Month: February 2008
Jaaju Jaaju Stories – The Wicked Sons
From Jataka Tales
A very wealthy old man, imagining that he was on the point of death, sent for his sons and divided his property among them. However, he did not die for several years afterwards; and miserable years many of them were. Besides the weariness of old age, the old fellow had to bear with much abuse and cruelty from his sons. Wretched, selfish ingrates!
One day he met a friend and related to him all his troubles. The friend sympathized very much with him, and promised to think over the matter, and call in a little while and tell him what to do.
He did so; in a few days he visited the old man and put down four bags full of stones and gravel before him.
When the young men got to hear of this further increase of wealth they began to be more attentive and pleasing to their father than ever before. And thus they continued to the day of the old man’s demise, when the bags were greedily opened, and found to contain only stones and gravel!
(From “Indian Fairy Tales” by Joseph Jacobs)
Rights issues are a safe bet in bear market situations
Rights issues are a safe bet in bear market situations
Prerna Katiyar, TNN
MUMBAI: Companies like SBI, Exide Industries and Gujarat NRE Coke recently announced rights issues. While their share prices have reduced considerably in the recent meltdown, they’re still trading above the rights price.
The equity market has seen a sharp correction in the past week. Just a couple of weeks ago, companies like SBI, Gujarat NRE Coke announced issuance of rights shares. SBI, for instance, announced a 1:5 rights issue at a price of Rs 1,590 per share.
While the share prices have seen correction (it was at the Rs 2,400-level some days back) to Rs 2,159, the rights price is still at a 25% discount to the latest market price. After adjusting for equity dilution, it’s still available at an 11% discount. The discount factor has reduced, but long-term investors could still consider rights issues like that of SBI, Exide Industries, Gujarat NRE Coke, Dhanalakshmi Bank, Centurion Extrusion if they are upbeat about business prospects.
What is a rights issue?
Rights issues are shares issued by a company only to its existing shareholders. In fact, rights issue is a method of raising further capital from the existing shareholders/debenture holders by offering additional shares on a pre-emptive basis, usually at a discounted price. The number of shares offered depends on the number of shares already held and other terms made in the offer. For example, if you hold 200 shares in XYZ and it makes an offer of one-for-two, you can buy up to 100 shares at the price stated.
Why the discount?
The main idea behind this is to make the issue attractive for its shareholders. Also, as the shares of the company usually fall post-issue due to equity dilution, it makes sense for the company to offer the shares at a discount.
Why does the company offer a discount and not go in for a further public offering (FPO)?
It’s money and nothing else. The company makes the offer to raise capital. This is done either to expand its existing business, set up a new plant, or even pay back loans. “It is largely because the company want to pass on the benefit to its existing shareholders that it makes the rights issue rather than going in for an FPO,” says SBI MF manager Jayesh Shroff. Also, the transaction cost for a rights issue works out to be lower than going in for an FPO.
I’m not a shareholder, can I still benefit from rights issue?
Yes, provided you become a shareholder of the company before the record date. While declaring a rights issue, a company also declares the record date or the date on which a shareholder must officially own shares in order to be entitled for the issue. For SBI, it is February 4, 2008.
One thing to be kept in mind is that you will not be entitled for rights issue if you buy the share on this date. You need to buy the stock two days before the record date for becoming a shareholder. Another important date to keep in mind is the closing date.
What options do you have?
Rights issue is offered to all its existing shareholders individually and you have the choice to reject it (which means, not to subscribe for any shares), accept it in full (subscribe for all the shares offered) or accept it in part. So you do have a right to say no to it.
Can I go in for more shares than offered?
Usually, shareholders are given a chance to subscribe for more shares than offered. Although, there is no guarantee that those number of shares will be allotted.
Is rights issue transferable?
Yes. You can sell them in the open market or transfer it.
Should one always go for it?
“Provided the investor is confident of the company’s management and the business model, one can go for the issue for the simple reason that he is getting the stock at a discount than the present market price,” adds Mr Shroff. Although, in a falling market, the lucrativeness of the offer is falling day by day, one may consider these issues as one is aware of the trading history and performance of the stock.
All that brouhaha about bonus
All that brouhaha about bonus
Prerna Katiyar, TNN
The Reliance Power bonus issue is finally out. The company declared a 3:5 ratio on Sunday giving three extra shares for every five shares held by a shareholder. These shares were issued to only non-promoter shareholders. The record date for the issue is still to be declared by the stock exchange.
What is a bonus issue?
