DLF goes deep into the hole, Crisil lowers Ratings with a finger on further downgrades

DLF goes deep into the hole, Crisil lowers Ratings with a finger on further downgrades

DLF, the country's largest real estate company, today said that it has deferred several residential, hotel and commercial projects and retrenched an unspecified number of staff due to the lack of demand for housing.

DLF Chairman K P Singh said the real estate sector would witness massive job losses unless steps were taken to boost housing demand by reducing the rate of interest on home loans to around 7 per cent.

Singh said the real estate sector supports the livelihood of many people and stalled projects meant people will lose their jobs. He added that his company may have laid off some people, but did not give any numbers. Other developers like Unitech and Parsvnath Developers are also reported to have retrenched staff in the recent past.

Singh's remarks, made on the sidelines of the India Economic Summit organised by the World Economic Forum, come at a time when there are reports of real estate firms laying off employees, as part of their cost-cutting drive.

Developers have been facing liquidity crunch for over a year now. One of the reasons for this is the high risk weightage for bank loans to real estate and the ban on them from borrowing funds overseas.

However, the government has asked developers to slash prices of their projects to boost demand in the sector. Singh said the lack of demand has already led to lower prices.

Meanwhile, Crisil has lowered its rating on DLF's non-convertible debenture programme and long-term bank facilities to AA-/Stable from AA/Stable. The rating agency said the revision was prompted by a weakening of the company's debt protection measures and higher-than-expected gearings.

The weakening was on account of higher debt funding of receivables from DLF Assets (DAL) and increased payments made for land.

The rating agency said it may revise its outlook on DLF to 'negative' if the receivables from DAL increase significantly beyond current levels. Conversely, the outlook may be revised to 'positive' if there is a significant improvement in the company’s capital structure and debt protection measures.

Crisil's rating derives support from the company’s policy of reducing its gearing to about 0.5 times. "These rating strengths are partially offset by the risks and cyclicality inherent to the real estate sector, DLF’s aggressive plans of diversification into non-real-estate businesses, and the high levels of receivables from DAL," said Crisil.

GVK POWER and Infrastructure (GVKPIL) is planning to divest 25% stake in its energy vertical.

GVK POWER and Infrastructure (GVKPIL) is planning to divest 25% stake in its energy vertical.

The company is in talks with some global private equity funds and a European bank for the proposed deal, which is valued at around $500-700 million. “We have got five confirmed term-sheets from four global private equity funds and one foreign bank. We hope to sew up the deal with one of them after our power plants commence operations by the year-end,” said a top official of the company who did not wish to be named. A term-sheet is a non-binding agreement setting forth the basic terms. The company is waiting for gas supplies from Mukesh Ambani-led Reliance Gas Corporation for two of its power plants in the state. “We will settle the transaction once the Vemagiri and Gautami power plants in east Godavari district start generating power,” said the official. Currently, these two power plants are lying idle. Reliance Gas Corporation has entered into an agreement with GVKPIL to supply 8.94 million cubic metres of gas per day for the gas-based power plants in Andhra Pradesh. The Mumbai-based company would be producing 40 million cubic metres per day of gas in the first phase. GVK Power & Infrastructure, an arm of the GVK group, has diversified businesses. It has a focus on infrastructure and urban infrastructure projects, besides interests in the hospitality, services and manufacturing sectors. The company owns, operates and maintains power plants by itself and through its subsidiaries. In February 2008, the GVKPIL incorporated GVK Energy as its wholly-owned subsidiary. Later, the company acquired both GVK Energy and GVK Developmental Projects.

Indian shares tumble for second session in a row; ICICI Bank leads declines

Indian shares tumble for second session in a row; ICICI Bank leads declines

Indian shares extended losses for the second session in a row Monday, tumbling nearly 4 percent on fears that the credit crisis may take its toll on the European financial institutions, after the collapse of large U.S. banks.
EUROPEAN BANKS HIT BY THE CREDIT CRISIS
Credit crisis fears returned on Monday, as the European states took steps to rescue the nations' lenders from the event of bankruptcy. The Belgian, Dutch and Luxembourg governments saved financial firm Fortis over the weekend to prevent a domino-like spread of failure. The UK government said lender Bradford & Bingley Plc's branch network will be sold to Spanish bank Santander and the remainder of the group will be nationalised.
Moreover, Iceland's government bought a 75 percent stake to take control of Glitnir Bank after the lender's funding position deteriorated. German lender Hypo Real Estate Holdings A.G. struck a last-minute deal with the government and a consortium of banks to resolve a refinancing squeeze.
MARKET COLLAPSES TRACKING EUROPEAN CUES
The Bombay Stock Exchange's benchmark 30-share Sensitive Index plunged 506.43 points or 3.87 percent to 12,595.75, recovering from the day's low of 12,402.84 points, it's lowest in a year and a half. The 50-share S&P CNX Nifty of the National Stock Exchange sank 135.20 points or 3.39 percent to 3,850.05.
Weak opening among the European indices and the UK government's announcement of Bradford triggered panic-selling in the banking and realty shares, which later spread across the counters.
'The market recovered by some points later, as insurance companies bought on the shares at lower levels later in the day,' said a dealer at a Mumbai-based brokerage.
At the close, all the 30 benchmark equities which constitute the Sensex declined except consumer goods giant Hindustan Unilever Ltd., which gained 0.8 percent to 254.50 rupees.
No. 1 private lender ICICI Bank Ltd. led the declines, sliding 12.1 percent to 493.30 rupees. The lender came up with a statement in the mid-market hours that its UK subsidiary has no exposure to U.S. sub-prime credit and that 98 percent of its non-India investment book of $3.5 billion was 'rated investment grade and above.'
Top engineering company Larsen & Toubro Ltd. dipped almost 5 percent to 2,345.35 rupees and no. 2 software company Infosys Technologies Ltd. slipped 3.85 percent to 1,391.95 rupees.
All 13 BSE sector indices declined, with the banking index being the worst hit. The gauge of 16 lenders tumbled 6.02 percent, and is off 34.8 percent since Sept. 28, a year ago.
About 263.9 million shares changed hands in the broader market, as 357 advancers trailed 2,287 decliners.
Forty-six of the 50 Nifty shares declined, led by world's fifth largest wind turbines maker Suzlon Energy Ltd. as it pared 12.4 percent to 153.50 rupees. State-run oil refining and marketing company Bharat Petroleum Corp. Ltd. (BPCL) gained the most as it rose 1.8 percent to 341.10 rupees on the National Stock Exchange, which recorded 555.1 million trades.

