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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Thursday, August 30, 2012

HYUNDAI AGONY & ECSTACY

AFTER BEING THE CLEAR #2 IN THE INDIAN PASSENGER VEHICLE SEGMENT FOR OVER 11 YEARS, THE TIDE SEEMS TO BE TURNING IN FAVOUR OF ITS CLOSEST COMPETITORS. CAN H. W. PARK, THE CAPTAIN OF THE SOUTH KOREAN SHIP, STEER IT CLEAR OF THE MANY ICEBERGS ON THE WAY? BY PAWAN CHABRA

Fifteen years ago, H. W. Park wasn’t a known name in the Indian automobile circle. Even Hyundai Motor Company wasn’t. The Indian auto-lovers then, were busy test-driving vehicles that bore tags of Honda, Ford, GM, Daewoo, Maruti Suzuki, Hindustan Motors and Premier Automobiles. A South Korean car-maker didn’t bother the car buyers in India. In September 1998, Hyundai rolled-out the first Santro in the country, and six months later, the company (under the leadership of B. V. R. Subbu, the-then President of Hyundai India), surprised all by climbing to the #2 spot in the Indian passenger vehicle market. Park wasn’t talked about even then. He was busy handling costs, auditing and managing Hyundai Motor’s finances, back in South Korea.

He was finally transferred to India in 2003, and was handed over responsibilities as the CFO of Hyundai’s India operations. Six years later, this MBA from the University of Dankook (Seoul), convinced the Hyundai Headquarters to make him the CEO & MD of Hyundai India with his leadership skills and successful management of the company’s resources. They obliged. That was last November.

Nine months into the job, Park finds himself in a tight spot, a spot he might not have wanted to be stuck in at this time, so soon into his leadership. In the Indian passenger vehicles segment (the only playing field for Park), Hyundai had belligerently defended its 2nd rank for 11 years consecutively. No Ford, GM, Fiat or the likes could beat them. The lead was secure, sacrosanct and Hyundai protected the position religiously. Now, for the first time after 11 years, Hyundai saw itself being displaced from the #2 spot by the Ratan Tata army. During Q1, FY2010-11 (April-June quarter), Hyundai sold 83,018 units, while Tata Motors outperformed it with a sales figure of 83,739 units. [For the month of June alone, the figures for Hyundai and Tata Motors stood at 27,366 and 32,479 units respectively]. If one thought this was a quarterly hiccup, in July 2010, while the South Korean automaker managed a sales figure of 28,811 units, Tata Motors yet again sold 32,731 units. Even though the Tata Motors’ lead may be marginal, and may not even last long, what this has done is something iconic yet ironic – it has proved that Hyundai can be beaten. And if Hyundai can be, then so can be Maruti, the leader since years (read the interview with Shinzo Nakanishi, MD, Maruti India, later in this cover story).

Absolute figures apart, Park will get the drift of the argument if he takes a look at the manner in which Tata Motors has grown from being just a minnow in the passenger vehicles segment to a threat to every player around it. The magic wand being the Nano. With negative growth plaguing its performance in the first half of 2009, Tata Motors breathed a sigh of relief with the Nano’s mass roll-out in July 2009, post which, the company has scripted y-o-y growth (in monthly sales) in excess of 19% till date. This followed on the heels of a negative 3.12% growth in the quarter that preceded the deliveries of the Nano (quarter ending June 30, 2009). Continuing its upward trajectory, December 2009 saw the company touch a sales growth of 61.37%. The show continues till date, with a y-o-y growth of 50.13% recorded in July 2010. Hyundai on the other hand, has been a slow runner, its monthly sales growth falling from 53.94% in July 2009 to 24.22% in July 2010 (coupled with a Q1, 2010 y-o-y growth of 21.61% as compared to Tata Motors’ 49.59%).

But Park hasn’t given up yet, and the fight to capture the coveted #2 spot is still on between the South Korean and the Indian. There is however a small problem for him. The Nano production process is gaining momentum by the day. Translation: Hyundai is in for tougher days ahead in the domestic circuit. Once Tata’s Sanand Nano plant assumes full production capacity of 500,000 units per year (from the current 250,000 units per year, which the company plans by the end of FY2010-11), the South Korean giants will be forced to reconsider their priorities and set their targets higher. Park tells B&E, “We will be looking at close to 340,000 units in the Indian market during FY2010-11. Last year, we did close to 290,000 units.” But will this be enough? While Hyundai has set this target, sales of Tata Motors is forecasted to exceed 500,000 units (including 250,000 units of Nano as forecasted by P. M. Telang, Head of India Operations, Tata Motors). Even if we conservatively assume the non-Nano days growth of Tata Motors to repeat this financial year’s growth (growth of 23.88% during FY2009-10), the sales figure for FY2010-11 will touch 566,508 units – 66.62% more than Hyundai’s! [This represents a y-o-y annual sales growth of 98.2% for Tata Motors – the highest ever since it gained substantial volumes in the passenger vehicles market.] For the records, the A1 segment-ruling and price-conscious buyer-pleasing Nano has already sold 23,779 units of Nano so far in 2010 (as on July 31, 2010), as compared to 30,350 units sold in 2009.

