happens, they raise hand and offshore companies, so
loosely regulated or not regulated at all, go bust and the policy holders suffer.
Before this crisis started, I advised my oldest customers (they are my friends now) to take
out loan against their policy and keep them in banks in India (except ICICI Bank) so that
in the event of Insurance company going under, their savings are saved. I asked them to
adjust the loan after about 18 months, so that most of their losses will be interest
differentials @1% per year or at the most 1.5% - that was in fact insurance against
possible default by insurance companies.
I hope you will now understand why I said about insurance companies as innocent or
stupid buyers of such derivatives.
Kalidas, Hong Kong

Ref: 08076R of 19-03-2008
Sir,
In view of Goldman , Lehman, showing good results (Who knows FED might have forced

them to manipulate the results!!) and Fed reducing interest rates again, looks like
problem is getting postponed.
Sir , you said LTCM 1 trillion problem is covered , might also be popping now. FED feels
if they manage to postpone the problem now, they can postpone it few more years like
LTCM. So I think we may be at the bottom. What is your opinion?
Sir Other day you said FED does not want Dow to go below 11800. I have been seeing
some how FED is able to arrest the fall below that magic number till now. What is the
significance of that number? Is it just technical?? Sir ,Do you think US ultimately is
getting in to situation like JAPAN which they really don’t want??? What is your opinion
about the future of the US economic condition in such gloomy conditions?
Shiva
Reply to Shia Post of 19/3
Do you know swimming? When you climb down the well, you see the bottom and feel
that it is very near. In fact it is much deeper, almost twice as deep as you thought.
In swimming pool, the water is much clearer - you see the bottom from 100 feet distance.
However, when enter the pool, and you do not know swimming, you feel that the bottom
is much deeper than you thought.
Current crisis is more akin to your climb down to 100 feet deep well. You are not down
even by 20 feet and start guessing the bottom in dirtiest water. If this can explain, I will
be happy. Sometime practical life examples work to bring clarity.
When a patient suffers a cancer and undergoes chemotherapy, he is bed ridden or walks
around in a wheel chair. He lives on medications or UV rays, but the inside getting worse
and worse. First he is unable to eat - so hole is driven to feed him down the tube. When
that fails, he is transferred to ICU and finally Gangajal is ordered to let him die
eventually.
Current patient USA suffers exactly same fashion - it lives on medication and
chemotherapy. Rate cuts, Tax cuts are emergency medicines - they postpone the crisis,
but eventually worse happens.
A country never dies. So USA will survive. Americans are the best race of the mankind.
They are expert problem solver. They live in crisis, thrive in crisis. for them crisis is
Oxygen. this is why they develop and maintain the crisis, and then call best firemen in
their country to resolve or solve the problem. Americans are the Best Crisis Managers -
so let the crisis deepen and best of them will come out - at that time you begin to invest.
Kalidas, Hong Kong

Ref: 08077R of 19-03-2008

Ref: 08074 of 18-03-2008
Bear Stearns, JPM Chase & FED
I am amused to read that JP Morgan Chase has come to the rescue with the blessing of
FED to take over the Bear Stearns for just $2/Share against Friday price of about $28, $
80+ a month ago and $ 140+ a few months ago.
If the JPMC could pay only $ 2/share, then why should federal Reserve Bank give as
much as US$ 30 Billions to JPMC in non-recourse financing? Why did not it allow Bear
Stearns to just liquidate? When JPMC wants to pay just $236 Millions, why should FED
become magnanimous to pay US$ 30 Billions or USA$ 30,000 Millions or cool Rs
120,000 crores?
"Non Recourse" financing mean that FED can not demand the repayment of $30 Billions
from JPMC. It will be voluntary obligation of JPMC.
Many analysts have been commenting that JPMC is a savior and they are totally non-
plussed as to why FED should have used this mode to rescue Bear Stearns. They are
applauding JPMC move as though they were "Gandhi" to help the BS out of the woods.
No one, I repeat, no one analyst is able to gauge the reasons and depth of the reasons for
such transaction.
In America, there is bankruptcy law under which there are two prominent chapters -
Chapter 11 which everyone is aware of and another Chapter 7.
Chapter 11 is being resorted to by non financial companies to help them avoid immediate
liquidity problems. Example - United Airlines, Delta Airlines etc. Under this remedy, the
borrowers are given "respite" by the Court to resurrect itself and come back to health in a
few years. The borrower is not liquidated.
However, financial company including brokerages can not resort to Chapter 11. - They
have only Chapter 7 which permits only "Compulsory Liquidation" The court appoints a
receiver and then he liquidates Assets one by one. Everyone knows what Assets the
bankrupt borrower has.
This is the main fear. If Bear Stearns is allowed to file for bankruptcy under Chapter 7,
there will be sysmic upheaval. Every one will know who Bear Stearns dealt with , and
which other brokers/banks/mutual funds/hedge funds will take a hit. Thus, if Chapter 7 is
allowed to file, the entire financial market will be fed with disastrous rumours of one or
the other company whose names will be no longer secret.
No that ordinary shareholders of Bear Stearns are charitable to help JPM Chase.
Further, JP Morgan Chase, considered and reported by many as strong bank, is in fact one
of the weakest bank with trillions of derivative exposures, including extremely large

