Justice Karnan’s Contempt Proceedings - The discussion in Supreme Court

The question is, if Supreme Court asks for impeachment, will the Parliament heed.

AG Mukul Rohatgi: (Pointing to Karnan) The Contemnor is here

Justice Karnan: (Lists a number of cases and complaints against several other judges he made) says “Instead action is being taken against me

CJI Khehar: So it means that ..we take it that you stand by what you said in your complaint. See you should be very careful in your response. If you want to say that you want to think about it then we can give you time

Karnan: Please restore my judicial work

CJI: We will allow you to think. We want you to be completely relaxed

Karnan: After restoring my work, I can relax. Only then I can relax

Justice Chelameswar: Our question now is do you wish to be defended by a lawyer? A counsel? If you want we can appoint somebody.

Justice Misra: The letter you gave dated March 25 suggests you want to unconditionally apologize

Karnan: Yes my unconditional apology may be accepted

Justice Misra : So are you ready to unconditionally apologize or affirm your earlier allegations. In that case we shall proceed with the contempt and allow you to appoint a lawyer

Karnan: No I am not a contemnor. My whole work was taken away without hearing me. Every body asking me why your work was taken away. I live in a colony. So many people know me. I have no answer

CJI: The letter of March 25 you say complaint withdrawn against all 20 judge. Then you say allow me to work and then you will supply us with material to prove the complaint against the judges. We are not able to understand. You still stand by your allegations?

CJI to Rohatgi and K K Venugopal: Seriously one feels he may not be in a condition to respond. Seriously we do not know if he is in a position to comprehend or understand what we are asking

AG: The point is that I personally feel that from the point he made the allegations, coupled with scandalous press conferences, stayed his transfer, the gentleman knows what he is doing.

CJI: To my view these all the more shows why he is not in a position to comprehend

AG: No I don’t think so..He goes on naming judges he knows press will say that the particular judge is corrupt

Karnan: Everybody knows

AG: If he does not accept a lawyer, then nothing remains. Is is open and shut

Adv R Dwivedi (For W Bengal DGP) When police was sent, he made bad comments about the seven judges who passed the warrant order. Said they had no locus standi, said it was illegal, malafide. He made several abominable comments

Karnan: Why was police sent? What did I do ? I am not a terrorist or an anti-social element. Your lordship should protect my dignity. It has been spoiled in public. I am also holding a constitutional office

CJI: When we issued a notice to you you did not enter presence..Why? that is why bailable warrant was issued..It is not as if you are a terrorist. Despite being a judge you were not complying with a court’s directions.

CJI: So we are giving you time to reply

Karnan: First you restore my work. If contempt proceedings proved against me any punishment is fine

CJI: We will proceed only after we get a written response from Justice Karnan. A response by way of an affidavit

Karnan: If my work is not restored I cannot file a reply. I am very mentally disturbed

CJI: (WHILE RISING AFTER PASSING THE ORDER) If you feel that you are mentally not in a position to reply give a medical certificate. Then we will consider

Karnan: I want punishment. Send me to jail. Please record this. I will not appear before you next hearing. Arrest me. Put me in jail”

Indian Share Market for a Long Term Investor - An Analysis

I was doing a level of analysis over consistent market performers from 2008. Below are the criteria which I considered.
1. 300% returns over the whole time period
2. 12% returns in the last one year
The returns expected are very modest, but will beat the FD rates in India.
I got a total of 32 companies in total(the only gap in analysis is share split) and below are the major inferences.
1. Only 3 are the largest companies in their segment and only 7 companies exist with more than 10% of the total market cap of the sector.
2. 12 companies exist with market cap share less than .1%
3. 6 companies exist with market cap less than 250 crore and of them, 2 are less than 100. It is surprising to see that companies that small, categorized as X are that consistent performers.
4. 25 out of 33 of these companies have P/E less than market P/E for that segment
5. 11 companies are literally debtless. They have a D/E ratio less than or equal to .01. The number shoots up to 25 companies if D/E ratio is less than .5. Only two companies have D/E ratio greater than one and one of the both - Can Fin Homes is a housing finance company.
6. 15 of the companies are chemicals related(Chemicals, Dyes, Pesticides etc) and 4 are Textile related.
7. 15 of the companies have daily share sales less than 15 lakhs - 1 less than 1 lakh, 4 less than 5 lakhs and 10 less than 10 lakhs. Again, it needs to be seen how these companies tick.

