Reliance Power IPO: Complains

Reliance Power IPO was set to make history for the Indian Markets.
It was supposed to be the IPO that could make Anil Ambani the richest man of India, bypassing elder brother Mukesh Ambani. However, it did create history, but only on the other side.

The pain for Reliance Power IPO does not stop there. As per the latest news, SEBI has received 2261 complains, almost all from Retail Investors, against the Reliance Power IPO. The primary reasons for complains are No Refunds sent to the investors, No Credit/allotment of Shares and no receipt of interest on the delayed refunds.

Interestingly, almost all the complains have come from the retail investors, and more interestingly, the issue has reached the Parliament. The minister for finance has apprised the parliament that the issues have been forwarded to SEBI who have forwarded it to the concerned company which is looking into the matter.

Already the investors of Reliance Power Issue are beating their heads for the negative price movement they have seen in the price of reliance power after listing of the shares. Even a Bonus issue offer from the ADAG could not help the falling stock prices. Now the number of complains that have piled up is shattering the trust of the investors.

Related: Reliance Power Bonus Shares Allotment Date

Let’s see what is the outcome of all these complains. If you are one of the affected applicants of the Reliance Power IPO, then you must address your grievances to the concerned authorities without delay.

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Mortgage Approvals Slump: Strict standards for Mortgage Approvals

The mortgage lenders are tightening their standards and guidelines to offer loans to the mortgage borrowers in the ailing mortgage industry.
Since January, the number of loans has fallen by 34 percent, all due to strict lending criteria.

So if you are a mortgage borrower and your mortgage loan application has been disqualified, don’t blame your mortgage lending company. Because, the entire mortgage market is collapsing and hence it is becoming difficult for the mortgage lending companies to offer any easy loans or mortgages.
The data from the Council for Mortgage Lenders reveals that 50,300 loans were made for house purchases in January, which is a clear 20 per cent fall from December 2007. The total loan or mortgage value of £7.8bn stands at 31 per cent less.

Banks are also not taking any chances. They are asking for more and big deposits and offering only smaller loans which are in multiples of the salary received by the individuals.
First-time buyers took out average loans for 88 per cent of a property's value in January, down from 90 per cent in December. They typically borrowed 3.32 times their income.

Fortunately, these are good times for some. If you have that extra money with which you can invest in a falling real estate market, then you must go for it and forget your investments for 3 to 5 years.

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Heathrow & Gatwick: Pay more for landing

BAA owns the two busiest airports of Heathrow & Gatwick airports. It has recently got the permission to increase the landing charges which could inflate or increase the charges of using these airports to the tune of 20 GBP per passenger. The cost will be recovered from the airlines, which will ultimately pass the charges to the passengers and hence the passengers will have to shell out more money.

As per the news:
The Civil Aviation Authority (CAA), which sets the fees the airports can charge airlines, said on Tuesday that rates at Heathrow can rise almost 24 per cent next year to £12.80, with promised above-inflation increases then likely to take them to around £20 by 2013. Similarly, at Gatwick, the charges will rise 21 per cent next year to £6.79, and reach about £9 in the next five years.

And actually, BAA cannot be blamed for rising the landing charges. The number of passengers these airports are serving have gone up to the tune of almost 2 times since last year. Hence, BAA needs more money to maintain the airports. But airline companies said the fees would lead to higher ticket prices with passengers left paying more to finance the huge debts incurred by the Spanish purchaser of BAA.

Anyways, with the current decision in place, the passengers are sure to be made to pay more if they travel through Heathrow or Gatwick.

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Ratnagiri Gas IPO

Ratnagiri Gas and Power (abbreviated as RGPPL), with primary which operations in the 2,140 mw power plant at Dabhol, Maharashtra, is planning to come out with its IPO to raise around 10 billion Rs. by selling a part of its shares through the book building process.

Interestingly, the company is jointly owned by another listed power company, NTPC, which was in the news recently after the debacle of the Reliance Power IPO, and was setting the benchmark of a perfect alternate to investing in Reliance Power. Other partner owners are Gail India Limited, and MSEB.

The primary reason for IPO of Ratnagiri Gas is that it is incurring a huge debt of 70 billion Rs. So from the 10 billion Rs. raised thrugh the IPO, the company will make a part repayment of debt to the tune of 5 billion Rs.

Related: Should you apply for an IPO?

The Dabhol plant will be fully operational by the first week of April when the third power generating unit is commissioned. Majority of the work on the liquefied natural gas (LNG) terminal has also been undertaken and it will be commissioned in November. The breakwater, which will enable the five million tons a year LNG terminal operate to full capacity, would be ready by the end of 2011.

No Information is presently available about the offer price, price band of the shares. The IPO is expected in October-November this year. Hopefully, situation will improve by the year and Ratnagiri Gas can think about capitalizing on the IPO business.

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Review: Pogo IPO Review

Its time for more action in the American aviation skies. Pogo Jet, Inc. has come out with its IPO for listing the POGO Jet shares on the stock exchanges.
Pogo Jet intends to be a leading provider of private on-demand jet charter service, initially in the Northeast, Mid-Atlantic, Ohio Valley and Carolinas.

