Vijay Shanthi Builders Ltd

BSE Code: 523724

CMP: Rs.18.87

Book Value: Rs.42.69

EPS: Rs.3.62

P/E: 4.94

Industry P/E: 17.63

Market Cap: Rs.46.80 Cr

Dividend Yield: 4.48%

Target: Rs.32-38

Time: 2-4 months.

Medium Term Target: Rs.47-54

Introduction: Vijay Shanthi Builders Limited was started in 1977 as a partnership firm in the name of Shri Shanthi Constructions by Late Mr. V. C. Jain. In its aspiration of creating a “home for all”, Vijay Shanthi went public in January 1992 with an IPO of Rs.65.5 million and is listed on the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and Madras Stock Exchange (MSE).
Vijay Shanthi Builders Limited is engaged in Property Development mainly of Promotion of residential spaces in and around Chennai. VSBL is known for its excellence in quality of Homes with a delivery of clear title, on time and without cost escalations, along with necessary completion certificates from the regulatory authorities. VSBL gives guarantee for its homes, is transparent in its area calculation and provides maximum plinth area. VSBL is included in the panel of approved builders of south Indian bank, Kotak. HDFC, LIC Home Finance, ICICI Bank, IDBI Bank, SBI and other such reputed institutions. Vijay Shanthi Builders Ltd is also known to offer luxury apartments at affordable prices to discerning citizens. The Company currently has several projects under implementation and continues to explore newer opportunities. To rewind, a couple of years back; it merged High End Homes Private Limited into itself. Pursuant to this, the Company issued one equity share of Rs.10 each fully paid up, for every three equity shares held by the Shareholders in High End Homes Private Limited.

The Company used to run a mineral water plant in the name of Vijay Shanthi. However, considering miniscule contribution (0.83%) of this segment to its top line, the Board of Directors had proposed to exit the Company from mineral water business from the FY11-12. As the assets deployed by the Company to this segment are very less, this decision would not involve any substantial sale / dilution in the value of assets of the Company.  It was in 2003 when Vijay Shanthi Builders started engaging in premium segment. It is probably the first company in this space in Chennai, to make a foray into this segment  and to come up with the concept of lifestyle premium homes, complete with theme, concept planning and high end amenities. Its elite homes boasted personalized lifts, mammoth open spaces, the finest gyms, spas and more. It has also ventured into villa housing concepts. Vijay Shanthi has been an Award Winning Company. It has been awarded by CREDAI and CRISIL in the years 2008 and 2009 respectively. Vijay Shanthi Builders Ltd has touched the lives of over 10000 happy families and has created some of the most finely crafted and contemporary homes in South India, covering a built up area of over to 50 lakhs square feet. It has already completed about 275 projects and is still counting. 

Shareholding Pattern: The promoters hold 66.89% while the general public holds 33.11%. Thus the company has the controlling stake which helps in taking fast decisions.

Financials: For FY12, the company came out with flat net profit even in a high interest rate regime. The total income of the company for FY12, came out to be Rs.210.78 Cr as against Rs.136.40 Cr in the same period previous year. The PBDT of the company is Rs.14.50 Cr in FY12 as against Rs.12.60 Cr in FY11. The net profit of the company came out to be flat at Rs.9.47 Cr as against Rs.9.50 Cr in the same period previous year. The EPS of the company remained flat at Rs.3.62 in FY12 as against Rs.3.63 in the same period previous year. The fall in net profit in FY12 is basically due to higher depreciation, tax component, and interest outgo. Meanwhile, the reserves of the company increased to Rs.83.17 Cr in FY12 as against Rs.76.14 Cr in the same period previous year. The book value of the shares also improved to Rs.42.69 from earlier, Rs.39.07.

Triggers:

(i) The demand for Housing continues to increase as ever, though the increase in lending rates by the Banks affected the off-take of home loans to a large extent, during the last few months. However, now with the RBI going in for the CRR cut, followed by an interest cut, we can look forwards for a softer interest rate regime in the coming days. The company is confident that with completion of various residential projects in the coming months, both its top and bottomlines, are set to witness a substantial increase.

(ii) Following are the on-going projects of Vijay Shanthi Builders Limited, which are expected to be revenue accretive in the coming days:

Project Name                                        Location

Lotus Pond                                                               Thaiyur

Infiniti                                                                     Mevalurkuppam

Park Avenue (Phase I)                                              Kandigai

Boulevord                                                                 Kandigai

Silent Valley                                                            Tambaram

Mystiq                                                                     Purasawalkam

The Art                                                                   Nunganbakkam

(iii) Vijay Shanthi Builders Limited has a land holding of 5507795 sq. ft (approx.) which is valued at Rs.1878 crores (approx). This shows the real potential of the company, in terms of value creation for the shareholders.

(iv) The futures projects are the following:

Project	Name of the Location	Total Saleable Area
Serene	Perungudi	48000 sq. ft.
Aurum	Besant Nagar	85000 sq. ft.
Whistling Woods	NH4-Bangalore Highway	700000 sq. ft.
Calm Springs	Ratnamangalam Vandalur–             Kelambakkam	1500000 sq. ft.
Eternal Springs	Ambattur	500000 sq. ft.

(v) The Company’s projects are currently located in Chennai, Tamil Nadu only. Since Chennai has a lot of scope and potential, the Company plans to exploit all the opportunities provided by the city to the fullest. In the future the company might think of moving to other locations. (vi) The Company is in the process of completing and handing over around 800 apartments constituting more than 8 lacs Sq.ft. of constructed space during the first quarter of the Finance year 2012—13 (FY13) and further expect to complete and handover nearly 7 lacs Sq. Ft. constructed space during the subsequent quarter. This trigger alone can take the scrip to over Rs.50 price band. (vii) The Company is consistently paying dividend to its shareholders, since the last 7 years.  Vijay Shanthi Builders Ltd informed that the Board of Directors of the Company at its meeting held on May 30, 2012, inter alia, has recommended the dividend of Re. 0.80 per equity Share for the financial year 2011-2012, (Face Value of equity share is Rs. 10). Due to the Company’s superb performance it has been ranked among the TOP 400 SMALL CAP CORPORATES OF INDIA in Dalal Street Journal's widely circulated and read "SMALLCAP 400, 2011".  Vijay Shanthi builders are the leaders of the High end segment projects and have been conferred  with the prestigious “ACCOLADES OF EXCELLENCE” – India’s Best Residential Project  award for their Unique project  “PATIO” from CNBC & CRISIL. A rare Honour reserved for a select few in the real estate industry. It’s the first and only home in Chennai to have been bestowed with this special privilege.

Conclusion: The scrip is looking good on the charts and is about to give a breakout above Rs.18.20, which is expected to cross easily as the momentum is very strong.  Considering all the factors mentioned above, investors can go in for the scrip, at the CMP of Rs.18.87, for a price target of Rs.32-38, in the next 2-4 months time frame. Moreover, a decent P/E rating of 10 can also take the scrip to around Rs.37-38 in the coming days. The worst is over for the sector, as the rate cut by the RBI is imminent in the next policy meet as the inflation is expected to come down. 

Disclaimer: Though due care has been taken while preparing this report but no responsibility will be assumed by the author for the consequences what so ever, resulting out of acting on the recommendation or after reading the report.

