LKR

Shriram Transport Finance - A story of its kind!

2013-05-04T11:42:00.002-07:00

R Thyagarajan's Shriram Transport Finance has kept investors and shareholders happy, several times over. STFC has delivered large returns for its investors – both the retail and the private equity guys; ChrysCapital made 10x and TPG over 7x.

RT built the company through internal accruals and debt over 20 years before accepting any private equity. By then, his processes were rock-solid. This is what the 70-year-old had to say about his approach. Not having a cellphone is a beginning.

No cellphone

A doctor needs a cellphone because his patients may need urgent attention. There are professions in which a customer benefits if he can reach you urgently. I am not in that sort of a business. I am of no use to anyone in an emergency. I also don't like to carry anything too heavy on me. Before I get down to work, I take off my watch. I don't carry a purse, just some 10-rupee notes or 50-rupee notes.

Trust people

I cannot distrust people. I don't start with suspicions. This goes for private equity investors or partners. In 1990, when Ashok Leyland and Tata Motors took 15 percent stakes in the company some people said, "Oh, they are big players and they will swallow us." I did not think so. When we made people branch managers, we gave them total freedom to decide on the quantum of money to lend and the risk mitigation steps. I shared my opinion on what I thought, but the decision was theirs. We have 700 to 800 branch managers, and only one or two didn't work out. Most people are quite sensible. Till date, my trust has never been betrayed.

High performers get more responsibility

In any group of 20 to 30 people there will be three or four who will perform better than others. I measure performance objectively. I am a statistician by training and keep subjectivity to a minimum. I ask myself why I consider someone a better performer than others. Once you have identified those people you give them more responsibility.

Your way or my way

When someone who runs a particular business disagrees with me I ask them to run it. I don't interfere. In one of my early hire-purchase business, there was this person in charge who would take a lot of risks. I decided to bring in an MD from a bank to make sure the business did not take too much risk. The person in charge resisted and said, "You are trying to clip my wings". I backed off. The business did very well for at least four to five more years

Profit is only a yardstick

It is never the end goal. The customer always comes first. Profit is simply a way of finding out how well we are serving the community. If you serve the community well you make a higher profit.

Walk the talk

For instance, when we do a fixed deposit mobilisation, the branch manager will not just fix a target for others; he will first take a target for himself. So, we never ask our colleagues to do things that we ourselves could not do. When we started our business, it was customary to repossess [take back the vehicle if the loan wasn't repaid] through an outside agency. We did it ourselves. We would explain to the customer that he wasn't managing his property well, and that if we took back the vehicle we could minimise his loss.

Private equity works

We have had almost three, four or five private equity firms that have invested in us. We found them to be pretty good. Their direct contribution was good, but more important was they did not try to contribute! One person from TPG who was there in Shriram City Union Finance said after three months, "I don't see a role for myself here. You are doing your job well. I don't want to be a nuisance here." We want private equity partners to make money for their investors. Our business needs capital. If they make money they will support our future ventures too.

Understand risk, not fear it

Risk is a part of business. When I look at the business, I see the possibilities along with the risk. When you see a face you don't just see the nose. You have to see it in totality. I am aware of risk. Sometimes you don't know the risk and only when you get into the business you come to know its extent. I am okay with that because I always provide for that unknown in some measure so that I don't drown.

Source: Forbes

Why it makes sense to buy Infosys now.!

2012-07-14T12:32:00.001-07:00

There has been debate amongst investors about Infosys ’ falling fortune after disappointing first quarter results. The scrip fell around 10% in two trading sessions as the market priced in lower earnings growth. On the other hand, TCS reported better-than-expected results, raising questions on Infosys’ strategy and execution skills. One of the leading business daily on Friday carried an article on the front page with title “IT’s over for Infy: TCS is the new Bellwether”. There is no doubt that TCS is doing excellent job in terms of operations and profitability, but investors must chase stocks that promise good capital appreciation for the risk one is taking.

I am outlining four strong reasons why one should bet on the Infosys for next three years.

Reason 1

Quarterly Net profit growth of 33%

When global as well as domestic economic outlook is weak it’s very difficult for many good companies to show even higher single digit growth. But Infosys, on the other hand, despite much adverse business conditions reported 33% year-on-year growth in net profit for quarter ended June 2012. I am not sure how many companies for the quarter would be able to show over 25% growth in their net profit. In this context Infosys results are good. Remember one is looking at TCS and then comparing with Infosys. But one must understand that Infosys is in the process of overhauling its business model and hence there could be short term pain before the strategy starts paying off. Infosys management has said that they are here for the marathon and not a sprint and hence one must have patience before jumping to any conclusion. Many investors would recollect that Tata Motors incurred huge losses before it entered the four wheeler passenger car businesses with launch of Indica in 1990s. Many investors had written off Tata Motors.

Reason 2

Excellent Valuations

Valuations make a company good or bad. While one looks at share price of Infosys, its valuation is really looking attractive. The company’s trailing 12 months price earnings is at 14.4 times against TCS of 21.48 times. I strongly believe that TCS and Infosys P/E would converge in next three years and hence makes sense to get into Infosys. Infosys always commanded higher P/E against TCS despite having higher floating stock.

Also if one looks at historical P/E of Infosys, the counter looks attractive as lowest P/E it commanded in last ten years was in 2009 when it stood at 13.3. At the same time, Infosys at present is commanding lowest P/E amongst the top four IT firms. I am not sure how long Infosys would continue at that level.

Historical P/E commanded by Infosys

Reason 3

Neat and clean Balance sheet

The company follows one of the best corporate governance practice and has impeccable record of transparency. What is icing on the cake is that it has cash and cash equivalent of Rs 20,596 crore as on June 2012. Going by the statements from the management I feel that it will use this cash pile to acquire assets in next six months. Also the company ruling out buy-back is a good pointer that acquisition is on cards. Even if acquisitions do not happen, it will still be able to plough this cash very well. Please note that company’s RONW is excellent with over 25% despite higher cash and cash equivalents. Not many companies of this size have been able to maintain operating profit margin consistently above 30% and RONW above 25%. This shows excellent management bandwidth to navigate the uncertain business environment and yet be able to create value for investors. It is one of the few companies who have been paying consistent dividend (Rs 32 per share last year).

Reason 4

Risk Vs Returns favour returns

Looking at the valuations of the company I would assume that there is no substantial downside on the counter from the present level of Rs 2,223. But upside potential is at least 20% (around Rs 2,700) by March 2013. Please note that company’s market cap is Rs 1.25 lakh crore and looking at the balance sheet and management bandwidth it’s unlikely that market cap would take beating from this level.

So when domestic business scenario is uncertain its make sense to get into a company that has low downside risk but higher probability of capital appreciation. Also note that all negatives are already priced in and hence one is unlikely to see major shock value in the future. Any positive news would make the counter rally.

I would recommend Infosys share as a part of your core portfolio.

Source :- Sunil Damania - investment expert, Money Control.

The Rise and Fall of a McKinsey Product.!

2012-06-19T05:13:00.001-07:00

It was rightly said by someone “Most of the mess that is called history comes about because kings and presidents cannot be satisfied with a nice chicken and a good loaf of bread.” The same is talked about Rajat Gupta who is hailed as a poster-boy of Indians scaling great heights in corporate echelons abroad and his friends describe him as a God-fearing, “First-Class guy” and who is now involved in Insider trading scam.!

Mango Background -

Born in Maniktala in Kolkata, son of a freedom fighter-turned-journalist father and a school teacher mother, Gupta was orphaned at the age of 18. Ranking 15th in the IIT entrance exam of 1966, Gupta was admitted to IIT Delhi on a scholarship from where he did his B-Tech in mechanical engineering.

He was Offered a job at cigarette maker ITC Ltd, then about the most sought-after employment for a young graduate, Gupta instead opted to go to Harvard Business School, where he was a Baker Scholar, an honour bestowed on the top 5 percent of the MBA class. He landed a job at consulting giant McKinsey and quickly rose through the ranks.

In 1994, he was made the global head of the firm, the first non-American to hold that position. Gupta’s enviable resume boasted of job profiles as board members of some of the biggest US companies. After 10 years at McKinsey, Gupta joined the boards of many corporations and nonprofit organisations. In addition to Procter & Gamble and Goldman, he was a director of the AMR Corporation, the parent company of American Airlines.

The Rockefeller Foundation appointed him a trustee; he was named an adviser to the former US president Bill Clinton and Bill Gates, co-founder and chairman of Microsoft, on their global health initiatives. He is also the co-founder of the Indian School of Business in Hyderabad. Gupta was also appointed as special advisor on management reform to then UN Secretary-General Kofi Annan.

