India Companies in The Global 2000

Forbes released its annual list of the Global 2000 this week with a number of Indian companies on the list. The largest Indian company (Reliance Industries) checks in at #193. What's interesting is the top 8 out of 10 Indian companies are all "old industry" (steel, utilities, oil and gas), with only two communication comapnies representing New India. I suspect this will change in 5 years, but for now the old industries still rule.

Global 2000 table (Top Indian companies shown)

Rank	Company	Country	Industry	Sales ($bil)	Profits ($bil)	Assets ($bil)	Market Value ($bil)
193	Reliance Industries	India	Oil & Gas Operations	26.07	2.79	30.67	89.29
198	Oil & Natural Gas	India	Oil & Gas Operations	18.90	4.11	33.79	54.11
219	State Bank of India Group	India	Banking	15.77	1.47	188.56	33.29
303	Indian Oil	India	Oil & Gas Operations	42.68	1.82	25.39	16.36
374	Icici Bank	India	Banking	9.84	0.64	91.07	29.85
411	NTPC	India	Utilities	7.84	1.60	20.34	41.57
647	Steel Authority of India	India	Materials	7.88	1.45	8.05	26.37
738	Tata Steel	India	Materials	5.83	0.97	11.48	14.63
826	Bharti Airtel	India	Telecommunications Services	4.26	0.94	6.61	39.16
846	Reliance Communications	India	Telecommunications Services	3.13	0.65	13.08	29.63
927	Tata Consultancy Svcs	India	Software & Services	4.32	0.97	3.03	21.38
949	HDFC-Housing Devel	India	Banking	1.49	0.40	16.97	19.07
961	Larsen & Toubro	India	Capital Goods	4.68	0.52	5.72	24.94
967	Bharat Petroleum	India	Oil & Gas Operations	22.77	0.50	8.67	4.16
1012	Bharat Heavy Electricals	India	Capital Goods	3.99	0.56	5.17	27.92
1040	Infosys Technologies	India	Software & Services	3.21	0.89	3.08	22.09
1093	HDFC Bank	India	Banking	1.96	0.27	21.09	12.87
1102	Wipro	India	Software & Services	3.47	0.68	3.26	15.87
1111	Tata Motors	India	Capital Goods	7.27	0.50	5.77	6.75

To see the entire India Forbes list click here

Reliance Industries to reinvent its textile brand

By Vipin Agnihotri

I have full-proof information that Reliance Industries is working overtime to reinvent its textiles brand, Vimal. According to company sources, the whole idea behind all this is to offer Italian styling at Indian prices. Point to be noted here is that Maurizio Bonas, an Italian designer, has been visiting India regularly to teach select tailors the intricacies of Italian style and tailoring.

By the end of this year, Vimal, which was first launched by Reliance founder Dhirubhai Ambani, will have 25 stores across 15 cities. In my opinion, apart from the shift into the ready-to-wear segment, Vimal is now sharply focussed on young men in the 25-40 age group compared to earlier when there was no clearly defined target segment.

The question now arises: What prompted Reliance Industries to resurrect Vimal? The answer of this question is the booming Indian economy. It is worth mentioning in this regard that with incomes increasing and modern retail spreading, the opportunities in the market have exploded. In the case of Reliance, it has big retail plans (under Reliance Retail) that entail selling everything from fruits and vegetables to apparel to consumer electronics.

Most of the experts feel that there is plenty of back-end synergies that the new Vimal and Reliance Retail’s apparel business can share. In addition, Vimal itself has more than 150 exclusive showrooms across the country that can be revamped to attract younger clients. Even better, Reliance’s textile unit in Naroda, which has been underutilized in the last two or three years because of the company’s focus on petrochemicals will get a much-needed opportunity to revive itself.

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Reliance Industries Limited on a shopping spree!

By Vipin Agnihotri

Reliance Industries Limited, biggest private enterprise in India is in news these days. It’s not only the controversy about their retail chains but also their buying spree that caught the attraction of The India Street.

To be precise, the start was a gift that Reliance got itself on the silver jubilee occasion of its polyester business- the successful takeover of Malaysia’s leading polyester company Hualon for an undisclosed amount.

It is worth mentioning in this regard that Hualon not only boasts of a manufacturing capacity of nearly half a million tonnes per annum but is also one of the biggest exporters from Malaysia.