So, what do we infer, if we want a long term investment?
1. D/E ratio should be as less as possible.
2. P/E less than segment P/E
3. To be more safe, have a market cap limit of, say 500 or 1000 crore.
4. Look into segments like Finance, Auto, Chemicals and Textiles - they are ever growing

The data below.

Row Labels	BSE Code	Name	Scrip Class		Market Cap	Sector	P/E	Industry P/E	BOOK VALUE (RS)	% of Segment	Daily Sale Volume(lakhs)	Debt Equity Ratio	Price							Margn
			2008	2017									21/02/2008	21/02/2013	21/02/2014	20/02/2015	22/02/2016	21/02/2017	21/03/2017	9 Year	4 Year	3 Year	2 Year	1 Year	1 Month
EICHER MOTOR	505200	Eicher Motors Limited	B1	A	69,467.77	AUTO - LCVS & HCVS	44.32	103.97	1273.17	26.72%	400.923005	0.01	287.05	2783.65	4872.15	16373	18927.1	25234.45	24902.05	8575.16%	794.58%	411.11%	52.09%	31.57%	-1.32%
GODREJ CONS	532424	Godrej Consumer Products Limited	A	A	57,338.44	PERSONAL CARE	46.84	54.04	149.67	12.35%	192.241896	0.58	117.25	757.5	802.35	1104	1212.9	1701.85	1698.4	1348.53%	124.21%	111.68%	53.84%	40.03%	-0.20%
TUBE INV.	504973	Tube Investments of India	B1	A	12,962.02	MISCELLANEOUS	12.48	17.64	177.34		23.3449425	0.19	64.8	167.05	189.85	359.85	365.75	605.45	615.15	849.31%	268.24%	224.02%	70.95%	68.19%	1.60%
SRF LIMITED	503806	SRF Limited	B1	A	9,813.16	TEXTILES - MANMADE	20.58	27.2	457.26	59.37%	241.322794	0.49	118.1	198	216	924	1091.85	1603.4	1603.9	1258.09%	710.05%	642.55%	73.58%	46.90%	0.03%
VARDH TEXT	502986	Vardhman Textiles	B1	B	7,478.62	TEXTILES - SPINNING - COTTON BLENDED	7.61	16.62	669.33	29.35%	15.23766	0.28	114.55	284.45	341.1	496.1	758.2	1371.4	1330.8	1061.76%	367.85%	290.15%	168.25%	75.52%	-2.96%
ATUL LTD.	500027	Atul Ltd.	B1	A	7,341.28	DYES & PIGMENTS	25.19	26.51	429.75	41.89%	624.140785	0.2	71.55	334.05	436.55	1293.9	1400.95	2254.45	2243.9	3036.13%	571.73%	414.01%	73.42%	60.17%	-0.47%
PVR LTD	532689	PVR Ltd	T	A	7,300.33	MEDIA & ENTERTAINMENT	85.31	45.78	186.04	4.37%	144.622375	0.67	273.2	276.6	531.55	694.75	720.7	1269.1	1410.95	416.45%	410.10%	165.44%	103.09%	95.77%	11.18%
FINOLEX IND.	500940	Finolex Industries	A	A	6,907.15	PETROCHEMICALS	23.01	35.6	80.12	37.60%	38.78805	0.23	74.75	88.05	182.9	278.95	306.85	522.3	543.25	626.76%	516.98%	197.02%	94.75%	77.04%	4.01%