SHORT position in Gold, Silver and South African Rand. About 5 years ago, they
reportedly had derivative exposures of over US$ 30 Trillions or US$ 30,000 Billions or
US$ 30,000,000 Millions or Rs 120,000,000 crores!
How could one bankrupt bank save another bankrupt investment banker even with the
state help and whether they will succeed at all?
A few years ago when LTCM (Long Term Capital Management) busted with US$ 1
trillion or US$ 1000 Billions when Russian Bonds collapsed, the markets the world over
crashed. Under the guidance of culprit Rupert Rubin (now Chairman of Citicorp) and
former Treasury Secretary and also Former Vice President of Goldman Sach, FED and
almost banks contributed US$ 26 Billions to deal with the price.
After 6 months everyone came out smiling of a Board Meeting to announce that LTCM
problem was resolved successfully and all banks recovered their $26 Billions. Every fool
believed it and until now even leading Professors from Harvard, Stanford, Massachusetts,
and Nobel Laureate believed them.
No one asked, how these bankers recovered US$ 1000 Billions in just under 6 months
with the help of additional capital of just US$ 26 Billions? That is whopping 3746%
absolute or 7492% on Annualized basis?
Same banks were involved - Citibank, JP Morgan chase, UBS, Merrill Lynch, Morgan
Stanley, Goldman Sach, Deutsche Bank, Barclays etc. They simply manipulated the
books and passed on those dubious derivatives to their unsuspecting clients, mostly
Insurance companies.
The losses remain in system, but it will explode now, because the swap market has come
to an end. Now no more roll over - just lie down in a coffin and rest forever.
How much ICICI lost in such gamble is anybody's guess
Kalidas, Hong Kong

18-Mar-08
Reply to aquarius5863 on (19-Mar-08 08:09 )
for ICICI Bank: - Savings Bank:

In India the deposits are insured up to Rs 100,000 only. However, Government of India is
'Kuber'. It will come to the rescue of depositors in case something happens to ICICI. At
the moment it does not appear that they will have liquidity crisis, but we do not know
where do they stand. What we have seen is some of their exposure.
When someone's pant is pulled down, he immediately places his hands as cover on his
vital organs. In crisis, therefore, we see only the exposed portion - not the hidden ones.

DeMat account:
Nothing happens here. It is Government of India's depository. ICICI may be the only
Agent.
Trading Account:
Here too, nothing happens - your exposure is only for two days - they you get either paid
in your savings account or delivered into Demat account.
If something happens to the bank, it is possible that you may not have access to both
trading and demat account. That is the only risk remains. Alternative is that you open
immediately some other trading and demat account with some other banks like UTI bank
or HDFC bank if you prefer online and do not have someone in India to service you.
Do not keep entire savings into one bank. Keep them in 3 or 4 banks. Use at least 2
nationalized banks, because if something happens, Government will compensate you -
they can because they can print the notes and credit you account. Private banks can not do
that.
Please note that I am not scaring you into doing something stupid. You should consult
others and also watch for concrete signs for immediate actions.
Kalidas, Hong Kong

Ref:08078R of 19-03-2008
This is an eye opener.

I have two related questions:
1. What happens to the long-term FDs with the ICICI bank in case it goes down?
2. If you have money marked for trading in your trading account with ICICI, is that safe?
Thanks.
Reply to pkk07 on (19-Mar-08 10:32 )
1. All deposits are collectively insured up to Rs 1 Lakh under DIC (Deposit Insurance
Corporation of India). That limit may have been raised, I do not know. Check with them.
In USA, the cover from SPIC is USD 500,000 in the form of USD 400,000 for securities
and USD 100,000 in the form of cash.
2. Until the money is applied for stocks, they still remain with the bank. So the normal
risk continues as with the deposits.
Let me put to rest your anxiety. In worse scenario, the bank could be nationalized. Of all
the governments in the world, Indian government is the only one who really cares for the
depositors. It is the best Government for social security in this sense - otherwise there are
many other drawbacks. No one lost when BCCI & GTB were liquidated. Similarly, no
one suffered when some cooperative banks were also liquidated. UNLESS of course, the
GOI change the tacks.

Kalidas, Hong Kong
Ref: 08079R of 19-03-2008
20th Mar 2008

Respected sir,what is yur opinion about Gujrath Narmada nigam bonds?I have 3 bonds
@Rs 3600 for 21 years.The board will be paying Rs.1 lac 11 thousand after 21
years.Govt. of Gujrath has given guarranty for the same.I enjoy your posts;but can not
follow derivatives messages as I do not have any knowledge about the same.Will you
please suggest some basic books about options futures etc?Thankig you.Arunkant.
Reply to Arunkant on (20-Mar-08 05:08 )
Are you referring to Sardar Sarovar Deep discount Bonds? They mature on 11/01/2004
and trading at Rs 56000 or about on Bombay Stock Exchange in its Debt Segment against
original issue price of Rs 5000 as Deep Discount Bond (DDB) repayable in 2014 at Rs
100,000 +5% premium.
These bonds ,when issued, carried almost 19% interest - I had bought them for my clients
who consider it as Best Investment ever made by them.
For Example, if someone invested Rs 100,000, that is, 20 Bonds of Rs 5000 each, then he
will be getting 20x56000=11,20,000 against his original investment.
There is heavy demand for this bond. The Company tried to redeem the bonds earlier, but
their action was opposed by some holders and High Court too refuse to allow the
company to redeem the bonds at least twice.
It seems that Gujarat Narmada Nigam is the new name of Sardar Sarovar. Check your
bond certificates or original allotment letter. or check with BSE direct.
Following are the scrip details:
Scrip Name:SAR SAROVR -DDB-11/01/2014

Scrip Code :911545
Scrip ID :SARS053
Current MP: Rs 54094 Bid /55100 Offer
Kalidas, Hong Kong

Ref: 08083R of 20-Mar-2008
Anilbhai,
i m very interested in bonds.i wud like to know more abt bonds,like how to buy or sell

them,where can i get market price for bonds. :)
it wud be helpful,if u guide beginners like us :)
thanks in advance.
Rajeev
for geniusjaggu
This is no time to buy bonds. You buy bonds when the interest rates are very high and
about to fall. If you buy the bonds now, and interest rates rise, the bond price will fall.
Keep the money in bank deposits especially in Savings Bank so that you can use them at
your discretion when some really good opportunity come by
Kalidas, Hong Kong

