Why reliance power is in big mess?

Over the years I have been monitoring the progress of the Reliance Power, with the only intension to invest at the right time and build it as a stock in my long term portfolio.

It all began with the IPO - Reliance Power, then the subsidiary of Reliance Energy, floated India’s largest public issue of Rs 11,700 crore, by selling Rs 10 face value shares in the range of Rs 415 to Rs 450.

The share on the offer only represented 10% of the company and so one can imagine the firepower that RP was trying to derive. This is not the end, it is the beginning. Much to the liking of every investor in this ipo, the gray market projected price was double.

As soon as the hype was over so was the projected listing price and the only direction the share understood was downward projectory.

Reliance brand is one of its kind they just did not offer bonus but they also offered dividend to the shareholder. All in the hope of keeping the goodwill. Reliance brand has value of its own and Anil Ambani just knows how to exploit it. Like Reliance Power many more ipos are waiting in his stable. What am I going to do if I hear another ipo from Anil Ambani? Lets analyze RP for answering this question.

To understand reliance power better lets list down all the power plants that it going to setup. Details in the attached image.


What are the positives of Reliance Power establishment?
1. A MOU is signed with Chinese Bank and US Exim bank for over Rs. 75000 crore for financing various projects. RP is getting cheap loan from Chinese and that is a very good step.
2. Also a contract of Rs. 3400 crore has been signed with General Electric for 2400 MW gas based Samalkot project.
3. Thrust on augmenting the renewable energy sources
4. Speed of execution is fast. The results are evident from Rosa I setup.

Now lets look into the points that prick me.
1. The company is going to run into huge debt. No company in the history of the stock market has survived the debt shivers. To just take few examples, a highly consolidated firm like Tata Steel is finding difficulty with Corus financials. Well we do know the reasons lie on many direction but the payoff is quiet low.
How is RP going to manage to pay $12 billion and more with such low tariffs? This logic completely baffles me. The only way out is pay all the profits out at the cost of the future growth and the dividend. Now who wants that?

2. The last of their project will be connected to the power grid by 2016. What happens next? It will start holding a power throughput to what NTPC already has now. And NTPC is a safe-bet in the stock market because it is a laggard. The growth is quiet minimal.
The question that remains now is why should I invest in RP when I can get a defense stock like NTPC.
The only reason everybody queued up for RP shares were because of its brand equity and now that Anil Ambani has tarnished its image, now would we want to be part of Reliance Power family?

3. All the projects are being executed by Reliance Infra. Now what shall I make out of this? The main beneficiary of this arrangement is the promoter. Promoters already hold 85 percent in the company.

4. Merger with RNRL. What did RP gain from this merger?

5. Much delayed gas projects.

6. After winning many UMPP projects, Government many not be interested in awarding future projects to RP. Putting all the eggs in the same basket is not going to work here.

7. Cost of maintenance and Chinese products are big risk factors

8. Reliability of Anil Ambani has been hit.

9. Investment rationale for any new investor needs to understood. The current mcap is Rs 40,000 Cr. Investor and FII investment is more than Rs. 12,000 Cr. What is the public holding amounting to?

10. RNRL stockholders lost more than they would imagine from RP merger. Stock price came tumbling down with this merger. What is the guarantee that RP's future would be similar?

At the end of the day, it is the individuals call to decide where his hard earned money goes. All the odds are against Reliance Power.

Silver plate

The author will be reachable at aahadqj@gmail.com.
Abdul Ahad
Research Analyst

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Law of Equivalent Exchange

The Law of Equivalent Exchange states that to gain something an equivalent value must be lost. So if the flesh of the body has been made by sand then by transformation can we create the lost limbs.

How can lost things be gained? Just like the nails grow without the human does not it mean it also possible to put back rest of the lost bone to shape. Body a complex set chemical composition with gene structure so complex has puzzled the human exploratory mind for decades. But the creation of something just like nail can also mean the body has the necessary infrastructure in place to create the lost item, it just needs to be activated.

I am not sure where I am going with this. But definitely this is not something impossible to let go.

If the body can get paralysed by a virus does not that mean the reverse engineering of the virus might actually help bring back the body.

All we need is the determination to think beyond!

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Mano o Mano!

Caught between the act of creativeness and periodic play, what would you do?

What makes money? What drives money? Is money everything?

oh yeah! I guess in this World it definetely means a World

Mano o Mano!

This confortation is working elliptically into world where ray of hope is seeming to disintegrate the very essence of thought making

haa!

Abdul Ahad

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Innovation Drive

In a competitive level playing field innovation has played a key role in being key differentiator and not just that.. then we have trend setters.

So what is the kind of innovation are we talking about?
There are various types of innovation which are totally out-of-box and on the other hand we have mix of existing products/solutions to reinvent a new solution

India is far behind in R&D, Innovation expenditure. But why is that?
Instead of being trend-setter we have been more of a following the herd policy. Companies are not willing to take risk. Being a product development company calls for resource expenditure without a view of possible market capitalization.
Once the product is ready, it calls for major Sales/ Promotion Drive. Are we ready for it?