Fall of Gupta - Down down the hill.

But then the climate changed and Gupta found himself in the thick of an insider trading case. Gupta’s undoing began when his billionaire friend Raj Rajaratnam, a Sri Lankan, was charged by federal prosecutors of running of one of the biggest insider trading scams in US history.

Gupta met Galleon hedge fund founder Rajaratnam through another Indian-American McKinsey partner Anil Kumar. Rajaratnam had made an anonymous contribution of a million dollars to the Indian School of Business, Hyderabad, which Gupta had co-founded with Kumar. Together, they helped start New Silk Route Partners, a private equity firm focused on investments in India.

The two became friends and occasionally had lunch together, eating Indian takeout in Rajaratnam’s office in Manhattan. Rajaratnam is currently serving an 11-year prison sentence for making millions of dollars in profits and avoiding large scale losses thanks to confidential information he received.

Gupta was convicted on three counts of securities fraud and one count of conspiracy for passing along confidential boardroom information about Goldman and Proctor & Gamble companies to the hedge fund that earned millions of dollars trading on his tips. He was acquitted of two counts of securities fraud. He was found guilty for information about the $5 billion investment by Warren Buffett’s Berkshire Hathaway Inc,and of proving information to Rajaratnam on 24 October 2008 about Goldman stock.

In one call, the day after the Buffett investment announcement, Rajaratnam told trader Ian Horowitz: "I got a call at 3:58, right? ... Saying something good might happen to Goldman." On October 24, 2008 Rajaratnam is caught on the wiretap telling portfolio manager David Lau: "Um, now I, I heard yesterday from somebody who's on the board of Goldman Sachs, that they are gonna lose $2 per share. The Street has them making $2.50."

Prosecutors said Gupta had called Rajaratnam on October 23, 2008, only 23 seconds after a Goldman board meeting heard the firm was headed toward its first quarterly loss ever as a public company.

Food for thought - Gupta could spend as many as 20-25 years in jail. But for what.? Just for leaking the Insider information.! All these things happen generally in India. Have not heard till date anyone sentenced for it. As usual "Chalta hai attitude".

Courtesy - Wikipedia & Money control & Shree Nidhi.

My Letter to Pranab da.!

2012-04-28T10:52:00.000-07:00

Dear Pranab da.

So the rating agency "Standard and Poor’s" lowered the Outlook on India’s long-term sovereign credit rating to "negative" from 'stable'. Really, who cares? After the initial shock wore off, financial markets shrugged off the news. Apparently, your government seems to have done the same.

You have to admit dada, that you seem to have more faith than the rest of us that the country will be able to “overcome”. Especially when nothing is actually being done to overcome anything.

Making matters worse, you seem to be on a mission to drive out foreign investors through a range of ‘hostile’ measures, including a retrospective taxation proposal and attempting to tax transactions deemed to have been done to ‘evade tax’. Phew. Indeed, so far, your government has done precious little to support economic growth. The situation is really murky dada. Its like your saying to Foreign investors ‘take-your-money-and-run’.Bhag FII bhag.! Tujhe Sonia ji ki Kasam!

Just saying “timely warning” is not good enough, Pranab-da. You need to act on it. Now.! There are atleast 39 bills which are pending in the Parliament.

In my view there are 6 key policy reforms that may save India from downgrade and may again put the economy back on track.

1) Goods and Services Tax (GST)

2) Direct Tax Code (DTC)

3) FDI in aviation

4) FDI in retail

5) Diesel decontrol

6) Companies Bill 2011

Dada, I have invested lots of money in the markets and I am as bullish as Jim Rogers is about the way forward for India. Aah this reminds me of an anecdote I read sometime back.

"Once upon a time in a village, a man announced to the villagers that he would buy monkeys for Rs 10. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them..The man bought thousands at Rs 10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at Rs 20. This renewed the efforts of the villagers and they started catching monkeys again. Soon the supply diminished even further and people started going back to their farms.The offer rate increased to Rs 25 and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it! The man now announced that he would buy monkeys at Rs 50!

However, since he had to go to the city on some business, his assistant would now buy on behalf of him. In the absence of the man, the assistant told the villagers. Look at all these monkeys in the big cage that the man has collected. I will sell them to you at Rs 35 and when the man returns from the city, you can sell it to him for Rs 50. " The villagers squeezed up with all their savings and bought all the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere!

Welcome to the 'Stock Market'! ‘

This shouldn’t be the message you give to Investors atleast for time being dada.

Your's Esteemed

Bengali misti misti Jalebi

LKR

Lessons from Share Market.!

2012-01-28T23:06:00.000-08:00

Many of us desire to make money from the stock markets, because it doesn't seem to take a lot of skill. After all, like a casino, all you need is one good trade. That's what we read about — the success stories of investing talk about how Warren Buffett bought into Coke, or Rakesh Jhunjhunwala bought Titan, or Paulson shorted sub-prime mortgages or such.

While these investors — and many others — have benefited from the huge success of a few stocks, there are thousands, even millions, of other investors who lost much of their money chasing performance. And not just speculating, but even with deep, well researched analysis. A stock that seemed like a steal three years ago is still a steal; they have higher profits, and a lower stock price. In another ten years, they might still have the same stock price. The "value trap" attracts people who think luck plays no role in investing, that all it takes is good analysis. Value traps are lessons you don't learn about in books; real life teaches you instead.

I attended the School of Hard Knocks, and every time I think I'm close to graduating, I fail the next test. Here are four mistakes I've made and hopefully, learnt from.

Chasing Highs and Lows

What we like is to have "caught the low" — bought it when the stock was at the bottom. This is unlikely to happen — you may catch a bottom once or twice, but it's like a falling knife that'll slice through you. When Satyam fell rapidly from over 200 to 80 in December 2008, I had decided to pick up a few shares, assuming that it was just a "margin call" or something. The news about Mr. Raju's announcement waltzed in a few minutes later, that he had lied about the company's financials all along. I sold the stock — intra-day — at Rs. 65 or so. It still languishes around those levels three years later. What I thought was a "low" at Rs. 80 went all the way to Rs. 20.

I want to sell the highs too. I held a share called Reliance Petroleum Limited (RPL) which was bought in its IPO at Rs. 60. The stock went to Rs. 240 and I decided to sell. Yet, I felt those pangs of regret as the stock went to Rs. 300. Even with a very good profit — 300% in less than two years — I felt bad that I couldn't make some more?

For the record, I have picked highs and lows; I have bought at the high and sold at the low more often than the other way around.

The Desire to "know".

A friend who had $1,000 in currency asked me if it was a good time to convert to rupees. I said I had no idea. He laughed, and asked me why I was in the finance business if I didn't know. But I honestly didn't know if:

a) He should care where the rupee or dollar would go, in a one-off transaction, not being a trader

b) The dollar would move further up — and therefore my friend could get a few more rupees for his dollars

c) Any prediction would be to simply assuage my friend's need for an answer.

We all wish we could know, which is why astrology is so popular. But we don't. The markets have asymmetrical information; different participants know different things. An investor may be aware of a problem that you and I don't — and if he sells heavily, the stock collapses; with the information we have, the stock looks attractive, but is it?

I've been trapped enough times thinking that I know more than the market — but more often than not, I've been the ignorant one. In the face of the knowledge that one doesn't really know, what's the right action? Not invest or trade? That would be pointless, because investing or trading, even with incomplete information, can lead to substantially higher returns.

The Revenge Trade

And just when I've admitted I was wrong, the stock stops falling and goes back up to new highs. This short-circuits my brain, and I feel like the universe has just conspired against me.

The desire for revenge has made me jump back into a stock, only to watch the temporary move reverse and again come back to hurt me. Usually, such a trade has no logic; it's just a strong feeling that losses in one stock must be recovered from the same stock.

The Perspective: Percentages and Absolutes

Consider the proposal where if you invest Rs. 20,000 in certain (80CCF) bonds, you don't get taxed on that amount. With all sorts of calculations, you hear that you're really investing Rs. 14,000 (since you would have paid Rs. 6,000 as tax on that money, in the highest marginal tax bracket) And then, you get back Rs. 26,000 in five years, making your return 13.2%.

