Indian Oil Corporation ( IOC ) to raise petrol prices in India

Indian Oil Corporation, India's largest oil firm, may increase petrol prices all throughout the country. The exact increase that can happen is not known currently. Average per liter price is Rs: 65/- in India +- Rs:4/- according to the various cities. It is estimated that IOC makes a loss of about Rs:7/- per liter currently. Add tax to it and it makes about Rs:7.50/- loss considering the current price. If the prices are increased by anything more than Rs:5/- per liter than that is going to disturb the environment nationally. Prices are regulated by the government and common public in India blames the government for any fuel price rise without knowing that global prices are actually very high than what we get in India. The government and Indian oil companies always try to keep a balance but oil companies just cannot keep making losses, some or the other time the burden has to pass to the people who are actually using the vehicles.

IOC was losing Rs 297 crore per day on selling diesel, domestic LPG and kerosene at the government controlled rates. IOC is losing about Rs:18/- per litre on diesel, Rs 28/- per litre on kerosene and whooping Rs:315/- per LPG cylinder (14.2 kg domestic cylinder). The total debt of IOC was around Rs:53,000/- crore at the end of March, 2011 and is growing at the rate of Rs:5,000/- crore per month! This cannot continue forever! Price rise is the only solution.  Is there any else?

Mukesh Ambani becomes first non-American to come on board of Bank Of America

Mumbai(India): Mukesh Ambani, chairman of India' most valuable oil company Reliance Industries(RIL) and highly recognized businessman comes on the board of Bank of America - one of the oldest and largest financial institutions alive in US. Surprising it may sound, why an Oil company tycoon is been invited on board of one of the world's largest banking and financial institution, but that's the truth. Mukesh brings a lot on board. Mukesh Ambani is a multi-billionaire who is listed on Forbes billionaire list in top 10. Reliance Industries run the world's largest oil refinery at Jamnagar, Gujrat and has a total market capitalization of more than $70 billion! Reliance Industries has revenues more than $40 billion - more than what Facebook and Google have combined together (Google has about $24 billion and Facebook around $2 billion at the max.). Reliance Industries and various companies under the 'Reliance' belt Mukesh and his brother-cum-business rival Anil Ambani own have tremendous influence on various sectors of the Indian business market including oil, retail, electronics and telecommunication, finance and mutual fund industry etc. India is a thriving market and Mukesh Ambani understands India and Indian market at granular level, I'm sure Bank of America has some serious business plans in India.

Reliance Power IPO - how should a retail investor approach it?

Reliance Power IPO is causing daily news and todays is its last day of offering. The price band is 405-450. This is 4th day - the last day and untill tommorrow the issue was over subscribed about 38 times - I dont know exact figures but it will be around it. Now should you apply to this one or not?
I think its not a good company to remain invested in. Relaince Power have no mega projects going on - all it has are promises. Other power companies in India like Tata Power, NTPC look more strong than Reliance Power, just for comparison NTPC will have a capacity double to that of Reliance Power in 2016 - even we consider all the promises of Reliance Power to be true. I feel we should make just listing gains in this IPO as i think above 800 the Reliance Power share is over priced.

India's Retail Sector is Booooming...?

Retail in India has gained a surprising importance in past year as we see many corporate gaints investing in billions into this sector. India has topped the AT Kearney’s annual Global Retail Development Index (GRDI) for the third consecutive year, maintaining its position as the most attractive market for retail investment. The Indian retail market -- one of India's fastest growing industries -- is expected to grow from US$ 350 billion to US$ 427 billion by 2010. According to Euromonitor International, the Indian Retail market will grow in value terms by a total of 39.6 per cent between 2006 and 2011, averaging growth of almost 7 per cent a year.

The food Retail and Mobile Retail is growing at a high pace. Reliance Retail, a subsidiary of Mumbai-based petroleum gaint Reliance Industries, has opened around 100 fruit and vegetable stores under "Reliance Fresh" brand in less than a year, already invested around Rs:2500 crore (US$ 0.637 billion!) and plans to invest about Rs:90,000 crore ($22.99 billion!) in setting up retails stores in various formats- hyper markets-supermarkets, speciality stores, discount stores...etc. Also Bharti Wal-Mart is setting up itself to enter into this sector soon. So look out for more billion dollar investments in these sector in comming year 2008.

