Friday, August 31, 2012

INDIA’S 100 MOST PROFITABLE COMPANIES

Global Investment Guru Jim Rogers, who Co-Founded the Quantum Fund along with George Soros (The Fund Returned 4,200% in ten years, as compared to the S&P 500’s 47% in the same duration), believes that commodities are a strong investment avenue for indian firms, and that the govt. should cooperate to make india inc. more profitable

Then again, Indian tourism also has a bright future, as even the Chinese can come to India easily now for the first time in 300 years and tourism can be of great potential especially when there is peace between India and China now. The natural resources in India especially mineral wealth ensure a great future and with reforms coming up in infrastructure and the promises made by the government on infrastructure, therein lies a huge potential. If India finds competent companies to look on and manage these sectors, all of them have a very bright future.

But, India is failing to attract investors because no one wants their money to be blocked, as investors will never want to move their money out of US or Australia to a country like India where their money is almost trapped. Bonds are one of the best investment options and I really want to look up to the bond market in India, but it is not open. India has a huge population and many people can invest in bonds but the problem lies in the fact that the currency is not convertible and rigid barriers to entry of foreign investors does not allow the Indian bond market to open up properly. It is one of the best times to open up the bond market, making India a hot investment destination and Indian companies the biggest profit making corporations in the world.

For that to happen, India must open up to capital account convertibility, which is of great significance to corporates around the world. India should actually develop an offshore bond market as most of the Indian citizens don’t have money offshore, and it’s really strange that India still has a non-convertible currency. Indians are investing all around the world but there has to be some money that should even come to India. And investors will always take it as a great opportunity, if they allow reforms. The politicians in India should actually realise the benefits of currency convertibility in a globalised economy. And with the sovereign debt crisis going on in the Europe, investors are sure to move to countries which are not in trouble, and India is certainly a big destination for these investors, as they will prefer their money to be safe in a developing economy than a debt-shadowed economies like in EU.

There is a strict need of reforms in the Indian system to make it a hot destination for the investors. India has a debt to GDP ratio of almost 90%, which is actually alarming and studies show when you reach that level, you do not grow significantly and you have trouble attracting anyone. In India’s case, debt is going to rise continuously. Even if you look at the government’s budget projections, debt is going to rise for the years to come. Without some tap on debt and the non-convertible currency, its surely a big problem for Indian companies to dream about a windfall of profits, as there would be no investments. So while China will continue receiving all the FDIs, India will have to be satisfied with just FIIs. India as a whole and Indian companies should look at various smart strategies to build upon their bottomlines. But they need government cooperation too. The first thing is to look at core strong sectors and encourage the foreign companies to invest in the country. Believe in core sectors, reforms, equity and bonds, and profits will automatically follow.




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