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The largest private bank, ICICI is set to become even bigger.  Though the price they are paying to buy out Bank of Rajasthan seems a bit too much.

Bank of Rajasthan, one of the oldest private sector banks in the country, on Tuesday announced that it would merge with the largest private sector bank, ICICI Bank.

The board of ICICI Bank, which met later in the day, also agreed to give in-principle approval for merger of Bank of Rajasthan with it “subject to due diligence and valuation by an independent valuer jointly appointed by both banks.”

“The board will consider the due diligence report and the valuation report at a subsequent meeting. The proposal if approved by the boards of ICICI Bank and Bank of Rajasthan would then be placed before the shareholders of both banks for approval and would be submitted to the Reserve Bank of India (RBI) for its consideration,” ICICI Bank stated after its board meeting here.

Full article here

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After years of talking to many industrial and retail houses, the French retail giant, Carrefour has agreed for a retail alliance with Kishore Biyani’s Future Group.

Future Group will open Carrefour-branded franchise stores in the country under a deal signed three months ago, said the two persons, who spoke on condition of anonymity because an announcement is yet to be made.

Future Group plans to open between 150 and 300 Carrefour-branded hypermarkets in the next five years, said one of the two persons.

“This is quite ambitious given the challenges in finding right space required for such hypermarkets,” said the person.

Future Group, which runs Pantaloon and the Big Bazaar chains, will pay the French retailer a royalty for using the brand, said the person, who declined to specify the royalty amount.

Indian rules allow foreign multi-brand retailers to operate in the country only through franchise agreements with local firms.

Carrefour has been scouting for a partner for several years, without success. It has previously held talks with Bharti Enterprises Ltd, which teamed up with Wal-Mart Stores Inc., Wadia Group, and real estate firms DLF Ltd and MGF Ltd, among others.

In 2007, Carrefour started two separate units in India, Carrefour WC and C India Pvt. Ltd to roll out fully owned wholesale stores, and Carrefour India Master Franchise Co. Pvt. Ltd, which was to partner an Indian company to open the French firm’s branded stores in the country.

Full article here

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After a spectacular 100% rise from 2008 levels, the markets moved into a bubble territory.  The Greece debt downgrading to junk status might be the needle that would prick the bubble.

For an ordinary man on the street, its a disaster.  For the newscasters, its breaking news.  For a long term investor, its a good time to buy some great stocks at fabulous prices.

A leading credit agency lowered Greece’s rating to junk status, dealing a blow to an international rescue plan for the country and hammering U.S. and European stock markets.

The junk rating, unusual for a developed nation, deepened fears that big fiscal deficits and debt burdens elsewhere could threaten the economic recovery in Europe. Stock markets on both sides of the Atlantic tumbled about 2 percent or more after the downgrade by Standard & Poor’s.

The downgrade fanned investors’ doubts that the proposed economic reforms in Greece will go far enough to prevent the country from spiraling into even deeper trouble. It also presented a new obstacle to the planned $60 billion bailout from European governments and the International Monetary Fund.

Full news here

As i write, the BSE Sensex is more than 250 points down from yesterday’s close.  Portugal also has been downgraded. With Ireland, Italy, Spain also in the line, there seems to be long dark days ahead.

Hope the Sensex collapses some more over the next few weeks to settle around 15-16k. So that i can do some bargain hunting

Above picture source: Tribune

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I first saw this book in a bookshop in India. Didnt buy it then as i found the price a bit too high for my pocket.  Also i hadnt read any reviews of the book and i didnt want to spend so much money on a book that i didnt know much about.

Recently i managed to lay my hands on the book and it turned out to be a breezy read.  Mohnish Pabrai of Pabrai Funds who is the author of this book writes about the Dhandho way of doing business.  To do this he quotes examples of the Patels own the majority  of motels in the US, about Richard Branson’s way of doing business and also Laxmi Mittal who owns the Arcelor-Mittal group of steel companies.

According to Pabrai before buying into a company or before buying the stocks of a company, the investor needs to do the following checks

1. Is it a business I understand very well—squarely within my circle of competence?
2 . Do I know the intrinsic value of the business today and, with a high degree of confidence, how it is likely to change over the next few years?
3 . Is the business priced at a large discount to its intrinsic value today and in two to three years? Over 50 percent?
4 . Would I be willing to invest a large part of my net worth into this business?
5 . Is the downside minimal?
6 . Does the business have a moat?
7 . Is it run by able and honest managers?

The mantra always is “few bets, big bets, infrequent bets”—all placed when the odds are overwhelmingly in your favor.

The Dhandho Investor – The Low Risk Value Method to High Returns
Author – Mohnish Pabrai
Pages – 209
Publisher – John Wiley & Sons

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What a recovery it has been for the markets.  Just a year ago, the Sensex crashed to 8160 points.  Now its trading above 17000 points.  More than 100% growth in just a year.  No other sector (gold, PPF, debt, realty) would give you that kind of growth.  When the markets were down last year and i was talking about the opportunity to buy into some good companies, many of my friends dissuaded me from doing that.

“Buy when everyone sells and sell when everyone buys” is probably the only way to make money in the market.  Following the heard mentality is sure to give a lot of heart pain in the long run.

The exhilarating bounce from the lows that the Indian equity market touched on 9 March 2009 is now a year old—and what a year it has been. These 12 months have been a wildly profitable time for those brave souls who held their nerve and bought stocks, while it has been a missed opportunity for those who thought it was a short-lived bear market rally and thus preferred to sit on cash.

The benchmark Bombay Stock Exchange Sensitive Index, or Sensex, closed on Tuesday at 17,052.54, up 109% over a year ago, though just about nobody believes the next 12 months will be as good.

Read the full article here

Above picture courtesy: Livemint

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