Saturday, October 16, 2010

AVOID:COAL INDIA IPO

Hi Mahesh,
e-mailing you after long time.
I am actually very much against investing in any IPOs considering the way things work in all IPOs.
But this Coal India IPO is making so much news that one cant ignore.
And it has one big plus ( which is my weak point) its debt-free.
Whats your view on it.
Please share your thoughts on the same on your blog.
Thanks in advance.
Vikas bargale

welcome again vikas bargale ji

When IPO of reliance power coming I say to my friends that “ I buy this share below 200 “ and they laugh on me and think I am a big fool and one of my friend buy 1000 reliance power share @460 and now he ask me regularly on phone that “ when to movement is start in reliance power?”
When IPO of NHPC come I declare in this blog that I buy this share below 28 and when price down below 28 I again write in this blog that now NHPC is safe buy read THIS LINK for proof

http://sharegenius.blogspot.com/2010/05/buy-nhpc-28-may-accumulate-28-to-20.html
Same thing will happen and I think I buy this coal India share below IPO price from secondary market due to following risk factors that not discuss by analysts now but after listing of these shares there language is change

1.Now analysts say “ coal India have huge reserves” I think after some time of IPO there language is change to say “ coal India experienced significant delays in obtaining relevant statutory and regulatory approvals for the acquisition of land and surface rights to commence mining activities because there reserve are in Assam and west Bengal and land equisesion in these 2 state is not so easy remember example of Tata motors in west Bengal and statement of rahul ghandi in Orissa” most of coal India reserve is situated in forest land and significant Procedural delays in obtaining the requisite approvals from the Ministry of Environment and Forests ,There can be no assurance that coal India will be able to acquire land and associated surface rights for all of His projects in forest land.
2. The minister of envirment and forests is currently in discussion with the Ministry of commerce regarding a proposal for the demarcation of certain coal bearing forest areas in India based on the permissibility of using such land for mining purposes. If such proposal is implemented and forest areas are demarcated where mining activities are restricted then you think what price of coal India share in market?
3. The Jharia and Raniganj coalfields are susceptible to fire and land subsidence and pose a serious Environmental, health and safety risk.
4. When in rail budget any increase in transportation costs happen (rail is largest transportation source for coal) then price of our coal India share… “Tare jamin par…”
5. Two of coal India Subsidiaries, BCCL and ECL have been referred to the Board for Industrial and Financial Reconstruction (“BIFR”).
(Means diwalia ho gai hai)
6. Some of coal India assets and mining operations are located in areas of India that are exposed to risks of attack by Rebel groups, such as in Jharkhand, Chhattisgarh, Orissa and Assam.
7. The use of alternative energy sources for power generation could reduce coal consumption by Indian electric power generators, which could result in lower demand for coal.
8. so I avoid coal India IPO it may give some listing gain but after 6 months to 1 year of listing price of this share will adjusted on above factor . So I wait this negative time for buying this share.

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