Encashing the ESOP - another stark reminder from Satyam!

We all know about the Satyam scandal and the various efforts made by the Government in salvaging whatever possible for the various stakeholders from this unprecedented fiasco. At this juncture, we have to remember the employee millionaires of Satyam who had made tremendous wealth (of course on paper) through ESOP's. The employees who were holding ESOP's were one of the worst affected of the lot due to steep correction in share values of Satyam. We cautioned in one of our earlier articles when Bear Stearns went down in March 2008 about the need to systematically encash ESOP's to avoid situations like this. You can read that article here.

Read the full article by logging on to http://www.ideas2wealth.blogspot.com/

Satyam - where is it?

Satyam has created history yesterday when its Chairman Mr Ramalinga Raju accepted the fact that his company's accounts are cooked up. Cooked up to the extent of some Rs7000 crores. Not a small amount. Due to this, Satyam becomes the undisputed leader of "Corporate Frauds" in India. Satyam has beaten down its rivals like deposit taking NBFC's of India, Harshad Mehta and Ketan Parekh's stock market scams in terms of the amount of fraud.

What Raju claims to have done?

Raju claims that the company has been showing inflated profits over the last so many quarters/years to please the analysts/investors to ensure that the company doesnt become a takeover target. He says that the company was actually making profits of 3% of its revenue but it has reported a net profit margin of 20% or so. That is, on a turnover of Rs2100 odd crores of turnover reported in Q2, 2008, it has actually made a profit of Rs63 crores but it has reported a profit of Rs580 crores. That is it has overstated profit to the extent of Rs517 crores in Q2, 2008 alone. Raju claims that the company has overstated revenues and income over the last so many years. As the actual profits are less than the reported profits, the excess of the profits between the reported profit and the actual profit has been accounted for in the cash in the books of Satyam.

Raju also claims that he has arranged more than Rs1200 crores over the last few years to keep the company afloat. That is, he has used his influence to borrow money for the business purpose of Satyam without accounting these loans in the books of Satyam.

Therefore, to sum it up, he says that he has overstated profits and understated the liabilities in the books of Satyam. All these being done to prop up the share price and to keep the company afloat and meet the salary and other obligations to Associates (employees of Satyam). All sounds noble, isnt?

What would have actually happened?

Raju is no saint and he is not running a company to help his associates make money at the cost of his personal wealth. It has been reported in the press that there has been sizeable siphoning of funds from Satyam towards purchase of land and properties in Hyderabad. Maytas Infrastructure, a group company of Satyam which was proposed to be acquired by Satyam three weeks ago, is into real estate and infrastructure development.

Raju may have probably siphoned the money to buy land in and around Hyderabad and other cities. He would have believed that real estate returns would be better so that he could be able to sell the land and repay the money back to Satyam. But the land prices moved against his expectations leading to a large erosion in value. He wanted to set right the erosion in value by merging the Maytas Infra and Maytas Properties with Satyam so that the "unreal" cash and bank balance can be exchanged for the real assets held by Maytas. Since Raju and his family owns 35% of Maytas Infra, it would be easy for him to carry the amount due to Maytas as just a book entry in Satyam. Atleast, he would have been able to buy sometime before he could arrange for funds and settle the due to Maytas Infra. But that is not the case now.

Raju's conscience has been telling him to accept guilt and face the law of the land!! So he wrote a letter to other Board Members and went into hiding for the last 2 days. The Indian law enforcement has been still grappling trying to figure out how to nail him down. No arrest warrant has been issued for him even after accepting the guilt for swindling Rs5000 crores from Satyam. Long live the Indian Laws!! Jai Hind!!

More on Satyam to come.

Interview with Howard G Buffet, son of Warren Buffet!!

We all have heard so many things about legendary investor, Warren Buffet. His investment insights, annual reports with wit and humour and at the same time lot of meaning, his generous contribution to charity etc., But his personal side is not that much explored! ( I dont know if it is a right word to say). Warren Buffet has three children and one of them is Howard Graham Buffet, named after Warren's father Howard and Warren's mentor, Benjamin Graham. Naming your son after your father's name is a unique thing to Tamilnadu (particularly Southern part of Tamilnadu, I guess) but Warren Buffet has also followed that!!