The shares of Pogo will be allocated through the OpenIPO offering process.
OpenIPO® is an innovative auction process for distributing stock to individuals and institutions through a more efficient and equitable process. The auction process allows shares of an initial public offering to be allocated in an impartial way. All successful bidders pay the same price per share.
Should I apply for Pogo IPO? What is the opinion & expectations about Pogo Jet IPO? Will the Pogo IPO have a good listing price? What is the expected listing price of Pogo IPO?

Interestingly, it has been a long time since any airline company in the US came out with an IPO. That too, given the turbulent market situations across the globe, it is a brave front put up the the POGO Jet team, to come out for a public listing in such a highly volatile stock market scenario.

The offerings will be made through the OpenIPO Auction method, which is to ensure that free and fair allotment is done to all the eligible applications.
The exchange on which Pogo will be listed is NASDAQ stock exchange, a quote driven OTC exchange. The stock market symbol assigned to Pogo Jets is “POGO”.

Total number of shares to be offered are 7,000,000

The price range or price band for Pogo IPO is set at: $12.50 to $16.50

Expected Pricing Date is the 17th march Week of 2008
Related: Should you apply for an IPO? & Review of Visa IPO
POGO is NOT a certified company till date; they plan to become operational as a FAA-certified Part 135 operator by the first quarter of 2009.

The business idea of POGO Jet is simple: to provide on-demand private air travel and make it easily affordable to use along with the convenience.
Pogo aims to utilize the low costing small aircrafts, something like a chartered plane, and use these light jet aircrafts to penetrate deep into the unutilized but commonly accessibly landing areas, so as to cut the costs yet reach the customers to provide them with maximum convenience.

Pogo Jets also have a state of the art on-line booking system which permits customers to quickly book and arrange for a flight that most closely fits into their requirements. And, by serving a vast network of underutilized small airports, POGO customers will be able to bypass congested areas, saving both on time and cost. In fact, the customers will have a vast range of choice from over 400 airports in our initial service area.

However, markets are turbulent. There are clear fears that US economy will be or is already into a recession. The IPO markets have their own twists and turns. Investors who believe that POGO Jets will be able to keep up with their business performance in these turbulent stock market timings can take a bet in the market by applying to the IPO of POGO Jet.

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India China Worst performers in Stock Markets

Emerging economies of India and China, along with other Asian countries are the best bet for investments. Right? WRONG, says a report from Thomson Financials. Instead, they are the worst performing markets in the world if you look at the returns for 2008.

Indian stock markets have collapsed by more than 16% since the beginning of 2008, while the Chinese stock market went done even more, by almost 17.5% in the same period. Ultimately, China and India hold the first 2 ranks when it comes to worst stock market performance of 2008 till date.

Now one would say, when the entire global markets are going down, how can India and China be shielded? Very true, but then it better to learn a lesson from such debacles. What goes up like a rocket, comes down at much faster pace when things start going bad. Not only for the overall markets, but even if you look at individual stocks like RNRL, Reliance Petroleum, Reliance Power IPO debut, all these stocks were the once that led the rally. Today, they are the ones which got butchered mercilessly, which ultimately means that the shareholders of these stocks got butchered for their money and investments.

How about Infosys, ever heard of any stock analyst or market expert talking about Infosys anymore.

The report by Thomson Financials cite a reason that India and China were late to join the global slowdown rally. While US and other world economy went down in November-December itself, India and China held on. Now, since these countries heavily rely on exports to US, they ultimately succumbed to the pressure and are now going down further – just to match their peers.

It’s easy to give a report on what has happened in the past. What were the same analyst s and market experts doing in November-December? That is why it is said, things work randomly. One needs to be lucky to make money in the markets.

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L&T hedging Losses: Risk Management or betting Business

Is hedging always beneficial? Ask a Larsen and Toubro (L&T) executive and the answer will come as a big NO.
It has just experienced the disadvantages of international exposures in the commodities markets. Larsen & Toubro, the country’s largest engineering firm, said its Dubai arm could suffer losses of around Rs 200 crore, as its commodity bets have backfired.

The work of L&T is in the field of metal and construction. To hedge away the price fluctuations, L&T took futures positions in the London Metal Exchange (LME) to hedge some of the underlying commodity trades. The underlying and costly assumption made by L&T was that the prices of Zinc and some other base metals will either remain the same or go high, but may not decline. This is the assumption that proved to be costly to the tune of 200 Crore Rs.

Fortunately, L&T had made quite a lot of profit in the past few years by taking futures positions in the name of hedging. Unfortunately, this time their bet turned out to be incorrect.

Contrary to the assumption, the Zinc prices declined. Hence, the long positions that L&T took in futures market turned out to be a loss making venture.

Related: Example of Laker Airline collapse due to costly assumptions

That is the problem when Hedgers become arbitrageurs. As explained in this article about hedging, Hedging should be done for hedging (eliminate the risk or cutting the losses short), not for making profits. It’s easy to be lucky for the first few shots and assume that we can play around in these futures and options instruments and make profits.

However, it all works randomly. Warren Buffet has rightly defined the futures and options instruments as “Weapons of Financial Destruction”.

You don’t know how much you can loose in the F&O business. Ultimately, it’s the investors and shareholders who will suffer the losses due to the these hedging or betting activities of the financial managers of L&T

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