Short term investment strategy for Stock Mind game

It seems that everyone who are about to participate in “Stock Mind” game have some sort of questions in their mind, but at my point of view I found a similar question among every one which is how to go about it? If you too have the same question prevailing in your mind then continue reading. This blog post will give you some suggestion as how to plan and execute an effective short term investment strategy for our ten day stock mind game.

Which approach am I supposed to use?  -  Fun or Tek

Firstly, let’s decide which analysis better suits the game. I know that everyone have read well and more about fundamental and technical analysis which helps one to analyze a security and make investment decision from our academics. I think its time to apply those methods in this game to make some winning decisions. Fundamental analysis involves analysing the characteristics of a company to estimate its intrinsic value whereas technical analysis is all about studies of supply and demand in the market to determine what direction/trend will continue in the future. Contrary to the fundamental analysis, technical analysis doesn’t even care about the value of the company. Both are very broad topics so you’ll need to dig deeper into the concepts to understand it. Lets get into the details of how these two approaches differ to find which suits us. 

In Fundamental analysis it tries to determine the intrinsic value of company by looking at its balance sheets, cash flow statements and income statements. Its fairly very easy to take decisions in this approach. If you ascertain and invest in a company’s stock which trades below its intrinsic value then it a good investment. However, it takes a long time for a company’s intrinsic value to get reflected in the market so till then no gain will be realised. They call this as value investing and assume that the short-term market is wrong and believe it’ll correct itself in long run.

Some critics say that Technical analysis as a form of black magic. Don’t get surprised but recently it has got some credibility like fundamental analysis. Technical analysis argues that the past trading information is already reflected in the price of the stock and, it is useless to value an undervalued stock/security. Here in technical analysis it tries to determine the trend instead of the intrinsic value by looking at the historical charts, indicators and oscillators. It believes that prices of a stock moves in trend and history tend to repeat itself. For a short term investment decision this analysis suits best.

 I would suggest everyone to concentrate more on Technical analysis rather than Fundamental analysis to grow your portfolio's value within ten days. Tomorrow I’ll give more information about the strategies while investing and how am I going to use technical analysis to take investment decisions. Guys if you are so curious go back and take out your Security analysis and portfolio management  books to have a glance on technical analysis.  See you guys tomorrow.

An industrial visit to Indian Piston Rings

•  We visited India Piston Rings Ltd on 1^st October 2012 at 12:00 P.M to 4:00 P.M at Maraimalai nagar plant, Chennai.
•   Prof.Ranganathan, Ms.Renuka & Ms.Jaisuchi tailor led students on the visit.
•  On behalf of Company Mr.Rajamanikam (HRD General Manager) welcomed and also gave invaluable information regarding India Piston Ring Ltd. He also accompanied and explained us the various process in the plant.

 Company Fact Sheet

Company Information                      :        India Piston Rings is promoted by India Piston limited a memeber of the amulgamation group. It is one of the largest producers of Pistons, Piston rings, Gudgeon rings, Cylinder liners and allied components in India. Formed by Mr.S.Anantharamakrishnan in July 1949. In 2010-11 its revenue was $350 million.

Year of Establishment                      :         1991

Nature of Business                            :         Manufacturer

Total Number of Employees           :         600 Employees

                                        Conform Employees (Operators)        :   150

                                                  Trainee/Apprentice                    :   150

                                                  Management Staff                       :   110

                                                  Contract Employees                    :   125

                                                  Supervisors/B.E                           :   80

                    (75% of employees are ITI holders & 25% are +2 & 10)

Major Markets              :         Indian – OEM (Original Equipment    Manufacturers)

Primary Competitive Advantage

                                       :         Technical collaboration with Nippon Piston    Rings, Japan

                                       :         Surface Coating Technology

                                       :         Latest Surface Coating Technology        

                                       :         Experienced R&D department

                                       :         Good TQM implementation

Plant and Machinery:

At India piston rings, they have latest state of the art manufacturing plants and machineries having a capacity of 10 lakh piston rings per month. India piston ring produces piston rings, both compression and oil control rings for a variety of gasoline and diesel engines. They offer Pistons made out of a variety of high quality cast iron and steel materials. Their raw materials are being imported from Japan and the materials ranges from grey cast iron; (heat treated) alloyed grey cast iron to sperodial graphite cast iron. Their product Piston rings which includes high alloyed steel having 17% carbon content. In India piston rings they have process which include surface treatments or coatings like Granoliting, Chrome plating, Chrome Molly, Molybdenum, Moly Chrome Ceramic and Flame sprayed coatings. Their Piston rings fits for Pistons with bore diameters ranging from 35 to 160mm.

Products of the Company:

•     Piston Rings for four wheeler & Gears

 Quality Assurance:

They are quality oriented organisation which is ISO 9001:2008 for management system and ISO/TS 16949 an ISO for technical specification aiming to the development of a quality management system that provides for continual improvement, emphasizing defect prevention and the reduction of variation and waste in the supply chain. The company believes in providing the clients with the premium quality products as per their specifications and requirements. In my observation I found that their quality control is rigid and they implement TQM (Total Quality Management) system so that the finished products are at par with the international quality standards.

Manufacturing Units:

They have the manufacturing process in the latest technology from Japan is installed. This ensures the quality and fast production of Piston rings. Manufacturing is done as per the specifications and the requirements of their clients. Major of their selling is to the OEM (Original Equipment Manufacturer) in India and they do export a very little amount of their products to Bangladesh, Nepal and Sri Lanka. They have divided their manufacturing units into 24 zones for better maintenance.

Ware-housing and packaging:

They have a well spacious warehousing unit for the safe storage of products. Quality is assured at every stage.

Current and Future Expansions:

In our conversation with Mr. Rajamanikam, he briefed us about the future plans. In 2004 they expanded themselves into gear manufacturing from Piston Rings. Also, by very next year they are planning to enter into the 2 Wheeler piston ring market. The entire organisation strive to achieve 5 star because an external audit which is conducted every year by Hyundai rate in 5 star. If they achieve they bag the project to supply piston rings to Hyundai all over the world.

Clients:

They have a huge customer base in India.

1.     Ashok Leyland

2.     Tata

3.     Mahindra

4.     Eicher

5.     Escorts

6.     Hindustan Motors

7.     Ford

8.     Maruti Suzuki

9.     Royal Enfield

1.     Hyundai

Competitors:

In our conversation with Mr.Rajamanikam, India Piston Rings currently have a 50% market share and their major competitor is Sriram pistons & rings ltd.

Some Good Practices found in India Piston Rings:

•   Hands on system – Each machine has a Beacon attached. Where three lighting are there which has specific meaning.

o   Green Light – Machine is functioning

o   Red Light     - Some Problem in the Machine

o   Amber          - Machine is in need of materials

•      OPC (Operation Control Process) – To recycle the scraps. Currently, they sell their paper scraps and 1.2% industrial scraps to the vendors.
•      2 suggestions for improvement in process is mandatory for each employee per month.
•      Small Group activities scheme is introduced and managed.

Achievements:

•      100PPM certificate from Hyundai
•      Gold and Platinum award for quality excellence
•      Frust and Sullivan IMEA super gold award for manufacturing
•      ACMA silver trophy for excellence
•      HV Axles ltd – best new mod. Company

Corporate Social Responsibility:

•      Rain water harvesting – Maintained in their own premises
•      Commitment to Society – Park maintenance at Maraimalai nagar
•      Recently donated 3 lakh worth X-ray unit to hospital
•    Annually they spend 4 lakh for Single teacher program – 10 schools are being maintained by the management and 4 schools by the employees contribution.