The call made herein is for informational purposes and is not a recommendation to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness is not guaranteed. The author does not accept any liability for the use of this column for buying and selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his acquaintances, his company or his family members may or may not have positions in the Scrip mentioned in this column. Investors should take their own decisions while buying and  selling the shares/securities

Reliance Power: Superb Future Ahead

Commissioning triggers ahead; Reiterate Buy

CMP: Rs.108.35
Target: Rs.135--160
Time: 2--6 months

4Q12 (4th Quarter of FY12) reported PAT of Rs.2.3bn, in line with the estimates at PAT level; Other income reported below expectations but impact was offset by negative tax provisioning. 

• (1) Rosa fully commissioned, (2) Sasan mine production in 2Q13, (3) Butibori unit#1 in Jun’12, (4) JORC study completed for Indo mines & (5) boiler hydro test done for Sasan unit#1. For more details on Power Projects, please CLICK HERE.
• Building strength - (1) huge cheap captive coal, (2) merchant capacity in captive coal plants only, (3) plants near load centers (PoC), (4) minimizing cost of capital & (5) low to reasonable tariffs - offtake and payment risk minimized.
• Solidity & positive triggers ignored with stock at around 30% discount to fair value. Foresee RPWR as most sustainable private power utility; Reiterate ‘Buy’ with TP of Rs.155/Share.

Recent Triggers:

(i) Sentimental effect of the 26% hike in power tariff by Delhi Electricity Regulatory Commission effective July. 

(ii) PMO directs environment ministry to grant clearances to 12 projects with 10 MT additional output.

As the country battles coal shortage, the Prime Minister's Office [PMO] on Friday sought to give a push to its production by directing the environment ministry to grant clearances to 12 projects which would lead to an additional output of 10 million tonnes per year. The PMO took stock of the coal production at a meeting attended by representatives of the ministries of coal, power and environment and forest besides the officials of the Coal India Limited [CIL].

The meeting specifically reviewed the status of 12 projects of the CIL which are proposed to increase production by 25 per cent.

At the meeting, it was decided that these projects should be given clearances by the environment ministry within 3-4 month. These are expected to yield additional 10 million tonnes of coal every year. The progress in the matter will be monitored on a monthly basis by the PMO, the sources said. The push comes at a time when the demand and supply gap of coal is expected to touch 200 million tonnes by 2016-17 after crossing the 161.5 million tonnes mark last fiscal. This has severely affected the power sector.

(iii) Against the backdrop of the PMO asking Coal India Ltd (CIL) to sign pacts with power firms, assuring a minimum supply of 65% of the total coal committed to them, the PSU's board will meet on 10th July, 2012 to finalize various issues, including changes in the penalty clause of new model FSAs. CIL has been directed by PMO to provide assured supply of 65% for the first three years of the FSAs, instead of 80% directed by it earlier in April. But in the fourth year, the assured supply has to increase to 72%, followed by 80% in the fifth year of the agreements. CIL, which missed the revised production target last fiscal and produced 435 million tonnes of coal, has set a production target of 464 MT for 2012-13.

(iv) The detailed exploration of 54 coal mines to be allocated, both through the auction and the government dispensation routes, is likely to begin in the next two months. Of these 54 mines, a maximum of 16 have been earmarked for the power sector, 12 for the steel sector, 12 for government firms, 7 for the cement sector, 5 for sponge iron and 2 for surface gasification.

(iv) Amid the People's Bank of China's July 5, 2012 decision to lower key interest rates, the market expects the consumer price index (CPI) for June to reflect a faster fall, to as low as 2%. This suggests that China may be moving beyond the era of negative interest rates (when the rate of inflation outstrips that of saving). Commodity prices are continuing to fall and the growth rate in prices in June is expected to fall to 2.5%, according to Guo Tianyong, director of a banking research center at Central University of Finance and Economics in Beijing. The People's Bank of China said it would cut the one-year renminbi lending rate by 31 basis points, to 6%, effective July 6, expecting borrowing to become more attractive. India could follow the suit, with a positive effect on the overall equity markets. 