In my opinion, after the acquisition of textile company Trevira in Germany in 2004, Hualon’s takeover will further strengthen Reliance Industries Limited position as one of the biggest polyester manufacturer across the globe.

If experts are to be believed, the company’s highly automated plants and cutting edge technology will enable Reliance Industries Limited to become a complete solution provider in the global textile industry.

Apart from that, in the business of liquid gold too, Reliance Industries Limited has just completed the successful acquisition of Gulf America Petroleum Corporation for a price that has again been kept under wraps.

Point to be noted here is that this might not contribute much to Reliance Industries Limited profits but the company officials definitely view it as a strategic move. According to experts, with the help of this deal, Reliance Industries Limited will be able to export the produce from its Gujarat refinery (at this moment of time being expanded to become the world’s biggest) to Africa.

No one will argue with the fact that Africa is a location that is witnessing a steep rise in oil demand. Theoretically speaking, Gulf Africa retails oil in Tanzania, Uganda and owns storage tanks and depots in East and Central Africa. And, if you are of the opinion that it’s over, then you are surely mistaken.

According to sources, Reliance Industries Limited is even planning Rs 250 billion investments in health care over a period of seven to eight years. As a matter of fact, company has chalked out plans to set up 1,500 healthcare centers in B and C class towns in an attempt to revolutionize healthcare industry in India.

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Indian fertilizers to get hot again as Mukesh Ambani all set to setup a 2-million tonne fertilizer unit

By Vipin Agnihotri

Increasing cost of production and delays in subsidy payments has stymied capacity addition in the Indian fertilizer industry over the last few years. But with the Indian government mulling a new subsidy regime, fertilizers promise to get hot again.

It is worth mentioning in this regard that last month, Reliance Industries Chairman Mukesh Ambani met Fertilizer Secretary JS Sharma and presented his proposal to setup a 2-million tonne fertilizer unit in the country. According to sources, Ambani projected a 30 per cent return from the business.

This is absolute magic because the rest of the industry is not able to hit even double-digit returns. In my opinion, this is just a preview of the changing face of the Rs 43,000 crore Indian fertilizer sector that will be driven by a new policy initiative that the Indian government hopes to finalize in a few months.

In theory, IFFCO, a co-operative and the largest fertilizer producer in the country has margins of under 2 per cent. If experts are to be believed, the investment climate has been gloomy over the last few years. As a matter of fact, private sector majors like KK Birla's Chambal Fertilizers & Chemicals and the Tata Group's Tata Chemicals are also only revamping their existing facilities rather than investing in new ones.

But all this will change thanks to the Indian government move of getting rid of cost-based, fixed returns regime and usher in deregulation and import parity pricing. This is the real reason due to which Mukesh Ambani is eyeing the fertilizer sector. Mukesh Ambani holds all the aces- his big gas finds in the Krishna Godavari Basin, at peak production, can meet the complete short fall in supplies.

But the fact of the matter is that agricultural growth of India has been stagnating over the last ten years or so and without a growing market, all this means little. To counter this situation, Prime Minister Manmohan Singh has already announced an Rs 25,000 crore package. The pivotal factor here is that pumping money into the agriculture sector or improving returns for fertilizer companies alone will not help. It is of paramount importance that Indian government made some structural changes as well.

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Note to Mukesh Ambani – Why rich should share wealth with poor

I came across this Mukesh Ambani press release today and while it offered little in detail it was a push in the right direction. While I am not a believer in a philosophy of giving for giving sake, I do believe that corporations should help the poor by creating meaningful jobs. Mukesh seems to believe in restructuring the rural farmer’s retail arrangement (let’s assume and hope he means cutting out the middlemen) with consumers.

Making a case for his retail outlets, he said: “Indian farmer bears the highest risks. So, by unleashing a genuine pro-farmer and pro-consumer retail, it would help both and put them in a win-win situation.”

I agree, but let’s add taking government out of the equation entirely. Why not let the farmer decide the price based on market demand? Currently, these farmers are lining up in long queues while their product rots. Why do local governments or quasi government officials need to be involved at all? Let the farmer decide how to sell his product and let the entrepreneurs in India decide how to best get it to market.

