Who’s investing?

IIPM MANAGEMENT INSTITUTE

MFs are! And overseas...jump in if you want to roll it...

It’s not child’s play any more! After all, it’s your money and you have the option of getting the best out of it. How about buying a global mutual fund for your teenage daughter on her birthday? Sounds eccentric, right? The fact is that we are not far from such a situation. MFs are queuing up to tap the investors’ hunger for global markets with schemes aimed at investing in other countries.

Most promisingly, both DSP Merrill Lynch & Kotak MF have already launched their global funds recently. UTI MF & HSBC Asset Management Company also have plans to launch similar new schemes that would allow investors to invest overseas. But do we take this as an alternate investment option, and at a time when the Sensex is busy playing the ‘hide & seek’ game and making the market more volatile?

Sandesh Kirkire, CEO, Kotak Mahindra MF, commented to us, “In an increasingly integrated financial world, the rise & fall has been a factor of liquidity play; and therefore diversification remains a critical factor. The emerging markets today display greater buoyancy and hold nearly 60% of the global forex reserves. Consequently, the risk perception about these (foreign) investment destinations has come down and investment in these markets is seen as a relatively safer option providing adequate diversification cover.”

Truly, the ongoing volatility does certainly provide a more attractive entry point for global funds! Ironically, while on one hand, India would continue to remain an attractive destination for foreign investments, on the other, Indians themselves are going global behind these funds. Factually, many of the emerging markets are witnessing a burgeoning of domestic demand while their overall industrial wage competitiveness remains strong; ergo, it is quite likely there exists much room for growth and stock appreciation in such economies. Confirms Kirkire of Kotak, “The growth in developed markets has largely saturated and their real growth rates remains in the 0.5% to 3% range. In comparison, most emerging market economies are growing above 5.5%, and will continue to do so for a long time. This growth is nearly 50% higher than that of developed markets.”

Amit Saxena, CEO, Planman Financial, additionally commented, “Such overseas investments would get a boost as recently there has been upward revision by RBI in the limits set earlier on overseas MF investments; and this even though the earlier limits were not fully utilised by the MF industry.” When B&E questioned Vijai Mantri, CEO, Deutsche Asset Management, India, he agreed and gave a similar perspective that there seems to be a gain in the momentum of global funds after RBI eased norms for MFs’ investment in global markets. Most industry experts gave similar affirmative answers to B&E.

Clearly, though all this does not mean that we are not believers in the India story, given the current scenario in the Indian stock markets, it makes more sense to provide investors the growth potential of emerging markets with an intention to allow them to diversify their portfolio risk. This would definitely pave way for more innovative themes in the global investment space. And better for the retail investor, international credit rating agencies are now ever-ready to rate the viability of such investments. If you’re still in two minds, just gift us your money, we’ll do the needful.

B&E research: Sunanda Roy

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

When being ‘half-indian’ is critical!

The Sunday Indian - India's Greatest News weekly

How has your experience with the organisation been & what changes do you see in Indian textile sector?
The experience with the Birla Group, rather the company has been awesome. We have certain values like integrity, commitment, speed, passion et al. And I think the overall industry growth has been phenomenal in the past two years.

Why do you think major Indian textile manufacturers have failed to create a brand in the global market? What success strategy have you followed?
I think the business is more profitable when you become a supplier to global brands. But to dominate in Indian market, you need to have a strong brand image & that’s what I have done with Grasim. I made it a Grasim Brand, which has a 15% market share today. In our case, 50% revenues come from domestic market and the rests from exports – that’s because we have focused on both the markets. We might not have created a strong brand name and are invisible in global markets but our revenues are equally distributed.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Meet the Slims

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The Carlos Slim legacy has terrific endurance value

Visit the land of Mexico and you will instantly feel the strong presence of this man in the everyday life of Mexicans. His influence over this erstwhile Spanish colony would instantly invite comparisons with the Ambanis & Tatas in India. And unlike these behemoths, Carlos Slim has amassed his huge wealth from mainly two sectors – telecom & finance. And just through his holdings in these two sectors, his iconic status in Mexico is well known. No wonder that George W. Grayson, a professor of Government at the College of William & Mary, aptly coined a terminology, “Slimlandia” to define Mexico.

And recently, at the age of 67, Slim became a symbol of Mexican, and for that matter, Third World resurgence, by taking the mantle of the richest man in the world; overtaking Bill Gates with a marginal difference of $1 billion. This development is in sync with a surge in the American Movil stock that increased Slim’s net worth by another $12 billion this year to $59 billion. His family’s holdings representing over 5% of Mexico’s GDP in 2006 and the companies under his control amount to 1/3rd of the Mexican Bolsa (stock exchange).

Slim is of Lebanese descent but he has totally adopted a typical Mexican living, which is quite obvious with the cigar he puff s and his manner of speech. Among the mantras of business, he is also an ardent art collector and boasts of being a philanthropist. One of his famous one liners on good economics goes thus, “When everybody else is better off , they can buy more, they strengthen demand, strengthen the market, strengthen the country.”

Slim’s appearance is oft en matched to the legendary J.P. Morgan and his meteoric rise is compared to John D. Rockefeller, as the latter had similarly taken undue advantage of weak regulatory norms in the American oil sector. His wealth sings the saga of his Mexican wireless monopoly, as he controls over 92% of Mexico’s phone lines via Telefonos de Mexico. “Twenty years ago, Mexico’s phone system was a joke. However, new wireless technology has changed the quality of Mexico’s phone system,” quotes Jeff Kagan, Wireless and Telecom Industry Analyst, Commentator, Provocateur. But his most stinging criticism comes from the fact that thanks to his monopoly, Mexican telecom customers still bear the brunt of high tariff s. States an OECD report on Mexico, “Although telecom tariff s have fallen, they remain significantly higher than in most OECD countries...”

