Sunday, November 27, 2011

Is Cyrus the best choice for Chairmanship?

We have all read glowing tributes about Cyrus Mistry, the new Chairman in waiting, of Tata Sons, India's most respected business conglomerate. He is not too old but is mature enough, has the right credentials, comes from a certain community and represents the largest shareholder.  All very good and he may turn out to be a good Chairman, however I have seen no analysis of why he is the number one choice.  As a small minority shareholder, I would like to know 

  • Who all were considered for post of the Chairman? After all a committee was formed for the search
  • And why is young Cyrus, best choice out of all the others considered or not considered
Why is there so much secrecy on the process? After all Tata's are supposed to be transparent and open. Or maybe I am expecting too much? 

Sachin misses out again on his 100th hundred

Arrhh! he missed it again! Twice!!!

Everything was aligned
  • No pressure test with India already up 2:Zip in the 3 match series
  • Perfect conditions for batting
  • Huge run chase
  • Home conditions
  • Thousands of cheering fans
He came close, but could not get past the nervous nineties in the first innings. The cricket gods even gave him a second chance, after the pitch surprising started to spin on the 5th morning and WI collapsed in their second effort to give India a whiff of victory. All nicely set up to for Sachin to blast a ton and take India to victory with his 100th International hundred.. But it was't to be. Sachin missed, getting out early to a delivery that stopped on him. And India could not close out the win despite useful contributions from a number of other players. 

Australia, here we come...

Thursday, November 24, 2011

Sachin Scores 100th ton at Wankhede in Mumbai?

As if truck loads of talent and some luck wasn't enough, Sachin, it seems has additional help for scoring his 100th century at his home ground in Mumbai. The powers that be have made sure that pitch curators craft a perfect pitch to make sure he gets to the landmark at his home ground.

When it comes to Sachin, every thing else is secondary. 

Wednesday, November 23, 2011

Vikram Akula resigns from SKS Micro Finance

Vikram Akula, the star face of Micro finance movement in India. has quit the board of SKS Micro Finance, a company that he founded. Akula's company changed thousands of lives for the better, freeing them from the monstrous local money lenders by providing them seed money to start or support their micro enterprises. However, with one strike of regressive policy by the state government of AP, where SKS had majority of its 'tiny loans' business, brought down the company to its knees.

When SKS was listed last year, there were many detractors who said that an MFI should not be run with a profit motive. Would be interesting to find out, what have these guys done to provide financial inclusion to the underprivileged. To be sure, SKS was making loads of money, but it was pumping it back into the system to provide more loans to the poor. Any money that shareholders would have made would not have been from the pockets of the poor (No decent sized listed company in India has high dividend yields).

If government, wanted to decrease the interest rate charged further, then the right way would have been to encourage creation of hundreds' of more SKS'. Increased competition would have brought down interest rates by forcing these companies to innovate and reduce their costs or perish.

Perhaps the trigger was malpractices by some unscrupulous players and unfair collection processes deployed by some lenders.The solutions was to identify culprits and put them behind bars for violating the law of the land. But with its poor regulation the government has thrown the baby out with the bath water. 

Sunday, November 20, 2011

Cricket loses out to Kabaddi?

The recent cricket matches between India and England and now India -WI have drawn poor response from spectators. While some of this was expected due to the heavy cricket calendar and string of defeats in England immediately preceding, the nearly empty stands have been surprising.  While, I pretend to care less about the results (vs earlier) I still am saddened to see India lose and am egging them on to win from the comfort of my living room. In contrast the IPL drew huge crowds.  This raises important questions for the administrators and players alike

1. Are the glory days of test cricket over, despite continuous cries for the purest format from the players because at the end a sport would survive only if there are spectators? 
2. Is ODI format destined to become irrelevant with Players wanting Test Cricket and Spectators wanting T20's? 

For India, importantly, this may be a chance to try popularize other sports. People are already trying to innovate in hockey to revive the game. Similarly there is brewing interest in other traditional and non-traditional sports. Kabaddi, for example.  It was interesting to witness huge in-stadium crowds for the kabaddi world cup organized in Punjab. While a part of the crowd may have been herded in by the gov't, it was any standards. Also, it helps, if team India is doing well. India emerged world champs in Kabaddi, on expected lines.

Perhaps, real acid test for cricket in India would be the series down under. India need to do well to stem decline of interest in the game

Thursday, November 17, 2011

Everonn close to raising $100 Million from PE?

As reported by BS, Everonn may be close to raising $100 million from private equity players including Carlyle and New York Life capital partners. If true then this would be among the largest PE investments in education sector. At current market price of Rs 298, it has a market cap of about $115 million dollars. However, I would be surprised if Everonn is able to pull it off due to the following reasons

1. Carlyle has burnt its fingers in the past in another Indian education company, which it self has fallen out of favor due to fears on corporate governance. With Everonn's recent problems, including arrest of the former CEO and also deferring of the open offer and poor Q2 results, PE players won't get any where near the company

2. The open offer was to be at Rs 528, almost double the current price. The sharp decline in price would prevent any preferential allotment due to SEBI restrictions on pricing (higher of average of last six months or last two weeks)

Also, NIIT, which is a venerable Indian education training company, is three times the size of Everonn and is available at less than $100 million after adjusting for its 25% stake in NIIT Technologies. And, Educomp, despite concerns on debt is also available at a lower PE of 6.5.

The deferring of the open offer is really worrisome and could see the stock really tanking to lows seen in 2009. 

Tuesday, November 15, 2011

Everonn Q2 FY12 Results: Revenues slump 26%, PAT in negative territory

Everonn announced its results for the the 2nd quarter (July-Sept 2011)  for FY12.  The effect of the recent turmoil was visible in the results. Revenues dipped 26% YoY to Rs 79.5 Cr from Rs 108 Cr last year. Decline in revenue and  massive increase in depreciation and interest costs pushed Everonn  into a loss with a PAT of negative 3.7 Cr versus 15.5 Cr of profit in the corresponding quarter of FY11.

After Educomp, Everonn is the second education company to disappoint the market this week with poor results. Everonn's share price fell over 5% in today's trade. Educomp's stock has already fallen 25% over the last 3 days. 

Friday, November 11, 2011

Educomp Q2 FY12 Results: Profit slumps 78%

Educomp today reported Q2 FY12 results and surprised negatively on the profits. The profit after tax came in at Rs 13 Cr which was 78% lower than corresponding quarter of last year (Q2 FY11 PAT was Rs 58 Cr). This despite the 16% increase in revenue.

Profit was impacted by 37 Cr of forex losses and an almost fifty percent jump in interest cost to Rs 31 Cr for the quarter  What is of concern is Rs 1908 Cr of debt on the books of the company and the muted growth rate in the School Learning Solutions which consists of the flagship smart class business.

Further the jump in debtors, inventories and provisions is a matter of concern, as is the increase in Loans and Advances.

Post Script: Educomp reported 28% growth in smart class segment which is impressive, but overall numbers are a matter of concern and do not inspire confidence.  Given the high debt, investors are likely to stay away from this counter till FCCB's are paid off and overall debt comes down. The de-leveraging would keep growth rates low in the short to medium term .

Blog Widget by LinkWithin