20-03-2008
for no trader
Be broad hearted and not miser. When you make decent gain - say about 700% - do not
hesitate to pay taxes or STCG that is, short Term Capital Gain. Considering your price,
you would have had only LTCG which is exempt of tax.
The stock slid from Rs 90 to Rs 41 or by about Rs 49, that is you lost gain of nearly
376% on your original purchase price (Rs49/Rs13 %). If you had sold at that time, you
would have paid STCG of 10% of (90-13) or just Rs 7.70 by way of STCG.
You can avoid STCG whenever you are running into losses of any scrip which may be
sold at the end of the day and buying back on next day morning. Keep quantity different
to avoid any query.
The stock at Rs 41 is very attractive but too early to buy. There are rumours that Merrill
Lynch may soon wind up. It had insured $3.1 Billion of bonds portfolio with an insurer
who refuses to recognize their claim. Merrill wants to sue them. This is why its stock
dropped by 11% yesterday.(19/3)
Use rally to get out of the market now and book as much loss as possible before 31/03/08,
so that carried over losses can be set off against future STCG.
I am liquidating entire portfolio, some at good loss, and wish to liquidate entire holding
to ZERO by 31/03/08. I will then buy back same stocks again afresh from 1/4/2008
progressively, because I am sure that the market is not going anywhere but down, down
and down.
Gold which dropped from 1029 to 937 or almost 10% is temporary aberration. I will not

be surprised if it jumps by $100 or $150 in one day.
Whole global system is now flooded with paper currency which will force IMF to re-
introduce Gold Standard in next 12/18 months or so. This will prop up real demand of
Gold from all central banks - right now only retails customers are buying.
Do not be surprised, if Gold goes to $3000/Oz or Rs 40,000/10g or tola in India. Allow

+/- for Rupee appreciation or depreciation. Silver will rise faster than gold.
Kalidas, Hong Kong

Ref: 08084 of 19/3/2008
PS Hold the cash now and follow only those stocks you know. IFCI today is not as good
as it was because almost entire holding of its equity have dropped in value by 70%. They
were stupid in not cashing in when the grass was green.
for Radhika nandlal,
To my knowledge all DDB were called back by IDBI, SIDBI and ICICI. In fact, ICICI
was the first to call back. I do not know which series of bonds you have. All bonds were
also listed on BSE. Check the debt segment of the BSE and see whether your bonds are
still listed.
Originally, these DDB (IDBI and SIDBI) were not callable. This was the main reason that
I invested in them very large amount and also sold almost Rs 60 crores of bonds to Hong
Kong investors. I do recall my meeting with IDBI General Manager Mr. Subramaniam
(who later was transferred to UTI and then sacked for UTI Bonds 1964 debacle) where I
asked him how did IDBI take the view for such large interest rate for 30 years, and why
did not have any clause to make it 'Callable'.
It looks to me that the debenture deed was later amended with retrospective effect to
make it callable after 10 years.
ICICI did have 'Call' option and that was the reason I did not buy them. Therefore, it
appears to me that your ICICI bonds were redeemed almost 6 years back and may be you
got the notice of redemption and did not act on it. May be they are sitting on your money
without interest for over 5 years.
I checked the BSE site (Debt segment) there is no reference of ICICI bonds in issue. The
only live reference is Sardar Sarovar DDB. That means that all other bonds have been
redeemed.
ICICI may not pay you interest from Post Redemption date. Better get all money you can
because in the event of deep correction, you have money to invest.

Kalidas, Hong Kong
20-03-08
one more question is about RBI bonds.. RBI bond one was 8.5% that is redemmed and in
FD another is the 6.5% RBI bonds...both tax free this matures in one year but i am tired
of this RBI bond.. i want to redeem this and play markets... so if i redeem it now before
maturity what will be the damage??.. could u kindly answer this... before they cut interet
rates further let want to put half of it in FD and other half play markets.. Thanks.
for rashika nandlal,
It is good that your money is in RBI Bond and not in your slippery hand. This is why you
are saved, and let it remain that way. This is not the time to play the market, and since
you are very active player, you have to have someone to control your trading instinct.
Take it easy.
All bonds you are quoting are listed on BSE in retail debt segment (if it is Government
securities) or under Corporate debt. You can also list them in your moneycontrol portfolio
so that you are constantly updated, instead of logging onto BSE and then press various
buttons.
Kalidas, Hong Kong

20-03-08
Kalidas, I could not agree with only one point of yours..I one has lost, the other gain.
Example: To keep it simple, If sensex companies Mkt Cap On Jan 1st 08 was 1000 cr
with 1000 stake holders, today it is 650 cr with 1000 different stake holders. During
valuation loss, amt lost by earlier 1000 is far more than amt gained by current 1000
stake holders. It can never be equal.
It will be the other way if mkt cap moves up from 650cr to 1000 cr. It can be 1:1 neither
in terms of number of losers nor in term of losses:Gain.
Regards/Milind
for safemil,
BSE Marketcap includes all stocks including those held by Promoters. Generally, over
50% stock is in promotors' hands and never change hands. Often they are given to bank
as collaterals.
The real floating stock is hardly 25% to 30% - this is where trading takes place. In trading
there are always two parties - seller and buyer, so if one loses, the other gains.
Total valuation of marketcap is only notional. No one loses 300,000 crores in India - no

one in India has that much of money. Such figures are given to play to the gallery.
for Instance, take the example of stock of any nationalized bank where almost 75% is
held by Government of India. Public float is just 25% where the active trading take place.
In the event of marketrise, entire 100% valuation increases, including 75% of GOI.
However, this is just notional. Similarly when the market sinks, the entire valuation
suffers. Again, loss of GOI for 75% of its holding is notional.
Kalidas, Hong Kong

20-03-08
dear kalidasji.. i am a big fan of yours and closely monitor all your posts. In case if it is
not too much of an effort, i would request you to advise me on a small query.
I am a dubai based NRI and have bought 35000 shares of IFCI at an avg cost price of
39/- . The aim was to hold on to it for a long term of say 5 years and get good returns. In
the current scenario do you think the strategy is fine. I am aware that, at the moment,
IFCI is not the story what it was some time back, especially when its equity holdings are
70% down in value. Do you think that in another 5 yrs the stock will reach the dizzy
heights which it was supposed to reach once upon a time. Thank you sir, in
anticipation....Sunil
for Guest
We are near major meltdown. I do not think the market recovery will be fast enough to
get you the kind of gain you had before.
When the stock was at 120 and comes down to 30, it is known as 75% correction.
However, when the stock is then aimed to go back to 120 again, we are talking about rise
in value by 300%.
I would sell at least 80% of current holding whatever may be the price and use same
money to buy after the intensity of storm has passed.
This is no time to show your bravery. Be practical and act.
Kalidas, Hong Kong

