Monday, March 29, 2010

BASF Ciba Merger - Good for shareholders?

BASF, the parent company of BASF India, announced on 15 September 2008 its intention to acquire Ciba Holdings AG, the parent company of Ciba India. Ciba India, informed about the public tender offer of BASF for shares of Ciba Holdings AG on 31 March 2009. BASF completed its acquisition of Ciba Holdings AG on 9 April 2009. On 11 April, BASF announced an open offer to acquire 20% shares of Ciba India at INR 237.13. The offer started on June 4, 2009 and ended on June 23, 2009. BASF was able to gather only 2.12% (281,584) more shares instead of 20% (2,656,164) that it offered to acquire. On September 7, 2009, both the companies, BASF India and Ciba India, announced to meet on September 12, 2009 for amalgamation. The share swap ratio was announced on September 14, 2009 where shareholders of Ciba India will get 90 shares of BASF India for every 100 shares held and shareholders of Ciba Research India will get 18 shares of BASF India for every 100 shares held.

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Thursday, March 25, 2010

Anybody willing to marry Greenspan?

This clearly is fun. I have added some keyword ads on my blog and thought I would earn something from it. But it seems that the following image completely rules out any possibility of that happening:

Why would specify Greenspan as one of the keywords to show their ad is not something that I can understand!!!
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Wednesday, March 24, 2010

Some more pain

Extending my previous post, following are some more charts of stock prices of some companies over the last three years:

The first one is from Subex Systems and the second one is of Northgate Technologies.

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Tuesday, March 23, 2010

When will this end?

I am talking about the fall in prices of shares of Cranes Software. Here is the chart for the last three years:

The company's share price touched an all time high of INR 174 in December 2007, at the peak of the then ongoing bull market. The last closing price on 22 March 2010 was INR 16.9, a correction of more than 90% from top. The share price was trading around INR 35 in March 2009 when the Sensex bottomed. Thus it has lost 50% more after the Sensex bottomed.

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Friday, March 5, 2010

Why is this company so richly valued?

Recently, there was a change in BSE500 Index. A new company Shree Global Tradefin Limited was introduced in BSE500 Index. I was surprised, since I had never heard the name of the company. After looking at some of the data, I found that the company's market cap is around INR 5000 Crore, i.e. $1.1 billion. That's more than that of BEML or Britannia. The company's revenue last year was around INR 310 Crore, i.e. $70 million. and profits are almost NIL. Till FY2005, the company didn't have any revenue at all. The company's total revenue was less than INR 100 Crore till FY2007. The company in the last ten years haven't paid any dividend. The company's website is still under construction.

The company's equity capital till March 2005 was INR 205.81 Crore consisting of 20.581 Crore shares of INR 10 each. In FY2006, the company reduced its share capital by half and it became INR 102.905 Crore consisting of 20.581 Crore shares of INR 5 each. Since the share price is around INR 240, the market cap comes to INR 5000 Crore.

Strange case!!! Is SEBI listening?
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Did everybody make money last year?

The Sensex closed on 9 March 2009 at 8160.4 and yesterday at 16971.7, a gain of around 108% in less than a year. Has every investor made profit? Following table gives a list of some companies who made their investors cry:

Company NameClosing Price 9-March-2009Closing Price 4-March-2010Return
Cranes Software38.719.8-48.84%
Tata Communications409.75290.7-29.26%

Many advisors on CNBC were saying at that time to buy anything and you are bound to make money. The investors who bought these shares didn't make money.
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Graham's advice to Retailers

We have seen the death of three retailers in India over the last two years, Subhiksha, Vishal Retail and Pyramid. Pyramid was acquired by Indiabulls and so it didn't face a death but we can say it got bailed out. The father of value investing in his 1934 edition of Security Analysis had following to say:

The chain-store grocery trade contained within itself many elements of relative stability, such as stable demand, diversified locations, and rapid inventory turnover. A typical large unit in this field, provided only it abstained from reckless expansion policies, was not likely to suffer tremendous fluctuations in its earnings.

Alas!!! People would listen to what others have said in the past!!!!
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Tuesday, March 2, 2010

Indian Budget 2010-11

Indian Budget for the year 2010-11 was released on 26th February by Finance ministry. Besides the annual financial statement of Indian Government, there is a lot of statistical data available in the documents annexed to the budget.

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