(v) The government is likely to exempt companies from paying customs duty on equipment imported for mega power plants and for which the orders have already been placed. A person in the know of the proposal said the exemption was beign planed to ensure projects that had mega status continued to get the inventive since they had already placed orders and signed power purchase agreements with the distribution companies. 
(vi) The recent power sector reforms aims at resolving near-term issues through rationalization of capacity additions and coal supplies. While the government is working on the modalities to resolve the structural issues such as expediting environmental clearances, improving evacuation infrastructure (mostly rail) and implementing power distribution reforms.
(vii) “Overall, although near-term volatility may continue, we think it is a good time to look at the sector. We believe power sector stocks are at an interesting level for longer-term investors. A reasonable mix of defensive companies and more volatile names provides the best positioning, in our view,” UBS Investment Research said in report.
(viii) RNRL-led consortium (RNRL, RELINFRA, Geopetrol and NaftoGaz) won one oil and gas block in the state of Mizoram and received the letter of award on February 12, 2007. The Company signed a contract with the Government of India on March 2, 2007 for exploration and production of Oil and Gas block having acreage of 3,619 Sq. Kms. Petroleum Exploration License (PEL) was notified by the Government of Mizoram on November 20, 2007. The Company has completed environmental impact assessment studies, geochemical studies and geological studies in line with the work commitment.
(ix) Carbon Credits: 
(a) Sasan Ultra Mega Power Project( UMPP): Sasan Power, implementing the 3,960 MW super-critical technology based power plant, in Singrauli district in Madhya Pradesh, India, is the world’s largest power generation plant ever registered with CDM-EB under United Nations Framework Convention on Climate Change since its inception. It is also the first Ultra Mega Power Project, in India, to be registered with the CDM-EB.  Sasan Power would reduce 2.24 million tonnes of CO2 per year (approximately).This emission reduction effort entitles the project to earn approximately 22.4 million carbon credits during its first ten years of operation. 
(b) Krishnapatnam Ultra Mega Power Project( UMPP): Coastal Andhra Power, implementing the 3,960 MW super-critical technology based power plant, in Potti Sri Ramulu Nellore district in Andhra Pradesh,has become the second UMPP to get  approval for carbon credits from United Nations Framework Convention on Climate change.  Coastal Andhra Power would reduce 1.23 million tonnes of CO2 per year (approximately),an effort that entitles Coastal Andhra Power to earn approximately 12.3 million carbon credits during its first ten years of operation. 
(c) Jharkhand Integrated Power Ltd: Jharkhand Integrated Power, implementing the 3,960 MW super-critical technology based power plant, in Hazaribagh District, Jharkhand, India, has become the third UMPP to get approval for carbon credits from United Nations Framework Convention on Climate change. Jharkhand Integrated Power would reduce 2.13 million tonnes of CO2 per year,an effort that would  earn 21.3million carbon credits for Jharkhand Integrated Power during its initial ten years of operation. 
(d) Samalkot Power Ltd: Samalkot Power, implementing the 2,460 MW natural gas based power plant, in East Godavari district, Andhra Pradesh. The project is currently under validation. Samalkot Power, being implemented in three CDM phases/blocks reduces approximately 5.55 Million tonnes of CO2 per year in comparison to baseline. This would entitle Samalkot Power to approximately 55.5 Million Carbon credits during its first ten years of operation, enabling it to become the world largest generator of carbon credits in the world. 
(e) Rajasthan Sun Technique Energy Private Ltd: Rajasthan Sun Technique is developing a large-scale solar power project in Jaisalmer district, Rajasthan. Validation of the project is currently underway.  Rajasthan Sun Technique would reduce 266,169 tonnes of CO2 per year (conservatively) in comparison to baseline. This would entitle Rajasthan Sun Technique to approximately 2.6 million carbon credits during its initial ten years of operation. 
(f) Reliance Cleantech Private Ltd: Reliance Clean Technique is developing a large scale  solar power project in Jaisalmer district,Rajasthan. Validation of the project is currently under progress. This would entitle Reliance Cleantech to approximately 3.7 million carbon credits during its initial ten years of operation.
(g) Dahanu Solar  Private Ltd: Rajasthan Sun Techinque  is developing a large scale solar photovoltaic (PV) power project in  Jaisalmer district, Rajasthan. Validation of  the project is currently underway. The Project would result in 153,717 tonnes of CO2 reduction per year (conservatively) in comparison to baseline.This would entitle Rajasthan Sun technique to approximately 1.53  million carbon credits during its intial ten years of operation.
(x) Renewable Energy: Reliance Power Ltd is developing a 40 MW solar photovoltaic project, India's largest such project , in Pokharan, Rajasthan which is expected to be commissioned by Q2FY13. This will be followed by a 100 MW solar thermal project at the same location which is expected to be commissioned by May 2013. It is also developing a 200 MW wind project in Vashpet, Maharashtra. The company has around 94 MW of operational wind farms within the Group. Reliance Power Ltd has finalized plans to develop 5,292 MW of hydroelectric power projects which are at various stages of development. It has also identified locations for setting up of wind and solar based capacities which would take its total renewable capacities to 1,000 MW. The company expects that, of its total energy portfolio as much as 10 (ten) percent will come from renewable energy capacities.
(xi) Fuel Business: The company has developed a portfolio of power projects utilizing a variety of fuel sources. Presently it is developing more than 18,000 MW of coal-fired capacity using domestic and imported coal, 8,000 MW of gas-fired capacity and 4,620 MW of hydroelectric capacity. 
##Sasan Coal Mines: The Government of India had allocated Moher, Moher–Amroli extension and Chhatrasal coal mines in the Singrauli coalfields to Sasan Power Limited, the company developing Sasan Ultra Mega Power Project. The allocation was made in the year 2006. Sasan Power Limited was transferred to the company in the year 2007. Subsequent to the transfer, the company along with the strategic partner North American Coal Corporation Limited developed a detailed mine plan for the Sasan coal mines. North American Coal Corporation Limited, the strategic partner for developing and operating coal mines, is an American coal mining and mining services company and ranks as America’s largest lignite coal producer.
According to the mine plans prepared by the company for these mines, the aggregate coal reserves of these mines are around 700 MT with a production level of 25 mtpa. The average stripping ratio of the mines would be 4 with an average calorific value of the coal would be around 4600 kcal. The Moher and Moher–Amroli and Chhatrasal coal mines are approximately 20 km from the Sasan project and 40 Km from the Chitrangi project. On commencement of production, the company will be the largest coal mining company in the private sector in the country. In order to produce coal from these mines in the most productive and cost-efficient manner, the company evaluated coal mining equipments from reputed vendors from different countries. The company would be procuring the best-in-class and large capacity coal mining equipments such as Draglines, Shovels, Dumpers from the most reputed companies in the world. The productivity being targeted with these equipments would be the best in the country and the company would seek to benchmark its productivity with the best coal producers in the world. Along with its strategic partner, the company has put in place a coal mining team capable of implementing these plans. The team is lead by very experienced coal mining professional who had developed and operated coal mines in the same area. The other members of the team too are people having rich experience of developing and operating coal mines. The experienced management team is supported by other young coal mining professionals who are also being trained in the deployment of the high quality equipments being procured for the project.
## Tilaiya Coal Mines: The Government of India has allocated Kerandari ‘B’ and ‘C’ coal blocks in North Karanpura coal fields the state of Jharkhand to Jharkhand Integrated Power Company Limited which is developing Tilaiya Ultra Mega Power Project. The allocation was made in the year 2007. Jharkhand Integrated Power Limited was transferred to the company in the year 2009. Subsequent to the transfer, the company along with the strategic partner North American Coal Corporation Limited developed a detailed mine plan for the Tilaiya coal mines. According to the mine plans prepared by the company for these mines which have been submitted for approval to the Ministry of Coal, Government of India, the aggregate coal reserves of these mines are around 1.3 billion tonees and the mine plans envisage a production level of 40 mtpa. The Tilaiya coal mines are approximately 100 kms from the Tilaiya project. The production of coal from these mines are being planned such that tit meets the coal requirements of the Tilaiya power project, On commencement of production, the company will be the largest coal mining company in the private sector in the country.
## Coal Mines in Indonesia: The company is developing the 3,960 MW Krishnapatnam Ultra Mega Power Project which would be using imported coal. To supply coal for this project the company, through its subsidiary – Reliance Coal Resources Private Limited – has acquired 100% economic interest in two coal companies in Indonesia which own three coal mines in Indonesia. These coal mines are located in South Sumatra in Indonesia. The company has evaluated these mines and they have significant resource potential which can support coal production which will not only meet the requirements of Krishnapatnam, but additional capacities also. The coal mines in Indonesia are located at an average distance of around 200 km from the nearest port in Bengkulu. We are planning to develop coal mines such that they commence production in time to meet the requirements of the Krishnapatnam project. The company is planning to develop the railway infrastructure facilities for transporting the coal from the mines to the port in Indonesia. The coal from the Indonesian port would be transported through ships to the Krishnapatnam port. The tie-up for shipping logistics is under finalization.
## Coal Bed Methane: Coal Bed Methane is a natural gas absorbed in coal and lignite seams and is an eco-friendly source of energy. Coal is both the source and reservoir rock for CBM. CBM production is done by simple depressurization and dewatering process. To harness this new source of energy in the country, the Government approved a comprehensive CBM policy in July, 1997 for exploration and production of CBM gas
In the year 2006 an RNRL-led Consortium won four CBM blocks in CBM III round, having an acreage of 3,251 sq. kms. The CBM blocks are located in Madhya Pradesh (one Block), Andhra Pradesh (one Block) and Rajasthan (two Blocks). After signing the contracts for all four blocks with the Government of India on November 7, 2006, the Company has obtained Petroleum Exploration Licence (PEL) for three of the blocks in MP and Rajasthan. The consortium has completed the Environment Impact Assessment study, geological and remote sensing studies in all the four blocks. Preliminary geological assessment has also been completed. The core hole drilling and testing is expected to commence soon. For more details please CLICK HERE.

References: 

(i) Millenniumpost

(ii) www.dnaindia.com

(iii) www.moneycontrol.com
(iv) www.wantchinatimes.com
(vi) http://www.reliancepower.co.in
(vii) Emkay Global Financial Services Ltd
Disclaimer: I do not hold any position in any of the Power Companies listed in BSE/NSE, including Reliance Power Ltd. But my clients could be having positions in the Power Sector. This is just a follow on report on Reliance Power and the Power Sector in general. 

Buy Reliance Power Ltd

CMP: Rs.106.20, 

Target: Rs.135-160

Time: 2 to 6 months

Reliance Power, a part of Reliance Group has the largest portfolio of power projects in the private sector based on coal, gas, hydro and renewable energy, with an operating portfolio of 1540 megawatts. 

Reliance Power Ltd is a huge company and according to Wikipedia: "Along with its subsidiaries, it is presently developing 13 medium and large-sized power projects with a combined planned installed capacity of 33,480 MW". 

Moreover, another point which many might have over looked is that: Reliance Natural Resources was merged with Reliance Power in 2010, shortly after its initial public offering---so it is basically two companies merged into one company. So, doesn't it look attractive at the CMP of Rs.106.20. 