India’s wealthy corporations and high net worth (HNW) individuals should be pushing for economic reforms from India’s government to better empower the individual by offering meaningful jobs. The lesson of simply giving to the poor has been learned time eternal. By giving to the poor without any strings or just as bad without any working opportunities, you create a welfare situation. The US has (and still is) learning how difficult it can be to get people off welfare. Had the US implemented a 90 day financial safety net along with extensive training programs (instead of giving money without strings) the poor and their offspring would have been much better off.

I loathe the extremely wealthy preaching to the rest of us to help the poor without giving any details. It’s easy for the wealthy to make those statements because they can afford to make them. Most of these pitches to help the poor are simply public relations stunts and do nothing to actually help the poor. The HNW individuals I respect actually train the poor or offer them real jobs and opportunities with real career paths. It appears that Mukesh Ambani is doing just that by offering farmers a way to sell their goods bypassing the middlemen. While he profits in turn, welcome to the world of free enterprise. It’s a win-win situation that can be duplicated by all retailers across India. Reliance is not a monopoly (another free enterprise feature) and others can ride the success if Ambani manages to change the farmer/consumer retail paradigm.

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Reliance Industries Will be First Ever India Company to reach $100-billion Market Cap

By Vipin Agnihotri

Billionaires all around the world watch out for Mukesh Dhirubhai Ambani. He is all set to get the bragging rights as one of the worlds top three or four richest men. It is worth mentioning in this regard that Forbes has put him at a distant 14, with a net worth of $20.1 billion.

I am not saying this because he is an Indian. I have a valid point to say that. According to Wall Street, Reliance Industries could touch $100 billion (Rs 4,10,000 crore) in market cap sometime soon. If that happens, Reliance will be the first company in India to achieve that feat.

At this moment of time, Reliance Industries market cap is around $63 billion, and Ambani owns more than half of the company. Morgan Stanley analysts are of the opinion that Reliance Industries value will jump by 58 per cent?

I totally agree with their estimation because from next year onwards, Reliance Industries will start pumping oil from its proven reserves of 1.4 billion barrels. When one take into consideration the fact that Reliance Industries total proven and possible reserves presently of 5.4 billion barrels, the companys exploration and production (E&P) business will generate $3.5 billion (Rs 14,350 crore) in profits between 2010 and 2015.

But the question now arises: How Reliance Industries will unlock its share value to touch $100 billion? When The India Street contacted Reliance Industries spokesperson in this regard he said that that the company would have to opt for both organic and inorganic growth to achieve the target.

Apart from that, Reliance Industries would need to substantially increase its share of revenues from E&P presently just 2 per cent of its $22-billion turnover. Point to be noted here is that at present, 60 to 70 per cent of Reliance industries turnover of Rs 1,10,000 crore comes from the refining business.

However, some of the experts believe that one-third of the Reliance Industries value is coming from gas and if the government, which has a profit sharing agreement, fixes a lower price, Reliance Industries could suffer.

All in all, if the Sensex rises 30 per cent in the next one year, you could see Reliance Industries hitting the $100-billion mark sooner than expected. In short, Reliance Industries joining the $100-billion market cap club is not a matter of if, but when.

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The Top 5 Bullish Stocks for this Week

Analysis of select India stocks (short term perspective)

Disclosure

In this article let us review some stocks which are technically bullish for the short term. As I have mentioned in my earlier articles these stocks are selected either from A category or B1 category of BSE (Bombay Stock Exchange). This helps in eliminating illiquid stocks, those with listing related issues etc.

Celebrity Fashions Limited:

This is a Chennai based garment exporter company. It has the capability to manufacture the largest number of trousers in the country. The company also has its own national premier menswear brand, Indian Terrain. The clientele include Timberland, Marlboro Classics, Vans, Dockers San Franisco, The North Face, etc. Their design studio at Madras Export Processing Zone (MEPZ) has computer aided design and development for prints and plaids, trend analysis and lifestyle presentation. It recorded a net profit of Rs.9.41 crores in 2005 – 06; during 2006 – 07 it has reported a net loss of Rs.5.50 crores. EPS too has fallen from 7.19 to -3.09.

The company is being traded since January 2006. The issue price was Rs.180.

On the day of listing, 12 January 2006, it opened at 236.30 and touched a high of 269.90. It kept falling continuously and made a low of 62.10 on 13 June 2007. We have seen in my earlier article, “How do IPO’s perform in Secondary Market?” about how some of the IPO’s have done exceptionally well and some others have failed miserably.