Q: What is your take on the kind of damage that we are seeing in a lot of largecap names like ICICI Bank and Unitech? Do you think they are getting oversold or there are legitimate reasons for these kinds of sharp falls?

Kapoor: To some extent, there is panic both in the real estate sector as well as in ICICI Bank if we take that specific name. The reasons are that in real estate, a lot of foreign money or private equity money had come in and all these institutions are finding themselves in problems. Real estate prices have the potential to go down much more than they have in the last one year or so.

So, that explains this panic in real estate stocks. ICICI Bank, in terms of valuations et cetera is at a very good price at this point to accumulate. But in a panic state, markets can become very irrational as they can become in a very bullish market.

So, one really cannot put a bottom to it. But at every decline, ICICI Bank is a stock that one can accumulate, but very gradually and carefully because we don’t know where this bottom will finally happen.

---dggopi4u

KSK Energy Ventures Ltd Ipo

Power producer KSK Energy Ventures Ltd. plans to raise a maximum of 12.98 billion rupees through an initial public offering and a pre-IPO share placement.

The price band for the 34.611-million-share initial public offer, that opens on June 23 and closes on June 25, has been set at 240 rupees to 255 rupees per share, banking sources said.

Its promoter, London-listed KSK Power Ventures , on Friday said it issued 17.306 million shares to a clutch of institutions including Macquarie Bank, Infrastructure Development Finance Co , Axis Bank and GE Capital, at 240 rupees each, raising 4.15 billion rupees.

KSK Power Ventures, a company listed on the AIM market of London Stock Exchange, today said its Indian subsidiary has raised Rs 415.34 crore through an pre-IPO placement.

KSK Power said its subsidiary KSK Energy Ventures, has successfully completed a pre-IPO placement of 1.73 crore equity shares at a price of Rs 240 per share, a company statement said.

The company has issued shares to six financial institutions including Macquarie Bank (UK), Tree Line Asia Master Fund, Infrastructure Development Finance Company, Axis Bank, Universities Superannuation Scheme, UK and GE Capital (Mauritius).
After the big let-down for investors by Anil Ambani's Reliance Power, a little known company, KSK Energy Ventures Ltd, with negligible experience in the power sector is planning to raise around Rs 2,000 crore through an IPO. When one of the largest industrial houses in the country could not reward its IPO subscribers with good returns post-listing, it has to be seen how this issue fares on listing


KSK Power Ventur plc is India focused Power project development and Investment Company listed on Alternate Investment Market (AIM) of the London Stock Exchange.
KSK operates across India through its fully owned subsidiary, KSK Energy Ventures Limited.
KSK Power Ventur plc is a power project development company listed on Alternate Investment Market (AIM) of the London Stock Exchange. KSK operates in India through its fully owned subsidiary, KSK Energy Ventures Limited (KSKEV). Its operations in the Indian Power Sector are powered by the growth opportunities it realizes and capitalizes on. An affiliate of Lehman Brothers of USA has 33.5% stake in KSKEV.

Red and Green with share market

Do’s & Don’ts

Do’s

Always keep your profit margin not more than 25% - 30%
Check out the rates consistently and sell it as it reaches the target rate.


Don’ts

Do not over trade
Do not trade only with one sector
Don’t rush to take profits as long as market is acting right.
Don’t make averages by buying shares when price decrease than your last purchase
Don’t watch or trade too many stocks at a time.
Don’t invest by listening to rumors.

Investment tips

1. Widen your horizons

The expression, "don't put all your eggs in one basket" is meaningful when it comes to investing. Don't put all your money in one stock. Also, buy bonds, debentures and stocks. Don't pick only one type of investment. Your portfolio must be diversified.

2. Examine the existing date

Obtain and analyze as much information as possible before making your investment decisions. This will provide you the basis for investment. And on the basis you would be able to take correct decision.

3. Establish your goals

Determine the price at which you're willing to buy and sell. Analyze interest rates to decide what return you want. There are various types of investment where you can invest. For achieving the goals , you financial decisions must be based on your risk bearing capacity.

4. Higher the Risk : Higher the return.

If you want to have a higher returns you need to take higher risks. So if you can not afford to loss , donot invest beyond your limits.

5. Only Long term investments are good investments

Company stock prices will fluctuate, sometimes unfavorably, in the short-term. Invest for the long-term, but keep your current financial needs in mind. In long term, the market will repeat the history and you should wait for that.

6. Don't take sudden decisions.

An impulse buy, whether at the mall or on the stock market, is still an impulse buy. Stick to your plan.

7. Tax Planning Is vital

Consider income-splitting techniques.

8. Focused assist

If you're starting out, you must hire the best professional help . Professional advice will likely pay for itself within a short period of time.

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