If you remember the upper cut off price for the bid in its IPO (Indian Public Offering) was Rs. 450. You are getting the same share after more than  4 years at almost 1/4th (One fourth), the IPO price. Isn't it an amazing offer..??!!

According to Wikipedia: "On January 15, 2008, the company attracted $27.5 billion of bids on the first day of its initial public offering (IPO), equivalent to 10.5 times the stock on offer, thereby, creating India's IPO record. The upper cut off price for the bid was Rs.450. The proposed IPO was to fund the development of its six power projects across the country whose completion dates are scheduled from December 2009 to March 2014". 

Besides this, after being hit by many negatives in the last few years, there seem to be emerging some positives for the power sector. 
Recently a tariff hike was implemented in states like West Bengal, Tamil Nadu, Delhi, etc and it is believed that a few other states will also follow suit. The PMO’s office, coal ministry and the power ministry also seem to be very serious about resolving the power crisis situation in the country. And although coal production has not shown any overnight increase, the government has asked the coal ministry to de-allocate the private sector coal blocks and give them to Coal India. Besides, it has asked Coal India to appoint mine developers and operators (MDOs) in order to expedite coal production from these mines. On the international front the coal prices have cooled off. The demand for coal has declined a bit, as reflected in the coal prices. The Indonesian coal reference price in the last one year has come down by 14%. And  and there is mixed opinion about whether the coal prices will down any further from here on. The cooling of the international coal prices looks good for the Indian power sector which has some of the companies importing coal from Indonesia.

Also, the coal prices in other countries such as Australia, South Africa, etc have also shown a significant decline. The fall in the coal prices can be attributed to the over-supply situation created due to the availability of cheap natural gas. The U.S. has been replacing coal with cheap natural gas. Besides, the fall in industrial activity in many countries has also helped the coal prices show correction of between 20-30% in one year’s time. The slowdown in the Chinese economy has resulted in lower coal consumption and thus the Indonesian coal prices have shown a decline.

The situation should look good for sectors dependent on coal, such as power, steel and cement, especially in the view of rupee appreciating sharply against the USD in the last few days. Therefore, there would be good impact on the profits of the companies in the power sector, due to cooling off of the international coal prices. Therefore, buy the scrip of Reliance Power Ltd, like a bank Fixed Deposit and keep holding. I am expecting the scrip to cross Rs.135, within the next couple of months time frame. Today, the scrip closed at Rs.106.20. 

Suzlon Energy Ltd

Suzlon Energy Ltd was asked to be accumulated around Rs.17.50--18, after studying its improving fundamentals. Today it seems the scrip has given signs of a break out.

Off late the company has regained some of its faded glory in the international arena.

Suzlon Energy is a leading manufacturer and supplier of wind turbines. Having acquired German wind turbine manufacturer REpower's business in the recent past, the company now has a strong presence in the international market, especially in Europe. However, the acquisition has also significantly pushed up debt on its books.

If Suzlon has any thing to cheer about today, it is probably its order book position. Suzlon Energy's order backlog as at March 2012 stood at a healthy Rs.41,500 crore.

This is nearly double its net revenue of over Rs.21,000 crore for FY12. The company's top line of over Rs.21,000 crore for the year 2012 is an increase of 18% over the previous year. It has also reported a healthy increase in its operating profits for the year as compared to the previous two years resulting in a significant improvement in its operating margins from 2% to over 5%. 

Given the healthy order backlog, the company has guided for a revenue growth of 33% and an operating margin of about 6% for FY13. 

Suzlon Ltd's scrip has lost around 200% of its value in the past one year and it currently trades at around Rs.18.10 against over Rs.55 until a year ago. The worst is probably over for the company and the scrip has a limited downside, as it trades near its all time low. I therefore,  see no reason why the scrip should not trade above Rs.30, in the short term. 

Prajay Engineers Ltd: Shamelss Promoters & Cooked up Results

Prajay Engineers Sydicate Ltd is a listed entry in Bombay Stock Exchange, but it seems the promoters think it to be their own properties. It has been presenting (probably) cooked up results, quarter after quarters, in full view of the regulators, who are like statutes. Now while the directors are enjoying most of the benefits of the mango, the shareholders are given the seed of the mango, to suck. Very unfortunate!! These people have no shame at all, as they go on declaring projects after projects, with all profits probably sucked by the dishonest management.

The company has an unending appetite of doing projects and making money from them, but then on the books the profits are few lakhs and even losses. 

It has huge land holdings, but then for shareholders it is all cipher--no use, as no one knows where the company's lands are....because it does not have a habit of disclosing the details to the stock exchanges, probably because of their feudal mentality!! The good will of the Hyderabad based companies have been long lost after the "Satyam Computer Fiasco", some years back, and it is one of those time bombs waiting to burst, if the regulators do not become strict. 

If we analyze the results of the company since last 5 quarters (more than one  year), we would find that, the net profits in any quarter have never crossed Rs.6 lakhs. Also, during the last 5 quarters the revenues of the company have never crossed Rs.40 Cr. In Q4FY12, I think we have seen the height of imaginary results. On a turnover of Rs.28.17 Cr, the expenditure is whooping Rs.27.60 Cr. And hold your breadth the net loss is Rs.5.55 Cr!! Now there there is no end to the manipulation: The NPM speaking on the basis of Q-o-Q comes down from (-) 1.75% in Q4FY11 to (-) 19.72% in Q4FY14. Simply a joke!! Have you heard such fluctuation in good listed companies? But it can happen even worse if the dishonest promoters are given a free hand on the things (who do not even  have the controlling stake in the company according to the latest figures presented on the site of BSE). 

The question now is: Is the company running any charitable institution? Or is it running a listed company? Even a good Kirana (Retail shops) Shop in Bombay has an average net profits of few lakhs in a quarter and mind that this is BSE listed company, having an asset base of few crores and doing projects worth crores. Hilarious but sad for the poor shareholders, who have seen their wealth plummet almost 100 times when the shares of Prajay Engineers Syndicate Ltd were quoting around (its peak level) Rs.480 plus to the CMP of around Rs.5.68. The promoters probably think all the investors are jerks and morons that they can do whatever they like. Last time, I took on the management of Jamna Auto Ltd and you must have seen how the company performed after that.....the shareholders need to be outspoken and vigilant---or else these crows will suck every penny from their pocket.

Anyway, the tragedy for the shareholders does not end here. No one knows what projects the company is doing or the progress of the projects. The company's website is almost defunct. I have been told by one of the sources that the website is being maintained from Bangalore, and soon it will be uploaded--don't know when. The word, "Soon" can denote 5 years also, if the promoters are greedy and dishonest.
Meanwhile, the greedy promoters who only have 23.63% of the stake in the company have pledged around 28.90% shares, may be for working capital requirements. The greed for making money to fill their coffers does not end here, as it is going hammer and tongues, project after project. The company has land in Hyderabad and Vizag, and according to the sources, the company is doing projects there too......Huh!! I am hearing this since the last couple of years, but do not know what is the current status of the projects--or all these are to pacify the angry shareholders!!!!!!!!!!

Moreover, the question is: can they be called projects or making of "Dharma Shalas" if on a turnover of Rs.38.83 Cr (Q4FY11), the company has expenditure of Rs.30.55 Cr or PBDT is only Rs.4.57 Cr. Suddenly the provisions for taxation becomes Rs.4.17 Cr. This year (Q4FY12) it is even worst--the tax component shooting more than 10%, Y-o-Y. 

