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Hitesh Shah
Senior Member
Joined: 12/Oct/2008
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Posts: 3656
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   Posted: 06/Jul/2009 at 8:45am |
Help!Can someone please explain this:
| The Budget speech brought in some potentially major reforms in a
by-the-way manner. Fertiliser subsidies would now be nutrient-based;
the farmer would finally get the subsidy rather than inefficient
government and private companies. Great for the economy, and the
farmer, and bad for fertiliser companies. |
SourceWhy will the new method be worse than the old method for the fertiliser companies?
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catcall
Senior Member
Joined: 02/Sep/2006
Location: India
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Posted: 06/Jul/2009 at 9:25am |
Originally posted by Hitesh Shah
Help!Can someone please explain this:
The Budget speech brought in some potentially major reforms in a
by-the-way manner. Fertiliser subsidies would now be nutrient-based;
the farmer would finally get the subsidy rather than inefficient
government and private companies. Great for the economy, and the
farmer, and bad for fertiliser companies. |
SourceWhy will the new method be worse than the old method for the fertiliser companies?
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I am not sure either of this is the correct picture. In case the fertilizer cos are allowed free fertilizer pricing and the subsidy goes directly to the farmers, it will actually benefit companies with older plants (being fully depreciated),since their production cost is lower.Also, at present, Fertilzer ministry allocates (regulates)territories to various fertilizer companies. This to will have to be deregulated, giving pricing power to companies located nearto farming heartlands (transportation cost reduction and brand power).
As regards to benefiting the farmers, we all know how efficient (or otherwise!) the PDS system is!
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There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!
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Hitesh Shah
Senior Member
Joined: 12/Oct/2008
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Posts: 3656
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Posted: 06/Jul/2009 at 10:42am |
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Maybe, yesterday everything was interpreted darkly.
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catcall
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Location: India
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Posted: 07/Jul/2009 at 12:08pm |
Originally posted by Hitesh Shah
Maybe, yesterday everything was interpreted darkly.
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Additionally, fertilzer cos were not too happy with this subsidy stuff. First the payment of subsidy is almost always delayed (often carried forward to the next FY to show a lower fiscal deficit) which resulted in cash flow problems for these companies. secondly, a major part of these subsidy was often paid in bonds, which the fert. companies had to offload in the market at a discount...
these companies are better off getting the money against sale directly, the govt can do what it wants to be with the farmers....
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There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing!
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Hitesh Shah
Senior Member
Joined: 12/Oct/2008
Online Status: Offline
Posts: 3656
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Posted: 11/Aug/2009 at 11:35pm |
SourceShah
says he would invest in companies which are into agri-commodities like
sugar or tea. "Farmers who make money from the high prices of
agri-commodities may go in for aggressive buying of fertilisers,
pesticides, and agro chemicals. Hence, I would certainly be very
bullish on anything related with agriculture. Also, I would get into
some irrigation companies, which are into manufacturing of PVC pipes
because only 30-35% of the total cultivable land in the country is
irrigated. Looking at what has happened this year, a number of
initiatives would go towards irrigating the farm fields in a very
aggressive manner over the next few months and years."
From agri-commodities, he likes McLeod Russell, Bayer Cropscience, Rallis India,
and ITC. "McLeod Russell is showing a lot of strength. It is quoting
hardly about 10-11 times earnings and tea prices are going pretty firm.
Bayer Cropscience and Rallies India are quoting a P/E of 10. I would
certainly not hesitate to get into companies like ITC which are into
rural retailing at about Rs 200-210 kind of levels."
He is also bullish on Finolex Industries from the irrigation pack. "Finolex Industries
is quoting just about 5 times compared to Jain Irrigation which is
quoting about 20 times. This company has also got a subsidiary joint
venture with an Israeli company which is significant player in the drip
irrigation and the micro irrigation business." |
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Edited by Hitesh Shah - 11/Aug/2009 at 11:36pm
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EquityInv
Senior Member
Joined: 21/Jul/2009
Location: United States
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Posts: 536
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Posted: 11/Aug/2009 at 1:58am |
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One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do – James Rogers
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EquityInv
Senior Member
Joined: 21/Jul/2009
Location: United States
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Posted: 11/Aug/2009 at 2:00am |
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Hitesh,
Are you tracking Finolex Industries? Any idea about their management and business?
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One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do – James Rogers
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EquityInv
Senior Member
Joined: 21/Jul/2009
Location: United States
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Posts: 536
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Posted: 15/Aug/2009 at 12:07pm |
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One of the best rules anybody can learn about investing is to do nothing, absolutely nothing, unless there is something to do – James Rogers
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