CANFIN HOMES	511196	Can Fin Homes Limited	T	B	6,776.46	FINANCE - HOUSING	31.99	31.91	329.71	1.79%	269.111439	7.93	75.95	154.65	174.9	619.25	965.95	1989.85	2100.3	2665.37%	1258.10%	1100.86%	239.17%	117.43%	5.55%
AARTI INDUST	524208	Aarti Industries	B1	B	6,577.02	CHEMICALS	21.84	39.03	135.63	3.86%	28.263771	0.49	37.15	86.5	90.8	283.15	429	786.95	789.05	2023.96%	812.20%	769.00%	178.67%	83.93%	0.27%
ICRA	532835	ICRA Limited - Credit Ratings	B	A	4,116.52	MISCELLANEOUS	57.54	56.28	480.03		0.5426135	0	790.5	1268.75	1594.2	3647.75	3704.15	4170.9	4173.95	428.01%	228.98%	161.82%	14.43%	12.68%	0.07%
TVS SRICHAKR	509243	TVS Srichakra	S	B	2,909.68	TYRES	16.73	13.71	538.25	4.33%	83.895236	0.07	140	222.1	265.75	1670.25	2281.35	3080.7	3323.9	2274.21%	1396.58%	1150.76%	99.01%	45.70%	7.89%
J.B.CHEMICAL	506943	J. B. Chemicals and Pharmaceuticals Ltd	A	B	2,844.44	PHARMACEUTICALS	17.53	28.1	128.95	0.37%	20.937675	0.15	56.65	82	131.4	191.25	251.05	331.4	338.25	497.09%	312.50%	157.42%	76.86%	34.73%	2.07%
EXCEL CROP.	532511	Excel Crop Care Limited	B1	B	1,899.57	PESTICIDES & AGRO CHEMICALS	26.18	43.68	353.78	3.66%	8.219528	0	110.9	179.7	479.95	854	936.25	1740.7	1771.45	1497.34%	885.78%	269.09%	107.43%	89.21%	1.77%
DFM FOODS	519588	DFM Foods	T	B	1,648.28	MISCELLANEOUS	69.16	52.31	64.83		63.6132825	0.97	19.85	188	313	380	992	1829.15	1734.75	8639.29%	822.74%	454.23%	356.51%	74.87%	-5.16%
SUTLEJ TEXT	532782	Sutlej Textiles and Industries	B1	B	1,503.95	TEXTILES - GENERAL	8.67	29.19	412.6	17.25%	39.7302165	0.64	106.25	212	213.9	328.4	441.5	846.15	831.35	682.45%	292.15%	288.66%	153.15%	88.30%	-1.75%
HONDA SIEL	522064	Honda Siel Power Products	B1	B	1,478.86	ELECTRIC EQUIPMENT	24.91	41.05	361.4	2.96%	10.54155	0	228.5	455.6	456.4	1089.5	1145	1389.6	1360.2	495.27%	198.55%	198.03%	24.85%	18.79%	-2.12%
TASTY BITE	519091	Tasty Bite	T	XC	1,308.66	FOOD PROCESSING	63.75	52.31	234.79	0.74%	101.7967885	0.34	54.45	145	265	720.5	1530	4774.8	4794.95	8706.15%	3206.86%	1709.42%	565.50%	213.40%	0.42%
ARCOTECH LTD	532914	Arcotech Ltd	Z	B	1,013.25	MISCELLANEOUS	28.82	20.95	94.98		65.27478	0.43	6.22	49.65	171.85	344.8	351.6	629.2	542.6	8623.47%	992.85%	215.74%	57.37%	54.32%	-13.76%
AMBIKA COTTO	531978	Ambika Cotton Mills	B	B	775.74	TEXTILES - SPINNING - COTTON BLENDED	14.85	16.62	584.97	3.04%	9.272367	0.01	122.35	204.05	302.35	530	774.25	1205.05	1320.85	979.57%	547.32%	336.86%	149.22%	70.60%	9.61%