Reading all this how's you feeling? Mind blowing reports with huge numbers about India's Retail sector, feeling great? Read next.....

Very few people think of the other part. The government decision on January 24 allows up to 51 percent foreign direct investment (FDI) in “single brand” retail stores. Nike, Nokia or Levi can establish stores, but multi-brand retailers such as Wal-Mart and Carrefour are excluded, for now. Commerce and Industry Minister Kamal Nath told the leaders of the world’s richest corporations that India was seeking to increase its FDI to $US10 billion by 2006-2007, up from the $6.5 billion invested in 2005.Retail activities such as door-to-door selling, street carts and market stalls, act as a last resort for the unemployed, given the lack of jobs in manufacturing and agriculture. Many in the retail trade are living below the poverty line. A report published in December 2004 by the Centre for Policy Alternatives (CPAS) entitled “FDI in India’s Retail Sector: More Bad than Good” stated that retailing is “probably the primary form of disguised unemployment/underemployment in the country”.The report continued: “Given the already over-crowded agricultural sector, and the stagnating manufacturing sector, and the hard nature and relatively low wages of jobs in both, many million Indians are virtually forced into the services sector. Here, given the lack of opportunities, it is almost a natural decision for an individual to set up a small shop or store, depending on his or her means or capital. And thus a retailer is born, seemingly out of circumstance rather than choice.” The report is spelndid, you can view it here :- http://72.14.253.104/search?q=cache:eZn1OLJE7PcJ:indiafdiwatch.org/fileadmin/India_site/10-FDI-Retail-more-bad.pdf+retail+sector+in+india&hl=en&ct=clnk&cd=13&gl=in

Although the Indian government hails foreign investment as an economic boon, the growth has largely benefitted the wealthy to the detriment of large sections of workers, small business and farmers. The opening up of the Indian economy and deregulation has resulted in substantial public sector job cuts, the destruction of industries, land seizures and cuts to food and fuel subsidies. There are approximately 40 million people and 11 million outlets in India’s retail sector. Many of these are marginal businesses—small shops and stalls, street vendors and hawkers—which will be destroyed by competition from large retail outlets and chains. Many people, who have no alternate source of income or work, will be left completely destitute.

(I have written this article with lot of research. I want to know your comments over this.Thank you.)

Reliance Mutual Fund presents Fixed Maturity Plans.

Hello friends,
I got a post from Reliance MF some days ago which had my account statements of Reliance MF I hold and also mentioning about their new plan called "Fixed Maturity Plan" (FMP). As you all know that Fixed Deposits are one of the safest way of investment. But its drawback is that the rate of return is very very low. Most FD's offer only up to 8.25%, for about 1-3 years of lock-in period. Also the returns are taxable ( 33.99% ) depending on the level of your income. Another safe investment is PPF (Public Provident Fund). But PPF has lock-in period of 15 years ( Note:you can withdraw part of your contribution only after completion of 6 years) - so its just toooooo long. ( I personally treat PPF not for our generation - but for next generation.) Also there is another option of RBI Savings Bond, but there NRI's cannot invest and premature encashment is not allowed. Reliance wants to provide a blend in this type of reliable investment adding flavours of attractive returns, choice of Maturity periods, and tax efficient returns. They have come up with FMP.

FMP offers various maturity period options - monthly / quarterly / half yearly / yearly and more than one year. You can invest depending upon your requirement of cash flows on maturity. FMP offer minimal risk as compared to normal open-ended debt funds. These open-ended debt funds are associated with 3 kinds of risks : interest rate, credit and liquidity risk. Last but not the least feature of FMP is that it provides tax-benefit. For FD's tax rate is 33.99%, but for FMP's its 22.66% and also indexation benefits are available. If we assume 10% rate of interest/year and compare FD and FMP then calculations tell that assuming 5% indexation rate, and considering tax deductions, we actually get 6.61% for FD and 9.86% for FMP. More information can be found on www.reliancemutual.com

I personally think its a good choice of investment rather than normal FD's of nationalised banks. Only one concern is that, even FMP have very very low risk, they still are venerable to market ups and downs and FMP don't offer guaranteed returns, but it is likely to yield better than FD's. You can also get benefit of double-indexation, where you can get indexation benefit of 2nd year by remaining invested just for some time more than 1 year. So you get benefit if total 2 years, instead of 1 year. Your comments are awaited.