Howard Buffet still lives in Omaha and he loves farming. He has 850 acres farm where he cultivates soya and corn. He says that his life as the son of world's richest person has been no different from any body else. Howard Buffet is engaged in charity work in Latin America and other developing nations. He has been tipped to become the Chairman of Berkshire Hathaway after Warren Buffet. It is really interesting to see that successor to Warren Buffet is from his family. Corporate America also follows the Indian way of succession planning or what??

You click the link here to read an interview with Howard G Buffet, the second son of Warren Buffet and President of Howard G Buffet Foundation.

Mysore Cements - what I think about..

Recently read through the Annual Report of Mysore Cements. These are my initial impressions from report.
Mysore Cements is a SK Birla promoted company with a cement production capacity of 2.1 million tonnes across 3 production facilities in Karnataka, UP and MP. The SK Birla group has recently off-loaded its entire stake of 54.38% to Hiedelberg Cement Group of Germany. Now, Mysore Cements is a subsidary of Hiedelberg Group. The company is expanding its capacity to 5.9 million tonnes per annum subject to approvals from regulatory authorities. The Board of the company has been re-cast with the nominees from Hiedelberg group taking over the Birla held board positions. The company is merging Indorama cement and Hiedelberg Cement India P Ltd with itself w.e.f 01 April 2008.
The company follows Jan-Dec accounting year and for the y.e 31 Dec 2007, the total production of Cement and Clinker stood at 2.201 Million tonnes companred to 1.610 million tonnes for the y.e. 31 Dec 2006, implying a production increase of 36%. The net realisation per tonne of cement during 2007 stood at Rs3271 compared to Rs2954, again showing an upward bias in price realisation.

Positives:
1. The company revenue and profits have been raising continuously over the last 4 quarters. Of course, the cement cycle is doing good being the primary reason, the company's association with Hiedelberg may be a positive in the long run. The net profit of the company has increased to Rs97.65 crores for the y.e 31-12-07 compared to the loss of 2.19 Rs34.31 crores in y.e. 31-12-06. For the quarter ended 31-03-08, the company has reported an EPS of Rs 2.59.
2. The company holds cash to the extent of Rs180.73 crores in the Balance sheet as at 31-12-07. This works to per share value of Rs11.43. The total market capitalisation of Mysore Cements at the current rate of Rs32 works out to Rs506 crores.
3. The company has generated cash of more than Rs.80 crores for the year ended 31.12.07.
4. The company holds 12 lakh shares of Cimmco Birla Ltd., in its books valued at Rs12 lakhs. The market price of Cimmco Birla is Rs25 per share and there is already a proposal of takeover by Titagarh Wagons. Since Cimmco Birla is under BIFR purview, the promoter company can not sell the stake now.
5. In addition to this, the company holds investments in listed entities which are valued clost to Rs2.50 crores. (As per the last balance sheet it was valued at Rs5.45 crores. Considering the erosion in value of securities over the last few months, I have reduced the market value of investments by more than 50% to Rs2.50 crores)
6. The company has accumulated losses of Rs269.83 crores in the books which will help the company to reduce the tax burden over the next couple of years.
7. The company is quoting at an attractive valuation of less than USD65 Economic Value per tonne compared to the industry average of USD105 per tonne.

8. The company has an expanding operating margin over the last 3-4 quarters.

Negatives:
1. Cement being a highly cyclical industry, the fortunes may swing wildly. The per tonne realisation may not be sustained, there can also be a drop in the demand for cement due to economy slowdown. The company may also face difficulty in managing rising input costs, in-adequate limestone mining facilities, coal availability and increasing railway freight charges.
2. The company being located in the hinterland, the exports may not be an viable option at all.
3. The accumulated losses to the extent of Rs269 crores will stop any dividend pay-out for the next couple of years atleast.
4. Increasing cement capacity across the industry leading to fall in price.

My take on this company:
The company looks interesting to me at this price of Rs32 considering its parentage. I am being very conservative in estimating the full year EPS to be around Rs7.50 (instead of Rs10 thats what you will get if you just annualise the first quarter ending 31 March'08). It is quoting at 4 PE but since it is a turn-around story and zero-debt company (very important in a rising interest rate scenario) it is destined to do better.