LINCOLN PHAR	531633	Lincoln Pharmaceuticals Ltd	B	B	452.3	PHARMACEUTICALS	15.04	28.1	67.95	0.06%	28.639968	0.07	10.8	35.65	40.2	87.9	162.1	191.75	234.6	2072.22%	558.06%	483.58%	166.89%	44.73%	22.35%
IFB AGRO	507438	IFB Agro Industries Limited	B	B	423.3	CHEMICALS	12.55	35.11	267.91	0.25%	7.2793035	0.17	74.95	176.4	197.85	280.8	399.9	454.6	451.85	502.87%	156.15%	128.38%	60.92%	12.99%	-0.60%
CAMPH.& ALL	500078	Camphor and Allied Products Ltd	TS	XC	413.26	CHEMICALS	18.27	39.03	303.25	0.24%	6.6967145	1.35	73.25	154.05	165.05	269.9	473.1	687.7	710.15	869.49%	360.99%	330.26%	163.12%	50.11%	3.26%
DAI-ICHI KAR	526821	Dai-Ichi Karkaria	S	XC	393.72	CHEMICALS	18.21	40.38	164.93	0.23%	6.216	0.01	30.05	39.8	50.2	166.3	329.4	502.5	480	1497.34%	1106.03%	856.18%	188.63%	45.72%	-4.48%
TRANSPEK	506687	Transpek Industries Ltd	TS	XC	340.72	CHEMICALS	15.2	40.38	161.95	0.20%	5.26128	0.29	75	75.65	105	256.5	357.9	534.25	582	676.00%	669.33%	454.29%	126.90%	62.62%	8.94%
PRIMA PLASTI	530589	Prima Plastics	T	XC	298.61	PLASTICS	27.72	44.52	58.48	0.63%	14.7476	0.01	9.41	13	13.1	50.3	116.5	227.6	230	2344.21%	1669.23%	1655.73%	357.26%	97.42%	1.05%
NGL FINE CHM	524774	NGL Fine-Chem Ltd	B	XC	242.8	PHARMACEUTICALS	17.01	28.1	71.57	0.03%	10.50284	0.01	13.6	17.71	23.5	75.45	209.2	345.15	377.8	2677.94%	2033.26%	1507.66%	400.73%	80.59%	9.46%
JENBURKT PH.	524731	Jenburkt Pharmaceuticals Ltd	B	XC	223.17	PHARMACEUTICALS	19.88	28.1	86.44	0.03%	22.548426	0.01	32.8	68.5	90.45	327.9	393.4	461.15	455.8	1289.63%	565.40%	403.92%	39.01%	15.86%	-1.16%
COMPETENT AU	531041	Competent Automobiles Co Ltd	S	XD	143.39	MISCELLANEOUS	10.51	43.19	167.92		2.852379	0.01	42.25	50.5	61.7	107.7	130	175.15	175.1	314.44%	246.73%	183.79%	62.58%	34.69%	-0.03%
BAID LEASING	511724	Baid Leasing & Finance Co	Z	XD	69.99	FINANCE - LEASING & HIRE PURCHASE	15.26	36.4	20.52	0.04%	11.080272	0.58	10.99	13.4	17.5	25.35	36.5	91.95	78.4	613.38%	485.07%	348.00%	209.27%	114.79%	-14.74%
JAYSN DYEST	506910	Jaysynth Dyestuff	B	B	69.52	DYES & PIGMENTS	10.98	26.51	78.97	0.40%	1.450008	0	10.84	23.85	26.9	41.05	46.6	82	82.2	658.30%	244.65%	205.58%	100.24%	76.39%	0.24%
VIRAT INDUS.	530521	Virat Industries	B	XD	67.65	TEXTILES - HOSIERY & KNITWEAR	22.16	23.34	30.08	1.30%	1.2947	0.03	10.15	19	30	58	83.9	95.1	107	954.19%	463.16%	256.67%	84.48%	27.53%	12.51%