20-03-08
24th Mar 2008

CLSA buying ICICI – may sell warrants
for Vivek67
REJOINDER:
Crows are black everywhere, be they from Economic Times or Barrons.
CLSA may have bought ICICI Bank - they are the poorest investors and one of the
riskiest gamblers in derivatives. This bank has all credentials to go 'Boom' Only French
government saves them time and again.
Kalidas, Hong Kong

24-03-08
for Vivek67
REJOINDER 2 - CLSA and ICICI Bank
The reason that CLSA bought ICICI appears to be they want to sell the covered warrants
on this stock. They take the view that this stock will go down, so they will issue 'covered
warrants' at premium, say 30% for just about 12 months. CLSA is a specialist in this
field.
So if the stock goes down, they buy back their warrants to make money. they usullay
leverage the warrants nearly 3 times, that is, if they buy the stock say, 50 Million shares,
they will issue warrants for 150 million shares.
At the same time, they may be shorting its ADR to the extent of 20% or so, so in case of
bets going other way, their losses get reduced to some extent.
CLSA's buying of ICICI Bank is the first indication that the stock will go down... Writing
is on the wall.
Kalidas, Hong Kong

24-03-08
My take is ...
What did not happen in last 67 years, may happen now. Ask CEO of Bears Stearns and
also Barings Securities, both of whom got busted.
Trusting ICICI is your choice. She is not your wife that you have to show your eternal
loyalty. It is a stock, damn it, it is a stock. If you still do not want to learn from whatever
happened until now, it is your choice. Misplaced trust kills ultimately.

Where there is smoke, there is a fire. When the traders in bank like Credit Suisse could
conceal massive losses running into USD 2.6 Billions, what is ICICI or SBI? Employees
do try to conceal their misdeeds or misjudgement - it is only later that people know what
hit them.
I do not say that ICICI is not a good stock to own - it may be but not now until we know
what is going on there? Can not you stay away about 2 months before all secrets are out?
Re-enter again if there is nothing wrong.
Kalidas, Hong Kong

24-03-2008
Gold price and Siver
vaise i should say .. read his previous post .. you will get an answer to Which and Why ..
if you dont want to do it .. it is Physical.
Thanks Kalidas sir for the reply. If the rally comes .. i too want to liquidate for the time
being. But you please keep posting on the further direction. My father had lot of ucobank
.. which he accumulated in 25-30 range .. but could not sell it at proper time .. now its
back on the same price again.
for Vivek Dhariwal
Agreed. You may defer buying Gold and Silver for time being. While Gold may fall to
810 to 835, Silver may fall faster - often 20% in a single day. This level may be reached if
FED moves the way I thought.
My upside target is Gold 1800 Min 2400 Max and Silver $31 Min and $60 Max for short
period of 12 months. In India, the Silver may fall to Rs 18000/Kg and upward target is Rs
36000 Min and Rs 60000 max per Kg. If Rupee drops by 7%, add that much amount to
above target.
Please note that Gold is real money. If the crisis continues, a day will come when like
Bretton Wood Conference in the past, the world monetary system may go back to Gold
Standard one way or another.
The Gold demand will therefore rise, not only from retail investors in India but also
Central Bankers all over the world. GOLD IS GOD and TRUST WE DO IN GOD
Kalidas, Hong Kong

24-03-08

Stocks purching during/now crash
Dear Kalidas Ji,
Read ur post. Indeed interesting prediction. But I guess also fraught with risk. I guess
rather than take any immediate action, one shud wait until there actually is such an
announcement. The next day, investors may still lose out on atleast 500-700 points in
rally before they get to enter...but i believe its less risky to lose on a part of a rally than to
build position on its speculation.
I hope u agree.
Thanks again for ur great insight.
for Guest,
Agreed. My call is purely short term to maximize the gain. My move is more of
anticipatory than fact based. Cautious investors should wait - but only those are waiting
for long who have already lost lot of money. Those who are professionals and are not
afraid to wager on well calculated gamble, should buy before FED Acts.
These rumors or loose talks have emanated from very knowledgeable quarters. One of
them is Alan Blinder who used to be very vocal member of FED in the past. Another is
from the Fund Manager from PIMCO - world's largest bond manager. They are not
people who will even move their lips unless they have strong reason to.
But you are right. It is better to leave 500 to 700 points on table, rather than risking on the
basis if heresay. However, please note that there may not be 500 to 700 points rise - it will
be much bigger than you think, and may be there may not be any seller in same way there
were no buyers when the market fell by 3000 points.
My scenario is only for professional investors only who know what is RISK and RRR
(Risk Related Returns.
I did buy 3000 UCO at 33.7+, Air Deccan 1000 @103.5 on average, and 21000 of GV
Films at 4.60 (not suitable for small investors). I did buy IFCI at 38.90 but sold it back
at Rs 38.65 (2000 shares) because I wanted to buy Air Deccan more than IFCI. I had sold
Air Deccan earlier over 304 having bought earlier at 138. I would buy Spicejet at this
price 38+ (could not get it), and GE Shipping at 330 (the level at which I had bought
earlier and sold at 480)
Kalidas, Hong Kong