While the 13% is attractive, the entire exercise allows you to earn Rs. 12,000 in five years (assuming the 6,000 in tax saving, and 6,000 in interest).That's Rs. 2,400 per year, or Rs. 200 per month. When you are earning more than Rs. 8 lakhs per year — that's at the highest tax bracket — the amount saved is significantly lower than the joy you feel by hearing "13%".

Absolutes and percentages both matter; when you get a high percentage return on a single trade, the school of hard knocks tells you to evaluate the overall return on your portfolio instead. You don't appreciate a car that has a great steering wheel if its engine misfires, its headlamps don't work and the seat is uncomfortable. You don't praise one good trade if you have three equal (or worse!) bad ones burning your portfolio.

Food for thought:- Perhaps you invested five years ago, when the India story was going strong and they told you, like they told me, that India was the next big thing. Five years have gone, India's GDP and per capita income have doubled, car sales have quadrupled, and yet, markets have returned a miserable 4% per annum, just about beating the savings deposit rate. India's stock market behaves very differently from the rest of India, we learn, as we pass through another year in the school of hard knocks.

Courtesy :- Deepak Shenoy, Co-founder of Market Vision.

Invest like how a girl does.!

2012-01-17T06:45:00.000-08:00

Warren Buffet is undoubtedly the best man when it comes to making Investments. It is popularly said that his hands have a Midas touch and whichever investments he makes; it earns him a healthy profit. As per Forbes, Warren Buffet’s wealth has been estimated at a whopping 50 billion dollars (as of March 2011) and all of his wealth has been made through Investments.

But how does Warren Buffet do so? What is his Investment style that makes him unique and which no-one has been able to replicate since decades? A recent study conducted by LouAnn Lofton who studied the habits of the world’s most renowned investor has revealed that Warren Buffet’s investing style can be correlated to that of a woman. 'Yes, you read it right, Warren Buffet has a Feminine Investing Style.'

The Researcher of this study has also authored a book on this study by the name – ‘Warren Buffet Invests like a Girl’. By the way, some of the most interesting recent studies have just begun to uncover the role of testosterone in investing, risk taking and trading. You're not shocked to hear it has one, are you?

The key here is that women's trading hurt their performance less than men's, thanks to men's greater Overconfidence. The difference, then, is more related to temperament than it is to skill. You can be the smartest securities analyst around, but not having the correct mindset can absolutely sink you as an investor. All the know-how in the world can't correct for bad habits. Temperament matters, plain and simple.

How does the issue of overconfidence play into investing behavior and results? Well, because of their overconfidence, it was assumed correctly, as it turned out that men would trade more than women do. And what does more frequent trading do to your investment results? It drags them down, running up transaction costs and acting like the proverbial albatross on what might otherwise be smart investment decisions.

The Eight traits female investors share with Warren Buffett:

1. Trade less than men do.

2. Exhibit less overconfidence: men think they know more than they do, while women are more likely to know what they don't know.

3. Shun risk more than male investors do.

4. Be less optimistic, and therefore more realistic, than their male counterparts.

5. Put in more time and effort researching possible investments, considering every angle and detail, as well as considering alternate points of view.

6. Be more immune to peer pressure and tend to make decisions the same way regardless of who's watching.

7. They learn from their mistakes, men don’t.

8. Have less testosterone than men do, making them less willing to take extreme risks, which, in turn, could lead to less extreme market cycles.

Food for thought:- Investing isn't a man's world anymore—and that's a good thing for individual portfolios, Dalal Street, and the world's financial system. "After all, the stock market is filled with individuals who know the price of everything, but the value of nothing."

Why one can't write off US..??

2012-01-10T08:18:00.000-08:00

A recent report by Boston Consulting Group (BCG) put forth an argument that a certain economy could challenge China's status as the world's preferred manufacturing base by 2015. Can you guess which economy it can be? Alas, how much ever we may want, it is certainly not India. Instead, that economy is none other than the US. Surprising, isn't it? Even I was quite bewildered when i read this. And though it cannot be said with any certainty how things will turn out, it would be worth noting the arguments behind the view.

Let's first understand what led China into becoming the global manufacturing hub. There were three main reasons: Cheap labour, Cheap currency and Robust government initiatives to attract foreign capital. However, the Chinese Yuan has appreciated by about 20% against the US dollar over the last five years. During the same period, China's annual inflation has on an average been 1% higher than that of the US. What is also worth noting is the fact that between 2005 and 2010, pay and benefits surged by 19% annually for average Chinese factory workers.

Compare that with a modest rise of only 4% for US workers. By 2015, BCG estimates US manufacturing to be just as economical as Chinese for many goods made for North American consumers. In fact, after hitting a low of 8% in 2008, the US share of global exports has been on the rise. This means good news for the US dollar but bad news for emerging economies including India. Many believe that the Indian rupee has been beaten down mainly due to the Eurozone crisis and will regain lost ground once the crisis eases. However, if the US economy does make a comeback, and the Indian economy continues to suffer from a high current account deficit and high inflation, the rupee may remain depressed for much longer than we think it should.

US nominal GDP was nearly $14.5 trillion in 2010,approximately a quarter of nominal global GDP. The European Union has a larger collective economy, but is not a single nation. Its GDP at purchasing power parity was also the largest in the world, approximately a fifth of global GDP at purchasing power parity. The U.S. economy also maintains a very high level of output. I usually hate giving numbers in my blog but then sometimes I have too. Apologies pls.! In 2010, it had a per capita GDP (PPP) of $46,844, the 7th highest in the world. The U.S is the largest trading nation in the world. Its three largest trading partners of 2011 were Canada, China and Mexico. Remember pls.! May be asked in Tata Crucible Quiz.!! ah,Carry on.

The United States is home to 139 of the world's 500 largest companies, which is almost twice that of any other country. About 60% the global currency reserves has been invested in the United States dollar and only 24% in euro. The country is one of the world's largest and most influential financial markets. Foreign investments made in the United States total almost $2.4 trillion, which is more than twice that of any other country. American investments in foreign countries total over $3.3 trillion, which is almost twice that of any other country.

The labor market in the United States has attracted immigrants from all over the world and its net migration rate is among the highest in the world. The United States is one of the top-performing economies in studies such as the Ease of Doing Business Index, the Global Competitiveness Report. Last but not the least of all, nothing can beat US in terms of technology and Innovation. That's the sheer truth.

Food for thought:- Word of caution infact for some - According to the Tax Foundation’s Microsimulation Model, to erase the 2011 U.S. budget deficit, the U.S. Congress would have to multiply each tax rate by 2.4. Thus, the 10 percent rate would be 24 percent, the 15 percent rate would be 36 percent, and the 35 percent rate would have to be 85 percent. Total U.S. government debt is now up to 90 percent of gross domestic product. Still, one can't have the guts to write off US.

The A to Z of 2011.!

2011-12-31T06:41:00.000-08:00

A –A year that began with a bang for Automobile companies, only fizzled out in the end with car sales posting the steepest fall in nearly 11 years; a year marred by strikes – 2011 will be one that the Indian automobile industry would like to forget in a hurry.

And the one word which has become the mantra of the year is undoubtedly, Anna. His fight and fast against corruption, taking on the entire might of the Govt, took the nation by storm. He continues to remain the man of the year even as 2011 draws to a close.

B – Ban on iron ores exports has crippled the entire mining industry. The Govt ban on shipments of the key steel making raw material from Karnataka and subdued output in Goa remains strongly in place, debilitating the entire sector with tremors being felt by the steel sector too.

C –Undoubtedly, Cyrus Mistry, the 43 year-old son of Pallonji Mistry, whose company Shapoorji Pallonji is the largest shareholder in Tata Sons and now, is the successor to Ratan Tata. It cannot get bigger than this!

Cable TV digitization Bill was passed and it is to be implemented in phases, to be completed by December 2014. This is certainly a moment of triumph for broadcasters who had been lobbying with the government to allow the cable industry to convert from analog to digital.

D – Divestment target of Rs.40,000crore is nowhere close to being met. Till date, only 3% of this target or a measly Rs.1200 crore has been collected. Most of the PSUs share sale have been deferred. Yet the Govt kept on stating that it will meet the target and removed the bunny from the hat – sale of SUUTI assets and it might just manage to meet the target!

E – Europe debt crisis kept the world markets on leash. The news of the crisis first crept up in the first part of the year and since then has held the world markets at the edge of its sword. It continues to remain a big Damocles sword.

F – FDI in retail was a huge buzz word during the year. Huge expectation built up over 51% FDI in multi brand and 100% in single brand. But it all fizzled like air out of the balloon.

