Now it is M 2 M Gains MTM Gains…. The marked-to-market losses incurred by companies on exotic foreign exchange derivatives deals sold by banks. Fitch Ratings has gone on record saying that the total mark to market (MTM) losses of Indian companies on foreign exchange derivative transactions is estimated to be $ 3 billion to $ 3.5 billion. The more vulnerable segment of small and medium size (SME) enterprises accounts 25 per cent of MTM losses. Many firms have also moved court against banks, alleging that exotic forex derivatives were mis-sold. The rating agency further stressed the need to review the risk management strategies of companies and banks. "Banks, in particular, need to further refine their derivatives underwriting policies, including practices for assessing potential future exposures," Fitch said. while also adopting a more conservative approach towards capital allocation," Fitch said. Amtek today informed the stock exchanges that it could potentially make a loss of up to $18 million (Rs 72.18 crore) in the next two years on its exposure to currency hedges and swaps. Mark-to-market (MTM) losses of 46 companies on account of foreign exchange contracts, fluctuation in exchange rate and commodity hedging aggregated to Rs 1,365 crore so far, as per their results for the March 2008 quarter. The losses account for 8.2 per cent of the net profit of the 46 firms, which have reported a net profit growth of 24.3 per cent after provisioning. The information culled from the quarterly results shows 13 firms have made provisioning of Rs 302 crore for MTM losses on account of derivative contracts, 18 firms have provided Rs 800 crore for exchange rate fluctuations, four firms have provided Rs 118 crore for forex hedging and the remaining 11 have provided Rs 143 crore for commodity hedging and interest cost on foreign currency convertible bonds (FCCBs). The MTM losses declared so far appear to be modest if one considers the exposure of Indian firms to overseas loans. The combined figure of derivative exposure by the India firms is not know, but State Bank of India (SBI) has confirmed that its 300-odd clients in the forex derivatives segments have MTM losses of Rs 600-700 crore, while ICICI Bank has preferred not to divulge any details on the probable MTM forex derivatives losses of its clients. The borrowings on account of FCCBs aggregated to $11 billion (Rs 44,000 crore at exchange rate of Rs 40), while the external commercial borrowings (ECBs) amounted to $31.6 billion (Rs 126,400 crore) during the financial years 2005-06 and 2006-07. Among the forex losers, ICICI Bank's treasury income was down 63 per cent as it recorded Rs 400 crore MTM losses on its overseas investments during the fourth quarter. The bank also holds investments worth $5-5.5 billion in its UK and Canada subsidiaries, where it set aside about $60-70 million as MTM provisions in their Profit & Loss account. Finolex Cables reported a forex loss of Rs 3.6 crore on hedge contracts and made provisioning of Rs 9.2 crore on outstanding forex contracts. Infosys Technologies reported hedge revenue worth $760 million in the fourth quarter and posted a forex loss of Rs 45 crore. Maruti Suzuki made MTM loss provisioning of Rs 50.5 crore on its forex derivatives and a one-time expense of Rs 54.5 crore as compensation to dealer. Bharti Airtel made its forex loss as finance cost and JSW Steel charged it to other expenditures. Few other companies such as Alps, Alok Industries, Ranbaxy, Bharati, Bhushan Steel, JSW, Reliance, Arbindo Pharma Jet Airways where there MTM but all the co’s may not have provided for the same. Reliance has not provided MTM losses of Rs 940 crs whereas R Com Rs 1063 crs, Bharati Rs 260 crs Bhushan Rs 25 crs and Jet 625 crs. The turmoil in global financial markets has given Indian companies