U.S. bank stocks may rise 10-20 pct in year: Barron'sMarch 23, 2008 12:52 PM ET
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Article tools E-mail this article Print-friendly version Discuss this articleStocks
mentioned in this articleBear Stearns Ord Shs (BSC) Stock Quote, Chart, News, Add to
WatchlistCIT Group Ord Shs (CIT) Stock Quote, Chart, News, Add to WatchlistGoldman
Sachs Ord Shs (GS) Stock Quote, Chart, News, Add to WatchlistJP Morgan Chase Ord
Shs (JPM) Stock Quote, Chart, News, Add to WatchlistLehman Brothers Holdings Ord
Shs (LEH) Stock Quote, Chart, News, Add to WatchlistRelated newsMarket likely uneasy
over Bear Stearns
All Reuters newsNEW YORK (Reuters) - Shares of stronger U.S. banks and brokerages
may rise 10 percent to 20 percent in the next year as panic over credit markets recedes
and earnings improve, Barron's said in its March 24 edition.
The sector will still face negative headlines such as finance company's CIT Group Inc
decision on Thursday to tap an entire $7.3 billion credit line, and perhaps see weaker
banks go bust or seek bailouts, Barron's said.
But this month's collapse of Bear Stearns Cos may have marked a bottom for the broader
market, Barron's said. Bear agreed on March 16 to a buyout by JPMorgan Chase & Co
at a fire-sale price of $2 per share.
Banks have suffered from lower earnings and share prices, hurt by the slowing economy,
the housing crunch, an increase in soured loans, and illiquidity in a wide range of debt.
Many industry executives and economists have said they expect conditions to remain
tough for much of this year, or longer.
Longer-term investors bruised by losses could be forgiven for being unexcited about a 10
percent to 20 percent gain.
Despite an 11 percent jump last week, the 24-member Philadelphia KBW Bank Index
would have to rise an additional 41 percent to reach its February 2007 peak. And the
Amex Securities Broker-Dealer Index , which includes Bear, would have to soar 65
percent to reach its May 2007 peak.
Barron's said a main reason that bank and brokerage fortunes will improve is the large
gap between the yield on the 2- and 10-year U.S. Treasury notes, now about 1.72
percentage points according to Reuters data.
This 'steep yield curve' makes it easier for banks to borrow short-term money at low rates
and lend long-term at higher rates, and suggests the economy may be well along in a
recession rather than early in one, Barron's said.
Earnings may also grow faster if the bulk of write-downs for such things as subprime
mortgages, collateralized debt obligations and leveraged loans is in the past.

Though first-quarter earnings in the sector may fall by nearly half, third-quarter
earnings may rise 34 percent, Barron's said, citing Standard & Poor's analyst Howard
Silverblatt.
Goldman Sachs Group Inc , Lehman Brothers Holdings Inc and Morgan Stanley each
reported lower earnings last week, but results were better than analysts expected, and
Barron's said write-downs were manageable.
While several analysts have said Citigroup Inc may face a write-down in excess of $10
billion, they have projected it may be smaller than last quarter's $18.1 billion.
And having a friendly central bank also helps the sector, Barron's said. The Federal
Reserve this month slashed interest rates, and opened its lending window to investment
banks, giving them a new and stable source of funding.
Copyright 2008 Reuters
for Vivek67
Who paid for this Article in ET and why?
All these writers are paid by some large funds to write the story so that the stocks do not
fall and they can sell during the rally or period of stability. These are 'conman' - do simply
opposite what they asked you do. They know that most investors follow their ancestors -
monkey.
Did you read the story of a man selling caps/hats and crowd of money? Ask your parents
or someone elder who will tell you.
Kalidas, Hong Kong

24-03-08
Short Selling
for Karhikn
SEBI is a rat. They have ulterior motive - to stem the inflow of $ and prevent Rupee to
rise. This is why they decided to allow the short selling.
But to implement the suggestion at this point of time is suicidal. Small investors will be
killed, because they can not short the stock in cash segment. Large investors may have
avenue to borrow the stock from fund and sell it.
SEBI's logic, intelligence, stupidity, dilemma is/will be:

1. When $ is coming, they ask why are they coming to India (and forcing Rupee to rise
and our exports suffer?) Actions: Do everything to stop foreigners to invest into India.
SEBI succeeded
2. When $ is going out, they ask why FIIs are not investing in India when it has good
growth story and it is one of the fastest economy of the world? They are causing our
Rupee to fall and our oil import bills go higher. (SEBI forget that it was its own actions
which drove away the foreigners at first place)
After a few months, when the market falls steeply and when even UTI does not have
money to pump in, SEBI will ask the questions again - these FII bastards, they short out
country, our currency, our stock market and make the most money and you see - our
small investors are losing a lot. Let us do something...
And God alone knows what will be cooking in its mind at that time.
You have to learn from SEBI and its No. (8) CEO, how to cause maximum damage to the
investors and Indian economy.
Kalidas, Hong Kong

24-03-08
25th Mar 2008

Bloomberg Machine
Quote 'My scenario is only for professional investors only who know what is RISK and
RRR (Risk Related Returns).' Unquote .. :-)
Though i am not professional in any streach of imagination .. but i took you advice ..
Two stocks that felled 10-15 % yesterday BGR ENE and CAIRN .. Yesterday i purchased
a BGR Energy at its 52 week lowest 265 .. today it is trading at 311 .. so a good 15%
profit .. i invested not much .. only 20 shares .. but then it is called as Risk Related
Returns .. i missed the same on cairn .. it was trading at 189 .. now it is trading at 215 ..
but since it was crude related stock i avoided it.
But made some profit on BGR .. Thanks sir .. We am still waiting for your blog .. and one
more question .. i wanted to learn the few tricks these investment banks play .. can you
suggest a reference book on banking which i can understand??

for vivek Dhariwal,
I never read any book in my life. Hong Kong is too busy center to find time to read
hundreds of pages.
I gathered my knowledge reading magazines, newspapers, watching TV , and mostly

Bloomberg machine. Bloomberg machine was used by me when I was a stock broker -
and I consider it as my first wife (with second at home). There is no other quote and news
service in the world which can match Bloomberg. It is quite expensive though - costing
USD 1500 per month - but that was small expenditure for a brokerage firm where I was
working.
Books are valuable companion though. You learn a lot, but I did not have that luxury.
Read from every source but use your own common sense. You have to have keen
observation power that you can cultivate over the years. Nothing is impossible.
Kalidas, Hong Kong

