Archive for June, 2008

Litigation problems with housing projects – bane of even organised players

Posted on June 27, 2008. Filed under: Real Estate |

I always had an impression that land grabbing and wrongful transfer of properties without the actual owner being aware of this happens to individual buyers or sellers in the Indian market. But it has started impacting developers as well. Recently I cam across two legal notices/advertisements in leading newspapers given by Wellwin Industry against Chitra Anandan Constructions for a property in Perungudi and the other one by Ozone developers. There were advertisements by both the buyers and sellers in both the cases on back to back days.

Wellwin Industry – Chitra Anandan Constructions:
In this case, a subsidary company of Wellwin Industry was sold lock, stock and barrel to Chitra Anandan Constructions as per the advertisement of Chitra Anandan constructions. The subsidary company is the legal owner of the land and Chitra Anandan constructions is building a residential complex in this land. Wellwin Industry has refuted the claim of Chitra Anandan Construction saying that the land still remains with them.
Ozone Developers case:
Ozone developers contends that they have legally bought the land from the owners and they are in rightful possession. The land in question I guess is a hereditary land running into few centuries!! When I checked their website, they have a project coming up in Anna Nagar, Chennai and I am not sure if this pertains to their Anna Nagar project or any other land they have bought.

The buyers go to this organised players primarily to avoid legal issues in ownership. And now we are hearing about legal disputes even on lands/properties developed by reputed builders. I was recently told that even Ceebros Shyamala Gardens project ( being built on Shyamala studio land) at Saligramam has some legal issues. It is really vexing for individual buyers if they have to face these legal issues even after paying hefty premiums. Now buying a house without any legal issues boils down to your luck!!

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Is fuel retailing not a lucrative business?

Posted on June 24, 2008. Filed under: Chennai |

The answer seems so, particularly after seeing atleast two petrol pumps in the heart of the city closing down and converting or planning to utilise the real estate for other commerical purposes.
The petrol pump opposite to the Dass Community Centre on the Cathedral Road has been closed down. The other one is at Alwar Thirunagar just diagonally opposite to the Mega Mart showroom. Both are located at prime locations on a main road in the city (don’t kick me when I say Alwar thirunagar is a prime location..guys wake up Chennai is not Mylapore, T Nagar and Nungambakkam alone!!!).

My knowledge on the petrol retailing business is very limited. I have done some accounting and tax related work during my CA articleship training. I know that for every kilo litre of petrol, diesel sold, the Oil Marketing Companies (BPCL, HPCL etc) gives these petrol pumps commission. In addition to that, they also enjoy credit with this companies atleast for a weeks’s time. Remember, petrol/diesel is cash business (atleast 95% of the sales) and they enjoy the float. In addition to that there is wide-spread adulteration of petrol and diesel (common form of adulteration is to mix Kerosene, I was told) and under-selling on quantity. Also whenever you have a price hike, you hoard the entire quantity of stock overnight and sell it the next day morning to make a good tidy sum. But that is not a major portion since Indian fuel prices are changed very rarely. But in spite of all these money making avenues, many of the petrol pumps are being closed.

The other possible reason I can think of is that the land on which these petrol pumps operate or leased/rented lands and the owner refuses to renew the lease once it expires. The owners may think that by selling the land or by doing joint development they may be able to make more money than just renting it out to a petrol pump.

Do you know of any other reasons? Please post your comments.

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Poor customer service by Times of India

Posted on June 24, 2008. Filed under: Chennai |

On June 11, I came to know about the Times of India has re-opened the subscription window for annual subscriptions at Rs299/- per year. The same day I called up TOI office in chennai and registered my name. They informed me that their Marketing Executive would come collect the money, handover the bag and receipt. The delivery of the paper would start within 2 days from the date of collection.

But now, Times of India subscription is turning out to be a pain in the neck. I was very happy when I got the second chance to subscribe for TOI, but the problem is even after 13 days nobody has come to collect the money. I have called them twice to enquire on the status and everytime, they have been telling that their marketing executive would come and collect the amount.

I am losing interest now and I am not sure how long I may be able to wait.