All these are going on quarter after quarter, while the regulator/s is/are looking on the other side. There has been no attempt to pull the auditor of Prajay Engineers Syndicate Ltd, who is also probably a party to all these mischievous and wrong doings--a "Sham", profit and loss A/C is being presented quarter after quarter....as the share price drops, day after day....

Now when a Satyam Computer Ltd like thing will happen, suddenly the regulators will wake up from dream and start sending out all sorts of gimmick filled statements, like they did in case of Pyramid Saimira Theaters Ltd (PSTL). The promoter of PSTL is still at large while no one knows whether the shareholders will get a little pie from the liquidated assets or not. The regulators are busy asking the authorities to go in for compulsory de-listing---but no one knows what happened to the case of open offer. Or how will the open offer be triggered, if the stock is de-listed compulsorily. It seems no one bothers for safeguarding the wealth of small investors.
Case after case this is going on starting from DSQ Software Ltd, to Kolar Biotech Ltd, IFSL Ltd, to Shree Vasavi Industries Ltd to Ennore Software Ltd, etc, but regulators are busy finding out which share can be placed in the T-group and again brought back, so that a section of investors in their know, benefits. It is surprising to note that the regulators allow unbridled, speculations in the OPTIONS MARKET, where a Re.1 (one) CALL can become Rs.5 in one day---the regulators do not have problems with this kind of volatility. But they have problems with some companies only!! They do not have problem if in the F& O market, a share can tank more than 100% in one day (do you remember the Satyam Computer case). There are lot of companies in the F&O which have equity capital less than some of the companies who are placed in the T-group, but this goes on and on. 

I recently came across a knowledgeable gentleman, who has a website named, INVESTORS ARE IDIOTS. I also feel the same: taking the advantage of the ignorance of the investors,  both the regulators and the companies are eating BUTTER CHICKEN. We also have a defunct Finance Ministry, whose chief protagonist is probably now busy to become the President of India---who will care for the hapless small investors!! The lack of participation or fall in the urge to invest in the equity market, is due to fact that the small investors have been treated very badly not only by brokerage  houses, but also by the regulators and the promoters of companies. The dirty promoters go in for expansion after expansion and then sell the ventures, showing extraordinary income, giving nothing to the shareholders (Do you remember the case of recent doing of the Piramal Group and Essar Group in earlier occasions). 

I therefore take this occasion, to invite all those who are holding the shares of Prajay Engineers Syndicate Ltd to write strong letters to the company's promoters, using the e-mail: info@prajayengineers.com (www.prajayengineers.com), saying that if the company does not disclose the required information about the ongoing projects or stop presenting cooked up balance sheets, to the stock exchanges (Bombay Stock Exchange) then the investors' forum could file a RTI, against the company; so that everything becomes clear and the dishonest promoters are trapped and tagged to appropriate places. 

It is disgusting to find how the promoters of companies loot the gullible investors by opening public limited companies and operate them as if it's their fiefdom (their father's company). Down with the dishonest Promoters of Prajay Engineers Syndicate Ltd!! Long live small investors!! It is time we act in group, or else be prepared to get perished!!

Jai Balaji Industries: Trying to Strike the Right Chord

CMP: Rs.27.60

BSE Code: 532976

 Book Value:  Rs.152.72

Market Cap: Rs.176.04 Cr

Target: Rs.45-60

Time: 9-12 months

Introduction: Kolkata-based Rs.2, 200 crore Jai Balaji Group is one of the largest manufacturers of steel in the private sector in Eastern India. The company has integrated facilities for producing steel in eight manufacturing units spread across the states of West Bengal, Chhattisgarh, Orissa and Jharkhand in India.

The company’s products include: DRI, Pig Iron, Ferro Alloys, Alloy and Mild Steel Billets, Reinforcement Steel TMT Bars, Wire Rods, Ductile Iron Pipes and Alloy and Mild Steel Heavy Rounds. The company has propelled itself into the league of formidable steel players in Eastern India, which has not only diversified into power generation in West Bengal and Chhattisgarh but has progressed work in allied industries like cement as well.  The Company has three wholly owned subsidiaries namely, Nilachal Iron & Power Limited, Jai Balaji Steels (Purulia) Limited & Jai Balaji  Energy (Purulia) Limited. Jai Balaji industries (JBI) has emerged as the largest mini-mill after merging Shri Ramrupai Balaji Steels Limited and Jai Balaji Sponge and has touched capacity of one million tons by building a fully integrated steel plant and ferro alloys plant along with a captive power unit and a private railway siding.. According to some estimates the cost of setting an integrated steel plant of such size is not less than Rs.5000 Cr. The company has proximity to raw material sources and well built logistics infrastructure.

Joint Ventures:

(i) A joint venture company M/s Andal East Coal Company Private Limited was formed which the company along with M/s Bhushan Steel Limited and M/s Rashmi Cement Limited are venture partners. The said Joint Venture Company was formed in terms of allocation of Andal Non-Coking Coal Block in the State of West Bengal by Ministry of Coal, Government of India. It has 32.79% stake in the coal block.

(ii)  A Joint Venture Company Rohne Coal Company Private Limited was formed in 2008-09 with the Registrar of Companies, NCT of Delhi & Haryana, in which the company along with M/s JSW Steel Limited & M/s Bhushan Power & Steel Limited are venture partners. The said Joint Venture Company was formed in terms of allocation of Rohne-Coking Coal Block in the State of Jharkhand by Ministry of Coal, Government of India.  The company has 6.90% stake in the coal block.

Shareholding Pattern:  The promoters hold 51.15% while the general public holds 48.85% of the shares of the company. The FIIs hold 6.25% of the shares of the company while DIIs hold 2.55% of the shares of the company. Foreign Corporate Bodies hold 13.02% of the shares of the company. Among the non-promoters CVCIGP II Client Rosehill Ltd holds 6.09%, Copthall Mauritius Investment Ltd holds 3.49%, CVCIGP II Employee Rosehill holds 3.41%, Reliance Capital Trustee Co Ltd holds 2.55%, Ramnath Jhunjhunwala  holds 1.18%  and Jhunjhunwala Glass Ltd. holds 2% of the shares of the company.

Financials: For 12MFY12, the net revenues of the company came out to be Rs.2429.14 Cr as against Rs.2173.46 Cr in FY11. The net loss of the company for 12MFY12 came out to be Rs.186.21 Cr as against a net profit of Rs.73.95 Cr in FY11. The company has decided to extent the FY12, by three months. Therefore, the financial year which commenced from April, 2011, will now end on 30^th June, 2012.

For Q4FY12, the total revenues of the company came at (remained flat speaking sequentially) around Rs.596.36 Cr as against Rs.673.1.9 Cr in Q4FY11. The net loss of the company for Q4FY12 speaking sequentially is flat, which came at Rs.70.03 Cr. This is against a net profit of Rs.32.09 Cr in Q4FY11. The loss is basically due to downturn in the steel cycle, high price of raw materials and higher interest out go. But this is expected to come down in future, as it seems the steel cycle has more or less bottomed out and we are slowly moving towards a softer interest rate regime. Moreover, the company has already started to restructure its debts and the banks/Financial Institutions have in principle agreed to give 1% interest subvention across the board. Also, it is widely expected that from the June, 2012 quarter, the company could show some improvement in both its top and bottomlines. A consortium of 21 banks, including UCO Bank Ltd, State Bank of India Ltd, United Bank of India Ltd and Allahabad Bank Ltd, has their exposure. Also, there are talks of extension in tenure of repayment of loans. Moreover, as the interest rate comes down in future, the company’s debt servicing is also expected to get boost.

