The Present Economic Scenario, both within India and Globally is very Fragile and Ugly.

The Interest Rates are High, Inflation has made a Big Hole in Household Budgets, Stock Markets are moving lower by the day, No one is willing to take any Risk.

Even in these circumstances, one can Invest Sensibly and take advantage of the situation with Minimal Risk.

Investors with a Time Horizon of upto 3 yrs can get in touch with us.

VRIDHI – “Planning, for Your Financial Prosperity”

Rakesh Jhunjhunwala – September 2011 Holdings

The Holdings are in the format:

Company Name, %Holding, No of Shares (in Lakhs), Value in Rs.Crores

A2Z Maintenance and Engineering Services
17.22, 127.73, 255

Viceroy Hotels
10.02, 42.50, 11

Geojit BNP Paribas Financial Services
7.88, 180.00, 34

CRISIL
7.75, 5.50, 460

Praj Industries
7.39, 136.54, 98

Titan Industries
7.28, 646.67, 1,466

Ion Exchange (India)
6.48, 8.75, 12

Geometric
6.30, 39.40, 16

Zen Technologies
5.06, 4.50, 4

Adinath Exim Resources Ltd
4.59, 1.89, 0

Prime Focus
4.55, 63.25, 38

Agro Tech Foods
4.52, 11.01, 46

VIP Industries
4.47, 12.63, 122

Autoline Industries
4.26, 5.20, 6

Delta Corp
3.72, 75.00, 80

Rallis India
3.25, 6.31, 11

Rallis India
3.23, 6.28, 11

Titan Industries
2.49, 221.16, 501

Orchid Chemicals and Pharmaceuticals
2.48, 17.50, 34

Alphageo (India)
2.43, 1.25, 1

Reliance Broadcast Network
2.20, 17.50, 15

VIP Industries
1.96, 5.55, 54

NCC
1.95, 50.00, 33

A2Z Maintenance and Engineering Services
1.89, 14.00, 28

Subex
1.80, 12.50, 6

Prime Focus
1.80, 24.95, 15

Lupin
1.73, 77.30, 366

Provogue (India)
1.66, 19.00, 6

Mcnally Bharat Engineering
1.48, 4.60, 6

Hindustan Oil Exploration Company
1.38, 18.00, 23

Pantaloon Retail (India) – B-DVR
1.32, 2.11, 4

Hindustan Oil Exploration Company
1.27, 16.60, 21

Viceroy Hotels
1.18, 5.00, 1

Orchid Chemicals and Pharmaceuticals
1.06, 7.50, 15

***

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Source: Fwd Mail (published in ET, review by first post)

No one in the market will tell you that stock prices are going to crash. To figure that out, you have to read between the lines when they talk a lot. In a recent interview published by The Economic Times, India’s ace investor Rakesh Jhunjhunwala gave his take on the direction the markets will take and his conclusions are clear: it is headed downwards for now. Nirvana—making money—is only for the long-term.

Firstpost takes a close look at some of the things intoned by Jhunjhunwala— who is considered India’s Warren Buffett — and decodes them for a wider audience. While the newspaper interview focuses a lot on Jhunjhunwala’s own investments in companies like Titan, Lupin, VIP Industries, Relish and Orchid Chemicals, the real message is in the attitude he brings to investing. His message: don’t trade, but invest in the India story.

Here’s what he said, and what his words could mean (in italics):

Jhunjhunwala: The next three months will be very difficult for the markets. Chances to break down seem greater than the chances to break up.

• Firstpost take: The market is headed downwards, if not for a crash. No one knows how the next few months will pan out since we don’t know whether the monsoons will be good and the economy will pick up steam. By August, the market will have a clearer sense of direction. If all things work out positively, the market could pick up. So watch the monsoon and price trends.

The most important thing is inflation because it controls everything, be it interest rates or growth. The second headwind is sheer government inaction….

• This means all depends on governance – of which there is no sign. Inflation will partly depend on the monsoon, but that could be complicated by the Food Security Act, which will need huge amounts of grain to be sold at Rs 2-3 a kg for wheat and rice. It could make inflation worse. As for governance, bureaucrats are already slowing down action for fear of the law. The granaries are full with wheat and rice, but no one is willing to take a call on exports. This means grain will rot partly in the godowns. The 2G scam and investigations are far from over, and governance will not improve till the UPA re-discovers its will to act. Net-net: even after three months, the market could continue its slide.

I am bullish in the longer period – three, five, 10 years. (The golden period for Indian equities) has not even started. The golden period is still ahead.

• What Jhunjhunwala means is that the long-term India story does not depend on government improving things. The economy will grow on its own, given the demographic advantage India has (with a youthful population driving growth and consumption), and the fact that the population is grossly underinvested in equity. At some point, pension and provident funds have to get into equity, and foreign institutional investors have to return. At that point, equity will make a killing. But Jhunjhunwala does not know when that will happen.