G – Gold price dazzled everyone with its price climbing right into the sky. Gold rose more than 30 percent since the start of the year, to a record $1,923.70 an ounce in September. The driver was speculation that Europe's debt crisis would worsen as governments in the region and the U.S. tried to shore up growth through monetary easing.

H – Housing sector has never been so bad. The rising interest rate sapped out whatever little demand was there. And the outlook continues to look bleak. Maybe lowering rates will help spur demand in the new year.

I – Inflation, especially food inflation remained worrisome through the year. The highest was recorded during the year for the week ended 3rd Feb at 17.05% and it ended the year, at 0.41% for the week ended 17th Dec.

IIP along with price rise in a big concern.October IIP at -5.1% was a true shocker. The consistent low IIP shows that incessant rate hikes by RBI has started hampering growth. Estimates for closer to 7% GDP growth for 2011-12 have already been announced by rating agencies.

J – Japanese earthquake on Mar. 11, which measured 9 on the Richter scale caused a devastating chain of events few people predicted. The quake triggered a tsunami that claimed more than 15,000 lives. Thirty-foot-high waves flooded the cooling systems at Tepco's Fukushima Daiichi nuclear power plant, leading to the world's worst nuclear disaster since the Chernobyl meltdown 25 years ago

K – Kingfisher Airlines is struggling to pay its daily fuel bills, has lost many pilots and has cut down on the number of flights, this was definitely one of the worst years for Mallya.

L – Undoubtedly the Lokpal Bill. This is one Bill which is being perceived as the magic pill which will drive away the deep rooted weed of corruption from India.

M – Maruti made the maximum headlines this year, thanks to persistent labour problems at its Manesar plant. Striking employees led to a slump in production as well as car sales, intensifying the pain already being felt because of cooling demand.

N – End of an era when co-founder Narayana Murthy stepped down in late August. Murthy co-founded Infosys with six engineers in 1981 by borrowing Rs 10,000 from wife Sudha.

O – Occupy Wall Street. A quiet movement but it took a larger shape with similar agitations all over the world. The movement was about fight against greed and capitalism on Wall Street, about growing inequalities, the marker driven capitalist policies and unemployment.

P – Primary markets have literally dried up. There has not been a single IPO in three consecutive months – Oct, November and Dec there was one issue on the 30th. And the issues which did raise money were probably some of the worst crop that we have seen in recent times.

Q – Q2FY12 numbers have not been good but a common thread running through many companies is MTM or better recognised as forex loss. Tata Motors, Mahindra & Mahindra, Bharti, Exide, SterliteInds, Dish TV, Essar Oil, Arvind, Jet, Sesa Goa, Subex, JSW Steel, Shree Renuka, PFC, JSW Energy; around 70 major companies reported forex losses.

R – On Dec 15th, Rupee was at 54.2000/2050 per dollar, after hitting an all-time low of 54.30 in early trade after which RBI imposed curbs on banks' trading limits to help rein in speculation on the currency. The partially convertible currency closed down 15.8% compared with a fall of 19.1 percent during the global financial crisis in 2008.

S – Moody’s downgrade of State Bank of India’s financial strength rating to D+ from C- in October caused quite a commotion in equity markets, and even prompted Finance Minister Pranab Mukherjee to lash out ratings agencies for trying to “destabilise the banking system”.

Savings account deregulation was a huge thing and it is changing the way banks work now. Kudos to RBI for this!

T – Treasure worth Rs.1 lakh crore was unearthed at the Padmanabhaswamy Temple at Kerala and it took the whole country and world by storm. The treasure, an accumulation of religious offerings to the Hindu deity Lord Vishnu, includes a four-foot high gold idol studded with emeralds, gold and silver ornaments and sacks of diamonds.

U – UKSinha, Chairman of SEBI fired a powerful salvo just before the otherwise disappointing year from SEBI. By bringing to book the promoters, directors and merchant bankers of seven manipulative companies which had recently raised money via IPO, it ended the year with a sweet taste.

V – VikramAkula of SKS Micro came in for harsh criticism and he stepped down from the micro finance company, which has come in for harsh criticism for its flawed business model, changing from a NGO into a commercial institution that chased investor returns and rapid growth instead of providing financial services to the poor.

W –The victory at World Cup. The sheer exhilaration felt when India won the cup remains unmatched. The entire country and Indians across the world celebrated the victory as one and that is one beautiful moment we Indians will not forget in a hurry.

X – Xenophobia means fear of the unknown, especially foreigners and strangers. And in the aftermath of the terror attacks, countries world over are tightening their visa rules. India too has done it and drawn flak too. Call it whatever, but this was much needed.

Y – Youngistan is what India is all about which is what the Census 2011 indicated. Currently the 15-64 age group is around 65% of the population—India's baby boom generation.

Z – Zero debt company? Now that is the flavour of the season. With interest rates high and debt becoming a bad word, any sound company with no debt became a ‘hot cake’.

Courtesy :- Ruma Dubey

Double Dip Recession..??

2011-12-09T12:45:00.000-08:00

Europe is the world's biggest economy. It is menaced by bank and government debt defaults. It is growing old and has far more social spending obligations than it can afford. It is paralyzed by competing national governments and decentralized financial institutions. It can say 'drop dead' in 17 different languages.

And if Europe goes into a deep or prolonged economic slump, the rest of the world follows. Because Europe is a big customer, not only for Asia, but for America too.

The only way out of the debt problem for Europe is growth. Austerity alone won't do it. Europe's debts can only be serviced if the economy grows. Not that we're counting on it. On the contrary, we're guessing it won't happen.

Europe's social spending can only continue if there is growth. Without growth, everything goes bad. Debts can't be paid. Public workers can't be paid. And neither the stock market or the bond market are worth nearly as much as people think they are.

Everybody assumed growth would continue - even if it were interrupted from time to time by recession. Every recession since the '40s has been a relatively quick and relatively painless pause, not a major change of direction.

But now, something seems to have changed. Maybe it is a Great Recession, as some call it. Maybe it is a Great Correction, as we call it. And maybe the age of growth is over.

What a helluva thing that would be if it were true. When people lent money to government and private borrowers they were betting on growth. When the government extended its promises of pensions and health care, it was counting on growth. Take away the growth and the credits and promises turn bad. And if they're bad, the whole capital and government structure is in danger. Without growth almost all the world's major banks will go broke. Without growth, every government in the developed world will default (or worse). Without growth, the world we have known falls apart.

But why would growth stop?

We don't know. But it stopped in Japan. Today's output in Japan is actually lower than it was in 1991. What happened? Banks were over-indebted. Corporations were over-extended. Real estate and housing were over-bought.

The Japanese government has been able to hold things together. But only by over-doing it itself. Now, it has such heavy debt that the home islands may sink under the weight of it. Stocks and property have lost about 2/3rds their value. There are no more jobs than there were 20 years ago.

And still no sign of growth.

Could Europe go the same way? Yes, it could.

How about America? Ditto.

Courtesy :- Daily reckoning

My Letter to Mr.Kapil Sibal.

2011-12-07T07:52:00.000-08:00

Dear Kapil(ji)

Guess the baton has now been passed to you by Mr. Digvijay. Welcome.!

At first place I Don’t know what made you ask leading internet companies like Google, Facebook, Microsoft and Yahoo! to screen derogatory, defamatory and inflammatory content about political leaders and religion.

You say you have to take care of the sensibilities of our people, and so you have to protect their sensibilities. My left foot.!

Secondly, you may certainly evolve guidelines to ensure that such blasphemous material is not part of content on any platform. But for how many websites. By trying to do so, your evoking people to try out something new abt it. Regulating content on the Internet is legally, practically and technologically impossible. Listen Kapil dude, you cant stop from getting ur website hacked, how can you think of bringing a censorship on internet??

I don't think you even understand the so called Internet. Of course, this happens when you make a lawyer, a Telecom Minister. Like hiring Mayawati for an item song.!

I can’t imagine you in Dept of Telecom being tasked with approving content on internet, of deciding appropriate n inappropriate and tat too for blessings of ur madam a.k.a Sonia ‘ji’. Phew no.

Thirdly, the government has no right to demand respect for a particular religion, politician or higher authority. If you are in politics, you are bound to be talked about and made fun of. Tingilikaa zingali.! It’s funny when you say the Lokpal cannot monitor the lower bureaucracy because of its size, but you think you can monitor each and every Facebook user. Ridiculous.!

Your statement exposes the government's fear. It knows social media can reach out to millions, especially after the Arab revolutions in West Asia and the backlash in the country following Anna Hazare's arrest in August.