Triggers:

(i) The Company is in the process of setting up of 0.35 million tons Coke Oven Plant along with waste heat recovery boiler of 80 TPH at its unit at Durgapur, West Bengal. The two batteries of the coke oven plant expected to come up on stream by June, 2012 and within the next quarter, the company is expected to commence production in the remaining two batteries. So, the full plant would start operations, probably by the end of this year (Q3FY13). Having a monthly consumption of over 40,000 tonnes of Coke, this project is expected to leverage its key raw material and achieve economies in cost. It has a 0.8 million tonne (mt) steel plant at Durgapur.

(ii) The company has an order book of around Rs.200 plus crore from its 0.24 million ton Ductile Iron Pipes plant alone, plus orders which its discharges on weekly basis, by selling its other products.  The ductile iron plant is at present is working around 50% of its total capacity. The Company’s products meet stringent quality parameters and which is gaining market share comprising of private, institutional, non-institutional and government body buyers.

(iii) The company has land around 450 acres which were purchased at Rs.65 Cr a decade back in DURGAPUR, West Bengal. The present value of the land would not be less than Rs.200 Cr after 10 years. It has also a leased land of more than 1200 acres. The replacement cost of the plant would not be less than Rs.5000 Cr. Thus the value of its plant plus land holdings plus its current order book exceeds its market cap of around Rs.176.04 Cr by miles. The book value of the shares of the company is Rs.152.72. Besides, the promoters have purchased shares from the market at more than Rs.150 per share.

(iv)The company last year received its first monetary receipt of approximately Rs.33 million (Rupees Thirty three million only) on account of sale of 54,615 units of Carbon Credits. The CERs received by the company are on account of power generated from its Waste Heat Recovery Boilers. The company looks forward to getting more such installments in future. The company’s power is wholly used for captive purpose, which helps it in cost cutting and at the same time to get uninterrupted power. Moreover, the governments’ recent announcement of incentives to the power sector is positive for the company.

(v) Company has envisaged setting up 5 million tonne integrated Steel Plant, 3 million tonne Cement Plant and 1,215 MW Power Plant in Raghunathpur, in the District of Purulia in West Bengal. The Company has received adequate financial assistance from various banks and financial institutions for the 1st phase of the project. This mega project is another step by the Company to enhance its presence in Steel and Power business. In this direction the company has already acquired around 1200 acres of land and is seeking the West Bengal government’s consent in getting additional land out of the total land requirement of 3,600 acres. It will be the sixth unit of the Company. If the proposed expansion plans are implemented as per schedule, it might make it the second largest steel maker by 2015-16. The company has to start work on the plant within a maximum of three years, according to a recent circular, from the government of West Bengal. The company is also hopeful of commencing work on its proposed steel plant at Raghunathpur in the Purulia district of West Bengal soon.

(vi) It is to be noted that the alloy and stainless steel division in Durgapur, is capable of producing wide variety of value added alloys and stainless steel products that are consumed by sectors like railway, defense, forging and engineering industry, capital equipment and automotive components. Jai Balaji is focusing on increasing metallic production and ramping up its DI pipe mill, which will improve margins due to the use of captive pig iron and sinter. The company also has large coal reserves and there are significant capex plans to monetize the reserves. One of the coal mines has got the 2^nd stage of environmental clearance and mining is expected to commence from Q3FY13—from this the company would be able to generate additional Rs.70-80 Cr per annum.

(vii) The company expects strong production growth over the next two years as it has undertaken maintenance work on the furnace and does not expect a major maintenance (realigning) shutdown in the near future. Besides, the availability of iron ore has improved after the increase in export duty levied on ore. Globally steel prices are giving indication of firming up and by the end of 2012, the analysts are hopeful of another round of quantitative easing by the US (QE3), which could give a spurt to the commodity prices across the globe.

For 2013, the global steel consumption growth is expected to be of 4.5%-5%, including 4-5% in China, 5.5% in the NAFTA countries, roughly flat in the European Union, and 5.8% for the rest of the world. Though China is unlikely to repeat its prior couple of years of double-digit demand growth, a soft landing in FY13 is expected, requiring steel demand in line with forecast of 4-5%. The EU and U.S. are consuming 25%-35% less steel per capita than they did just five years ago, a trend that is not sustainable, while growth in Brazil and India is just starting to accelerate. Also, the price of coking coal, another key raw material, has also started to decline as supply has increased, namely thanks to the recovery of Australia's coal exports following last year's flooding and due economic conditions in Europe. The construction and infrastructure sector is India's largest steel consumer; accounting for nearly 61% of total steel consumption and future demands looks strong. Now since the government has started to give its thrust on the infra-spending, the company’s future looks bright.

Conclusion: Considering the above mentioned conditions the investors could slowly accumulate  the scrip, using SIP method and wait for it to break above Rs.31, with good volumes, to go for major buying in the counter for a target of Rs.45-60 in the next 9-12 months time frame. This fair value estimate is derived from base-case forecast for Jai Balaji Industries Ltd, which assumes a low-growth scenario overall with a modest recession in Europe, soft landing in China, preference on growth over inflation in India and continued progress in the U.S. There could be additional upside potential to this estimated fair value, if steel market conditions improve more quickly than is expected or QE3 comes in the US.

Moreover, the company expects to lower net debt further in 2012-13 on debt restructuring, and lower investments in working capital, particularly through better pricing effects as domestic steel prices rose moderately in 2011 and have upside potential in CY12; following resumption of construction activity in full force in a visibly soft interest rate regime.

Disclaimer: Though due care has been taken while preparing this report but no responsibility will be assumed by the author for the consequences what so ever, resulting out of acting on these recommendations or after reading the report. The calls made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is derived from sources that are deemed to be reliable but its accuracy and completeness are not guaranteed. The author does not accept any liability for the use of this column for buying and selling of securities. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. The author, his acquaintances, his company or his family members may or may not have positions in the Scrips mentioned in this column. Investors should take their own decisions while buying and selling the shares/securities.

HINDALCO Industries Ltd

CMP: Rs.125 (It is near its 5 2-week low price)

52-week High/Low: 224.64/Rs.111.25

Short Term Target: Rs.160

The Four Primary Triggers: 

(i) It is an industry leader in aliminium and copper and hence is able to absord any slowdown in the sector, with better management. It has a low cost business model, superior product mix, a balanced and de-risked portfolio and has operational excellence. Company’s Copper production, both in India and Australia, has been impressive. Furthermore, the expansion of the Company’s Pinda mill in Brazil and global de-bottle-necking projects designed to increase capacity, have been growth propellers. The Hirakud Flat Rolled Products project is expected to get operation by Q1FY13. Almost all of the Company’s Greenfield projects are on course. Of these projects, two aluminum smelters and one large alumina refinery viz. Mahan Aluminium, Aditya Aluminium and Utkal Alumina are in advance stage of execution with a capital outlay of US $ 5 billion. When these projects, along with those which are currently on the drawing board, are commissioned, Hindalco Industries Ltd would be a 1.7 million ton aluminum company with a 6 million ton alumina refining capacity. Thus in all probability, the company is all set for a quantum growth leap, going forward--it hopes to become a 65 billion dollar Group by 2015. The company gets around 75% of its business from the Aluminium segment. Q3FY12, results reflect a strong performance in the Aluminium Business in India and at Novelis. The previously announced rolling mill expansion in Brazil and the recently announced expansion in Korea as well as strategic automotive expansion in North America are key focus areas in the near term to capitalize on future growth and solidify its position as the leading player in the global FRP industry. Over the next year, Novelis expects continued strong demand in its key product segment. Moreover any buoyancy in the Power Sector in India, will be positive for the companies like Hindalco Industries Ltd.