The world is undoubtedly slowing. In western societies, the slowdown is due to structural and economic challenges, while in developing economies it is due to governments’ fight against inflation…. If commodity prices correct and we have a good monsoon, we will have a very good year (in 2012-13). It is difficult to predict what will happen in 2013. One worry is that the euro will break. There is no doubt that Greece will default.

• Jhunjhunwala is essentially saying that the real growth risks are outside India, with the US facing a problem of excess debts, Greece about to default, and Japan facing a permanent slowdown due to an ageing population and the aftermath of the nuclear disaster. But in the developing world, the economies have clearly overheated – India and China are now slowing down in order to control inflation and avoid a macroeconomic crisis. Net-net: the prospects for the next one year are not too good, either globally or in India. After that, the jury is out.

I wish I could find the next Titan. I do not see any on the horizon. Titan may get expensive for six months, but that does not change the long-term prospects…

• Jhunjhunwala made a killing by buying Titan shares and says he does not see many more Titans on the horizon for now. But this need not be taken at face value. What he means is that if he finds a Titan, he will invest in it first before he talks. Even if he has invested in it, he will not talk ill of it till he has sold it. Which is why he still says Titan is a good long-term prospect…It means chances of making big money in the short-term in this stock are weak.

I have never liked real estate stocks as they are laden with debt and there is no genuine cash flow. There is no scalability. There will be further distortion in these stocks in the next three months.

• In other words, forget real estate stocks. They should be avoided like the plague. They will not deliver value, and they will destroy further value before they get to become good investments – if ever.

Banking will grow in India but the question is efficiency. If you look at SBI, there is growth every year, but the cost-to-income ratio just does not go down… (But) I would not say yes, I would not say no (to buying public sector bank shares). It depends on the situations…

• Jhunjhunwala is unlikely to buy public sector banks. His own investments are in two old private sector banks – Karur Vysya and Federal Bank, based in Tamil Nadu and Kerala. Public sector banks won’t do well unless they have real autonomy, and become productive by increasing the profits per employee. In short, they have to deliver more before he considers buying them, though there may be exceptions…

I am not as bullish on commodities as other people are…

• High commodity prices are a double-edged sword for India. If it means costlier oil, it means more inflation, and slower growth. If it means costlier steel and cement, it also means higher inflation, but with better profits for big companies like Tata Steel, Hindalco, Grasim and ACC. High commodity prices are not so good for a new oil importer like India. If he is bullish on commodities, he has to be less bullish on India’s medium term prospects.

I don’t think (interest rates in the system have peaked out). We will get further hikes.

• Given high inflation, the RBI will keep raising rates till either (1) growth slows to a crawl, or (2) inflation falls below 5%, or (3) both. This means the short-term scenario for banks is a profit squeeze unless they can manage their costs better. One more reason not to buy public sector bank shares for now.

Equity will give me 15-25% post-tax return. I cannot do any business, any investment, which can give me a higher post-tax return on large volumes.

• This is bad news for India Inc. If equity will always give more returns than manufacturing and services, who will invest in industries that create jobs? Everybody will become a market operator.

Don’t trade is the first thing (I would advice investors). And you should invest in monthly schemes so that you get to invest at all levels in the market. Believe in the India story and you will make money.

• In short, buy only for the long term, and in companies that are well-run and have staying power. In the short run, there may be bad news. But in the long-term, India will deliver.

***

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4/6/2011, Times of India

In 1985, when Big Bull Rakesh Jhunjhunwala entered the market with Rs 5,000 as his initial capital, his dream was to earn about Rs 1 lakh a month. Now after journeying through a little over a quarter a century, even the man himself doesn’t remember when he had crossed that dream to enter into the current realty of probably earning much more than a lakh of rupees every hour.

So when we meet the last Big Bull of his generation at his 15th floor office at Nariman Bhavan in Mumbai’s central business district of Nariman Point, naturally a good part of the conversation is about his wealth along with others like the ethics, tricks and the secrets of the trade.

Although various estimates put his total wealth above $1 billion, 51-year-old Jhunjhunwala wouldn’t reveal a specific number. Instead his answer is a rather diplomatic and prosaic; "I have far less wealth than people think but I have much more than I need". But he is candid enough to add that the first time he was listed among the country’s richest, his father, a tax man whom the junior Jhunjhunwala idolizes, was happy about his son’s achievements. "He asked me to use more of it for charity," he says adding that that is something he has been trying to do seriously.

Whatever be his net worth, the fact remains he is the most watched man on Dalal Street. People want to know what he is buying, what he thinks of the market trends. At times there is an ‘irrational exuberance’ in a counter just because it is rumoured that Jhunjhunwala is interested in the company and its business.

It was Sesa Goa and Tata Power that he started off with in the mid-1980s, Jhunjhunwala reminisces, sitting across the corner office, which surprisingly doesn’t have any TV. What it has, however, is a lovely view of the Arabian Sea.