Born in 1940 in Mexico, Slim is a widower and a father of six. Slim graduated with B.Sc. from National Autonomous University of Mexico. By the age of 17, he was investing in the stock market and by the mid-1960s; he was putting bucks in various businesses that formed ‘Grupo Carso.’ During the 1982 economic crash, Slim executed his business interests so efficiently that within a decade, it gift ed him very high returns. Once a maths instructor, he built his empire by following his father’s words, “Though Mexico will have its ups and downs, don’t ever count the country out.” And Mexico was always on Slim’s cards when it came to amassing huge wealth that comprises American Movil ($31 billion), Carso global telecom ($12.9 billion), Grupo Carso ($7.1 billion), Inbursa ($5.6 billion), Ideal ($1.7 billion) & SAKS Inc. ($263 million).

Indeed, Slim has always been in form when it comes to making money but after his heart surgery in 1997, his sons Carlos Jr., Marco Antonio & Patrick have taken over the business. More than the wealth, his sons have inherited their father’s shrewd business skills and the art of multiplying money. And they all seem to have picked it up so flawlessly, that we could well expect the Slims right up there on the Fortune rich list for years to come!

Edit bureau: Romsha Singh

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Bajaj de-merger gets green signal

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The de-merger scheme, as mooted by Rahul Bajaj on May 17, 2007, has finally won approval of shareholders and unsecured creditors of Bajaj Auto Ltd. (BAL) with an astounding majority. Accordingly the group will now split into three separate entities along with the creation of two new companies. Bajaj Auto will be de-merged to create Bajaj Auto Limited, Bajaj Holdings & Investments & Bajaj Finserv Ltd; these companies would focus on auto business, wind power & financial services. The shareholders of BAL would become shareholders of the new companies and would be issued shares in the ratio 1:1 for the two new companies.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Dare to cross the ‘party line’ without the gun?!

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Aggressive militarism is not the final solution for the state to secure peace for their countrymen

Noam Chomsky, Professor at Massachusetts Institute of Technology

IN crude and brutal societies, the Party Line is publicly proclaimed, and it must be obeyed, or else. What you believe is your own business, of lesser concern.

In societies where the state has lost the capacity to control by force, the Party Line is not proclaimed. Rather, it is presupposed, and then vigorous debate is encouraged within the limits imposed by unstated doctrinal orthodoxy. The crude system leads to natural disbelief. The sophisticated variant gives the impression of openness and freedom, and serves to instill the Party Line as beyond question, even beyond thought, like the air we breathe.

In the ever more precarious standoff between Washington and Tehran, one Party Line confronts another. Among the well-known immediate victims are the Iranian- American detainees Parnaz Azima, Haleh Esfandiari, Ali Shakeri and Kian Tajbakhsh. But the whole world is held hostage to the US-Iran conflict, where, after all, the stakes are nuclear.

Unsurprisingly, President Bush’s announcement of a “surge” in Iraq – in reaction to the call of most Americans for steps toward withdrawal, and the even stronger demands of the (irrelevant) Iraqis – was accompanied by ominous leaks about Iranian- based fighters and Iranian made IEDS in Iraq aimed at disrupting Washington’s mission to gain victory, which is (by definition) noble.

Then followed the predictable debate: The hawks say we have to take violent measures against such outside interference in Iraq. The doves counter that we must make sure the evidence is compelling. The entire debate can proceed without absurdity only on the tacit assumption that we own the world. Therefore interference is limited to those who impede our objectives in a nation that we openly invade and occupy...

What are the plans of the increasingly desperate clique that narrowly holds political power in the United States? Reports of threatening, off -the-record statements by staffers for Vice President Cheney have heightened fears of an expanded war. “You do not want to give additional argument to new crazies who say, ‘Let’s go and bomb Iran,”’ Mohamed ElBaradei, Director-General of the International Atomic Energy Agency, told the BBC last month. “I wake up every morning and see 100 Iraqis, innocent civilians, are dying.”

US Secretary of State Condoleeza Rice, as against the ‘new crazies’, is supposedly pursuing the diplomatic track with Tehran. But the Party Line holds, unchanged. In April, Rice spoke about what she would say if she encountered her Iranian counterpart Manouchehr Mottaki at the international conference on Iraq at Sharm el Sheikh. “What do we need to do? It’s quite obvious,” Rice said. “Stop the flow of arms to foreign fighters; stop the flow of foreign fighters across the borders.” She is referring, of course, to Iranian fighters and arms. US fighters and arms are not “foreign” in Iraq. The tacit premise underlying her comment, and virtually all public discussion about Iraq (and beyond) is that we own the world. Do we not have the right to invade and destroy a foreign country? Of course we do. That’s a given. The only question is: Will the surge work?

Doubtless Tehran merits harsh condemnation, certainly for severe domestic repression and the inflammatory rhetoric of President Mahmoud Ahmadinejad (who has little to do with foreign affairs). It is, however, useful to ask how Washington would act if Iran had invaded and occupied Canada and Mexico, overthrown the governments there, slaughtered scores of thousands of people, deployed major naval forces in the Caribbean and issued credible threats to destroy the US if it did not terminate its nuclear energy programmes (and weapons). Would we watch quietly?

We can improve the prospects for democracy promotion in Iran by sharply reversing state policy here so that it reflects popular opinion. That would entail withdrawing the threats that are a gift to the Iranian hardliners and are bitterly condemned for that reason by Iranians concerned with democracy. We can act to open some space for those who are seeking to overthrow the reactionary and repressive theocracy from within, instead of undermining their efforts by threats.

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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