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Vehicle Number Watching

Posted on June 19, 2008. Filed under: General |

I have a curious habit of following the registration numbers of vehicles which are in front of me on the road while driving. I dont know how many of you have that habit but I have been doing it for years now. I cant remember when I started this. When I look at the number my immediate reaction is to total the sequence. No.. No.. I am not a numerologist as well.

The other aspect to this number watching is I get excited when I see a bike or a car which carries a registration number of my hometown, Tuticorin. Tuticorin’s registration number starts with “TN 69” and I really get tempted to find out who is on the wheel. I realise that my affinity towards my hometown has not diminished a bit even after started living in Chennai for more than 10 years now. My experience shows that I could not identify the person who drives the vehicle with TN 69 registration on 99.99% of the times, but still the habit lingers on.

Thanks to this habit, I have also found out that there are more number of vehicles on the Chennai road with registration numbers starting with TN 36, TN 37 and TN 38 (relating to the Coimbatore region), TN 59 relating to Madurai and TN 72 relating to Tirunelveli region compared to other places of Tamil Nadu.

Next to that of TN registrations, I find more cars/bikes carrying KA (Karnataka) registration.

The below link gives you an idea of the entire list of RTO (Regional Transport Officers) districts in the country with the registration numbers applicable to particular city or town. Click here.

Do you have any similar very odd but funny habits?

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Mysore Cements – what I think about..

Posted on June 17, 2008. Filed under: Stock Ideas - Long term |

Recently read through the Annual Report of Mysore Cements. These are my initial impressions from report.
Mysore Cements is a SK Birla promoted company with a cement production capacity of 2.1 million tonnes across 3 production facilities in Karnataka, UP and MP. The SK Birla group has recently off-loaded its entire stake of 54.38% to Hiedelberg Cement Group of Germany. Now, Mysore Cements is a subsidary of Hiedelberg Group. The company is expanding its capacity to 5.9 million tonnes per annum subject to approvals from regulatory authorities. The Board of the company has been re-cast with the nominees from Hiedelberg group taking over the Birla held board positions. The company is merging Indorama cement and Hiedelberg Cement India P Ltd with itself w.e.f 01 April 2008.
The company follows Jan-Dec accounting year and for the y.e 31 Dec 2007, the total production of Cement and Clinker stood at 2.201 Million tonnes companred to 1.610 million tonnes for the y.e. 31 Dec 2006, implying a production increase of 36%. The net realisation per tonne of cement during 2007 stood at Rs3271 compared to Rs2954, again showing an upward bias in price realisation.

Positives:
1. The company revenue and profits have been raising continuously over the last 4 quarters. Of course, the cement cycle is doing good being the primary reason, the company’s association with Hiedelberg may be a positive in the long run. The net profit of the company has increased to Rs97.65 crores for the y.e 31-12-07 compared to the loss of 2.19 Rs34.31 crores in y.e. 31-12-06. For the quarter ended 31-03-08, the company has reported an EPS of Rs 2.59.
2. The company holds cash to the extent of Rs180.73 crores in the Balance sheet as at 31-12-07. This works to per share value of Rs11.43. The total market capitalisation of Mysore Cements at the current rate of Rs32 works out to Rs506 crores.
3. The company has generated cash of more than Rs.80 crores for the year ended 31.12.07.
4. The company holds 12 lakh shares of Cimmco Birla Ltd., in its books valued at Rs12 lakhs. The market price of Cimmco Birla is Rs25 per share and there is already a proposal of takeover by Titagarh Wagons. Since Cimmco Birla is under BIFR purview, the promoter company can not sell the stake now.
5. In addition to this, the company holds investments in listed entities which are valued clost to Rs2.50 crores. (As per the last balance sheet it was valued at Rs5.45 crores. Considering the erosion in value of securities over the last few months, I have reduced the market value of investments by more than 50% to Rs2.50 crores)
6. The company has accumulated losses of Rs269.83 crores in the books which will help the company to reduce the tax burden over the next couple of years.
7. The company is quoting at an attractive valuation of less than USD65 Economic Value per tonne compared to the industry average of USD105 per tonne.