Any company, which has excess reserves that it may have build by retaining part of its profit over the years, may decide to convert some amount into its share capital by issuing bonus shares. This doesn’t change the market value of the company. “It is one of the ways, in which reserves of the company get capitalised,” said PN Vijay Financial Services managing director PN Vijay. In case of Reliance Power, the company is converting its share premium reserves into bonus.
What is bonus ratio?
New shares are issued in the proportion of their holdings. If the bonus ratio is 1:2, for every two shares held by the shareholder, he will get one extra share. This means, if someone was holding 100 shares of a company, he will get 50 free shares making total holding of shares in that company to 150 instead of 100. Rajesh Exports was another company to issue bonus. The ratio declared by the company was 2:1, which means every shareholder got two extra shares for each share held.
Why a bonus issue?
It is one of the ways for companies to capitalise their excess reserves and reward its shareholders. “Rajesh Exports has reserves in excess of Rs 500 crore and so the company decided to pass on the benefit to the shareholders in the form of bonus issue,” said Rajesh Mehta, the chairman of the Bangalore-based jewellery maker Rajesh Exports. Also, a bonus issue is seen as a sign of a company’s good health.
How do shareholders benefit?
The shareholders get the bonus shares for free, thus bringing down the cost of owning the shares and the company’s profit too remain intact. “It’s a win-win situation for both the issuing company and shareholders. While the company doesn’t need to generate free cash and issues the bonus shares from its accumulated reserves, the shareholders get free shares,” said JP Morgan Asset Management India chief executive Krishnamurthy Vijayan.
How does the company benefit?
Corporate actions like dividend payouts and bonus issues are ways of rewarding shareholders. While dividends are paid from profit after tax (PAT), bonus shares are issued from excess reserves the company may have. This means in case of the latter, the company is able to reward the shareholders without touching its profits.
Also, from the company’s point of view, it is more of an accounting entry that moves money from one accounting head to another. “Except for the sentiment among shareholders, there is no change in the company’s valuations after the bonus issue,” said Birla Sunlife Mutual Fund CIO A Bala Balasubramaniam.
Record date & ex-bonus
Record date is the date set by the company for determining the holders entitled to receive bonus shares. For Rajesh Exports, it was February 5, which means that anyone who had shares of the company till this date were entitled for free bonus shares. For Reliance Power, the date is yet to be declared. After record date, shares of the company become ex-bonus.
What about Reliance Power?
Anil Ambani holds 45% stake in Reliance Power and another 45% is held by Reliance Energy. Mr Ambani said he will be transferring his own 2.6% stake in Reliance Power to REL so that REL’s holding in Reliance Power remains intact.
For all those who are still wondering how the cost of acquisition for retail shareholders came to Rs 269, here’s the math: Suppose you were allotted 17 shares, making the total amount you invested to 430*17 or Rs 7,310. After the 3:5 bonus issue, most likely you will get 10 ‘free’ bonus shares, which means you now have 27 shares still keeping the invested amount at Rs 7,310. Now divide 7,310 by the new total number of shares you own (27) and you will get the answer.
Takreer plans to build new refining unit at Ruwais
Takreer plans to build new refining unit at Ruwais By Himendra Mohan Kumar, Staff Reporter GULF NEWS Published: February 25, 2008, 23:40
Abu Dhabi: The Abu Dhabi Oil Refining Company (Takreer), plans to build a new refinery with a capacity of 417,000 barrels per day (bpd) at Ruwais, 240 km west of Abu Dhabi, a senior company executive said on Monday.
“The project is in the front end engineering and design (FEED) phase. This phase will be completed in a year and then the construction of the unit will begin, subject to necessary approvals, with its completion planned for 2013,” Takreer general manager Jasem Ali Al Sayegh told delegates at the ongoing Middle East Refining Conference here.
He declined to comment on the estimated cost of the project.
“We will have an estimated cost one year from now,” said Al Sayegh, but admitted that Takreer is feeling the heat of project escalation costs, which is a global phenomenon.
Al Sayegh said the new refinery will complement Takreer’s present 400,000 bpd plant at Ruwais.
The Ruwais refinery currently processes 120,000 bpd of crude oil and 280,000 bpd of condensate.
In addition, Takreer operates the 85,000 bpd Abu Dhabi refinery located on the outskirts of Abu Dhabi.
Al Sayegh said Takreer’s future plans are driven by the demand growth for petroleum in the local and international markets.
The refiner’s green diesel project, which aims to reduce sulphur content in gasoil as mandated by the government, is planned for completion by the end of 2011.
In addition, Takreer is building an inter-refinery pipeline, which will connect both refineries with its Musaffah product dispatch terminal in the second quarter of 2008.