one more reason to worry about - mark-to-market losses. Across sectors, several leading companies that have announced the results for the quarter ending June 2008 have taken MTM hits in some form or the other. In some cases, MTM losses pushed some companies into the red on account of such provisions. MindTree Consulting turned into red on account of MTM forex losses of Rs 50 crore, which is nearly quarter of its revenues in June 2008 quarter. Pharma major Biocon's bottom-line was also hit hard on account of MTM losses. Its net profit stood at Rs 15 crore for this quarter against Rs 53 crore last quarter due to MTM losses of nearly Rs 26 crore. High profile victim of this is Power Finance Corporation (PFC), which has reported a net profit of Rs 296 crore in Q1 FY09 versus Rs 309 crore for the same period last year. PFC has provided for forex losses of Rs 58 crore compared with a gain of Rs 28 crore in the previous quarter. Axis Bank made a provision for over Rs 250 crore to cover losses from the decline in the value of their bond and equity holding. Reliance Communications suffered Rs 25.3 crore losses due to exchange rate fluctuations and MTM of derivative instruments. SBI reported a forex loss of Rs 100 crore due to reversal of excess forex income booked till nine months of fiscal 2007-08. The loss was not on account of any forex derivatives. The losses for FCCB and ECB issuers are on account of provisioning for interest cost and, for a few of them, for keeping the money in foreign accounts. Kotak Mahindra Bank today said it has made a provisioning of Rs 86 crore to cover the Mark-to-Market (MTM) losses of its clients on account of forex derivative transactions. Now the bottom line is that when the forex derivative losses hit the desk USD was at low of 94 as against yen. Now USD has climbed back to 110 USD and very close to the level of 114 from where the problem started. Having made huge recovery all the companies which have provided for MTM losses in March quarter are set to gain in Sept quarter as the provision has to be reversed. It should be noted that the MTM were only provision against the fall in the value of USD as per the A S 30 of ICAI and not actual losses. All the companies which have provided such MTM will stand to gain in terms of write back of provision no longer required. Beneficiaries of the stock are Reliance, R Com, Biocon, Bharati, Amtek, Alok, Maruti, Tata Motors, JSW, Jet Airways, Tisco, Yes Bank, Ranbaxy, ICICI Bank, HDFC Bank, Kotak Bank and other PSU banks.

39 new scripts in F & O 1 ABGSHIP ABG SHIPYARD LTD 2 AKRUTI AKRUTI CITY LIMITED 3 ASIANPAINT ASIAN PAINTS LIMITED 4 BALAJITELE BALAJI TELEFILMS LIMITED. 5 CONCOR CONTAINER CORP OF IND LTD 6 COREPROTEC CORE PROJ. & TECH. LTD. 7 DCHL DECCAN CHRONICLE HOLD LTD 8 DISHTV DISH TV INDIA LTD. 9 EVERONN EVERONN SYSTEMS IND. LTD 10 FSL FIRSTSOURCE SOLU. LTD. 11 GSPL GUJARAT STATE PETRO LTD 12 GTLINFRA GTL INFRA.LTD 13 GVKPIL GVK POW. & INFRA LTD. 14 HCL-INSYS HCL INFOSYSTEMS LTD 15 IBREALEST INDIABULLS REAL EST. LTD 16 ICSA ICSA (INDIA) LIMITED 17 KLGSYSTEL KLG SYSTEL LTD. 18 KSOILS K S OILS LIMITED 19 MIC MIC ELECTRONICS LIMITED 20 MINDTREE MINDTREE LIMITED 21 MLL MERCATOR LINES LIMITED 22 MONNETISPA MONNET ISPAT LTD 23 MRF MRF LTD 24 NBVENTURES NAVA BHARAT VENTURES LIMI 25 NOIDATOLL NOIDA TOLL BRIDGE CO LTD 26 OPTOCIRCUI OPTO CIRCUITS (I) LTD. 27 ORBITCORP ORBIT CORP. LTD. 28 PRISMCEM PRISM CEMENTS LTD 29 PTC PTC INDIA LIMITED 30 RIIL RELIANCE INDUSTRIAL INFRASTRUCTU LTD 31 SINTEX SINTEX INDUSTRIES LTD 32 SREINTFIN SREI INFRASTRUCTURE FINAN 33 THERMAX THERMAX LTD 34 TORNTPOWER TORRENT POWER LTD 35 TV-18 TV18 INDIA LIMITED 36 UCOBANK UCO BANK 37 UTVSOF UTV SOFT. COMM. LTD. 38 VOLTAMP VOLTAMP TRANSFORMERS LTD 39 WALCHANNAG WALCHANDNAGAR INDUSTRIES This will be effective 21st Aug 2008.