8. The company has an expanding operating margin over the last 3-4 quarters.

Negatives:
1. Cement being a highly cyclical industry, the fortunes may swing wildly. The per tonne realisation may not be sustained, there can also be a drop in the demand for cement due to economy slowdown. The company may also face difficulty in managing rising input costs, in-adequate limestone mining facilities, coal availability and increasing railway freight charges.
2. The company being located in the hinterland, the exports may not be an viable option at all.
3. The accumulated losses to the extent of Rs269 crores will stop any dividend pay-out for the next couple of years atleast.
4. Increasing cement capacity across the industry leading to fall in price.

My take on this company:
The company looks interesting to me at this price of Rs32 considering its parentage. I am being very conservative in estimating the full year EPS to be around Rs7.50 (instead of Rs10 thats what you will get if you just annualise the first quarter ending 31 March’08). It is quoting at 4 PE but since it is a turn-around story and zero-debt company (very important in a rising interest rate scenario) it is destined to do better.

I would ideally look at a price of Rs45 over the next one year at the minimum for this scrip, which presents a possible upside of around 50% from the current price levels.

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Traffic on GST Road

Posted on June 16, 2008. Filed under: Chennai |

I have always had a feeling that the traffic on GST Road would be smooth and particularly so after the opening up of the Kathipara flyover (ofcourse, partially). I was in for a rude shock last thursday when I have to go to Chrompet to attend a marriage reception. Somehow I chose the MIOT hospital route from my home at Valasaravakkam to reach the Kathipara junction. That was the first mistake on that day. The road has been blocked near the Butt Road and was the vehicles are routed through an alternate route. That took more than 15 minutes from that point to reach Kathipara Junction. I felt a sigh of relief after reaching Kathipara Junction and started driving on the GST Road. The road was free and the traffic was flowing. Alas, that was only up till a kilometer or so before the airport. From that point onwards till we crossed Pallavaram, the traffic was chaotic and hardly moved few meters in a minute. It was really bumper to bumper traffic and finding space to drive was nerve-wrecking. It took almost 45 minutes for me to move from Meenambakkam and cross Pallavaram, all for a distance of 3-4 kms.

I was getting phobic with the traffic and my legs started paining having to use clutch, accelerator and brake almost every second. For good 3-4 kms, I could not see anything other than vehicles on both sides of the car. I had started at 7.00 PM from Valasaravakkam and reached Chrompet at 8.45 PM, a good one hour and 45 minutes for a distance of 12 kms. Lucky that the food was still available at the marriage reception!!

The biggest regret is that there is apparently no reason why there was such a slow-moving traffic. While driving, I thought there may be some accident or break-down in the middle of the road, which is causing the traffic to hold-up. But there is absolutely nothing of that sort and I later heard from people in Chrompet that the congestion during the peak hours is worst and it takes hours to cross Pallavaram and Meenambakkam. I really pity guys who have to drive on GST Road day in and day out.

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Times of India one year subscription offer is back again!!!

Posted on June 11, 2008. Filed under: Chennai |

Time of India, Chennai edition which was launched on April 14 this year has become a major hit, I guess. This was evident from the way the market leader “The Hindu” reacted to the new arrival. The Hindu went on an advertisement blitzkrieg taking over most of the bus stops, mobile advertisements on the bus etc., proclaiming that “Chennai wakes up to only The Hindu”. It also went a step further, very unusual, of The Hindu, that it actually reduced the price. But I think the agony is not over for The Hindu.

Times of India has re-launched the special introductory offer price of Rs299/- for one year. I came to know of it through FM Radio advertisements and I have today enrolled for one year scheme. There are couple of things which made me opt for this one year subscription:
1. Though I am die-hard The Hindu fan, we have been invariably buying TOI on a daily basis paying Rs2 or Rs3 per edition. May be for the novelty value and for the local news coverage.
2. The other thing which caught my attention was the re-sale value of TOI. You may not believe it but it is true that TOI got me 75 paise for a day’s paper. The per day cost works out to 0.81 paise and you get back 75 paise, resulting in a net outflow of 0.06 paise a day. Not a bad bargain, I guess.

