For those who don’t know Nadi Shastra is a famous art of Tamil Astrology (Nadi means ‘in search of’). The practitioners claim that the stages of ancient India have recorded the entire human chain of events on a bundle of palm leaves. Based on the individuals thumb print and answers to a series of questions the practitioner is able to retrieve the relevant record (reference palm leaf and the predictions palm leaf) Over the past 20 centuries, several of these leaves are destroyed in fire, flood or due to carelessness. Also only one copy of the record exists. The Nadi Shastra centers have to issue these leaves and return them on a weekly basis. So the chance that your leaf would turn up in the center on that particular day is remote. However to the curiosity of my friend, his leaf turned up in 2 centers on the same day.

Have you wondered that whenever an unmarried person visits Nadi Sastra center, his/her leaf will not contain any information about his spouse’s name. However immediately after marriage, the leaf has the spouse’s name.

How many guesses will it take to correctly predict a randomly chosen number from 1- 127?

Answer: 7 (clue binary search tree algorithm)

They start with a group of commonly used alphabets and eliminate it one by one to obtain to arrive at the right answer. This coupled up with a few intelligent guesses helps build up the entire persona and predictions. Remember, a human being is a believer by nature. (or believes in disbelief) So irrespective of the information provided, he always hunts for an analogy, clause or an instance where the spoken words are true. That is why even a 2/- newspaper is able to make a quite accurate prediction of one’s day.

I would like up to sum up with the words of one of my friend who once said:
“Astrology is a dangerous art. I don’t know if there is any truth in this science, but there is then the astrologer would know things about me, my thoughts and actions even before I realize those words or actions are even possible. If it is bogus, then these guys can subtly persuade and influence me into acts and deeds that they think I should do without providing any logical bias.”

# Two-Stroke Diesel Engines

In text-books, we are taught that 2 stroke internal combustion engines are inefficient and are used only in small motors where weight is more important than efficiency or power. However what people don’t realize is that most of the big, high power, high efficiency diesel engines are also two stroke engines. This includes most of the locomotives, ships and submarines. (Gas turbines have higher efficiencies and power to weight ratio, but their high maintenance restricts its use as continuous power supply)

So why the role reversal for Diesel engine?

1. In a petrol engine the intake is a mixture of fuel (petrol) and air (oxygen). The major source of lower efficiency of 2 stroke IC engine is that either some of the fuel leaks away with the exhaust or the exhaust fumes are not fully drained out from the cylinder. However in diesel engine the intake is only air. The fuel is sprayed into the combustion chamber during the combustion phase only. So this takes care of the major source of inefficiency.

2. Diesel is traditionally regarded as a slow and bulky engine. However 2 stroke engine means that for the same rpm (and to the large extend weight and size), there is twice as much combustion and twice as much power.

However all said, 2 stroke engine crams up the intake and exhaust so much that a lot of aerodynamic and thermal stress problems emerge due to close proximity of cold intake with hot exhausts.

# East India Company

Incorporated in 1600 was one of the first traded stocks in the world. There is no dearth of evidence that East India’s operations were highly profitable and they reaped profits in shiploads (boatloads). Apart from India, the company had near monopoly in trade with China (opium) and America (before Boston Tea party). It was so successful that it was called ‘The Company’ during its heydays.

What is surprising is that throughout its 2 century of profiteering, the company did not make much wealth for its investors. In 1772, no one was ready to loan money to the Company because of rampant corruption in the ranks. The top man, Warren Hastings was impeached on corruption charges and his predecessor Robert Clive also faced many corruption charges. In 1773 (when company was at its heights) the British Government passed Regulating Acts to control corruption. However Company’s finances never recovered and in 1857 it declared bankruptcy and transferred its assets (right to rule India) to the Crown.

I do not want to start a patriotic debate, but just want to raise the importance of corporate governance while choosing one’s stocks. Traditionally Indian businessmen were infamous for over-invoicing and pocketing part of the proceeds raised from banks/government and stock market. The practice has been slowly changing, but still there is no dearth of company which makes huge yoy profits and yet little or no dividend/capital growth.