I would ideally look at a price of Rs45 over the next one year at the minimum for this scrip, which presents a possible upside of around 50% from the current price levels.

Orchid Chemicals & Pharmaceuticals - what is happening in the scrip?

Orchid Chemicals & Pharmaceuticals scrip has fallen more than 50% in the last two days. On Friday, 14 March, it closed at Rs206 and today on 18 March it has closed at Rs113.60. At today's closing price, the scrip is quoting at a PE of 4.16. Incidentally, the Business Line carried a detailed buy recommendation of Orchid Chemicals at Rs206 only last Sunday. Click here to view the report.

What would have triggered the steep fall in the scrip in the last couple of days?

1. Bear Stearns sold a huge chunk of Orchid Chemicals stock on Monday due to its liquidity related problems. Bear Sterns has sold the scrip at 195 range on Monday.

2. Macquaire Bank which holds a sizeable chunk of Orchid Chemicals is rumoured to have sold their stake in the market.

3. There is a sale of more than 20 lakh shares by the promoters family members on Monday at Rs135 range.

4. Orchid Chemicals is supposed to carry forex derivative contracts in their books which due to the recent currency movements in Yen and CHF may have a negative impact on the profit and loss for this quarter.

Answers to the questions above:

1. The entire lot sold by Bear Stearns has been picked up by another FII. Also we should note that the sale by Bear Stearns is nothing related to the fundamentals of Orchid Chemicals but due to its own liquidity position.

2. Macquaire Bank sale is still a rumour and no bulk deals reported.

3. The promoters have clarified that the sale of more than 20 lakh shares has been triggered due to margin call on their individual share trading accounts and it was not an intentional sale.

4. The company has clarified that their exposure in forex derivatives is negligible to their balance sheet size.

Technical view:

Don't think I am a qualified technical expert but when I had one look at the graph it has broken all supports and quoting below 100 DMA and 200 DMA. On pure technicals, it is not a buying signal!!

I think there is no justification for the steep correction of over 50% in the last two days in the scrip. The fundamentals merit a closer look at the scrip with large scale expansion planned by Orchid Chemicals, launch of new products in the coming year in US market etc., If at all somebody is going to buy Orchid, it is better to stagger your purchase. Remember the famous quotation, when the whole world is fearful, you can be greedy.


Disclaimer:
I don't currently own Orchid Chemicals but may own it in the future. Please check the fundamentals and take your own personal decision.

Does promoters buying shares in the open market a positive sign?

Conventional stock market wisdom says that whenever the promoters are buying shares from the open market, it is a positive sign. If you believe in this statement, there are couple of stocks which are consistently bought by the promoters making complete use of the weak stock markets.

1. Over the last couple of months, the promoters of K. S. Oils Ltd has been buying shares in the open market. The promoter, Ramesh Chandra Garg's name appears in the
Insider Trading Information every day, almost.

2. The second stock is Gujarat NRE Coke. This is again bought regularly from the market by a group company, Gujarat NRE Minerals.

Since the promoters are buying in a big way, I guess they know more than what all market watchers know. Only time can tell!!

There is another side of promoters selling stocks in a big way. Deepak Shenoy has written about First Source Solutions, where the insiders have sold their stocks. You can read about the sale of shares by insiders in First Source Solutions here.

We should not blindly buy shares of the companies where promoters are increasing their stake. If the performance of the company is good and you are satisfied about the fundamentals and then you know that promoters are also buying, it gives you the added comfort.

Client Service Levels of Brokerage houses!?

I decided to close one of my demat accounts with India Infoline as it was not being used at all. Why to have multiple demat accounts and pay the annual maintenance charges?

As soon as I decided to close the Demat account, I acted really fast (unusal of me!!) and submitted a letter to the local office of India Infoline during the third week of Sep 2007. I was told at that time that it would take a maximum of 3 weeks to close the account and I would receive the cheque for the balance amount lying in my trading account. Within a fortnight I got a call promptly from the India Infoline's Mumbai office enquiring about my intention of closing the account and couple of other questions on client servicing etc., I was very thrilled because atleast one financial service provider is acting on time.