25-03-08
JP Morgan Bear and Sterns
Sir
What is your view on JP Morgan raised bit (10) on Bear Stearns. Kindly reply.
for Mani25,
You do not increase the bid from $ 2 to $10 overnight. I can understand if it is in
increment of $0.50 or more or some other bidder had chipped in - but that was not the
case.
I will write soon about JPMC
In my short, sweet and bitter opinion, it is not JPMC who saved Bears Stearns =- it was
FED who saved JPMC whom I consider as 'bankrupt'. No one gives away US$ 30
Billions to a bank @ 2.5% for 10 years on non-recourse basis, with even nominal interest
being deferred for over 2 years.
2.5% on $30 Billion = US$ 750 Million per year or US$ 1.5 Billion for two years - are
we to believe that JPMC did not have such pittance amount to pay to the FED?
Bears Stearns was used as 'bait' - real troubles are brewing at JPMC - not from now but

for many many years - it is reaching climax...
Kalidas, Hong Kong

25-03-08
26th Mar 2008

ICICI bank
Hi Kalidas,
I personally hate doing business with ICICI bank. I am not very sure how deep they are
in this shit. I avoid doing business with them.
But I disagree with your view on SBI. SBI is too too too big to fail. And if it does then
everyone in this country is in big big trouble. I shudder at the thought of SBI failing. SBI
is atleast 50% of RBI.
sometime ago, the SBI staff were about to call a strike on payrise. The govt had bow to
SBI employee's demands, just because it could not afford it. There were talks of moving
the clearing operations from SBI to avoid such employee's blackmailing, but again it was
dropped.
A noted economist said that if SBI held the clearing of the cheques a day or two, the
interest earned on it will be much much higher than the revenues of all the pvt banks. Not
sure how much it is true. Even if it is true it cannot be validated.
Personally I extensively use SBI debitcard, becuase I can find an SBI ATM in every
corner of city as well as villages. If you go outside cities, you may not find many pvt bank
atms.
Cheers,
for Harini12 (26-03-08)
I never said that SBI is in real trouble. They denied any involvement in light hearted
manner. But I read their actions. They wanted to raise 16000 crores - for what? They lack
loan demand, reduce the interest rates to spur the demand, then what forced them to
borrow such large amount?
I do not know Government's holding in SBI - but must be 75% or more. so right issue
will involve Government's infusion of 12000 crores in SBI equity. Are they replenshing
what they have lost as capital? Wait for 6 months to know. But I am damn sure they lost
or have CDO/CLN type of exposure over 16000 crores or USD 4 Billions, larger than
ICICI. No one raises such huge capital without any need for it, unless they are trying to
cover up their past losses.

SBI can withstand this loss, if at all there is any. It does make good money and most of
the deposits they have are low interest bearing current account nature due to
Governmental accounts.
I may not agree with you regarding clearing of cheques - the process is automatic and
may be some problem at the brach you have account. Lodge a complaint with their
management.
Kalidas, Hong Kong
Dear Sir,
I regularly read ur message. After reading ur msg about ICICI, I have told many of my
friends to remove money from ICICI and keep them in govt bank. I even told my boss to
remove his fd and keep it in govt bnk.
In India we can keep in govt bank as it safe. But what about people who are in US. Is it
safe to keep money in SBI Newyork account instead of US Banks. Waiting for reply.
Rgds
Brb
Bangalore
for Guest
Yes. you are right. US government is notorious to protect the bigwig in the name of
democracy, non interference and capitalism. They always raise their hand in times of
troubles.
Government of India is not of that kind. SBI, New York is a branch of SBI and therefore
carry the obligations of both SBI Indian and Government of India (SBI was floated by the
act of parliament, and if I remember right, it was known at that time as Imperial Bank)
Unless Government of India runs into trouble, there is nothing to fear about SBI. Further,
Government of India's valuation of its stock holding of Public Sector Units is so high that
even $25 Billion dent will not make much difference.
Let me very specific about ICICI - I never suggested to anyone to withdraw money from
ICICI Bank - because in the event of serious trouble there, it can be nationalized by GOI.
So there is enough safety out there in India.
This brings me to the sage of BCCI Bank which collapsed earlier. They used to open
separate subsidiary (say BCCI (HK) Ltd or BCCI (India) Ltd. registered in those centres)
This was a smart move, because in the event of trouble at subsidiary, the parent back
home is not affected. They were distributing risk.

Indian banks are not so clever. They open the full dedicated branches without thinking
that the trouble out there will hurt them eventually. If Mr. Kamath is as clever as he is
made out to be, then I can say that he may be intelligent but lack common sense as to
how to structure bank's international operations.
Kalidas, Hong Kong

26-03-08
27th Mar 2008

nk
Shri Kalidas - With due respect, I think you have gone overboard in estimating the losses
of icici and SBI in CDOs.
The facts are yet to come out but most probably ICICI and SBI have tried to limit the
default risk on their indian corporate exposures especially in the large loans afforded to
indian companies for their foreign acquisitions. They were in the CDS market covering
this risk by paying a premium. Now, unless these corporates default big time it is unlikely
that the undertakers of that risk (ie foriegn investment banks) will be called upon to pay
up - which they may not because they -as per your estimation - may have no money to do
so.
Ms Mule the CFO of ICICI bank is on record that though the bank has exposure to CDO
and CDS (credit default swaps), there is no exposure to the subprime or even the retail
market. “All are investment grade exposure and about 70% of the papers are of Indian
corporates,”
Even if ICICI has sold credit default swaps for a fee, the bank is on record saying these
are exposed to indian corporates to the tune of 70%. Until the Indian borrowers default,
this 70% will expire harmlessly in a few months time when it may choose not to roll over
these swaps. Even if Rs 6000 Cr of ICICI is in total CDO exposure as has been estimated
by UBS, 70% or 4200 Cr is safe. Since ICICI bank CFO has said that they have no
exposure whatsoever to sub prime or retail segments in CDO or CDS, there is no reason
to believe that all or much of this is necessarily in default.
Now you could argue that even though icici has no exposure to subprime directly but the
CDOs it has exposure to may be derivatives of subprime assets. That is possible but then
to call the death of icici, we need to first see some major investment banks getting busted
(not taken over but busted). As this is unlikely to happen, considering the resolve of the
Fed to do what it takes to keep the financial system on even keel, I dont think icici will be
materially effected.
Besides, Why should indian banks buy up subprime mezzanine CDOs when they have

