Joined: 07/Sep/2009
Location: India
Online Status: Offline
Posts: 289
Posted: 18/Oct/2011 at 12:57pm
Sir Ji,
This is what exactly data i am asking for /looking for.
SEBs default &
REC writes off bad debts(loans) in numbers.
This should be in numbers reflected somewhere....
If one can show it in annual reports, published numbers, i am convinced and out of it. Case closed. Till now, all i was reading was close to Zero NPA's in their reports.
It is my lack of skills in reading through Financial tables, i never attempted it in the past and believed on published numbers, reports and equity web site to get the data.
I do care about my hard earned money. And i am not here with some emotional connect with company to defend. But data /numbers is what i am looking for and take the learning's ahead.
This is what exactly data i am asking for /looking for.
SEBs default &
REC writes off bad debts(loans) in numbers.
This should be in numbers reflected somewhere....
If one can show it in annual reports, published numbers, i am convinced and out of it. Case closed. Till now, all i was reading was close to Zero NPA's in their reports.
Hrishi, I'd say you really need to speak to some of REC's customers/employees. These things don't show up on ARs.
Everyone involved is very interested in keeping the game going for a long time.
As long as such companies can keep the music playing and ensure a decent stock price (so that they can sell more stocks) no one will know what is going on.
This is the reflexivity principal playing out for this company and for a few other small wonder banks which earn record profits every year through "innovation" which no one can explain as you're only supposed to marvel about it.
For an institutional type of business like this, what’s source of data for a small investor other than a glossy AR with nice pictures. Anyway, made me look up AR2011 and work for free:
1. Page 77 - Schedule 7:
See (i) (c) SPUs/SEBs etc, on unsecured loans of Rs 21,904 cr ,interest accrued on rescheduled loans is Rs 363 cr and for other normal loans is just Rs 4 cr, see the figures for 2010 Rs 432cr and 8 cr, so as % how much of this 21k should be under reschedulements. Do you think it will ever be classified.
See (iii) - on Rs 7,842 cr loans, interest accrued for restructured loans Rs 35 cr and same way.
2.Page 120 - Item 34:
Closing balance of principal rescheduled – Rs 8,223 cr and interest Rs 717 cr, On a gross book of Rs 82,132 cr, this is about 10%.
Is this stated position consistentwith (1) above.
3. And what prevents them from sanctioning a new loan (STL) when a large payment falls due. Which NPA and delinquency are we talking about.
4. Quality of Prudential norms are discussed before.
5. Look at the macro picture for T&D utilities – coal supplies drying up, operating costs going up, borrowing costs increasing, elections in next 2 years – from here, you expect fiscal discipline to improve or deteriorate?
6. Page 96 – Item iv - Annexure to auditors report:
“in certain areas internal control needs further strengthening like Utilization of grants/subsidies disbursed under various schemes; Monitoring and supervision of loans given to various SEBs/DISCOMS/ TRANSCOS/GENCOS including obtaining search reports for charges created against the loans given, ascertainment of viability of revised project at the time of re-schedulement of loan assets; Generation of various reports from loan module in ERP to have better control over loan assets “
You want an auditor to say more than this and get his fee. But the good thing is management has said they will make efforts to strengthen all these areas.
Let us promptly add, they will continue glorious results and stock can do extremely well.
Edited by master - 18/Oct/2011 at 9:12am
Someone’s sitting in shade today because someone planted a tree long time ago.
Joined: 07/Sep/2009
Location: India
Online Status: Offline
Posts: 289
Posted: 19/Oct/2011 at 8:16pm
Master Ji,
Thanks so much for pointing me at right places to look at. Next few days, i will try to read through every line and understand it in the Annual Report. (Are there any books, which I can get help from in these financial learning.)
Till now, use to read the Director's Report, Management Discussion and few more items and done with it. Never went to schedules and annexure. It is a learning indeed.
And if master want's to charge for it, by all means...
I am neither into this just to make money, though it is important, more important is to learn and earn. ELSE will be obsolete pretty early.
After learning/reading through similar practices in SKF from an article, i left it completely. And formed few rules for myself to select a company for investing.
On this new learning, I will spend much more time and redefine the selection criteria for the companies in my portfolio.
For an institutional type of business like this, what’s source of data for a small investor other than a glossy AR with nice pictures. Anyway, made me look up AR2011 and work for free:
1. Page 77 - Schedule 7:
See (i) (c) SPUs/SEBs etc, on unsecured loans of Rs 21,904 cr ,interest accrued on rescheduled loans is Rs 363 cr and for other normal loans is just Rs 4 cr, see the figures for 2010 Rs 432cr and 8 cr, so as % how much of this 21k should be under reschedulements. Do you think it will ever be classified.
See (iii) - on Rs 7,842 cr loans, interest accrued for restructured loans Rs 35 cr and same way.
2.Page 120 - Item 34:
Closing balance of principal rescheduled – Rs 8,223 cr and interest Rs 717 cr, On a gross book of Rs 82,132 cr, this is about 10%.
Is this stated position consistentwith (1) above.
3. And what prevents them from sanctioning a new loan (STL) when a large payment falls due. Which NPA and delinquency are we talking about.
4. Quality of Prudential norms are discussed before.
5. Look at the macro picture for T&D utilities – coal supplies drying up, operating costs going up, borrowing costs increasing, elections in next 2 years – from here, you expect fiscal discipline to improve or deteriorate?
6. Page 96 – Item iv - Annexure to auditors report:
“in certain areas internal control needs further strengthening like Utilization of grants/subsidies disbursed under various schemes; Monitoring and supervision of loans given to various SEBs/DISCOMS/ TRANSCOS/GENCOS including obtaining search reports for charges created against the loans given, ascertainment of viability of revised project at the time of re-schedulement of loan assets; Generation of various reports from loan module in ERP to have better control over loan assets “
You want an auditor to say more than this and get his fee. But the good thing is management has said they will make efforts to strengthen all these areas.
Let us promptly add, they will continue glorious results and stock can do extremely well.
Joined: 22/Oct/2011
Location: India
Online Status: Offline
Posts: 1
Posted: 22/Oct/2011 at 10:56am
Hi
I am a new boarder and excuse me if I have another idea. If we are really reading between the lines than entire Indian economy is at risk. Reliance who is sitting on huge case pile of 30K is paying 660 crores as interest. IF entire power sector is going fail, what is safe then.
In my opinion, you guys are reading in too much, see the larger picture and invest. what is per capita power consumption in India. What is the growth opportunities. Do not just look at the negative numbers. If two of the large entities having loan book worth 1.5 lac crores (PFC/REC) are not going to survive and banks are going to doom doom, tell me what is safe, specially when all these loans are backed up by Govt (State and central).
Stock market is always a risky proposition and you need to be more daring apart from reading reports. Good luck to all who invest or do not invest in markets.
Tardy progress in power sector reforms is now beginning to take its toll.
As per recent CRISIL report “Around Rs 56,000 crore of these lenders’ exposure is potentially at risk, if there is no meaningful progress on reforms in the next 18 months,”
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