As for me, everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference, and impart information and ideas through any media regardless of frontiers.

What next Mr.Sibal? There’s one lesson that you would do well to learn: it’s folly to spit into a head wind. You only end up spitting on yourself Mr.Sibal. Yup, we do know that the govt is trying out all ways to divert our attention from the main issues facing the country:Corruption,Black Money,Policy Paralysis,Economic Slowdown,Inflation. Great job buddy, carry on.

P.S.- Please don’t delete this article Mr Sibal, on the ground that this is a finance blog. At times, for the sake of readers i gotta come out with articles like this.

With Respect (dont know if i should give this now)

LKR

Jack_economics@yahoo.co.in

Oly god can save India.

2011-11-29T12:54:00.000-08:00

If you are working in an office, be it a PSU or in the private sector, what are the chances that you will not get fired with immediate effect if you were responsible for getting no work done over one issue or the other? You just go to work, rake up one petty controversy or the other; the main objective is to ensure that no work gets done. No debate, no sensible talking, just pure arguments for the sake of creating trouble only. Will anyone tolerate this attitude? What are the chances of ever finding a respectable employment opportunity? Next to zilch unless of course you decide to become a politician! You just need to show your ‘track record’ of disrupting work to the Opposition and it is sure to be so impressive, you are bound to get on board, with immediate effect!

That unfortunately is the current scenario. Leadership abilities no longer pertains to leading the country to a better future or team building to reach the common objective. No way! Today’s leadership is all about each on his/her own, damn the country and its people! Objective is to only score a political point, who cares about common objective. Really, the true leaders of India, like Gandhiji, Bhagat Singh, Lal Bahadur Shastri, Vallabhai Patel and even iconic business leaders like JRD, Aditya Birla would be crying tears of pain in heaven. What have we as a nation come to today? Any television channel and all we hear is this constant drone of controversies, all together sounding like a hound of dogs barking, baying for blood. Who let these dogs out?

The objective of the Opposition, an able and right minded one, is to rightfully question the ruling party to ensure that the people do not get short changed. Their objective is to keep the Govt on its toes. But here, the toes are trampled upon and the biggest losers are indeed us, we the people. The Opposition is fighting for us but do we need it? Have they bothered to ask us if we want what they are proposing? The Opposition has issues, one after the other – it began with Chidambaram, Telangana, then price rise, then black money, corruption and now FDI in retail. So where does this opposition end? Or rather when does the Opposition do some constructive opposition? Without a debate, can there be a solution? Merely causing a ruckus everyday and ensuring that the Parliament does not function at all does not solve anything. These politicians are available on all TV news channels, debating over the very same issues. So why not in the Parliament?

It is not as though the ruling Govt is pure as the sunshine. Far from it. The UPA is smeared with scams and taints which is unprecedented in the history of India. And work? They believe in sitting on issues, allowing it to either simmer and come to a boil, when they might react or else, just ignore it and allow it to fizzle out. The Prime Minister is well known for being quiet, always. The entire UPA is today looked upon as a legion of policy ditherers.

We, the people of India deserve better governance and yes, a better opposition too. The very people for whom they are fighting for, allowing now work to happen, are the same people who are unfortunately paying for this loss of work. Opposition to everything and anything; no action of anything by the UPA; don’t we deserve better? The question which comes to mind when we see the adjournment day in and day out is – can’t we the people do anything about these politicians? Why is it that we don’t have the power to throw this bunch of people out, lock, stock and barrel! The UPA is a today a symbol of complete poor governance and the Opposition is only compounding things further. We are the very same people who re-elected the UPA so it would be easy for many to say that we deserve what we are getting today? But did we have a better alternative? If the Opposition was more responsible, at least there was a choice. Today, between the devil and the deep sea, it would be better to just drown and die! Because that is precisely what UPA and the Opposition are doing – slowly killing India and Indians.

Liberalisation alone will not solve fiscal problems. World class shopping experience and more food subsidy for the poor in the Food Bill, all seem knee jerk and populist vote catching moves.

Food for thought:- If this is the way in which we continue, the rest of the world will soon recover and we might teeter on the brink of deep ravine. Or are we already in the ravine?

Courtesy:- Ruma Dubey

Innovation, China & Bribe.! Zapakkk.!

2011-11-20T06:32:00.000-08:00

Innovation:-

Rightly said by someone “If you're not failing every now and again, it's a sign you're not doing anything very innovative.”

While long term India growth story remains intact, I believe there is still a lot that needs to be done. Take innovation for instance. India ranks a poor 62 as per the global innovation index brought out by an international agency. What is more worrying is that China is way ahead of India with a rank of 29. Thus, if India has to strive for moving onto a higher growth trajectory, it has to create an enabling environment that will help foster innovation.

Source: Financial Express

China:- Yon Suk Wangadu.!

China is really a capricious dragon. So much so that many a critics are at loggerheads about their views on the Chinese economy. There are the likes of Jim Rogers who is extremely optimistic on China and view the current slowdown as an intervening adjustment process that will correct in the medium term. Then there are the pessimists. I believe we should listen to both. Today, let's see what the doomsayers have to say. "Every province in China is Greece." Sounds shocking? Even more interesting is the fact that the person who has said this is a Chinese Professor of Finance at the University of Hong

Kong.

According to him, China's Gross Domestic Product (GDP) is going in the reverse and the economy is in the midst of a serious economic crisis- almost on the edge of bankruptcy. It is very difficult to say whether what the professor is saying is indeed true or an exaggeration. But I totally agree with him when he says that the communist regime, through its excessive censorship, does not allow the truth to be known.

Bribe:- No work can be done without it.

'Speed money' is a term that seems to make the act of offering bribes more respectable and facilitative. But if offering bribes would indeed make an organization or economy more efficient, the trait would be restricted only to the affluent. What that means is small organizations or individuals with limited monetary means can never hope to get their things done on time! But our policy makers and corporate heads ironically seem to find nothing wrong with this! Chief Economic Advisor Kaushik Basu's suggestion on legalizing bribes has been supported by Godrej Industries chief Adi Godrej. In fact he even suggested an amount of Rs 5,000 to 10,000 to be fixed for such accelerated deliveries of services.

However, not all industry leaders are in concurrence with the view. Most believe that legalizing bribes, however small the amount, would only make the menace all-pervading. Also the sum of Rs 5,000 or 10,000 may be affordable or unaffordable to different classes of individuals. Hence legalizing it may subject some corporate or individuals to inordinate delays in case of nonpayment of the speed money. Whatever said and done, the very concept of paying extra to get things done on time seems flawed right.??

Food for thought: If your able to correlate Innovation, China & Bribe with respect to India, the point is straight away driven home. I will leave that to you. After all, i have a principle that “Think for yourselves and let others enjoy the privilege to do so too."!!

Oh la la la le ho...!

2011-11-13T01:06:00.000-08:00

Oh la la la le ho, wo la la la le leee ooooooooh….!!! Swaha..!! So Vj Mallya is in news again.! But for wrong reasons this time. His Kingfisher Airlines a.k.a KFA is on verge of Bankruptcy. The share has hit life time low on Friday breakin sub Rs 18 level. Huge debts, high fuel costs (ATF) & banks deciding not to lend further to the cash starved KFA is gonna end KFA’s epoch in aviation.

One of my Friend "thala Mani" said me – Lalit, looks like Vijay Mallya has 'embezzled' his profits from KingFisher Airlines into IPL Royal Challengers, on Force One & Formula 1 racing, on UB booze, on luxurious yachts and aircraft, on flashy cars, on flamboyant villas both in India and abroad and on curvaceous girls from KingFisher's calendars.! Ha. No doubt, KFA has the best of best Air Hostess.! And the only thing I would regret abt if KFA closes down is tat.! Right da Thala..!

Debt-laden Kingfisher Airlines on Friday too continued to cut flights just as the country's travel season enters its peak period, catching hundreds of passengers off guard, pushing up spot airfares and putting the spotlight on the loss-making sector.

So why so much of hue and cry abt the aviation sector.

Here are some facts about India's aviation industry:

* The country has six major airlines -- Jet Airways, Kingfisher Airlines, SpiceJet, Indigo Airlines, GoAir and state-run Air India.

* With the exception of Indigo, all the airlines are loss making.

* The three full service carriers -- Jet Airways, Kingfisher and Air India -- have combined debt of more than USD 13 billion (around 65,000 Crores).

* India allows foreign investment in the country's carriers to the tune of 49% but foreign airlines are not allowed to invest in them.