BSNL board clears $10-b IPO plan The BSNL board has cleared the company’s proposed $10-billion listing, a top Department of Telcom (DoT) official told . This will bring the company in direct conflict with its employee unions, which have threatened to go on an indefinite strike if the PSU goes ahead with the IPO. When contacted, a top BSNL executive said: “The BSNL board has recommended the IPO and asked the government to facilitate the listing of the company.” The executive also added that the company has already begun the process of appointing merchant bankers. On July 24, ET had reported that the government had initiated steps to put state-owned telecom major BSNL’s proposed $10-billion listing back on track. The report also said the finance ministry had asked BSNL to start preparing for the country’s largest-ever listing. The unions are against the BSNL management’s contention that listing is necessary for expansion and grant of navaratna status. “It is also decided that if the government moves with the IPO proposal, the entire BSNL workforce of three lakh will get into direct action, including indefinite strike. Other PSUs, including HAL, have been granted navaratna status without listing. As such, the arguments put forth for IPO in BSNL are a ploy to disinvest BSNL and gradually privatise it like Videsh Sanchar Nigam (VSNL),” the employee unions of the PSU said in a statement late Thursday night. Faced with opposition from its unions and the Left parties, the government had shelved BSNL’s IPO twice. The DoT official said the government would try and bridge “differences between the BSNL management and its employee unions, to ensure that talks between the two sides continue and all outstanding issues are addressed”. BSNL sources also added that the PSU was planning to offer ESOPs and other packages to employees to win their support for the IPO. It also plans to deploy a portion of the proceeds for a new pension package and for training and redeployment of its employees. If BSNL does manage to raise Rs 40,000 crore by selling a 10% stake, the telco would be valued at Rs 4,00,000 crore (around $100 billion). This will catapult BSNL into the league of top telcos in the world in terms of market cap. Incidentally, the market valuation of Bharti Airtel is just around $37 billion.

RComm plans to set up varsity in Punjab Anil Ambani led Reliance Communications (RComm) has proposed the Punjab government to set up an Information and Communication Technology (ICT) university in the state. The company has planned to offer courses like BTech (ICT), MTech (ICT),and MS (IT). The university is coming up on the lines of Dhirubhai Ambani Institute of Information and Communication Technology (DA-IICT), Gandhinagar. These ventures aim at building confidence, capacity, global mindsets and communication skills among young people. Reliance has asked the government to provide 60 acres to build the campus and plans intake of 1,260 students for different courses. If all goes as planned then the university is expected to come up in 2010 and it will be non-affiliated university. Talking to FE Mohanbir Singh Sidhu, additional director, department of technical education, Punjab said, “The government had offered land in Birla Farm in Ropar where 800 acres is lying vacant and in Fatehgarh Sahib in February. The company has now shown interest in taking the land in Ropar. It has submitted its complete proposal and given its strategy. The land will be given on the mutually agreed price.” However, he did not divulge investment details of the project. RComm also has a plan to come up with a similar project in Jammu and Kashmir and Kolkata. In the technical education sector in Punjab, 65 engineering colleges, 72 MBA colleges, 33 pharmacy institutes and 97 diploma courses are being run. Apart from Reliance various private players have shown interest for setting up specialised universities for different academic streams. These players include Bharti telecom (Airtel group), Lord Diljit Rana, (Chitkara group), Ryat and Bahra group and the SGPC which are keen for setting up universities in the state

Unitech to raise $1 bn from Private Equity Unitech Limited, the country’s second largest realty firm, plans to raise nearly US$1 billion (Rs 4,200 crore) in the current financial year from private equity (PE) players for expanding its hotel, commercial and retail business, across the country. The company intends to raise funds by floating special purpose vehicles (SPVs) in different projects. Under the proposed plan, the company will invest $300 million on hotel projects while $700 million on commercial and retail projects. The projects will be implemented in cities such as the National Capital Region and Mumbai among others. Earlier this year, the company had plans to raise $700 million through the listing of a real estate investment trust (REIT) on the Singapore Stock Exchange, and a qualified institutional placement of $1.5 billion in India. But, due to poor & volatile condition of stock markets, the company postponed its plans.