# IPO Bonanza

11 Different promoters have tapped the IPO market this month. These include Ramky Infra, Orient Green, Eros International, Microsec, Career Point, Cantabil Retail, VA Tech Wabag, Electrosteel ESL, Tecpro Systemts, Ashoka Buildcon and Gallant Ispat.

History has taught us that booms are followed by a bust. Yet every time when the Sensex zooms up, experts say this time it is different. Today the market closed at above 20K figures, so I went ahead to research why this week was chosen by so many promoters. Here is the list:

1. Most investors go for the relative valuations. i.e. if the PE in the industry is 20, and the IPO is at 17, its fairly priced. With stock market at 20k, promoters are getting a good price.
2. 2 year long bear run has made many firms desperate for capital. Hence they want to cash out before the mood changes bearish/cautious.
3. Coal-India. The interesting thing about all these IPOs is that it gives investors ample time to invest the money, wait for a day or two before selling the shares, another 3 days before the money is back in their accounts and ready for investing in Coal India. Now if a company does not go for listing now, it will have to wait for 5-6 weeks before those who invested in Coal India would be ready to invest in that IPO. Who knows where the market would be heading by then.
4. shraadha: September 24 to 7th October is considered inauspicious for any major purchases. No wonder all the IPOs were bunched so close together.
5. I recently discovered that any firm hitting the IPO market after 30th Sptember, would have to publish its Q2 results. No one wonder promoters with inside information want to cash out before they publish any disappointing results.

Usually I share my analysis for important issues. Unfortunately this time there are too many of them for me to publish my research. All I can say is that I did invest 2,00,000/- in Career Point IPO with the belief that I won’t be allotted more than 6-12k worth of shares. So the downside risk is minimal.

# Bird’s eye view

A young bird takes her first flight.
With every eye -span ,

she learns new things and grows bold.
Then she starts questioning the old….

Flying above I look down and see –
Grey buildings and brown land.
Every inch, an human errand.
The water shining black and blue
Smoke rings which block my view.

Massive dams that make river stop
Flying planes that come to me for talk
Mighty machine uprooting the tree
Opening up place for walking free.

A big drill to break open the earth
And pull out oil even from inside the crust.
Power weapons to tame elephants life
Ivory to jewel converting magic knife
Even the mighty whale cannot freely float
A magic machine can convert them to soap.

So much magic in the world below lies
New things I learn with each span of eye
But each eye-span chills my heart like ice
To realize that all my grandmother stories were lies —

“Blue water and green land” she told
“Elephant the mightiest animal” she behold
“River always flows to meet the sea” told she
“Only birds can reach the tallest tree.”

May be she never flew out of the nest,
May be she told all stories just in jest,
But when I return home to the flock
My grandmother I will delight with my talks.
I will tell her about the real World Rules
About man, machine and all the tools.
I know truth will give her delight
I know she will kiss me with pride.

But before I fly back home round
Why not eat the grains on the ground.
It is nice to chew these grains you bet,
But why are my feet tangled in a net?

# IndoSolar IPO

1. At a priceband of 32/- the promoters (who own 97.6% of the stock) are divesting 33% of their equity (indirectly). Which means that even before the company makes a penny, the promoter is able to get his entire investment back.

2. Not only the company is new, but also the promoter has no track record of managing a publicly listed company. so the uncertainity and risks are high. Even the company appointed auditors were uncomfortable with the fact that the top management paid itself 5.1Cr out of the total salary expenses of 8.1Cr. They felt that for a loss making company this level of remuneration is too high.

3. Phase 1 of the company got operational in July 2009, Phase 2 in March 2010 which brings the entire installed capacity to 160MW/annum. The company has order books 1000 cr or 170MW of which only 171cr/31MW is executed. So this brings the utilization factor of about 40%. Now the question is why would a company go for expansion of another 100MW before it is able to fully utlize its existing capacity or has received orders which would help it do so.

4. Indian listed companies which have invested heavily in solar energy are Websol Energy, Moser Baer and XL Telecom. Unfortunately none of them have done too well. Also globaly there is an oversupply of solar cell manufacturing capability.

Bad ipos with poor fundamentals being subscribed is according to me a harbinger of a major crash/correction.
I recently wrote an article about Gujarat Pipav port. IndoSolar is also another IPO which falls in the same category. I just hope it gets oversubscribed, which means that I should short NIFTY in a big way.