Some of the most beautiful ideas have turned into billion dollar company. Is it not a worth enough risk to atleast give it a shot?

Brother my Brother...

I incidentally was watching Pokemon movie 1999. Probably one of their first movies at that time. The villain character was far overstretched. It was the fight between the real and the cloned Pokemons that interested me a lot.

Here is the lyrics from the Movie Pokemon - Brother My Brother - By Blessid Union of Souls

Brother my brother
Tell me what are fighting for
We've got to end this war
We should love one another
Oh, can't we just pretend
This war never began
We can try
Brother my brother

We face each other from different sides
The anger burns can't remember why
It's kind of crazy to cause so much pain
Our foolish pride makes us hate this way

We watch our world fall apart
Tell me what good is winning
When you lose your heart

Brother my brother
Tell me what are fighting for
Isn't life worth so much more
We should love one another
Oh, can't we just pretend
This war never began
Tell me why
Brother my brother

Yes
We can try
Brother my brother
Yes

Let's take a moment to look deep inside
and say we're willing to give love a try
we're not as different as we seem to be
there's so much more to me than what you see

It don't have to be this way
Think about the consequences
then turn around and walk away

Brother my brother
Tell me what are fighting for
Isn't life worth so much more
We should love one another
Oh, can't we just pretend
This war never began
Tell me why
Brother my brother

Brother my brother
Tell me what are fighting for
Isn't life worth so much more
We should love one another
Oh, can't we just pretend
This war never began
Tell me why
Brother my brother

Dreams on Fire

It always makes me think whether am I satisfied with my work or not. Is my work really worth it? Looking back one year later
will I regret what I am doing?

I work with a major IT Company in which I am involved in Innovation Activities. Sounds challenging as well as interesting. But the
thing is like everybody else my goals are towards reaching the higher management. I really don't know when that is going to happen.
Satisfaction is primarily important to drive one-self. Well I have started believing that. This totally transforms work into passion.
What are we really passionate about?

We are here in this world for a purpose. Unless and until we don't identify what it is, what is the whole point in living?

Here is one of my fav song from Slumdog Millionaire




Dreams on Fire

You are my waking dream
You're all that's real to me
You are the magic in the world I see

You are the prayer I sing
You brought me to my knees
You are the faith that made me believe

Dreams on Fire
Higher and Higher
Passions burning bright on the pyre
One spark forever yours
Give me all your heart
Dreams on Fire
Higher and Higher

You are my ocean waves
You are my thought each day
You are the laughter from childhood games

You are the spark of dawn
You are where I belong
You are the ache I feel in every song

Dreams on Fire
Higher and Higher
Passions burning bright on the pyre
One spark forever yours
Give me all your heart
Dreams on Fire
Higher and Higher

Attempto

A day starting late is as good as losing the whole day. well, it was that kind of day for me. Saturday's are the time when I kinda start catching up with whats going around me and ofcourse the world.

Day did start a bit late, but speedo did make on.

Started with magnificent City Bus (only in the dark). God willingly I was able to fix lot of issues on the way. Finally the destination was the office.

It was going perfect until I came to know that my code which was working yesterday screwed...

Damn thing did not work the whole day :(

Whats more -This junkie is now trying to become a techie (God I hated that word). I have started doing some research around cloud computing.

Well for those you who don't know a thing about it - check this out - http://en.wikipedia.org/wiki/Cloud_computing

Even though the trend has began. It is I who will make it trendier (in dreams ofcourse). But will definitely do something about it.

Wondering....

Makes me wonder why our lives are not like the movies. Right on the next block you get to meet the most beautiful girl you have ever seen and guess what she stares at you like the bright moon in the skies.

Kinda wonder whats in store the very next second. I don't understand why am I wondering so much at 2:00 am in the morning.

Sleepless in Chennai

I am have started to feel the global cue hitting right down to my door steps. To start with Satyam fiasco, caused the 55,000 IT workforce on a disarray and today it is oil strick which has caused me to stay on the office premises.

So it is boys night out chilling in the comp cafe with me, myself and my beloved comp.

Just feel didn't right about it

Never knew how it hit me? But it did!

Is it control of my life? A challenge being wrestled out by some dictatorship!

Feel I am ready. I am

The other day I read a quote from Azim H Premji "Now or never"

The whole thing will not make a sense unless and until I will be giving a picture. Well, here it goes. Bossy in the org. seem to be taking an unusual advantage of their position and seem to play politico game.

But, well what can I say - I am a changed man. Doing what I am best at - R & D. I believe I am on my way to my goals.

Worst things are not over yet!!!

I have lost everybody I loved and this is happening yet again. Just did not feel right about the choices I have taken but I had to. It is time to make a change

Do Project Managers know their job?

I always wonder what are the qualifications required to become a PM? Is it enough to complete a BE/ BTech - 6/7/8/9/10 years of experience - some training - and tada............. here we have a new PM joining the forces of dumbos.

Project Management - by sheer sense means to manage project. Lets drill this down further. Who are homo sapience involved in making this happen? dev, qa, architect,..
So the PM should also be a people manager. And guess what guys, I have not found a single proper PM till now. Truly!! at least in India

Dictator is often apt word that fits a PM. Pretty simple to explain they do not have a convincing capability.