I have personally experienced that none of the brokerage houses, financial advisors turn up on time. I had instances of following up with them to find out what has happened and they hardly even bother to call up and apologise if there is a delay. So when things were different, I was totally impressed with the service from India Infoline and that too particularly for closing a demat account.

My joy didnt last forever. After that call nothing seems to happen for more than 3 months. I would have called the RM atleast 6 times in the intervening period but I was always told that the account has been closed and I would get the cheque for the balance amount. Last week when I was crossing their T Nagar office I just dropped in to enquire what has happened to the cheque. To my utter surprise, the RM apologises and produces the cheque to me dated 19 Nov 2007. He explained that as the account has been closed in their system they didnt have any contact details of mine and holding the cheque for the last 2 months.

Number of questions comes to my mind now.
1. Why India Infoline didnt send the cheque to my home and instead sent it to their T Nagar Office?
2. Why there is no formal communcation stating that my account has closed?
3. If they have sent the cheque to the RM to hand it over to the client, why they didnt provide my contact details to him?
4. Why did the RM kept saying that he has not received the cheque in the interim period between Nov 07 - Jan 08.

Luckily for me, the amount is just thousand odd rupees and it didnt really impact my cashflow. A lot needs to be changed with regard to service levels of these brokerage houses. I have had experienced myself or heard stories of very poor service levels from Kotak Securities, India Infoline, Geojit Securities, Sharekhan etc.,

Do you have any good or bad experiences to share?

Gujarat NRE - 3rd Quarter Results update

Gujarat NRE Coke has come out with sterling results for the third quarter. The topline has grown to Rs248 crores in Q3 2007 from Rs102 crores in Q2 2007. The net profit for the quarter is Rs49.90 crores which translates to an EPS of Rs1.45 (diluted) on a quarterly basis. The net profit margin has improved to 20.58% compared to 12.30% during the previous quarter.

There are very many fundamental changes happening in the company which I have earlier mentioned here. I am quoting below a snippet posted in Deepak Singh's blog "State of the market" on Gujarat NRE:
"Gujarat NRE Coke - A batch of foreign investors led by an Australian fund were seen buying shares of Gujarat NRE Coke in good numbers. According to these investors, floods in Australia, freezing weather in China and transport bottlenecks in Indonesia will stoke a sharp rise in the price of coal in other parts of Asia. JP Morgan recently raised its forecast for 2008 coking coal prices to $140 a tonne, a 42% jump from last year's agreed price of $98.38. Its previous estimate was $120 a tonne. It is in this light that foreign investors are accumulating shares of mining major Gujarat NRE Coke in good numbers...Economic Times"

With the projected rise in the coal prices and Gujarat NRE owning huge coal mines would stand to benefit. I continue to remain bullish on the stock.

Disclaimer: This is not an invitation to buy or sell shares. The views expressed are my personal opinion and please consult your financial planner before taking your decision. I own the shares of Gujarat NRE Coke.

Third quarter results update on my portfolio of stocks

I have written about Surya Pharmaceuticals before. You can read that here and here. The third quarter results for Surya Pharma has been declared and it is on track.

The topline is flat and the quarterly EPS is maintained around Rs8.27. There is an improvement on the operating margins by more than 120 basis points and by 50 basis points on the net profit level. The net profit is not reflected the higher operating margins because of higher depreciation and interest cost. The company has gone for expansion and I think it has not started generating revenues. We also need to look if there has been pricing pressures as well.

The trailing twelve months EPS is Rs29.10 and today it has closed at Rs115. The stock is currently quoting at PE of 3.95 and looks very attractive. I continue to hold the stock and I am planning to buy more around Rs100.

Disclaimer: Pls check independently before you buy or sell stocks. This is not an invitation to buy or sell stocks.

Reliance Power IPO - What I have learnt?

Reliance Power IPO is the hot topic doing the rounds in the capital markets for variety of reasons. I have read many articles on the Reliance Power IPO both for and against it.
Reliance Power would be setting up Ultra Mega Power Plants and the first revenue flow would start from Mar 2010 only. Till then the company would be in the investment mode with no tangible revenues accruing to it.