To subscribe for Times of India, call 044-24317979. They will take down your number and a marketing executive will come to your home to take the money and give you a travel bag as well. The paper delivery will start from the 5th day from the day you call up the Times of India number.

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Due dates and relevant forms for tax filing

Posted on June 10, 2008. Filed under: General |

The due date for filing income tax returns is fast approaching for various kinds of assessess. The following are the various types of Income Tax Return Forms which needs to be used by assessees for filing their return of income for the Assessment Year 2008-09 (Financial year ending 31 March 2008).
ITR 1 – For Individuals having Income from Salary/ Pension/ family pension & Interest
ITR 2 – For Individuals and HUFs not having Income from Business or Profession
ITR 3 – For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
ITR 4 – For individuals & HUFs having income from a proprietary business or profession
ITR 5 – For firms, AOPs and BOIs

The due dates for filing return of income is as givine below:

I Where the assessee is a Company – 31st October of the Assessment year.
II Where the assessee is a person other than a company :-
a) where accounts of the assessee are to be Audited or 2.a working partner of a firm whose accounts are required to be audited under the Income Tax Act or any other law – 31st October of the Assessment Year.
b) Where the return has to be filed under the one-by-six criteria – 31st October of the Assessment Year.
c) Any other assessee – 31st July of the Assessment Year
For the salaried employees the due date for filing return of income is 31 July 2008.

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Poll on Fuel price increase

Posted on June 6, 2008. Filed under: Poll |

A new poll has been commissioned to find out the popular opinion on the recent fuel price increase by the Central Government.

Question: What do you think is the right way for the Central Government to handle the global crude price increase?

Answer options:
1. Increase the price to consumers
2. Reduce the Central Government taxes
3. Ask State Governments to reduce taxes

Want to vote? Log in to www.venkateswaran75.blogspot.com and cast your vote. Your opinion counts!!

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Two books I read recently

Posted on June 5, 2008. Filed under: Books |

Couple of books which I read recently are “The Namesake” by Jhumpa Lahiri and “If God was a Banker” by Ravi Subramanian. Both the books are real good reads and I enjoyed reading them. The novel by Jhumpa Lahiri has been made as a film as well, it seems.

While reading these books, I realised that I tend to read it in one go if it really appeals to me. Else, I leave it half-way or read it in bits and pieces always wondering where did I last stop. I guess that should the habit of many other people as well. I should say I read both the books in one go. It made me to be awake till very late in the night for couple of days. I cant just keep the book down and wait for the next morning to start again.

“The Namesake” is based on a story of an young Indian student going to US for pursuing his higher studies and settles there to raise a family. The story revolves around the emotional struggle faced by him and his wife living in an alien land through out their adult life. Though they are in US for most part of their adult life, they still consider India as their homeland and feels attached to them. Very natural! The second part of the story is about their children, primarily their son, Gogol, born and brought up in US. How the second generation US born Indians look at their life, their priorities and preferences, their attitude towards India and fellow Indians were beautifully bought out. I could easily relate the life situations narrated in the novel and empathise with the characters. The flow was very good and the presentation was neat. Good book and enjoyed it to the last word.

The next one, “If God was a banker”, is a story about the lives of modern day bankers, who are ambitious and aggressive. The novel revolves around two young IIM graduates, Swami and Sandeep, who enter a Multi-national bank to pursue their careers. Both of them raise the corporate ladder but of course following two entirely different approaches. Swami, a South Indian Tam-Brahm, is portrayed as hard-working, ethical and intelligent whereas the other character, Sandeep grows using dubious ways. Since I have a first hand information of how competitive the entire banking industry has become for the employees, I was glued on to the novel. Of course, at times it looks like few of the situations as cliched but on retrospect thats how it happens in real life as well. Though the novel is an imaginary one, as the author claims (the author Ravi Subramanian is a IIM graduate currently working in a MNC Bank in their retail banking operations) it is rumoured that it has a close resembelance to real life story.

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