Lets examine the flaws - not fluent with English, no proper writing skills, they have no idea about what their product does (this is the least I would have expected), no proper business etiquette

God knows when they call themselves as a project manager, what they are really trying to prove

Mera India Mahan!

Mera Bharat mahan!

How many of us are proud to be an Indian? Whenever we compare ourselves with other countries, there are often apt word used to describe our feeling "There is nothing like India"

What is that drives us to be an proud to be Indian? Dunno

One of my fav movies "Swades" has just something to think about?

In the movie, Villagers compare India with rest of the countries and reply - we have values and others don't have!!
oh wow - Does not rest of the countries have that?

I happened to be in NY, and guess what - I was stunned at how gracious, peace-loving, rules-following (at least most of them) they were. If you go into their history, they were number one Gangsters! What changed them?

Why are we not striving to be the best? Why is the individual effort missing? Why do we blame everything to the government?

Financial Dilemma!

If I were to deposit cash in a Bank, will it be safe? Where can I invest? In which sector shall I have confidence on?

The situation is pretty sore and recovery in the near future has become a matter of question. Sensex and Nifty have been brutally crushed. Now it is one-third of the valuations from the highs.

Investments in Gold, real estate was supposed to be a safe bet and now it has turned into high risk zone. Where can a middle class person invest?

Well, the best thing to do is to hold on to cash until, clear signals are visible. If you have debt, then this is the time to pay them off.

MFs are not trustable anymore! Stay away from them.

Moments!

Being flamboyant can sometimes be a mixture of ridicule and laugh, as the audience is not prepared for you! This is most common when you hold meeting with dumbos of the century.

Being expressive in oneself is considered to be a trait that very few have. But when you deal with not-so-serious types, you may become a subject of ridicule. Now how do you deal with such moments?

When the smile has a hint of smirk, then it becomes a battle of wits. I was ill knowledged about with such junkos some time back. But let me give you some tips.

During such instances, the best statements are "Got a problem" (loud and clear), "something funny". The listener will be dumb-struck and will nod their head.

Ha... hit them hard where it pains!

How bad can you screw-up?

Juggernaut rolling on the railing has finally taken a side of my opponent. The cogent on convincing my inner soul does not seem to have worked.

It is all about Common Admission Test (CAT).

I will not be surprised of my fall, if it really happens for it was something that I did not assiduous work.

Where is the Goddamn spark!

My preparation was just for a month. My strategy was as good as a 5 year old kid who does not care about his future.

Let's start putting things on the table. What do you want to achieve in your life? What do you want to be? Where do you want to be ? Do you like what you are doing?

I am a very ambitious boy who does not have a proper directed path. Who dreams to be big, but does not really put the right efforts on the right direction. Well, I did follow the foot steps of my role model 3 years back. It goes all here; I am a finance freak. I am passionate about stock market. My instincts have most of the times worked. Well, like any other investors even I have done sever mistakes. I was able to convert 2000G to 4300Grand. It is a different story that during market blood meltdown I lost more than 50%.

But, that is not the point. Where will the stocky thing will take me to. I need a bloody degree to prove my skills.

CAT would have just helped me with that! and what did I do? Blow it up royally.

Today was one of my worst days of my carrier in WT. I felt very lonely. Bloody company does not have any capable/ mindful person whom I can talk to.

Ya mere Rab, hame rastha dekha!!

Thoughts Ideas.. Just One Spark

Dunno... but why me? why? why? why? but why?

Existence! If I exist now? where was I when I was not.. Sleeping, waiting for God to unleash me on earth!

Are you scared of death? Well, I am! Lets see, how will it be in the astral world to decipher the difference between the state of mind when u sleep and when you have left the body (I mean passed away!)

It is not for this reason that I sleep late (4:00 am) But it quizzes me the perfection of the world this world has. Why is it so perfect? Whatever we do has some margin of error? Even 6 sigma guys will agree with me on this.

So, what is the purpose of life? work? get married? go to onsite? What did god create us for?

Is it a test for eternal life or if I die, I go to sleep forever.

This makes me feel like leaving behind a mark. I am no Einstein or Newton or my role model Warren Buffet. what is it the bloody thing am I waiting for? All I need is a spark.

Come on sparky, spark.

Damn! I am an IT Engineer

Damn! I am an IT Engineer

But why why why but why?

Why did I do the same mistake as the rest of the folks and followed the wind.

Was it is because I did not want to be left behind the race or was it the money.

To come to think, was my 3 yrs in IT really worth. Have I lost quality time? Have I degraded my standard? Have I ruined the name of the CBSE students ?

It is 3 years, but it still feels the same. I don't understand what I have achieved till now is really worth.

Well now I have a designation of "Module Leader". But I am scared to death when I have to leave the current account. What is that I will be if I am leaving this account and starting fresh all over again.

I will loose all the lovely contacts, credibility and worst of all everything I have build here.

But I think the time has come to decide whether I have to stagnate or think beyond.