huge investment demand here in India and much higher interest rate on GOI securities
and especially when dollar was depreciating!
My reading of the situation is that it is those countries that have a trade surplus with US
who have majorly invested in CDOs. So, banks of China, japan, UK and middle east oil
producers are likely to see a mark down in their securities portfolios.
However,ICICI has its own problems like too much of aggression in domestic retail loans
which may push up NPAs. I do not think the CDO scare is material and if at all it will
lose - it will be a few percentage points in EPS.
I think ICICI is a strong buy now after this steep fall. I think in the worst case CDO MTM
will be 300 Cr and what is 300 Crores for an anticipated annual gross profit of 8000
Crores.
Disclaimer - I have icici bank in my portfolio.
jo
for Jo,
There can not be any direct lending by way of mortgages or sub-prime lending directly
by ICICI or SBI who are not in direct mortgage finance business abroad.
When those mortgages are converted into derivatives like CDO or CLN or similar tupe,
they assume almost 90% exposure of the Sub-Prime loans which are then subordinated to
prime debt. It is only after adjustment of Prime Lender's loans that they become eligible
for further distribution.
In USA, 30 years mortgage loan is given to a borrower on following basis:

Interest only - 3 years
Principal + Interest = 7 years (Trench 1)..after ARM
Principal + Interest = 5 Years (Trench 5)..after ARM
ARM = Adjustable Rate Mortgage
For first 3 years, the interest is fixed and thereafter interest is reset at the end of exh
period, known as Adjustable Rate of Intrest.
If loan amount is say, US$ 200,000, then each trench is for US$ 200,000 or even more.
Since the loans are forecloseable, the lender does not have right to sue the borrower for
shortfall, but assumed ownership of mortgaged assets - all profits and losses go the
lender.

Thus, if there is a default of first mortgage, the first mortgage lender assumes the
ownership of the property under Foreclosure. Since all profits and losses belong to him,
the secondary holders for various tranches have ZERO value of their investment.
If the first mortgage lender's loans is not defaulted, and the property does not get
foreclosed, then only secondary lender may have some value, but again it operates in
sequence. If there is a default in second stage, all lenders subsequent to second stage have
ZERO value, because second stage lender get hold of property under foreclosure.
Most banks, including ICICI, bought those derivatives from second stage onwards - this
is why you see lot of bad debt writing off. Basic sub prime lending constitute just 20% of
entire loan outstanding, that is, say 6%/6.5% per year or about 20% for 3 years.
The very base of Collateral Debt is destroyed once the property goes into foreclosure.
We do not know what will be the composition of ICICI CDO and what were the terms,
but whatever may be the terms, their so called Collateral property as asset backing does
not exist. So their MTM (or Marked to Market) value is big ZERO
Such properties are being sold by Prime Lender at steep 30% to 50% discount to the
market value. So all subsequent holders of CDO gets NOTHING and the loss is total.
This is my understanding based on various articles published on CDO. This is the reason
I am of the opinion that both ICICI and SBI will need to provide for the total loss on
instruments they never understood.
With regard to assertation of ICICI CFO that they do not have any exposure to Sub Prime
loans, is acceptable, because there can be NO such exposure towards dirct lending. What
she did not mention that there was exposure to CDO (collaterlized Debt Obligations) for
which there is no collateral nor there is recourse to the borrower.
Do not believe the statement of such executives. Even Bear Stearns CEO in an intereview
with CNBC Anchor David Faber asserted that BS did not have liquidity problem. CNBC
started trumping cards that Banking stocks were cheapest for the last several years. AND
very next day - BANG - BS declared insolvency and same CEO said, the situation in last
24 hours worsened so much, it was impossible to carry on the operation. This means that
almost all clients and banks withdrew their support and withdrew money en masse.
All Banks, Lenders and Brokers survive on notion that all customers will not withdraw
deposits from their account at same time. When those depositors decide to withdraw, en
masse, there is a RUN on the bank and bank goes bankrupt
Kalidas, Hong Kong

27-03-08

Reply to KASHIWALA on (27-Mar-08 08:39 )
Do you work for SBI in possibly senior position? It looks like you have good knowledge
of SBI statistics, especially social goal, which is not the subject of discussion here.
It seems that you are NOT reading my posts diligently, and allege as if I am misdirecting
other boarders. Please note that I have excellent track record here. I never venture into
spreading rumors. I read and analyze the situation and present my views with full
reasoning so that the boarders know what I said and why.
You say 'It is stated that Government holds 70 percent share in SBI. It is not so. The
holding is less than 50 percent' and read what I have suggested in following:
Quote (Kalidas on (26-Mar-08 20:30 ) for Harini12 (26-03-08)

I never said that SBI is in real trouble. They denied any involvement in light hearted
manner. But I read their actions. They wanted to raise 16000 crores - for what? They lack
loan demand, reduce the interest rates to spur the demand, then what forced them to
borrow such large amount?
I do not know Government's holding in SBI - but must be 75% or more. so right issue
will involve Government's infusion of 12000 crores in SBI equity. Are they replenishing
what they have lost as capital? Wait for 6 months to know. But I am damn sure they lost
or have CDO/CLN type of exposure over 16000 crores or USD 4 Billions, larger than
ICICI. No one raises such huge capital without any need for it, unless they are trying to
cover up their past losses.
SBI can withstand this loss, if at all there is any. It does make good money and most of
the deposits they have are low interest bearing current account nature due to
Governmental accounts.
UNQUOTE
Also I have never suggested that either SBI or ICICI will fail. In fact I exhorted everyone
to keep their savings in India with any bank. With regard to ICICI, I was also specific:
Quote ( Kalidas on (26-Mar-08 20:46 ) Reply to Guest