(ii) China, the world's largest importer and consumer of base metals, is seen re-exporting its copper stocks from the bonded warehouses at the Shanghai Futures Exchange, to ease LME backwardation. "Backwardation, is a sign of bullishness--it means that the spot market is tight with high demand and restricted supply. This hints at a bullish trend in base metals for the rest of the day. Also, in case of Aluminium, China continues to be the driving force behind the demand growth, growing at ~ 15-20% and contributing to over 35% of global aluminium demand. Moreover, India's domestic demand continued to be robust on the back of strong industrial growth, expected in the coming months, post cut in the repo rates. Strong growth in the end user segments such as automobiles, Industrial and infrastructure; and thrust on power sector growth, is expected to propel the future  the aluminium demand. The aluminium prices are expected to remain buoyant even as inventory levels  are highs. This is because of the tightness in the physical market, with most inventories tied up at various ware houses under financing deals.

(iii) Eurozone crisis is easing and this is giving strength to the Euro against the Dollar. This trend is expected to push dollar-denominated commodities such as base metals higher in the global market. The Global economy is continuing to recover after the unprecedented sharp fall in FY09. Strong demand from both emerging markets and developed markets on the back of increased Industrial activity is expected to fuel the demand for commodities in the coming days---the emerging markets will continue to be the torchbearer of this growth. In India inflationary pressures have receded to some extent, while fall in the crude oil prices off late has also ebbed some of concerns of rising fiscal deficit. Now with the RBI going all out for a cut in the Repo rate,  it is expected that the the domestic environment will more or less be on the path of recovery. With a strong recovery in the US and EU the demand momentum is expected to remain strong for the Aluminium and Copper segments.

(iv) Alcoa Inc, the biggest US aluminum producer reported better than expected quarterly profit and reaffirmed global demand for aluminum to grow 7% in 2012. This augurs well for aluminium related companies like Hindalco Industries Ltd.  Aluminium demand in India has been very strong in the recent past growing at almost 14% CAGR. Unlike the western world the primary demand driver for aluminium in India has been power sector which accounts for almost 48% demand. With government’s stated committed spending towards achieving 70,000 MW generation target, the spend on power infrastructure will be huge. As far as the other aluminium consuming sectors are concerned with growing urbanization the demand growth has picked up from packaging, automobile, construction (increased usage) electronics (cell phone, laptop bodies) etc.. The per capita consumption at ~1.2 kg is still abysmally low as compared with even China ~10 Kg and the western world~ 15-18 Kg. This offers significant potential demand upside. The Global demand outlook for FRP (Flat rolled products) is extremely bullish with rising demand from beverage cans; especially in the emerging markets, consumer electronics and automobile segment (with increased emphasis on weight reduction). Novelis is the global leader in this segment. The global refined copper demand is expected to increase by around 7% in CY2012.  Moreover, it is expected that the long term demand for copper will continue to be strong on the back of infrastructural demand from India, China and moderate demand growth from the western world. China will continue to have lion’s share in the incremental growth and is expected to account for over 60% of incremental growth over next 5 years, thus accounting for around 44% of 2015 global estimated demand of ~ 24 Million tonnes.  The long term fundamentals are strong and the copper consumption is expected to increase with renewed thrust on power sector reforms and urban housing. The copper consumption in India is relatively low. The per capita copper consumption stands at around 1.2 Kg as compared to 7Kgs in the US or even 3.6 Kgs in China and hence the growth potential is enormous.

The Company: Hindalco Industries Ltd is an industry leader in aluminium and copper. Hindalco Industries Limited, the metals flagship company of the Aditya Birla Group is the world's largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the world’s largest custom smelter at a single location.
The acquisition of Novelis Inc. in 2007 positioned Hindalco Industries Ltd, among the top five aluminium majors worldwide and the largest vertically integrated aluminium company in India. Today it is a metal powerhouse with high-end rolling capabilities and a global footprint in 13 countries. It is a part of the Fortune 500 league.
Its aluminium units across the globe encompass the entire gamut of operations, from bauxite mining, alumina refining and aluminium smelting to downstream rolling, extrusions, foils, along with captive power plants and coal mines. 

Its copper unit, Birla Copper, produces copper cathodes, continuous cast copper rods and other by-products, such as gold, silver and DAP fertilisers.
Its units are ISO 9001:2000, ISO 14001:2004 and OHSAS 18001 certified. Several units have gone a step further with an integrated management system (IMS), combining ISO 9001, ISO 14001 and OHSAS 18001 into one business excellence model. It was accorded the Star Trading House status in India. Hindalco's aluminium metal is accepted for delivery under the High Grade Aluminium Contract on the London Metal Exchange (LME). Its copper quality standards are also internationally recognised and registered on the LME with Grade A accreditation.
Hindalco's major products include standard and speciality grade aluminas and hydrates, aluminium ingots, billets, wire rods, flat rolled products, extrusions and foil. The integrated facility at Renukoot houses an alumina refinery and an aluminium smelter, along with facilities for the production of semi-fabricated products, namely, redraw rods, flat rolled products and extrusions. The plant is backed by a co-generation power unit and a 742 MW captive power plant at Renusagar to ensure the continuous supply of power for smelter and other operations.

Its copper unit, Birla Copper upholds its reputation for quality copper cathodes and continuous cast copper rods. Birla Copper, Hindalco’s copper unit, is located at Dahej in Gujarat, India. The unit has the unique distinction of being the largest single-location copper smelter in the world. The smelter uses state-of-the-art technology and has a capacity of 500,000 tpa.
Birla Copper also produces precious metals, fertilisers and sulphuric and phosphoric acid. The unit has captive power plants for continuous power generation and a captive jetty to facilitate logistics and transportation.
Birla Copper upholds its longstanding reputation for quality copper cathodes and continuous cast copper rods by assuring its management processes meet the highest standards. It has acquired certifications such as ISO-9001:2000 (Quality Management Systems), ISO-14001:2004 (Environmental Management System) and OHSAS-18001:2007 (Occupational Health and Safety Management Systems).
Mines:
Hindalco acquired two Australian copper mines, Nifty and Mt. Gordon, in 2003. The Birla Nifty copper mine consists of an underground mine, heap leach pads and a solvent extraction and electrowinning (SXEW) processing plant, which produces copper cathode.
Both Nifty and Mt. Gordon have a long-term life of mine off-take agreement with Hindalco for supply of copper concentrate to the copper smelter at Dahej.   
Expansion: 
(i) Brownfield Expansions: 