That’s where Jhunjhunwala, a trained chartered accountant, tasted the smell of money. Crisil, Titan, Praj Industries are some other stocks in which he has made loads of money. So is there a common thread to his stock selection? It’s his knack to pick stocks with strong under-valuations and long-term prospects. At present, "retail and banking are the sectors to watch out for," he revealed. Rather strange for a man who is known not to reveal any of his bets.

Although considered to be a Big Bull on the Street, unlike some of the discredited players in the past who also carried the same title, Jhunjhunwala doesn’t want to control the market. To a pointed question that how he is different from them, he said; "I don’t want to control the opportunity. Rather I grab the opportunity". "Greed and immaturity are the two things to avoid… I would never manipulate a stock. I know the road to Arthur Road Jail and I would not like to take that path," was his admission about his approach to the market. And since opportunities don’t come regularly, by his own admission, wealth has come to him in spurts. "It doesn’t come when you deserve it," he says taking a deep puff on a cigarette.

So we ask him what we believe many have asked him before: How does he select a stock before investing in it? There are several parameters, Jhunjhunwala says, handing out a booklet. First is to look at the opportunity. Infosys in IT, Titan in consumption, Colgate in toothpaste are some of the examples here. Then one should look for competitive advantage, like capital, branding, location, etc. "The third thing is scalability. A friend asked me do you invest in large cap or small cap. My answer is I invest in a small cap which will become a large cap. There the scalability is the key," Jhunjhunwala said. The quality of people which is difficult to judge, and the ability to generate cash are the other considerations. "And above all, it should be available at a good price," Jhunjhunwala added.

But besides the fundamentals, what is the underlying philosophy of his investments? "We invest out of ignorance. We invest in the future which is uncertain we invest in the realms of possibility," he said. "I invest in 25 different businesses and I can’t understand them all. We go by our basic understanding. All these (investment) judgments are with half knowledge," he adds. So does luck play a part? "I believe in one thing: What I am today is because of the grace of god and blessings of my elders," he confesses.

Jhunjhunwala literally needs something to chew on while we talk. So in the middle of a couple of smokes and a round of coffee, he digs into a plate of assorted Gujarati snacks (including fafdas), followed by a plate of neatly cut apples, and rounded it up, like a good Indian meal, with a paan.

So what next for the man who made millions on Dalal Street? "(Now) the dream is to replicate internationally what I have done in India," he said. So probably, Wall Street and the City of London should prepare for the arrival of brand Jhunjhunwala.

Over the years, how many mistakes has Jhunjhunwala made? "I have made many more mistakes than people know." Some of those were while investing in unlisted stocks, currently in terms of value which constitute about 15% of his wealth. We shift the conversation on to his recent efforts to sell the A2Z Maintenance & Engineering story through its IPO, in which he was one of the investors for the last few years and offered some shares in the issue? "The market rejected what my view is." Although he has other unlisted companies to take public, he has vowed not to offer for sale any shares in any future public offers. Another mistake, he says, is not taking care of his health the way he should have.

Lately, charity is the ‘in thing’ for the world’s super-rich, thanks to Warren Buffett. What’s Jhunjhunwala’s take on this? "For me good deeds and charity are done not to bring in good luck, but they are duties." He supports a home for poor children in Bangalore.

During Buffett’s visit to India, Jhunjhunwala was among those select few who had a private meeting with the chief of Berkshire Hathaway. Was there any rub-off effect on him? "After meeting Buffett, and Bill and Melinda Gates, my charity quotient has gone up substantially". He says he intends to give ‘a good percentage’ of his wealth to charity. But how much is ‘a good percentage’? He won’t give a number, but adds, "My wife is an equal partner in our wealth and I still have to discuss this matter with her." Given that charity is a flavour of the season, it wouldn’t perhaps be too long before the man, who by his own admission has enough for himself, to loosen his purse strings.

http://articles.timesofindia.indiatimes.com/2011-06-04/india-business/29620177_1_rakesh-jhunjhunwala-praj-industries-stocks/3

***

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10 things Japan Taught us from the Recent Tragedy!

01. THE CALM: Not a single visual of chest-beating or wild grief. Sorrow itself has been elevated.

02. THE DIGNITY: Disciplined queues for water and groceries. Not a rough word or a crude gesture.

03. THE ABILITY: The incredible architects, for instance. Buildings swayed but didn’t fall.

04. THE GRACE: People bought only what they needed for the present, so everybody could get something.

05. THE ORDER: No looting in shops. No honking and no overtaking on the roads. Just understanding.

06. THE SACRIFICE: Fifty workers stayed back to pump sea water in the N-reactors. How will they ever be repaid?

07. THE TENDERNESS: Restaurants cut prices. An unguarded ATM is left alone. The strong cared for the weak.

08. THE TRAINING: The old and the children, everyone knew exactly what to do. And they did just that.

09. THE MEDIA: They showed magnificent restraint in the bulletins. No silly reporters. Only calm reportage.

10. THE CONSCIENCE: When the power went off in a store, people put things back on the shelves and left quietly!

Hope we all learn atleast Two from the above!