“This project, upon completion, will eliminate shipment of products between refineries,” said Al Sayegh.
Another senior Takreer executive said nearly 30 per cent of the refiner’s output constitutes gasoline and diesel.
“As of now, we don’t import any oil products. We meet all our domestic fuel requirements and export too. We are exporting diesel, jet fuel and naphtha, mainly to Japan and the Far East,” said the Takreer executive.
He said the Ruwais refinery, which at present is undergoing partial maintenance, will resume normal operations within the next 25 days.
Takreer was established in June 1999 to take over the responsibility of refining operations of the Abu Dhabi National Oil Company (Adnoc).
Friday sermon to be telecast live in sign language
Friday sermon to be telecast live in sign language
By Adel Arafah (Our staff reporter) KHALEEJ TIMES 26 February 2008
ABU DHABI — The Juma (Friday) sermon at Shaikh Zayed Mosque in Abu Dhabi will be telecast live in sign language from the first Friday of March, Dr Mattar Al Ka’abi, Director-General of the General Authority for Islamic Affairs and Auqaf (Endowments), said recently.
Emirates TV channel would telecast the sermon in sign language every Friday, he said.
The move was part of the authority’s commitment to the people with hearing and speech difficulties, who number more than 200 in Abu Dhabi alone as per the statistics issued by the Zayed Higher Foundation for Humanitarian Care, he said.
The authority had signed contracts with two specialists in sign language to convey, in detail, the Juma sermon, he noted. These people with special needs are an integral part of the society, and the authority was planning to introduce sermons in sign language in more mosques in all emirates, he added.
Want to test your fitness, climb 55 floors
Want to test your fitness, climb 55 floors
By a staff reporter KHALEEJ TIMES 26 February 2008
DUBAI — A high rise stair climb in Dubai’s iconic tall buildings will be held on February 29. As part of it, participants will scale 55 floors to test both their endurance and fitness.
The ‘Dynamisan High Rise Stair Climb’ was announced yesterday by Novartis Consumer Health (NCH).
The climb, to be held at the A W Rostamani 21st Century Tower in Dubai, is expected to be rolled out throughout the GCC countries over the coming months.
With the increasing incidence of lifestyle diseases such as diabetes and cardiovascular diseases in the UAE, this climb aims to showcase the benefits of taking the stairs and getting more physical exercise to combat obesity and help ensure a healthy lifestyle.
Stair climbing is an effective cardiovascular work-out and burns twice as many calories as other sporting activities; 15 minutes of stair climbing produces the same results as 30 minutes of running. Climbing up the first 20 flights will be aerobic, after which the climb will intensify becoming an intense anaerobic work-out.
Samah ElManzalawy, Dynamisan Brand Manager from Novartis Consumer Health said, “We all work long hours and tend to neglect our health, especially with regards to exercise. We are often too tired to exercise, even though it will give us an energy boost.”
The event is open to everyone.
No ban on YouTube in UAE
No ban on YouTube in UAE
By Asma Ali Zain (Our staff reporter) KHALEEJ TIMES 26 February 2008
DUBAI — Internet users can be rest assured that YouTube, an active video sharing web site, will not be completely banned in the UAE as its content is already being regulated by the Telecommunication Regulatory Authority (TRA).
Users were concerned after Pakistan on Sunday asked its Internet service providers (ISPs) to completely ban the web site until further orders for posting blasphemous material.
A spokesperson for the TRA told Khaleej Times yesterday, “We have given choice to the Internet users in the country and not blocked the web site entirely. Adult content on the web site that is clearly against the religious, cultural, political and moral values of the UAE will automatically be blocked.
“Our ISPs (Etisalat and du) have an understanding with YouTube in this regard. Nearly two years ago, YouTube was blocked in the country. However, the TRA wants to provide flexibility to its subscribers. Therefore, the web site can be accessed in the country though objectionable content will remain blocked,” said the spokesperson.
“Following reports from Pakistan banning the site for blasphemous material, we were concerned that the UAE might follow suit since this is an Islamic country. Thankfully, the site is still accessible. Despite its drawbacks, it remains a rich source of information. It is fair though that the content is monitored and blocked if that is the rule in the country,” said Linda Brehick, a user.
“I think that the web site should be banned completely in the country because even though it is being monitored closely, there are certain objectionable materials that I would not like my children to see. It is practically impossible to monitor your children all the time. If the ban is in place, we can be assured that they will not have access to the site,” said Farida Mohammed.
