anil and political risk

Anil Ambani has raised the amount his firm ADA enterprises will invest in Reliance Capital from Rs 1000 crore and Rs 1500 crore, a whopping Rs 500 crore. was the increase brought about by a whim? for somebody who potrays himself as a professional manager.

The amount is large by any stretch of imagination and leaves one wondering how it happened.
The only possibility i can imagine is that some politicians wanted to be a part of the deal and anil was forced to take funds from them, afterall he had sought their help during the settlement and there can no points guessing the group of politicians.

now, if sahara and they get in trouble, there can be blood on Anil's hands.

also, the equity structure of ADA, i am sure, will make Reliance holding pattern look elegant.

PS: I am still unable to google the Reliance Capital website. It is still shown as a part of Reliance Industries website here!

safety on demat a/cs in question again

on feb 25, 2005, i had written:
"There is no great barrier to stop the stockbrokers who hold investor’s shares to transfer them to their own account. Many of broker-depository participants have closed down and some random cases of investor fraud have come to light especially in Kolkotta."
the full post is available here.

Now, the Business Standard reports that a fraud has come to light at Karvy, Kolkotta.
The manager of a branch transferred some shares from client a/cs to himself. there were warning signs earlier and now it has made it to the mainstream media.

"Incidentally, there were reports in a section of media that Karvy Stock Broking has allegedly siphoned off shares from the clients account for their own gain. It was also alleged that Karvy has not transferred the shares purchased by some clients to their respective depository accounts."

The complete article is available here.

If it can happen at Karvy, one of the better run broking houses, it is pretty nightmarish what can happen elsewhere. The demat system is structurally flawed i cant think what can be done to rectify it.

I believe the greatest risk to the Indian equity market does not come fronm global events like the London bombings but from the systemic risk in the demat procedures and entities like Sahara.

Sahara, Peerless under RBI lens

"Sahara and Peerless have already conveyed to the RBI that they have complied with all regulatory directions, but the central bank doesn�t believe in what they say, said a industry source." - July 13, Business Standard. The complete article is available here.

i am suprised that the RBI believed what Sahara said till date. i guess it is too little too late.

my tryst with fish farming

the market are showing remarkale strength. the japanese feel india is cheap. they are used to the nikkei at 30,000 levels so i guess 7000 looks like a value pick.
anyways, i continued to stay away from dalal street and look for other sources of income.
i decided to take a look at fish farming after a friend had difficulty in purchasing some. and ofcourse, i have always been impressed on druckers ideas on fish farming, how it is the next big wave. and i like New Marine Harvest.

i ventured to a dam near my place after seeing a photograph of the district collector at the fish farm, describing how the govt. would supply lakhs of fingerlings to prospective cultivators and how it provide employment to many.

i reached the dam at around 3 in the afternoon. a compound with the board inspector of fisheries was locked. the person who takes care of it leaves at 2 for lunch and only returns at 5.

luckily, there was another dam about 20 kms away. i went there and met an unhelpful guy, who had no interest in helping anyone set up a fish farm. he talked something about the types of fishes. i wonder how he could have been of use to anybody.

anyways, i have always believed that most goverment schemes are mere photo opps. and nothing serious comes off them. sadly, my stand has been vindicated.

my first experience with agri - cereal prices to soar!

The markets can remain irrational longer than i can solvent - to repeat an anon. quote repeated by ashu dutt, an anchor for NDTV Profit.

so, i thought i would be better off tilling some farmland - slightly below two acres- which my father owns. and what i saw pretty much stunned me and goaded me to write an elegy on indian agri if things go the same way.

The land is located in a supposedly very fertile area near a small city.

I took a turn off the road. the bike could proceed no further. i began to walk on the fields towards my land. i saw a abandoned well, a motor room and some power line poles. the land is dry with some weeds and paddy shoots griwing on it. i walk further on the bunds and reach my land. next to it, is a patch of yellow brinjal plants, left to ripe on the fields for some reason.

Some conclusion from my first visit:

1. subsidised/free power to farmers is an issue that needs to looked at closely. the city dewellers and free market economists, who want farmers to pay the actual ecomonic costs, shold realise that it could make farming unviable for many. the well, with water at 20 feet, was abonded by a person who couldn't pay the electricity bills, and hence stopped cultivation. the local government till recently had a policy of free power, which it has now reversed.

2. agriculuture, in the current form in which it is practised, does not seem to a profitable activity.
one person told me it is better to find some work in the city rather than pick up dung.

3. There is a tremendous pressure on farm land from encroaching cities. houses have sprung up a close as one kn away and somebody is selling plots 500 meters away from my plot.

4. i expect, that in India like in China, cereal prices could shoot up by 50% in the near term say 5 years, as quality agricultural lands becomes sparse and labour far more expensive. This can only be mitigated if agri. productivity is significantly raised.