The A to Z of 2011.!

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..??

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.

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.

                      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.!

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...!

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.

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…