Ruthless march... Singh is KING for sure but there is someone who is super king. No doubt the short rollover is not happened this time which indicate that short sellers are now really afraid to go short at these levels. 4400 was my call for yesterday but market maker decided to bring it today. Monday chances are very bright that market will open at 4500 plus and could travel to 4677 by Tuesday itself. No doubt the street will be surprised with the pace with the market because it is rising against the global clues and required fundamentals. Major bears will now come for fresh short selling only at 4900 to 5000 levels but those who are by and large now used sell short and earn have become habitual short seller and can’t see the positive side of the market. At the end of the day they will become poorer and poorer for 2 reasons. One that their balance sheet will get wiped off and 2 that they will not be able to cover their age old shares which they have sold in anticipation of Sensex 9000. As off now also most of technical experts and bears are holding their nerve with target 9000. They are our samba wamba and kalia walia. Here I would like mention one specific thing which is worth noting. I had been a one sided man and have seen bear runs and bull runs and still believe what others can’t even dare to say in the open. But I am surprised to see the best of bears coming on the wire channels and offering their free comments with regard to the market performance. At 14000 they started advocating sell call, at 12000 they were extremely bearish with target of 9000 and when market took U turn they says its bear rally. Well, dear if this is bear rally then they should have waited to sell 15000 instead of selling at 12000. But to my surprise, they made 15000 in short covering. My point here is that why should you listen to such idiots who are playing with your sentiments for their personal gains. I think you will be better off to start your own research instead of relying on these white collared guys. We had given bottom of 4240 in the morning and market took U turn from 4235 and closed at 4435 and rise of 200 points in one day. Market will open firm on Monday and Tuesday as we believe that there could some announcement from new delhi banning shorts through P notes. China did it today and India is set to follow the suit. In any case P note will expire in March where all positions have to be squared off. After we gave Bank of India buy call 10 others have followed the same. This was also true with IDFC. And now IDBI. Just watch IDBI for coming 2 days. As reported earlier in this column more than 7 bn USD worth stock is under short sold status which was borrowed from P note. Now FII being afraid insist for delivery of these stocks the short sellers will have no choice to lift the delivery form the open market and reverse the cycle. The cycle which created the downfall will create the windfall. This trigger apart from the reforms pace could take market to 18000 for sure which is as of today not been seen by anybody in India. Post 18000 the hot money will start coming back and then you see where the market goes. The largest beneficiary of this move could be IDBI, IFCI and SBI and banking is in overtly oversold state. Whole world had given short call on Reliance on the ground that ADAG gr will get favour from SP and there could be some damage to RIL gr. We had clarified this earlier that there could be some plus to ADAG gr but Govt can’t afford to do minus to RIL only for political compulsions. We are always bullish on RIL and we have reasonable belief that RIL will touch Rs 3000 in 2008 itself if not 52 week high. All our latest picks MSP, Gremach, Jayswal have reported better than expected earnings and you can take these future multi baggers. For every beauty there is an eye somewhere to see it. For every truth there is an ear somewhere to hear it. For every love there is a heart somewhere to receive it. I know there are thousands waiting for me.

Bush signs housing rescue law President Bush on Wednesday signed into law a sweeping housing bill that aims to boost the struggling housing market and bolster mortgage finance giants Fannie Mae and Freddie Mac. The Senate voted 72-13 in favor of the bill on Saturday, after the House passed it three days earlier. "We look forward to put in place new authorities to improve confidence and stability in markets, and to provide better oversight for Fannie Mae and Freddie Mac," said White House spokesman Tony Fratto. "The Federal Housing Administration will begin to implement new policies intended to keep more deserving American families in their homes." The new law, one of the most far-reaching on housing in decades, marks the centerpiece of Washington's efforts to address the nation's housing meltdown. The legislation has two principal objectives: to offer affordable government-backed mortgages to homeowners at risk of foreclosure, and to bolster Fannie and Freddie with a temporary rescue plan and a new, more stringent regulator. The White House last week reversed its long-standing threat to veto the bill. In fact, the administration still objects to parts of the legislation, including aid to states to buy foreclosed properties. But the president decided to sign it since "oversight of the housing government sponsored enterprises (GSEs) and the new temporary authorities requested by [Treasury] Secretary [Henry] Paulson are urgently needed now, and they'll contribute to confidence and stability in housing and financial markets," said White House spokesman Tony Fratto.