This company has lost nearly 77% from its all time high. The daily chart of the stock is shown below:

http://groups.google.com/group/theindiastreet/web/CELEBRITY.JPG

The stock has made higher highs and higher lows according to Elliot Wave Theory recently. Though failed in first attempt, it has successfully broken its resistances at 72.70 and 76.75 yesterday. It has even managed to pierce its next resistance at 79.80 though not being able to close above it. Now we may conclude that the stock has bottomed out. This can be confirmed by the money flow index making new highs. 61.8% retracement from the low of 62.10 works out to 96.65.

Gallantt Metal Limited:

The company’s integrated steel plant is located at Kutch, Gujarat. It has the capacity to manufacture nearly 100,000 metric tonnes of sponge iron, 176,420 MT of mild steel billets and 168,300 MT of thermomechanically treated (TMT) bars. It cas a captive power plant too, 18 MW capacity from waste heat and lignite. The company made a loss of 0.976 crores in 2005 – 06 whereas it has made profits of Rs.3.96 crores in 2006 – 07 with a very low EPS of 0.52.

http://groups.google.com/group/theindiastreet/web/GALLANTT.JPG

Watch the “cup and handle breakout” in the chart. It is a bullish continuation pattern. We have discussed this pattern in our articles “Buy These India Stocks and Hold for 6 Months” , “These 5 India Stocks Set to Move Up in the Short Term” and also in “5 India Stocks You Need to Own Now”. It can be observed that the pattern has taken about 7 months to complete. The next target for the stock is 17.95.

India Glycols Limited:

This is the only company in the world to produce ethylene oxide / mono ethylene glycol from molasses, a by product of sugar industry. Reliance Industries Limited has MEG plants at Hazira but ethylene is derived from naphtha cracker plant.

India Glycols Limited also produces ethoxylates, performance chemicals, glycol ethers / acetates, guar gum and potable alcohol. It is the largest ethoxylate, glycol ether producer and thus leader in ethylene oxide derivatives / surfactant business in India. It caters to more than 1,000 customers in various end use industries such as textile, agrochemical, oil & gas, personal care, pharmaceuticals, brake fluids, detergent, emulsion polymerisation & paints etc.

It reported a net profit of Rs.41.02 crores in 2006 – 07 at an EPS of 14.72.

http://groups.google.com/group/theindiastreet/web/INDIAGLYCO.JPG

The stock had retraced from a low of 99.65 on 28 March 2007 to a high of 153 on 15 May. It has now consolidated for 2 months as can be seen in the chart. On 13 July it had broken out its resistance with volumes. This confirms the bullish breakout. The technical targets for the stock are 202 and 215 once it closes above 172.50 where there is minor resistance (it has been broken on high price basis though.)

Karnataka Bank Limited:

Karnataka Bank Limited is a leading 'A' class scheduled commercial bank in India. It was incorporated on 18 February, 1924 at Mangalore. Over the years the bank grew with the merger of Sringeri Sharada Bank Limited, Chitladurg Bank Limited and Bank of Karnataka. It has a national presence with a network of 411 branches spread across 19 states and 2 Union Territories. There are about 2.6 million customers for this bank.

Karnataka Bank Limited had declared a net profit of Rs.177.03 crores for the financial year 2006 – 07 at an EPS of 14.6.

http://groups.google.com/group/theindiastreet/web/KTKBANK.jpg

Both weekly and daily charts have been shown above. The weekly chart clearly indicates the bullishness for medium term. Watch the bollinger bands contracting towards each other as prices open up. It has broken its resistance in daily chart on 17 July 2007. Short term target works out to 223 and medium term target around 261.

Usha Martin Limited:

This company manufactures steel wires and ropes (at Ranchi), alloys and steels (Jamshedpur), machinery for wire drawing (Bangalore), pre-stressing equipment & accessories (Ranchi) and underground telecommunication cables (subsidiary company Usha Martin Cables near Ranchi). It reported a net profit of Rs.137.45 for the financial year 2006 – 07 at an EPS of 30.32.

http://groups.google.com/group/theindiastreet/web/USHAMART.jpg

Both weekly and daily charts are shown above. We can see the consolidation pattern of about 2 months in daily chart followed by the resistance breakout with volumes. The stock is bullish in weekly as well as monthly charts. The short term target for the stock works out to 340.

SUNDARAMURTHY VADIVELU

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