Already the IPO has been over-subscribed by more than 10 times. That is, Reliance Power has garnered bids to the extent of more than 100,000 crores. Really staggering!! Probably, that is one of the reasons why we are seeing a sell-off in the Indian markets particularly, by the retail investors to apply to the Reliance IPO. NDTV Profit carried out an analysis of how much money the company would earn by parking the application money collected during the IPO. At 3.5% savings bank rate of interest, the Reliance Power is expected to earn anywhere between Rs1000 crores to Rs1500 crores as interest on the application money!! The grey market premium for Reliance Power is already around Rs400/- per share, which means that the listing can be expected around Rs850-900/-.

What is creating euphoria about the Reliance Power IPO?

• Ambani's project execution capability is one of the corner-stones on which the entire IPO has been built. They have executed projects in record time and this time as well they may be able to do it. Real test for Anil Ambani as all the previous projects were driven by Reliance group and not by Anil Ambani alone.
• I guess there is going to be a slew of announcements to follow post the Reliance Power listing or very close to the listing date. He may come up with stake sale announcements, acquisition of captive mines for Reliance Power fuel requirement, set up of equipment manufacturing company for power sector, merger of RNRL with Reliance Power and so on. Anil Ambani would like to keep the momentum going in the share markets for his company, as he may have plans of off-loading substantial stakes to bigger power manufacturers across the world. Already Anil Ambani has talked about setting up a power equipment manufacturing company.

Ambani's have been very popular with the shareholders because of their investor friendly activities. They have the capability of selling ideas in a big way and this time as well he has done it successfully.

Thanks to Reliance Power IPO, more and more analysis is being done on power sector and one stock which has come up for comparison is NTPC. If you take the comparison between the production capacities in 2010, Reliance Power would have 600 MW compared to 34,000 MW for NTPC. By the time, Reliance Power goes full stream in 2016, NTPC would have a generation capacity of close to 50,000 MW more than 100% of what Reliance Power would have.

By any standards, NTPC is a superior stock at current prices and valuations even after discounting for Reliance Power's management capability and vision. NTPC is one stock which I am going to buy at all possible opportunities.

Disclosure: I am not going to apply for Reliance Power IPO.

Distelleries are good bets against recession!!

Drinking has become a regular habit among Indians and socially more acceptable these days. Recently I read in one of the newspapers that in the month of December alone, the sales of liqour through TN Government retail outfit, TASMAC was a whopping Rs220 crores!! Out of which, more than 60 crores worth of liqour was bought by consumers(!) during the last week of December.

Considering the above fact, distellery stocks look attractive if there is recession or not. Already distellery stocks has caught the attention of investors and have appreciated well in the last few months. Added on to that is the Government's drive to to go for Ethanol-mixed petrol in a big way and power production by many of the distelleries is adding more stability to the earnings. As an industry, Distelleries and breweries looks interesting.

Few of the stocks worth looking at are:
1. Empee Distelleries - They are one of the authorised vendors for TASMAC in Tamilnadu and also has presence in all the four southern states. Not only a distellery but also has interests in Real Estate. The company owns huge tract of land near Poonamallee on the outskirts of Chennai, which is on the way to the industrial corridor of Sriperumbudur. They have major plans for developing townships and as per one analyst estimate real estate activities would bring in more than Rs200 crores revenue to the company in the next 3-4 years.

2. Pioneer Distelleries - Already a research report has been published by HDFC Securities in the last week of December. They are going on massive capacity expansion (nothing but natural!!) and co-generation of power.

Two other stocks worth investigating is GM Breweries and Balaji Distelleries.

Trading NIFTY Futures for living!

I came across an article written by Vijay Bhambwani of BSPL on trading in NIFTY Futures to keep your home fires burning. Vijay is a popular stock market analyst and regularly appears in NDTV Profit and CNBC India. Regular watchers of these channels would have seen him.

In this article, he talks about making a daily living (!!) by trading in NIFTY futures. He claims that he has beta tested this strategy and it has worked for him.