Let me very specific about ICICI - I never suggested to anyone to withdraw money from
ICICI Bank - because in the event of serious trouble there, it can be nationalized by GOI.
So there is enough safety out there in India.
UNQUOTE
Reply to Aquarius5863 (Kalidas on (22-Mar-08 22:08 )

QUOTE
India is safest place to keep money in the bank. Most of the banks are nationalized, and
Government of India is not like any other western government who will raise hands and

let depositors to go to dogs.
further in same post.....
You may therefore keep your savings in any bank including Standard Chartered Bank.
UNQUOTE
Now with regard to your statement that I should visit India and places like Bihar, UP,
Chhatisgarh, I may state that I have hand on experience on Agriculture.
My India based family and friends own farms and I have been helping them to modernize
by importing latest agricultural machineries and farm equipments from USA.
I know Chhatisgarh and recently visited Bhilai, Raipur, Rajim and other regions recently
and also went to number of farms.
Agriculture is my intense hobby. I use innovative approach in all these farms and
plantations. I can say authoritatively that I know 10 times more than what you know in
Agriculture. You know bank statistics whereas I have hand on experience. I also have
farms in USA which experience I wanted to share with India.
Please note that I too was a banker for 19 years in a nationalized bank in India, and know
pretty well about various norms including Capital Adequacy norms. India, a large city or
small village, is not new to me.
Kalidas, Hong Kong

08088 of Thursday, March 27, 2008
Dear kalidas sir,
If FED is taking the bad loans to find a permanent solution to subprime problems, why it
didnot do long back? It could have avoided so much of loss.
Regards
TVM
for TVMonty
FED is not legally permitted to buy bad loans. There are other agencies. Further, the
problem is not in sub prime loans but with derivatives. So even if the FED buys back
entire bad loans, the problems (of connected derivatives) are not going to be resolved.
Please read my previous post relating to CDO over here.

Kalidas, Hong Kong
27-03-08
dear Kalidasji,
You are writing in detail and explaining very well with convincing arguments on current
affairs and subjects of Boarder interest. Will you please be kind enough the give your
views on Tata Motors deal with Ford for the purchase of Jaguar and Land Rover. How
Tata Motors will be benefited with this deal. I quote here below form one of your earlier
messages-
Quote 'It is my solid experience that whenever a person gets elevated by magazines like
FORBES, FORTUNE, CNBC, International renowned body etc, that is the first
indication of a person's downward career and downfall. These media act last and out of
popularity rather than substance. Because they elevate a person larger than life, the
concerned person gets bold enough to get into misadventure. I simply throw away those
magazines and sell the concerned stock because that is the point of climax'
Unquote do you think that Ratan Tata is behaving the same way.
I am a share holder of Tata Motors since long exactly since last 15 years. Your Xray of
the deal will not only help me but to many Boarders who are unable to understand about
this deal. Why the loss making brands are being taken over by Tata Motors. What will be
the future of Tata Motors with so much borrowing.
for Karshin
I do not have specific views on Tata Motor's purchase of Jaguar.
I have a general view however for taking over companies. Right now is not the time to
take over any company. Market commercial interest rates are on rise, and they may gallop
upwards. The stock markets world over are in a state of flux and may suddenly take
plunge if real issues are not addressed now. This will make valuations of any company far
expensive. There is real fear of recession. Auto industry is extremely sensitive to
recession.
Even Microsoft's proposed take over of Yahoo is fraught with same risk. Microsift may
end up paying top dollars at wrong time. However, Microsoft is very Cash Rich, so it can
afford the taking over luxury. But supposing, microsoft's billions of dollar disappears if
the bank in which is it has kept billions, goes bust, what will happen to its take over?
Does Tata Motors have as much cash as Microsoft has? If they have, may be they will
succeed and if not, and they intend to finance acquistiion by debt. then may be they will
have to face some uncertain period.
If TATA MOTOR had waited for over 6 months from now, may be their purchase price
would have been much cheaper.

Kalidas, Hong kong
27-03-08

Kalidas

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Kalidas

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@9

Letters from Kalidas

19th Aug 2007.....................................................................................................................6

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If this happens, then following scenario may be noted:

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d. New Investment Banking income from IPO’s promoted by Goldman management

5. However the above target has following caveats or Assumptions:

Kalidas, Hong Kong

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complaints pending at the beginning of the quarter 2

complaints received during the quarter 583

complaints disposed off during the quarter 584

complaints unresolved at the end of the quarter 1

5. information on consolidated figures -

(i) turnover: rs 16639.60 million

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Curr.Quarter 31- Prev.Quarter Corr.Quarter 31-

IFCI 26 Stake Sale Analysis

Read the para 4F and 5a of my original post in answer to your queries.

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Kalidas, Hong Kong

15th Oct 2007

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Kalidas, Hong Kong

18th Oct 2007

for KJP - Reply Post

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for the Wall

The question arises:

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Kalidas, Hong Kong

Let us end discussion on this subject.

9th Nov 2007

Ref: 07/208 Date: 09-11-2007 Original Post

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Kalidas, Hong Kong

13th Nov 2007

Ref: 07/218 Date: 13-11-2007 Reply Post for Jamil150

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MRPL annual capacity is 9 Millions tones; operates at about 120% of rated

Now, potential earnings of Essar Oil could be worked out as under :

Oil Production …..Rs 28000 crores ….Profit 80% Rs 22,400 crores

OUTRAGEOUS, but it is a fact. Further, ESSAR OIL is expanding refinery

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Kalidas, Hong Kong

14th Nov 2007

Ref: 07/220 Date: 14-11-2007 Reply Post for hhhrules

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Giving up in desperation to Ruia is an act of cowardice in investment world. Being a

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Kalidas, Hong Kong

Scams in Stocks Market

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Kalidas, Hong Kong

15th Nov 2007

for Guest - Pramila

REASON FOR SELECTING ESSAR SHIPPING

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I hope this satisfies your enquiries.