Shriram Transport Finance - A story of its kind!

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.!

                                        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.!

                                   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.!

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.!

               

                        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.!

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..??

                          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.!

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