According to Wikipedia, YouTube is the third most visited web site (as per statistics from Alexa Internet). It has been censored several times in some countries since its launch and it is banned in several countries including Brazil, Iran, Morocco, Pakistan, Syria, Thailand and Turkey. Saudi Arabia and the United Arab Emirates only block content that is not in line with their policies.
How to achieve your financial goals
How to achieve your financial goals
Sheetal Mehta | February 25, 2008 for rediff.com
Saurabh Awasthi, 26, a media professional from Hyderabad was trying to figure out his financial goals. His wife Seeta, 25, too, was helping him in the exercise. At the end of the day both Saurabh and Seeta had exhausted themselves. They could not figure out as to what their priorities were: Planning for their 2 year old son’s higher education, buying a home for themselves which they desperately needed or spend Saurabh’s bonus on a world tour.
This, often, is the dilemma faced by many people planning their future finances. The most common question in such cases is how you should plan your finances. In the fast-growing Indian economy everyone is so keen on concentrating on their career and earning as much money as possible that they forget that the surplus money has to be invested for the future.
Or even if you do remember a bandwagon concept is adopted ?invest where everyone else is investing. But in the world of financial planning you must remember that one size does not fit all.
In my interaction with the people who I come across and further discussions with them I have noticed that they lack a clear picture of the purpose of their investments. Everyone just wants to invest and become rich. I wish if that were so easy.
Do not invest just for the sake of investing. As Ralph Seger rightly said, “An investor without an investment objective is like a traveller without destination.” Although this quote has been used n number of times I would still like to use it here as planning without a definite goal is akin to a traveller without destination.
First and foremost you must remember the most important aspect of financial planning, and that is, what you want to achieve? Try doing this: jot down 5 important financial goals that you want to achieve in the next 10-15 years. I am sure not many will be able to do this.
But there is a simple way that may help you to develop a fundamentally sound financial plan and achieve goals for which you are working so hard. The first and foremost step is to note down your goals as this is the starting point of your planning.
Don’t get foxed by returns on your investments
Goals give you an idea as to what you want to achieve. They can vary from just plain savings to your retirement, to your child’s education, buying a house, buying a car, funding your or your son’s/daughter’s marriage etc. The job does not end here though. Even after listing them, you must have a clear vision about their priorities. The best, way to make this daunting task easy is to divide your goals into the following three categories:
~ Responsibilities: Like providing for your parents, providing education to your children, funding their marriage, meeting any unforeseen events etc.
~ Needs: This includes requirements that you have like providing for retirement, buying a house, providing for day-to-day life and also saving for the near future, etc.
~ Dreams: Or aspirations. It can be anything like buying a luxury car to buying a solitaire for your wife or a world tour. Your dreams may be out of reach but there is no harm in listing them as this can act as a constant reminder for you to work hard.
Based on the above three criteria you categorise your goals. You need to prioritise the above listed goals in an order of importance in your life and their requirements.? There needs to be a fair balance drawn between needs and responsibilities as at a certain point in time both could be equally desired by you.
Time frame
Once you have set your goals then the second important step is to decide the time frame in which you would like to achieve them. This factor is very important when you are planning to invest. The time period for investment is based on the time in which you wish to achieve your set of goals.
Let’s take an example to understand it better.
Say you are planning to buy a car but are not sure when you can do it. You invest a part of your money in Public Provident fund, National Saving Certificate, Infrastructure bonds and some close-ended funds. After say 4 years a new car is introduced in the market which suits your requirements and you decide to buy it. But your entire sum is blocked as all of them have been invested in products which have a lock-in period.
Let me take one more example. Say your child’s admission to higher education is just a year away. You are planning to invest money to meet this requirement. Carried away with the stock market boom you invest all your money in the market. Just a few days before paying the fees the stock market crashes and your capital is reduced to half.
Remember that stock market is a good avenue to invest but only if you are a long term investor and your goal is at least 8 to 10 years away and not when it just a year away. You need the capacity to hold and stay invested. Also, to enter the stock market with the intention to be a trader and not an investor is a risky affair and such foolishness is better avoided.
However, it is not necessary to fix an exact time frame. A rough estimate of when you will need money can also give you a picture as to how to plan your financial goals. However, if you do not give a set time to achieve your goals then you may not only digress from the right path of planning but also end up depleting your hard earned money.
Charting
After you have done the above two exercises you need to put a financial figure as to how much money you will require when you reach that stage. That is, you must know the future value of your requirements in today’s cost. For instance, a two year MBA today may cost you say Rs 4 lakhs but eight years down the line you will surely need a higher amount for the same course.