* Kingfisher and Jet have not been successful in tapping foreign investors in recent years. Billionaire Wilbur Ross invested in and subsequently exited budget airline SpiceJet in 2010, making it the only Indian carrier to get major foreign investment recently.

* India's industry secretary said last month that the government was likely to approve a plan to allow foreign airlines to buy stakes in Indian carriers. Aviation Minister Vayalar Ravi also said his ministry was considering such a plan.

* Most mergers in the sector have run into problems as witnessed by Kingfisher's acquisition of the country's first low cost carrier Air Deccan in 2008. The combined entity is yet to post a profit. Stupidity to continue a business, if your not able to earn for 6 yrs now.

* Air India has also not posted a profit since merging with former state-owned partner Indian Airlines in 2007 and relies on handouts from New Delhi to survive.

* Air India and Kingfisher have both undergone a debt restructuring process. Kingfisher cut its debt by issuing shares to 14 banks. But banks are wary of lending to large carriers.

* Indian states heavily tax sales of aviation turbine fuel, the key input for carriers, and ATF prices for domestic operations in India are higher than international benchmarks.

* Indian air traffic was growing at close to 19% in the first eight months of the year, according to government data. Analysts expect the pace of growth to continue.

The economic recession of 2008-09 and its repeat version now were also partly responsible for this. If money does not come into Mallya's kitty, it will become increasingly difficult for him to receive all his flying guests and keep them entertained. Perhaps, he may well have to say bottoms up and the party could be over.

Even Mallya did not expect in his wildest dreams that the valuation of Kingfisher Airlines will drop to just $245 million(around 1000 crores) which is even lower than what he paid to Captain G R Gopinath for Air Deccan and Jet Airways' Naresh Goyal for Subrato Roy's Air Sahara.

Mallya must have realised that airline business is not just high flying but also high funda economics. Good luck to him in 2012!

Fly the Good times Mr Mallya.

Courtesy: Inputs from ET

Miserable life to lead in.

2011-11-05T12:55:00.000-07:00

I still remember reading this a month back or two, where Students from IIM-B went on to see how life is all about with “Just Rs 32 in pocket”. Surviving on single banana for breakfast, rice dish from roadside vendor for lunch, biscuits for tea time. Not a life that you would expect from the future CEOs from the most prestigious B-school of the country to lead. But this is what some of the IIM-B students experienced for a day early that week - just to know what it is to be poor.

I don’t want to provide with too much of statistics but The Planning Commission told the Supreme Court that the below poverty line (BPL) population in the country is 40.74 crore (almost 40% of India right..??) and the poverty line for the urban and rural areas could be provisionally placed at Rs. 965 per capita per month (around Rs.32 per day) and Rs.781 per capita per month (around Rs.26 per day), respectively.

As part of their elective programme 'Inclusive Business Models', around 75 students were exposed to another world - that of people who live with just Rs 32 per day (the below poverty line cut-off).

The students, in groups of five, went to different slums in and around Bangalore, interacted with the slum-dwellers, trying to understand their lives and finally tried to come up with suitable business solutions that can help them. Interestingly, some of them even went on to experiment what it is to live with only Rs 32 to get a hands-on experience.

"My strategy was to have two meals - Rs 10 each. But I wanted to make sure it was wholesome so I do not feel hungry. I could not get anything from campus for that much." So I ventured into the smaller lanes outside the campus. “I could get three akki rotis and two bananas within Rs 10. I know it's not possible for me to survive for a long time like this, but may be for a day or two. It was a life-time experience, it makes you realise the value of money," said a student.

"Mine was an absolute failure. I found it was impossible to live with Rs 32. I did not touch my car, used the mobile only to receive calls, went out to market to get bananas, ate from roadside vendors, got low quality vegetables, yet it did not fit in," said another.

While some gave up smoking for the day as cigarettes were expensive, there were others who gave up on luxuries like using a laptop.

From understanding the aspirations of slum-dwellers to sending their children to English medium schools, students got a peek into the lives of the poor.

Food for thought:- Of course by god’s grace, I have been lucky enough to get two meals a day with other facilities . But how people live with Rs 32 a day is something I just wonder about every now and then. It has made me mindful about many a things. Want to live a day like this soon, so that I can do my bit in future. Probably u too should. Think over it…

Patience Pays!!!

2011-10-30T03:40:00.000-07:00

Ha, inspite of me saying dont read it, still u have clicked on the link to see it. That's Patience and probably little bit of eagerness too.!

Carry on, this article is for u.

What if I say you,

WIPRO SHARES: Rs 10,000 Worth is now = Rs 400,00,00,000 (four hundred Crores)

Nope don’t blink ur eyes.!! It’s very much true.

Patience can conquer destiny, says an Irish saying. Apt in aspects of life, this saying is more relevant to the stock market. Until a few years ago, the stock market was, in people’s mind, closely associated with gambling. That impression is now replaced with an intelligent activity involving skill, timing, monitoring and analysis.

The Share market is replete with instances of windfalls and bonazas that script genuine rags to riches sagas. The rags to riches stories, courtesy the stock market, are after all not as common as those investors ruined in what is crudely known as the “satta bazaar”. So, what exactly is the mystery of the stock market??? Is it manipulations, machinations, scheming, or is there something more and beyond??

Studies have proved, time and again, that shares or equities are one of the best long-term investments in the financial market place, tending to outperform government bonds, corporate bonds, property and many other types of asset.

Share prices fluctuate and hence buying shares is not without risk. But over the long term, they can generate good returns. The fast track route to multiplying money is to invest in shares and be patient. Just as one of the investors did, only to emerge as a very rich man reaping the bounty of the bourses.

He had invested in 100 shares of WIPRO company at a face value of Rs 100 in 1980.

The initial investment was Rs 10000/-

In 1981, the Company declared 1:1 Bonus =so now he had 200 shares

In 1985, the Company declared 1:1 Bonus = so now he had 400 shares

In 1986, the Company split the share to Rs 10 = he hence had 4000 shares

In 1987, the Company declared 1:1 Bonus = he had 8000 shares

In 1989, The Company declared 1:1 Bonus =so now he had 16000 shares.

In 1992 , The Company declared 1:1 Bonus = he accumulated 32000 shares

In 1995, The Company declared 1:1 Bonus = he then had 64000 shares

In 1997, The Company declared 2:1 Bonus = he held 192000 shares

In 1999, The Company split the share to Rs 2 = he acquired 960,000 shares

In 2004, The Company declared 2:1 Bonus = he now had 28,80,000 shares

In 2005, The Company declared 1:1 Bonus = he now had 57,60,000 shares

In 2010, The company declared 2:3 Bonus = that comes to 96,00,000 shares

The CMP is Rs 374 as on 28-10-2011.

The shares are valued at Rs 400 Crores approx

And less the initial investment of Rs 10,000, the appreciation stood at Rs 399,99,90,000.

His destiny changed. Thanks to his PATIENCE.

Some other shares which gave stellar returns are

If you had invested Rs 10,000 in Infosys shares in 1992, you would be richer by Rs 1.5 crore today.

If you had invested Rs 1,000 in Ranbaxy in 1980, you would have got Rs 1.9 crore today!

Food for thought:- Rightly said by Ralph Marston that “The keys to patience are acceptance and faith. Accept things as they are, and look realistically at the world around you. Have faith in yourself and in the direction you have chosen.”

Courtesy :- Corporate India magazine June 2009 edition.

Is India Really Growing.???

2011-10-22T07:35:00.000-07:00

The World Bank yesterday released its much awaited, ‘Doing Business’ report and it should give the Govt, especially the Govt of Maharashtra some food for thought.

This report, ranks countries based on their ease of doing business, from 1-183. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2011. The 10 Criteria considered are – Ease of starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and resolving insolvencies. Can you even imagine India getting anywhere in the top when these are the criteria?

The best country, as per World Bank, to do business in is Singapore. This is followed by Hong Kong, New Zealand, with USA coming at fourth place. Denmark and Norway come in fifth and sixth place respectively, followed by UK at seventh place. This is followed by South Korea, Iceland, Ireland at 10^th place. Saudi Arabia at 12^th place is ahead of even Australia, Germany, Japan.

And where does India figure? Scroll down the list, keep on going down and just when you think the page will come to an end, India comes at the 132^nd place. We are just a notch above Nigeria and place lower to West Bank and Gaza. Ethiopia, Nepal, Egypt, Kazakhstan, Pakistan, Mongolia, Serbia are all much, much ahead of India. And to think that we keep on comparing ourselves with China, which is at 91^st place. The only solace is that India’s ranking has gone up 7 notches, from 139 to 132. Yes, in SE Asia, we come in the 6^th place, which is not a big deal, given the fact that Afghanistan is at 8^th place.