Natural State of Things – China, India and the World

Though I have written about this many times, it was more of an incoherent set of comments in response to something else.

Every country has got it’s own philosophy of governance. An older civilization which has stood the test of time and which has been ruled always in the same way for ages is not going to change that easily. Even if there is a blip, it is but natural, with passage of time, these countries will tend to move towards their natural state. The question is, is there any such natural state in the modern world?

Let’s take the two main points of focus in Asia – China and India. China traditionally follows something called a Mandala System. Mandala in Sanskrit means a circle. The system works like this. China is the big circle. There are some neighbouring entities for China like Korea, Tibet, Mongolia, Vietnam, Manchuria and others. Then, there is another level of smaller circles for these second level circles – Ladakh, Bhutan, Sikkim etc. Anything lesser than that, though possible(like Zanskar), is not that practical enough.

The second level circles are such placed geographically that they can’t interact with any other country. Same goes for the third. Now, how does this model work? China, by being the bigger circle, linking all the smaller circle offers it free access to all the second level circles. A Tibetian can go and work/trade in Korea, a Korean can serve as a part of Chinese imperial Army in Vietnam. But, China will never interfere in the internal policies of any of these smaller circles. In case, say, Tibet is facing an invasion, China doesn’t send an army. It’s Tibet which will fight the war. Only if Tibet says I need help, China will pitch in. For a war in Tibet, China doesn’t order Korea or Mongolia to send troops. Tibet can ask, but China doesn’t. Once the war is won, China will simply go back – it won’t stay and dictate policies. In return, China asks paper vassalage. So, what benefit China has got? Markets for it’s produce and extra military depth. What has the vassals got? A free market and a master who doesn’t bother about the internal independence. The vassals are more advantaged than the master and they will be in eternal gratitude for that – they voluntarily accept the position of a vassal. Take, for example, Japanese invasion of Korea in 1500s. Korea tried to beat back the invasion. It failed and China had to come to correct the situation. And, China simply went back. The story changed after 1750 where Qing  China decided to directly annex these vassals. This went on and off – when the centre was weak, the vassal got independent. The situation is this. Qing doesn’t know the way of life of Tibet. It doesn’t know how to rule the people and what endears them to the Tibetians. This bondage, in return, resulted in rebellion against China. For something which China is voluntarily getting, it is expending tremendous energy to enforce it through the use of force – there are popular rebellions, there is army highhandedness, there are policies which people didn’t like. But, when China withdrew from Tibet, the status quo was reestablished.

This is the situation China is in today. It is forcibly attempting to control entities which voluntarily follow China. And to maintain this façade, China needs a strong centre. It needs to project itself as a street bully whom everyone prefers not to approach. It is the same reason why China is acting such belligerent. It needs to project that it is strong and can never afford a war which can impact this status quo.

What is Indian model, then? India is not a single country – there are always small kingdoms which are out of reach of a strong centre which theoretically represented India. This centre, as time progresses, will absorb some independent kingdoms which flexed it’s muscles after the last round of chaos which gave this new centre to form(to make more sense, take it something like, Lodhis came strong, they wilted and were taken down by the Mughals. There were rebellions, which the Mughals gradually suppressed) – some of these were absorbed into the royal lands and the rest, allowed to govern on their own, but all of them are governors, not vassals. He may be a governor appointed by the ruler in the centre or a hereditary king, but he is just a governor. He has to maintain an army according to his stature and will be summoned to fight a war anywhere. Note that it’s not his army, but the central army garrisoned at a location. There is no Jaipur Army, there is no Orchcha army, it’s always Mughal Army. It’s that Mughal army which fights for everyone.

It is interesting to note that India is still following this model of governance – only that, there are no hereditary governors.

The most important point of this model is, both the countries ruled the world as economic superpowers when they were in their traditional model of governance. China is not following it’s model while India is, to some extent. What is the problem with China? It’s wasting it’s energy trying to control entities which it need not to. And going by the fact that China is a sea oriented economy and with wealth concentration solely on the coast and the gap increasing by the day, if spending too much money on military posturing, which will increase with India’s belligerence is going to widen the gap, eventually ripping the country apart. What’s the problem with India? By frequent change in policy decisions, there is no stability in approach. I don’t say democracy is wrong. But, decoupling economic policy making and populism will reduce the fickleness in finalizing the minutiae of the long term policy decision.

What is the natural state of things?

1.   The realization that there is no need of any market outside India-China-Iran historic belt – they themselves hold two thirds of the world population.

2.   The acceptance of the fact that the independence of entities like Tibet or Chinese Turkestan is inconsequential

3.   Open borders and an East Asian Free Trade Zone.

One of the greatest challenges for this to happen, which will happen for sure, is the nuisance of Pakistan. Where does Pakistan stand in this? Pakistan cannot survive on it’s own and needs life support. First it was America, now, it’s China. But, is it such a serious problem is what we need to look into.