Posts Tagged ‘FPO

24
Sep
11

Not a positive news for ONGC..

If this piece of news is correct http://www.business-standard.com/india/news/finmin-wants-ongc-others-to-pay-rs-56700-cr-fuel-subsidy/147052/on, then it will be detrimental for upstream companies. It will be suicidal for ONGC. In the last financial year FY10-11, ONGC paid Rs. 24,892 crore as subsidy. As per this news, ONGC subsidy share would increase to Rs 47,640 crore this fiscal. Till now, market was under impression that upstream companies would share one-third of Rs. 1.14 lakh crore subsidy. But it seems the Finance Ministry wants upstream companies to share one-third subsidy of Rs. 1.71 lakh crore, which was the subsidy amount before June duty cuts and fuel price hike. It goes without saying that it would be body blow for ONGC. I guess a lot of investors would have cried foul if this subsidy hike would have happened after FPO. After this subsidy hike, it would be difficult for government to come with FPO price more than 230-240. It might be a possibility that the government scraps FPO altogether after its antics. In Q4, FY11 also government arbitrarily increased upstream subsidy share from 33% to 38.8%. Its time to stay miles away from ONGC on long side. Government just want to reduce its share of subsidy so you never know what is the next googly. I have written ONGC October series 300 calls. Given all the negative sentiment around market in general and ONGC in particular, it would be difficult for ONGC to move up sharply from current levels. But one has to watch crude price level, if it corrects sharply, it might make the case for ONGC not falling sharply either. INR has depreciated recently, nullifying any kind of positive impact of crude price fall.

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09
Jul
11

Why I would vote for congress in next general election..

State of affairs at congress government can be summed by the PM Manmohan Singh’s recent meeting with the press. Instead of talking about future or any new policy initiatives, which have completely stopped, he was defending himself and the government from various corruption charges. As the head of the most corrupt central government as yet, he never knows anything, and everything happens behind him. He was a good economist and policy maker but now looks like a product beyond its best before date.

Recently, there was Deepak Parekh’s interview in TOI, http://articles.timesofindia.indiatimes.com/2011-07-07/india-business/29747100_1_deepak-parekh-housing-loan-market-growth. It seems a lot of business groups are frustrated at delays in getting approvals for their projects. Instead of working on land acquisition bill, the government is busy on working with minority quota. As if, current reservation quota is not enough, they are keen on introducing one more quota within quota for minorities. Everybody wants our forests to be protected but not if it stalls development and growth. After 6 years delay, India’s largest FDI as yet by POSCO was given environmental clearance. I wonder if it would help India’s image as an investment destination.

After several months of delay, the Government found time to decide on the fate of Cairn-Vedanta deal. Being a politically sensitive matter in India, delay in petroleum products hike is understandable. Not sure how long this adhoc policy on petroleum products can continue. I hope UID project helps in directing subsidy to the target segment in a more effective manner. How can you provide subsidy to actor sunil shetty doing hayyy…hayyy…in his movies and driving his gas guzzler hummer on Mumbai roads (My friend Vinod Tirupati imitates him better). I don’t know what’s the extent of black money stashed abroad, but instead of bringing tax evaders to justice, government is busy fighting with Supreme court on SIT issue. Sad part is that, we don’t have alternative either. BJP is busy with infighting, Communists are struggling with ideological crisis. I think congress knows this very well, otherwise they would have done something. There is a widespread frustration and discontent among general public.

Congress government has introduced F-word on stock exchanges. F-word or FPO has been instrumental in wealth destruction of a  lot of PSU’s. Still government can’t understand that FPO is not an efficient method of divesting stake in Public sector units. As an option trader, predominantly option writer I love this government’s inaction. They allow me to play on my friend, time value. I am thinking about becoming a congress member and campaigning for them in 2014. I request all of you to vote for congress government in every election.

05
Jul
11

ONGC follow up..

In one of my earlier post https://writingoptions.wordpress.com/2011/06/28/petroleum-products-price-hike/, I had mentioned about writing ONGC 240 puts for July series. There have been few positive developments for ONGC in terms of Cairn-Vedanta deal pre-conditions imposed by Government of India (GOI). As expected GOI has made royalty payments cost-recoverable as one of the pre-condition for approving the deal. It is difficult to say if the arm-twisting by GOI is correct and whether it would deter FDI in E&P sector in India on account of such ad-hoc policy changes. There was good article in BS on the same, http://business-standard.com/india/news/the-algorithmspolicy/441384/.

Someone on CNBC-TV18 commented, it looks like everybody in the GOI is working overtime to ensure success of ONGC Follow-on-Public Offer (FPO). One concern after other are getting resolved for ONGC and decks are being cleared for its FPO. Still one of the biggest overhang for the company, subsidy sharing formula is still pending. I think in a week or two clarity on the formula should come from GOI.

If one looks at ONGC July & August future contract prices (Rs 7 discount), it becomes quite clear that market is expecting ONGC FPO in August and not in July. I wrote some more ONGC July series 240 puts.




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