To overcome this, the best way is to prepare a chart as given below:
(The above table is hypothetical)
You need to factor in the inflation cost and find out what will be the future value of financial goals. This can be calculated using a simple formula:
FV = Present Value * (1+ Inflation rate) ^ number of years left to achieve your goal
FV = 4,00,000 * (1+6%) ^ 8
FV = Rs. 6.37 lakhs (approximately). So this is the figure for which you need to plan for.?
I hope the above will help you lay a path for your investment planning. Planning varies depending upon your needs but the factors that help lay a path to your plan remain same for everyone. The above process gives you a clear picture as to the path you need to follow to achieve your goals. It also helps you to decide on the most suitable investment that will help you and not your friend or neighbour.
The author is a financial consultant and can be reached at dhanplanner@rediffmail.com.
Virgin Atlantic jumbo jet is first airliner to fly partially on biofuel
Virgin Atlantic jumbo jet is first airliner to fly partially on biofuel
By Juliana LazarusPages Editor GULF NEWS Published: February 24, 2008, 23:07
London: Sir Richard Branson was one happy man yesterday when Virgin Atlantic became the first airline in the world to fly a commercial aircraft on biofuel.
The passengerless Boeing 747 jumbo jet made the journey from London to Amsterdam with one of its engines powered partially by biofuel made from babassu nuts and coconut oil, ingredients that are commonly found in products like shaving cream and lip balm.
The ratio of the blend was 20 per cent biofuel and 80 per cent standard fuel, Sir Richard said at Heathrow Airport before the launch, the result of a venture between Boeing, GE Aviation and Imperium Renewables.
“There were several reasons why Virgin chose babassu nuts and coconut oil over other energy sources,” Branson said.
First, unlike ethanol it did not freeze at altitudes above 30,000 feet. Second, both fuel sources did not compete with staple food crops and did not mean deforestation – they were in fact harvested from existing plantations. Third, there was no need to modify either the aircraft or the engines for the flight.
Sir Richard conceded that the biofuel was still several years away from certification, but he was confident that when that happened, it would not only mean smaller carbon footprints in the aviation industry but also cheaper airfares.
Use of seatbelts in back seats may be made compulsory
Use of seatbelts in back seats may be made compulsory
By Alia Al Theeb, Staff Reporter GULF NEWS Published: February 24, 2008, 23:29
Dubai: Police are working with the Interior Ministry to issue a law that considers making not wearing seatbelts in the back of a car an offence, a senior police official announced on Sunday.
Brigadier Mohammad Saif Al Zafein, Director of Dubai Police’s Traffic Department, did not elaborate on the issue, but stressed the importance of wearing seatbelts at all times. Currently, only front seat passengers need to wear seatbelts by law.
Police issued around 25,520 offences for not wearing seatbelts in 2007 with an average of 2,126 offences monthly. Brigadier Al Zafein announced the launch of a two-week awareness campaign on wearing seatbelts which began yesterday.
Awareness
He said awareness regarding wearing seatbelts had started going down and the number of motorists who now wore seatbelts was only 50 per cent. Brigadier Al Zafein revealed that 332 people were killed in traffic accidents last year and it is estimated that 40 per cent of those victims in collisions were not wearing seatbelts.
He pointed out that 16 per cent of people who were killed in accidents where cars flipped over in 2007 were not wearing seatbelts. The fine for not wearing seatbelts is Dh100 and three black points. The law fines the motorist and the passenger sitting next to the motorist.
“We are coordinating with the Interior Ministry to issue a law that considers not wearing seatbelts in the back seat a punishable offence,” Brigadier Al Zafein said.
He said the first week of the campaign would focus on spreading awareness on the importance of wearing seatbelts and the importance of using child car safety seats.
The second week will focus on road control and issuing fines to offenders.
“Seatbelts do not prevent accidents but they do reduce the damage to the lowest levels,” Brigadier Al Zafein said.
He pointed out that traffic police issued 14 fines to motorists who allowed children under 10 to sit in the front of cars.
Lieutenant Colonel Dr Jasim Mirza, Director of Dubai Police’s Security Awareness Department, said the focus of the campaign would be on educating schoolchildren.
Dubai Police’s Traffic Department launched the campaign in coordination with the Santis HSE Group, a Global Health, Safety and Environment Consultancy and Gargash Enterprises.
Santis HSE Group and Gargash Enterprises officials will take the campaign to schools, streets and shopping malls in Dubai to promote safety and give out complimentary child car seats and car safety packages.
- ← Previous
- 1
- 2
- 3
- …
- 12
- Next →
ClicksandWrites 
You must be logged in to post a comment.