It sounds very simple and I am tempted to try out something immediately. But I know for sure trading is much more an emotional battle than anything else. I have traded in the past and the amount of anxiety, pressure and sense of despair you get while trading is unbelievable. May be, if I had done it little more scientifically as mentioned in this article, I may not have very bad memories of day-trading.

Interesting article which would be useful for die-hard traders and above average risk takers.

Stocks in my portfolio which has not moved for a long time!!

I have a list of stocks which I hold for the last few years without seeing any profit:

1. KG Denim Ltd:
There was a great euphoria about the removal of quotas for textile companies couple of years ago. The expectations were that on removal of quota for textile companies would result in increased business opportunities. But on the contrary, the removal of the quotas didnt help the Indian companies.
As a retail investor started buying the shares of KG Denim Ltd., some two years ago. Today the stock is quoting around Rs21.40 whereas my average cost of holding is around Rs45. The company has expanded its capacity during the last year using the TUF scheme. For your information, the company owns the jeans brand "Trigger".

2. Rama Newsprint:
I dont exactly recollect the reason why I bought this share some 3 years ago now. The company restructured the capital and for every 100 shares you owned, I have 25 shares. Today it has closed at Rs35.80 against my purchase price of Rs68.00.

Lesson learnt is that be clear with the reasons why you buy the shares.

I am still holding on to these shares. What else to do?!

Indraprastha Medical and Surya Pharma - making smart moves!

Two scrips I wrote about in this blog over the last 3 months have started moving. I am very happy about it.

Indraprastha Medical:

I have earlier written about Indraprastha Medical here when it was quoting around Rs40. The stock has started moving after a very long consolidation and today it has closed at Rs57 with volumes in excess of 1.5 million shares on both the exchanges. I believe that the stock is getting re-rated and it is possible there is further appreciation. A neat 40% return in 3 months time.

Surya Pharma:

Surya Pharma initially discussed here around Rs90 has also started moving and it has closed today at Rs139.80.

On both the cases thee are positive fundamental reasons which have been listed in the original posts. Added on to the fundamental reasons, there is also a positive feeling about the pharma companies on the bourses now. The market has started responding to the fundamental changes happening and it now all depends on this quarter results.

I continue to remain bullish on both the counters.

Bajaj Auto - Impending Demerger and value unlocking!

Bajaj Auto is going to be demerged and it is highly possible there would be tremendous value unlocking. As per the market news (rumours), the demerger plan would be announced by end of December or early part of January.

With the impending announcement the stock has run up and today inspite of big NIFTY correction Bajaj Auto actually closed in the positive. For brave-heart traders, Bajaj Auto in the Futures segment provides a very good possibility to take a position. For a margin of around Rs30,000, you can take a position on 100 shares of Bajaj Auto. I expect Bajaj Auto to touch atleast Rs2950 before the annoucement.

This is only for the bravehearts and people who are willing to take risk.

Disclaimer: Pls think on your own or consult your financial planner before you take a decision. I currently dont hold a position in this stock but may own in the future.

Exited from Market Creators!!

I wrote about taking a speculative position on Market Creators counter to take advantage of the buzz around brokerage companies in November. You can read about the post here. I exited the stock couple of weeks ago at Rs21.

The stock did touch Rs26 but my greed didnt allow me to sell. Finally, I squared off the position at a price which is much lower than the high it touched. Never mind, it was small position and purely speculative.

Indrapratha Medical Corporation - watchout!

I have earlier written about Indraprastha Medical Corporation (BSE 532150) here.

Today Indraprastha Medical Corporation has made a big jump of around 9% with high volumes. This is an interesting development "technically" as it has broken out of consolidation zone. There may be fundamental reasons behind this which would unfold in the coming days. I am not saying I know of some thing which brewing in this company!! I am investor with no insider knowledge.

Keep a close watch on this stock and any close above Rs50 would take the stock to a higher level.

KR Choksey's Diwali Picks

When I was talking to my friend on Saturday, he mentioned that I didnt give the complete list of shares recommended by KR Choksey as part of their Diwali picks on the blog. I had earlier mentioned about the KR Choksey's recommendations here.