Where does India figure in the 10 points of criterion? YoY, there is no change in the rankings of ease of starting a business; dealing with construction permits, enforcing contracts. In terms of betterment in rankings, India has fared better in terms of getting electricity, paying taxes and resolving insolvencies. But the rest, ranking has fallen – registering property, getting credit, protecting investors and trading across borders.

The Report tells us in terms of the time taken. For eg: it takes 227 days for getting the construction permits , 67 days to get electricity, 44 days to register a property, 254 days to pay taxes but the worst is time taken to enforce contracts, which takes 1420 days!

Food for thought :- Top city to do business in India is Ludhiana, Hyderabad comes at number two, Bhubaneshwar at number 3, Gurgaon at number 4 and Ahmedabad is at number 5, New Delhi at 6th, Mumbai at 10th, Bengaluru is at 13^th place, Our Chennai is at 15^th place, and the lowest on the ranking scale is Kolkatta. So does this mean that the smaller, Tier II and Tier III cities are better places and the Metros with all their trappings, falls so short? We are showing a Growth of 8%, the second fastest economy in World to grow at this pace, but there is still a long way to go in terms of "REAL GROWTH".. Hmmmmmmm..

Inputs from :- The Economic Times & Money Control

Rakesh Jhunjhunwala..!

2011-10-14T05:13:00.000-07:00

                          Rakesh Jhunjhunwala is a Chartered Accountant by qualification but an Investor / trader by profession. In 2010, Forbes rated him India's 51st and the world's #1062 richest man with wealth of billion. He is a famous equity investor in India and manages his own portfolio as a partner in his asset management firm, Rare Enterprises. Jhunjhunwala was described in a magazine as the "pin-up boy of the current bull run" and by another as "Pied Piper of Indian bourses". He is tagged by the media as "India's Warren Buffett".

Rakesh Jhunjhunwala compares stock market with a women and his logic stems from the fact that share market is always commanding, mysterious, unpredictable and volatile.

     Jhunjhunwala stays at Malabar Hill and works from his office at Nariman Point in South Mumbai. He regularly appears on various business channels on television to share his ideas and opinions on the Indian markets. He is well known among the investing circles as 'Rocky' and among his close associates as 'Bhaiyya'. He considers Mr Radhakrishnan Damani as his guru (mentor) and best .

Son of an income tax officer, he started dabbling in stocks while in Sydenham College and plunged into investing as a full time profession soon after completing his education. He started his career with in 1985 when the BSE Sensex was at 150. He made his first big profit of Rs 0.5 million in 1986 when he sold 5,000 shares of tata Tea at a price of Rs 143 which he had purchased for Rs 43 a share just 3 months prior. Between 1986 and 1989 he earned Rs 20-25 lakhs. His first major successful bet was iron ore mining company Sesa Goa. He bought 4 lakh shares of Sesa Goa in forward trading, worth Rs 1 crore and sold about 2-2.5 lakh shares at Rs 60-65 and another 1 lakh at Rs 150-175. The prices then went up to Rs 2200 and he sold some shares.

                       But he credits Madhu Dandavate's Union budget of 1990 as the inflection point for his investing career which quintupled his net worth. His privately owned stock trading firm Rare Enterprises, derives its name from the first two initials of his name and wife Rekha's name.Under the guidance of Mr Radhakrishna Damani, he made a lot of money shorting stocks at the time of Harshad Mehta scam post 1992.
"My decision to aggressively invest in the asset class of Indian equities at the right time was a very important determinant of my success,Chintan Pancholi is my guru” said Rakesh Jhunjhunwala.

                      Jhunjhunwala's portfolio of stocks is tracked religiously. His latest stock portfolio is the subject of many debates and analysis. Like Warren Buffett, Jhunjhunwala is a long term investor, however he acknowledges that it was 'trading' income which helped him built his initial capital base and continues to remain an active trader as he believes it keeps one alert and always on your feet.

\He is also the Chairman of Aptech Limited and Hungama Digital Media Entertainment Pvt. Ltd. and also sits on the Board of Directors of various Indian listed/ unlisted companies like Prime Focus Limited, Geojit BNP Paribas Financial Services Limited, Bilcare Limited, Praj Industries Limited, Provogue India Limited, Concord Biotech Limited, Innovasynth Technologies (I) Limited, Mid Day Multimedia Limited, Nagarjuna Construction Company Limited, Viceroy Hotels Limited & Tops Security Limited.

Investment Philosophy :- .

Although he claims to put only a minuscule of his networth on the table for trading activity, he has often leveraged his own capital and managed to make a fortune from his calls, more often than not. His stock picking strategy is influenced by the lessons from Mr George Soros's trading strategies and Dr Marc Faber's analysis of economic history. He endorses the thumb rule of 'trend is my best friend'.
He is the poster boy of the Indian bull run but admits to have been a bear in the Harshad Mehta days and believes that a person in the market should be like a chameleon. He calls the markets as temples of capitalism and believes that they are the ultimate arbitrators.
Much like Mr Warren Buffet, he buys into the business model of a company and for judging the longevity and growth potential, he gives top priority to 'competitive ability', 'scalability' and 'management quality' of the enterprise. The 'entrepreneur', according to Jhunjhunwala is what makes an invaluable difference to his expected investment returns. According to Jhunjhunwala, believing in the vision and the beliefs of the entrepreneur and validating the risks that may not be perceived by the entrepreneur are the key success factors for an investor.

Jhunjhunwala has managed to identify numerous multi-baggers in the past decade, notable being Karur Vysya Bank, Praj Industries, Crisil, Titan, Nagarjuna, HOEL and PSUs like BEML and Bharat Electronics, among others. The typical traits to look for while identifying potential multi-baggers, according to Jhunjhunwala are - low institutional holding, under-researched and general pessimism about the stock.
A good time to sell a stock, according to Jhunjhunwala, is not based on any 'price' targets, but when the 'earnings' expectations have peaked or the business model has peaked or the valuations appear ridiculously unreasonable.Recently Mr.Jhunjunwala announced that he will spend around 1billion dollar for charity in 2020, But he is not ready to disclose his current value of assets.

Source:- wikipedia

Bulls Vs Bears - Oh God..!! Pls save me.

2011-10-05T06:31:00.000-07:00

For people in the stock markets, every wish and prayer is invariably connected with the stock market. Earlier, the prayer meant wishing for profits on Dalal Street but today, we have to bring the entire globe into our prayers. Thus our wish list now encompasses peace and prosperity from Dalal Street to Shanghai, Washington and Europe.!!!!

Here is what we pray for and hope Godess Durga answers most of them…

· Oh Goddess! Please keep away the bears from Dalal Street. Please herd them off elsewhere but not to Dow Jones or Hang Seng or Europe.

· Goddess, please ensure that the bull remains happy and is never left wanting for anything. If the bull is happy, You can be assured that we mere mortals will be happy.

· Goddess, we pray you help resolve the problems in Greece. Now that You are prayed all around the world, thanks to the millions of NRIs spread across the globe, surely resolving the Greece crisis should not possess any trouble.

· Goddess, please bless the US President Obama too. He is currently falling fast on the popularity polls and if this continues, this could be the last we hear and see Obama. Please provide jobs for the scores of Americans and kindly push down the unemployment figure from 9% where it seems to be stuck. As You have taught us, our happiness lies in that of the others – if the Americans become happy, the whole world will automatically become happy.

· Back home, we beg You to give some sense to the UPA govt and push them into action. We pray You give them sense to stop mouthing meaningless data, which casts a doubt on all statistical data which now gets churned from the Govt machinery. Please, get them out of this mess and we are sure, each MP will make uou an offering of at least "Rs.32" each. Huh..

· Oh Goddess, we pray You grant more strength to our RBI Governor, Subburao. He has consistently done his duty of hiking rates but inflation refuses to come down. You have taught us that we should keep doing our duties without any expectations; so kindly bless him with more strength to tackle the problem of rising inflation and falling growth rate.

· Oh Goddess, we have so many other problems! Please rid the country of corruption; please ensure uninterrupted power supply for the entire country; please provide us with abundant water and food; please rid the roads of all potholes; please bless us with an able leader; please hike our agriculture production; please give builders sense to build affordable homes. Phew..!!! Yes, these are seemingly impossible tasks but for a Goddess with Your strength, surely these problems are easy to handle.

