Preserving Money
In my previous article, I had highlighted some of the issues faced by senior citizens. Many readers asked me ‘where should senior citizens invest?’ This inevitably leads to a bigger discussion on evaluating the RISK-REWARD of investing in various asset classes and interest rates. Preservation of wealth is important; and the real issue that impacts our ‘wealth’ is the diminishing return on...
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  • Global weakness bring down Nifty, Sensex – Thursday closing report
    We had mentioned in Wednesday’s closing report that Nifty, Sensex are on an uptrend. On Thursday, the major indices ended in red with minor losses. On the NSE, there were 690 advances, 1,132 declines and 376 unchanged.
     
    The trends of the major indices in the course of Thursday’s trading are given in the table below:
     
     
    Dr. Reddy's Laboratories launched an over-the-counter (OTC) eye allergy drop Olopatadine Hydrochloride Ophthalmic Solution in the US.
     
    Happiest Minds Technologies stock registered a massive opening on the bourses, surging about 138% on an intraday basis on its debut on September 17.
     
    Ircon International bagged order worth Rs 1,900 crore from the Indian Railways for electrification works on various routes.
     
    Dhanuka Agritech’s board approved the buyback of equity shares worth up to Rs 100 crore and fixed September 28 as the record for determining the entitlement of equity shareholders.
     
    Manaksia Steels has acquired 13.25 lakh shares of Manaksia Limited through market purchase. Following the acquisition, the revised shareholding of the company in Manaksia Limited has been increased from 4.08% to 6.10%.
     
    Power Ministry gave a nod to monetise Power Grid’s assets held in Special Purpose Vehicles (SPVs) through InvIT (Infrastructure Investment Trust). 
     
    JMC Projects (India) secured new orders of Rs 1,342 crore. Contracts include infrastructure project in East Asia of approximately Rs 725 crore, water supply projects in Odisha totalling Rs 471 crore and building project in North India of Rs 146 crore.
     
    Ramco Systems signed up an agreement with Arla Foods for modernising and transforming its multi-country payroll operations on Ramco's Global Payroll platform.
     
    Tata Teleservices approved raising of up to Rs 5,000 crore by issuing preferential shares to parent firm and non-convertible debentures on private placement basis.
     
    Sterling and Wilson Solar Limited signed an order of 106.71 MW worth USD 62.6 million (around Rs462 crores) in Chile.
     
    The top gainers and top losers of the major indices are given in the table below:
     
     
    The closing values of the major Asian indices are given in the table below:
     
  • User 

    HOEC vs HOEC: Is Hindustan Oil Exploration Co Caught in its Own Web?
    Questions are being raised in stock market circles on the sharp increase in the stock price of HOEC which has tripled from Rs30 to Rs90 from March till August.
     
    Hindustan Oil Exploration Company or HOEC as it is known by the investors is a curious case, as it seems to be caught in a web of its own disclosures.
     
    The 36th annual report for FY19-20 along with the investor presentation was shared with the stock exchanges. At a time when oil and gas firms are going through a rough patch, HOEC has tried to play up some old and irrelevant information to keep the shareholders' interest alive. In the earning call and the documents share, HOEC claims that 'marquee investor' Kotak Small Cap Fund is holding little over 2.5% in the company.
     
    However, going by the shareholder details given as part of the 36th Annual Report for FY19-20, energy majors and supermajors—Unocal, Chevron and Eni—have exited the firm in the past 5-6 years. The company is trying to prop some of the old legacies to keep up the investors' interest. The lack of any substantive developments is making it difficult to explain the climb in share price of the company from little above Rs30 by end of March to above Rs90 by August-end.
     
    HOEC currently produces a small quantity of natural gas which has become unremunerative in India and worldwide. The last dividend was declared in the year 2010-11. Experts say that there might be a view that shareholder returns should factor in price appreciation too. However, this measure doesn't seem to offer much help in this case. HOEC had an unpredictable zig-zag bottom line.
     
    A case in point is the profit declared in Q3 FY19-20. In this period the profits were up notionally by Rs22 crore, but the gains were not because of any operational expertise or rise in production. It was due to the reversal of invoices of Eni (Italian major) pertaining to the period 2010-2014. Operationally, as per the latest investor presentation, HOEC has a portfolio of 10 assets. Most of these assets are non-functional and as per the company's presentation gross production from the functional assets are as little as 2,118 barrels of oil or equivalent per day (BOEPD), Q1 FY20-21.
     
    HOEC's share of production is not sum-from-each-assets; the latter just stacks up to 1,937 BOEPD, this being nearly 9% lower than the reported figure. HOEC's management team has been claiming —for more than 3 years—that they will be bringing B-80 Field on production. However, the production from B-80 has suffered several false starts and it is understood from sources close to the project that the production target has rolled over to January 2021. But the target of January 2021 would only be possible if the funding for the project is in place.
     
    The company is already neck-deep in liabilities—over Rs 600 crore as per the declaration made by the company as of 3 September 2020. To top up on these admitted liabilities, if the demand notices from Government of India on royalty payments and liquidated damages are to be relied upon, and there is no reason that the same are not payable, the net liabilities of HOEC are close to Rs780 crore as of 31 March 31 2020.
     
    To discharge these liabilities using cash from operations, it would take the company nearly 12 years if one goes by the most recent Q1FY 20-21 net cash run rate presented by the management, sources said. HOEC has tried to reassure investors by informing it has engaged well-known drilling and other service providers, such as Shelf, Lamprell, Baker Hughes, Dril-Quip, Expro, Zentech, Shipping Corporation of India and Tide Water.
     
    However, what the company has not told the investor community is that there are payment arrears worth $20 million to these vendors (some have already taken legal recourse including arbitration). This would surely be a cause of concern for the company and it could potentially push back the start date for the B-80 Field.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    shankar_1979

    1 month ago

    Excellent reporting by ML team.

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