So to satisfy my friend who asked for the complete listing, here I go:

1. Great Offshore
2. Hanung Toys
3. Micro Tech
4. Unitech
5. Mundra Port and SEZ

Careful when you subscribe to SIP in Mutual Funds!

Recently I started a SIP with DSP Merrill Lynch MF Equity fund Regular Dividend option. I chose the SIP route and went through a MF agent. I signed the form and handed it over to the MF agent, who agreed to hand over to the company after completing the form. I opted for ECS to relieve myself of the pain of signing cheques.

The first month went off fine as I started only during the third week. The problem started in the second month. DSP ML has an option to subscribe to SIP on four different dates of the month and my account started getting debited on all the four days. Initially I didnt realise till my account was debited for the 3rd time in the same month. Immediately I called the registrar of DSP ML MF, Computer Age Management Services (CAMS), Chennai. I told them patiently that I have opted for one single debit in a month but my bank account is getting debited on all the four days in a calendar month. They informed that is how the form has been filled up and handed over to them. Then I called up the agent to enquire about this but he also confirmed that he didnt select on all dates in a month option. Unfortunately, I didnt have a photo-copy of the submitted form and I couldnt prove that an error has creeped in at CAMS side.

Then I asked for a way out of this since my bank account was running out of balance. A novel idea was given by the CAMS staff on the phone. Withdraw all the money from that bank account so that the ECS debits doesnt happen. I found that absurd and the alternative I got was a letter asking to stop the ECS debit on all dates in a month. I went and handed over the letter to the local CAMS office and my agony continued even after that. My debits continued to happen. I was forced to call them atleast 3 times after I submitted the letter to find out why my account is still getting debited. Finally, the debits stopped after a letter and 3 angry phone calls running for a minimum of 15 minutes on each occasion. All this I have to undergo for the fault of not ensuring that the form was properly filled up. Now the SIP is 4 months old but I have already paid 8 instalments.

The story doesnt end there. When I received the October month statement, I noticed that I have been allotted some units under the growth option all of a sudden. So again I started calling CAMS for the reason. I patiently explained that I have been allotted units under a different scheme than I originally applied for and asked them to explain. The guy on the other side from the CAMS Call Centre took my number and promised ot call me in another 15 minutes. I received no information for the next two days and then I have to call them back. This time luckily an intelligent girl picked up and narrated the story and asked her to find out the reason. She promptly called back and informed that they have processed one ECS in September but didnt allocate any units and they decided to allot me funds under DSP ML Equity Fund Reg Growth Option in October. Nobody called me to inform that there has been an excess debit nor did they ask me what to do with the funds. Ofcourse, it is my mistake also not to have reconciled my bank account with the ECS debits for DSP ML Mutual Fund. I finally agreed to take those units since I didnt have any more patience.

What I learnt from this episode?
1. Always a retain a copy of the application form.
2. Personally fill up the MF application form and dont leave it for the MF agent to fill up details citing lack of time.
3. Reconcile your bank account every month with the auto debits which are happening. This not only applies to MF ECS debits but also for other loans and utility bill payments.

Observations during an Retail Investors Meet at Chennai

I attended on last Saturday a Retail Investors Meet organised by Tamilnadu Investors Association. The chief guest for the day was Mr Deven Choksey from KR Choksey Shares and Securities, Mumbai. He advised investors to stay invested for a period of atleast two years to get multi-fold returns rather than engage themselves in day-trading, which I think is very valid. There were questions on sub-prime issue and its impact on the Indian markets, P-Notes. Mr Choksey feels that these issues would not impact the FII inflow in 2008. Lets hope so.

It was a fairly well attended meet with around 250 participants. My observations were:

1. The most striking feature is the absence of youngsters. The majority of the crowd was above 45 years and hardly 10 people less than 30 years or so.
2. As with all retail investors meet, the idea of the people attending the meet is to get some tips or stock ideas to make some money. Deven Choksey didn't let them down and he quoted atleast 5 or 6 scrips which were duly noted by the participants.
3. People leave even before the "vote of thanks". I still cant understand why they cant spend that additional 5 minutes.

The stocks mentioned by Deven Choksey are as follows:

1. IDBI
2. Reliance Industries
3. Micro Tech