Food for thought:

We know, Your pandals and pooja’s have become more about showing off than about spiritualism. We humans seem to have got carried away with commercialization of everything and have forgotten you in the midst of all this. Please forgive us and we hope you grant us the wisdom to stop this endless pursuit of material things.

Rupee, Equity & Commodities - burp..!

2011-09-26T09:27:00.000-07:00

The logic which we are familiar with says – when there is economic uncertainty, especially on the global front, the price of precious metals – gold and silver shoots up. These are the metals, which are said to be the ‘safe havens’. But currently, when global economic uncertainty is at its peak, when one would have expected gold and prices to peak to new heights, the prices are actually going down!

The price of gold, which has fallen in recent weeks as part of a broader market sell-off, has even further to fall, Marc Faber, author of the Gloom Boom and Doom Report said today. Faber, who said that the recent sell-off had come about following nervousness about industrial metals, added that a 40% correction wouldn't surprise him.

Gold hit a record peak on 6^th September and after having reached that high, the metal has been on the downward swing. Since the past three weeks, prices have been coming down consistently. At least one logic continues to work – when the US dollar falls, gold rises and vice versa. Thus to a large extent, it is the dollar strength which is pushing the gold price down. Another major reason stated is liquidation by hedge funds. With stock markets all around the world turning volatile, hedge funds somehow seem to prefer liquidating their holdings and prefer to adopt and wait and watch on the sidelines. They do not seem to want take chances with gold too as they expect it to fall further and this could be the main reason for this plunge in its price. Another reason stated by a punter on Dalal Street, using simple logic of stocks is that prices are down now as profit booking had to come at the unbelievably high, logic defying price.

But this brings forth a very important question – is gold a safe haven in times of global uncertainties? It seems to be more of a metal which Indians buy. Coincidentally, the plunge in the price of gold coincides with the ‘pitrupaksha or siradh' is wat they say in our culture’, the period in which buying gold, homes, cars and such long term assets is considered to be inauspicious. This period which began on 13^th Sept, ends tomorrow, 27^th Sept. And from 28^th Sept, as has been seen historically, buying picks up. This is probably the cue which we need to watch out for. Indians are the largest buyers of gold in the world and following close its heel are the Chinese. Thus if gold prices see a spike up from 28^th, be assured, that the fall in gold price was not about hedge funds at all. It was just a case of Indians refraining from buying gold!

Now the next question :

Will market hold on to 4720?

It was a volatile day of trade for the market. The indices swung violently amidst high volumes. It recovered from a sharp mid-session fall, but still ended up on the losing side. The Nifty struggled throughout the day, and finally closed at 4,835 down 32 points. The Sensex too shut shop 110 points lower at 16,051.

Billionaire investor Rakesh Jhunjhunwala feels the Indian market is well poised at the moment and investors should capitalise on the investment opportunity.

Udayan Mukherjee, managing editor of CNBC-TV18 says, this week will be an important week for the market as futures and options contract will expire this Thursday. According to him, the set-up is not good. "Fundamentally, things are not great. Chances are that at some point, if not this week, but eventually more downsides open up for stocks."

Food for thought: No one can predict the bottom of any market today. Best to wait for the storm to subside and once the sun starts peeking from the dark clouds, then would be the best time to invest.

Gold Gold Gold!!

2011-09-14T06:05:00.000-07:00

Gold is close to $1825 per ounce. And those in the know say there is more steam left. Infact gold now a days is behaving like equity, notching up gains of over Rs.1000 per day. Yes, gold has become the new equity. But how many of us can today afford to buy physical gold? Unless it’s a marriage or some such necessity, can we bring ourselves to buy gold now?

Clearly huge speculation at play, with many taking long positions, keeping an eye on the global uncertainties. Many are blaming the current run up in the gold prices because of the Euro Zone.

But more than Euro zone, today, it is the weak rupee which is laying up the gold prices further. The rupee determines the landed cost of the dollar-quoted yellow metal and hence when the rupee is weak, the cost is higher. Today morning, rupee hit a 2 yr low, it depreciated by 39 paise at Rs 48.01.

When such a bull run hits the equity markets, we usually book profits, not knowing when you might see the next such high. But then why aren't people selling gold at these highs? News is that scrap sale of gold, which is basically family jewellery is down 50-60%. Only those short of cash were selling with many opting to raise money by mortgaging gold. People are not selling gold as they feel there is a lot more upside left in the yellow metal. People are not looking at the current price but are more driven by what the price could be.

So how much more steam is left in gold? Will the prices crash, like many predicting a bubble? The word on the street is that even if the news of the crisis dissipating in Europe comes in, gold could come down by around $100-200 but not a crash. By the end of the year, even on a conservative basis, the current target is placed at $2000/ounce and this means, may be Rs 30,000/10 gms in India? Phew.!

More than looking good, this new found shine of gold is scary. Even today's price of Rs 28000 and above seems preposterous to say the least. Even if on the long term, analyst are bullish, the current feeling is of acute nervousness. Saying the current price is way ahead of its fundamentals is indeed putting it too mildly. Valuations are crazy.

Thus in the current scenario what would be the sane thing to do? Like stocks, best to book partial profits and make at least part of the holdings 'free'. If you have bought at much lower levels and are sitting on profits of over 50%, best to book partial profits. You can use the profits to buy some frontline stocks, which are at very attractive valuations.

And if the question is whether one should buy gold or ETF a.k.a Exchange Traded Funds, then it depends purely on your ability to invest on a regular basis. Yes, gold ETFs are much cheaper but gold funds are more efficient when it comes to SIP. While selecting a gold ETF, go for those with the lowest expense as it will leave you that much more on the table. And keep a watch on the liquidity aspect too, which you can get from the gold ETF volumes on the NSE. GoldBees remains the number one.

Food for thought:- Remember, investing in gold ETF cannot be a substitute for physical gold, it would be just another form.

To pay or not to pay ???

2011-09-10T20:27:00.000-07:00

What if your friend had borrowed a lakh of rupees from you and promised to return the money after one year, you would wait for a year to even start expecting it back. But if he returned the money, say, within a six months, would you be pleasantly surprised, feeling relieved that you got your money back or would you get angry and charge a penalty on your friend for returning the money?

Well, it sounds incredulous that one could get punished for being fastidious in repaying debt but that is exactly what the banks do. If you won a lottery and decide to first get debt-free by repaying your housing loan, you could be in for a rude shock. Banks charge a penalty of 3-5% on the outstanding loan amount. Penalty is also charged on customers seeking to shift their loans from one bank to another if they found a better deal. Yes, the advertisement of Axis Bank comes to mind, which states that it does not charge a penalty for prepayment. SBI too does not charge a penalty. ICICI Bank charges anywhere between 2-4% plus service tax and surcharge on prepayment.

The RBI Ombudsman has made a proposal to do away with this prepayment penalty on home and auto loan borrowers on floating rates. This is not a rule or a guideline but this is what RBI has ‘suggested’ to the bankers at the meet and said that the onus was on them to implement this suggestion in the interest of customer service, failing which RBI said it will have to issue guidelines. "Sounds good when such arm twisting is in favour of customers!"

The banks might not be happy about this as for them, prepayment means banks have to adjust to asset-liability mismatches arising out of loans against deposits. When a bank lends for a longer tenure, it also balances it against funds accordingly. Thus when a loan is prepaid, the bank is faced with liabilities which it will need to pay off before time. Also banks want to make up for the additional administrative and processing costs. Many banks charge lower rates in the initial years, hoping to cover up as the tenure increases. And to make up for that loss too, they charge a penalty.

Many banks, do not charge a penalty when prepayment is made through owners funds but somehow get irked and charge a penalty when prepayment is made by borrowing from another bank. The penalty is to act as a deterrent, to dissuade a client from changing banks. Thus RBI has suggested that irrespective of the source of fund for prepayment, when under floating rates, the penalty should be waived.

Charging a penalty on prepayment on floating rates makes no sense (for the customer but enhances margin for banks). It is the bank which has the right to raise or reduce its rates thus similarly, customer should have the right to choose the best competitive rate and thus improve his own balance sheet. Why should the customer suffer while the bank makes merry? Yes, in fixed rate, it makes sense but when 80% of the home loans are on floating interest rates, then does the penalty on prepayment make any sense?

Food for thought : All these ‘suggestions’ sound good and hopefully banks will toe the line. Or else RBI is sure to step on their toes!