• Hirakud Smelter Expansion: The Smelter expansion at Hirakud from 155 KTPA to 161 KTPA was completed in Q4 FY11. A further expansion from 161 KTPA to 213 KTPA, along with a 100 MW Captive Power Plant [CPP] will be completed in early 2012. 
• The next phase of expansion of the Smelter from the proposed 213 KTPA to 360 KTPA, with a corresponding increase in CPP capacity from 467.5 MW to 967.5 MW is under evaluation. The environmental clearance for this is already in place.
• Hirakud Flat Rolled Products [FRP] Project: This project is underway for the transfer of all key equipment for FRP production from Novelis plant at Rogerstone, UK to Hirakud. In addition, orders have also been placed for related and balancing equipment. This will enable the Company to produce a wide range of superior engineering products, including can-body stock, for the local and export markets. The project is slated for completion in Q1FY13. Around 2,000 people are working at the site on civil and structural jobs. 
• Belgaum Special Alumina: The Specials Plant expansion from 189 KTPA to 301 KTPA, with a coal based co-generation power plant. Natural gas adaptation for its rotary kilns is being evaluated.
• Novelis - South America: Pinda is the largest aluminium rolling and recycling facility in South America in terms of shipments and the only facility in South America capable of producing can-body and end-stock. Pinda recycles primarily used aluminium beverage cans and is engaged in tolling recycled metal for its customers. In response to the growing demand for the company’s products in South America, a plan to invest nearly USD 300 million to expand the aluminium rolling operations in Pinda was announced earlier. This expansion will increase the plant’s capacity by more than 50% to approximately 600 Kt of aluminium sheet per year. The project is expected to come on stream by late 2012.
• Novelis - Asia:  In May 2011, Novelis announced plans to invest approximately USD 400 million to expand the aluminium rolling and recycling operations in South Korea, in response to the growing demand in Asia and the Middle East. The rolling expansion, which will include investments in both hot rolling and cold rolling operations, will increase aluminium sheet capacity in Asia to 1,000 Kt annually. As a response to the projected market growth in the region, this move is designed to rapidly bring to market, high quality aluminium rolling capacity, aligned with the projected needs of a growing customer base. The new capacity is expected to be commissioned in financial year 2013. The expansion will increase Novelis’ aluminium sheet capacity in Asia by more than 50% and will also include the construction of a state-of-the-art recycling centre for used aluminium beverage cans and a casting operation.

(ii) Greenfield Projects: Greenfield Projects have made significant progress during the fiscal FY12.

• Utkal Alumina International Ltd (UAIL): The construction of the alumina refinery, along with a 90 MW captive co-generation plant is in progress at UAIL, a 100% subsidiary of the Company. The output from UAIL would be sufficient to feed alumina to the Mahan and the Aditya Smelters. Contractors have mobilised more than 9,000 people at the site. The erection of major equipment like boilers, evaporators and turbines has begun. The project performance review of some of the contracts indicates slippage in performance of certain contractors, mainly in the area of civil work. In order to avoid further slippage, some of the non-performing contractors have been suitably replaced with new contractors, who have better performance track record. Internal accruals and free cash flows are adequate to meet the probable overruns which are being estimated. Despite these overruns, the project capital cost continues to be favourably benchmarked with the capital cost of other comparable global projects. The operating cost of this project will continue to be in the lowest cost quartile of the global cost of production and will continue to be
  value accretive.
• Mahan Aluminium Project: This 359 KTPA Aluminium Smelter, along with 900 MW CPP, is coming up in Bargwan, Madhya Pradesh. Contractors have mobilised about 16,000 people at the site. Engineering for the project is complete and major equipment for both the Smelter and the CPP have started arriving at the site. Civil foundation, fabrication and erection of structures have progressed substantially at both the Smelter and the CPP.
  The coal requirement for the CPP will be primarily met from Mahan Coal Block, being developed by Mahan Coal Limited (MCL), a joint venture between the Company and Essar Power Limited. Mahan Coal Block was included under the category of ‘No Go’ area. An Empowered Group of Ministers has been set up to resolve all environment and forest issues for coal mines under “No Go” areas. The Company is in the process of finalising the arrangements for mining to fast-track the development of the mines, once the final forest clearance is received. As an interim measure, the Company has applied to the Ministry of Coal for temporary supply of coal (tapering linkage) to the Mahan CPP, until the Company’s own mines commence operating at full capacity.
• The Aditya Aluminium project: A 359 ktpa, Aluminium smelter along with a 900 MW captive power plant, identical to the Mahan Project, is coming up in Orissa. The project has received stage 2 forest clearance in January 2011 and the construction work has started. Now the project is slated for completion in 2013.
• The Aditya Refinery Project: A 1.5 Million TPA Alumina Refinery along with a 90 MW cogen plant, replica of the Utkal Alumina refinery is coming up in Orissa. The preliminary cost estimate is in the order of magnitude is Rs. 6,000 Crores without financing cost. It is planned for commissioning in FY14.
• The Jharkhand Aluminium project: A 359 ktpa, Aluminium smelter along with a 900 MW captive power plant is coming up in Sonahatu, Jharkhand. The land acquisition process has already begun. The process for
  obtaining environmental clearance has begun. For this project the Tubed coal mine has been allotted to the project jointly with Tata Power. These projects will significantly enhance the scale of operations of the company and will further improve the cost competitiveness of the company firmly establishing it as one of the lowest cost global alumina and aluminium producers.

Suzlon Ltd: Steady Upmove expected in the short term

I think Suzlon Ltd (CMP: Rs.24.10) has bottomed out today and it has won a number of orders very recently. It is the fifth largest company in the world making the wind turbine and wind generators. The company has an order back log of around Rs.390 billion (1 Billion= 100 Cr) as of now. Suzlon Group reported 1,490 MW of highest ever order inflow in Q3FY12 among the geographies like India, North America, Europe and Brazil that improves visibility for FY13E. The order backlog of 5,755 MW (Suzlon WTB 2,407 MW + REpower 3,348MW) will be executed in FY13E & 14E. Suzlon Ltd, India's largest wind turbine manufacturer is expected to garner about $40 million by selling its non-core assets, by May, 2012, after completion of due diligence and requisite approvals. According to a company official, "This is a modest but important step forward in our strategy to optimize our capital structure and meet our repayment obligations this year". The wind farms of Suzlon Ltd are located across India, with majority of the assets in Tamil Nadu. Recently, Suzlon Energy's Germany-based arm REpower Systems SE inked an agreement with a consortium of banks, led by Bayern LB, Commerzbank Aktiengesellschaft and Deutsche Bank AG, for a syndicated loan of 750 million euros (about Rs 49.17 billion, where 1 billion= 100 crore). So, this would help the company to solve the FCCB issue. In the current year (FY13), the company needs to repay holders of its foreign currency convertible bonds $360 million in June and $209 million in October.
Last month there were media reports that the French engineering conglomerate Alstom SA is evaluating a potential offer to acquire its subsidiary REpower Systems. The report which appeared in the Financial Times Deutschland said, without quoting sources, that Alstom is working on an offer to buy REpower. According to Financial Times Deutschland, Alstom has been given exclusive access to financial data of REpower which may be sold to the company for 1.5 billion euros ($2 billion). Sector experts said that Suzlon may not consider complete exit in REpower, which is the biggest growth driver for the company. But strategic investors may not be interested in a minority stake in the company. In 2007, Suzlon Energy, through its subsidiary AE-Rotor Holding B.V., acquired REpower Systems to expand its presence in Europe and to get access to the company's technology. Although Suzlon gained management control of REpower, it was not allowed access to the company's technology as the German law does not allow it in the interest of minority shareholders. Suzlon succeeded in completing the acquisition of REpower in September 2011 and made the latter a 100%-owned subsidiary. 
A company of such magnitude cannot trade at Rs.24-25. Since you have got the share at such a low price, you should buy it and keep holding. These are some of the very few occasions when you can buy the share of a leader at such a price. 
Last time also, if  you remember, I recommended the scrip at around Rs.22, after which a number of analyst started to recommend and the scrip touched Rs.31. This time also similar thing will happen, as the company continues to build its strong order book positions. 

Note: This mini-report on www.sumanspeaks.blogspot.com on 18th April, 2012.