There is no denying that Hyundai has been a force to reckon with in the Indian auto market for long, and the strongest competitor to Maruti (the market leader for over two-and-a-half decades). There is no denying either that Hyundai will continue to be as powerful a force. But the pace at which competition is rising in the small-car (A2) segment (where its flagships – Santro and i10 – have reigned for long), is literally pushing it closer to the furnace. Giving Hyundai much displeasure, products like the Maruti A-Star & the Alto, the Chevrolet Spark & Beat, the Ford Figo, the Volkswagen Polo, the Fiat Grande Punto, the Nissan Micra and many more, have already made their mark in the Indian hatchback car market.

But is Hyundai really worried about the silver hat? Arvind Saxena, Director – Sales & Marketing, Hyundai Motors India refuses the proposition, “The second position is incidental. No one works for it. We are here to create a bigger brand. We will be happy to have a large satisfied customer base.” As for Park, he seems to be showing no dearth of realisation about the importance of the Indian auto market. He has already taken guard. As sources from the company confirm, he is increasingly focusing more on the domestic market. Saxena adds, “The domestic market has always been a priority for us. But when we realised that the demand here was insufficient, we exercised the option of making the most out of exports. This year, the domestic market will account for about 56% of out total unit sales. In five years, this percentage could grow to 65-70%.” In short – Park is determined to run till the last mile is over.

Hyundai is not the only one spending disquieted moments. Maruti Suzuki also faced a disturbing situation as recently as in June 2010, when its market fell below the 50% mark for the first time since it began operations in India. Currently (April 2010-July 2010 period), the market share of Maruti Suzuki in the passenger vehicle segment stands at 44.0%, with Tata Motors and Hyundai as followers with market shares of 15.4% and 14.8% respectively. Notably, even Hyundai has registered a fall in market share from the 20%-plus levels. But Maruti seems more perturbed about numbers at the moment, as Shinzo Nakanishi, MD & CEO, Maruti Suzuki India, tells B&E, “It is our aim that by the end of this fiscal, we will have over 50% of the passenger vehicle market in India...”



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Wednesday, August 29, 2012

Learning from the best

After an unexpected turn of events with Kites, Kangana is now hoping to do better with Once upon a time in Mumbai. The surprise of this film is that this time she’s finally playing a ‘normal’ girl and not a maniac or mentally disturbed character! A character inspired by Madhu Bala, Parveen Babi and Zeenat Aman, Kangana was required to pick up nuances of style, grandeur and sex appeal from the consummate work of these veterans. Awed by Madhu Bala, this 23-year-old now dreams of playing Anarkali someday.


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Friday, August 24, 2012

AFGHANISTAN: THE $1 TRILLION LOTTERY

The US has announced the discovery of minerals apparently worth $1 trillion in Afghanistan – the IIPM Think Tank believes much of this made up value is balderdash and pure hogwash forwarded by the US

There’re three reasons for the June 2010 re-branding of old news. First: when it comes to fragile governance, the Afghan government is already a top contender. It is today standing on legs largely because of foreign aid, which is over 70% of its budget. Undoubtedly, the announcement of this discovery will give Karzai – who has recently mended fences on his own terms with Obama – a new lifeline in his fragile political career, as he would be able to wishfully promise the mineral rich regions to tribal chiefs and Taliban representatives. Second: the announcement will give an excuse to the US to postpone their decision of withdrawing troops out of the country. Third: the US has been trying hard to figure out ways to attract foreign investment into the region. The announcement will jump start the proceedings. One can easily visualise deals being signed under pure promises and conjectures than on realistic data – leading to future litigation.

There is a huge downside for Afghanistan due to this announcement. Mineral and oil discovery announcements have led to social unrest in various countries; and Afghanistan is a country that is still struggling to come out of a war like condition. African nations like Ghana, Sierra Leone, Uganda, Nigeria and Sudan saw a decade long violence and civil unrest after similar discoveries. An analysis of the top oil rich countries would show that around 10-12 nations in the top 50 list are unstable. For Afghanistan, the announcement would exacerbate the ongoing power politics. If on one hand the local clans, Taliban, Al-Qaeda and the likes will fight a bloodying conflict to tap these supposed resources to fund their anti-social missions, then on the other, China, which last year grabbed the Aynak copper mine in Logar, would leave no stone unturned to expand its influence over the region and country in particular.

All this is not to say that there are no reserves – of course, there are. But in all probability, only around 1/5th of what has been announced – which anyway would be exploited by US firms. It’ll take decades for other investing companies to realise they’ve been had. By then, Obama will be out of power, and Afghanistan will no more be a priority.




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