Anand Krishna’s musings

L N Mittal, Mukesh Ambani, Anil Ambani and K P Singh of DLF are on Forbes magazine’s list of global billionaires. Mexican telecom magnate Carlos Slim has overtaken Bill Gates, I believe. Another piece of evidence of the emerging new world economic order…. chak de India!

India’s “Under 19″ cricket team today beat their South African counterparts to win the World Cup at Malaysia’s Kinrara Oval. The match was interrupted by rain, but given that we were defending only a modest total of some 160 runs, our bowlers did a great job. Some of the U-19 players seem much more aggressive than the youngsters in the current “seniors” team. While aggression and “positive attitude” in the game is good, but I am afraid when this “attitude” spreads to sledging and other on-field chatter, things can quickly go out of hand. I thought some of our boys were guilty of crossing the line today.

Again, it looks like Dav Whatmore has been able to weave his magic. Just a few months of his taking over as Ops Director at the NCA and more recently, as coach of the Indian U-19 team, he has delivered tangible results. Before today, South Africa had lost only one match in the tournament- and that was their league match against India. And India has the distinction of remaining unbeaten through the entire World Cup.

Chak de India U-19!

It’s finally here. The much awaited “people’s car” from the house of Tatas was unveiled at the New Delhi auto expo a couple of days ago. Initial reactions seem to be quite favourable. The design, the promised mileage/fuel-efficiency, the compliance with safey and environmental norms and of course, the price tag of Rs 1 lakh (INR 100,000 if you are not familar with the word “lakh”) are all incredible. Ratan Tata (and of course, Girish Wagh’s team) has delivered- possibly to the chagrin of several people who expected the Rs 1 lakh car to be no more than an auto-rickshaw.

In a separate piece, I have written about the contribution to traffic jams across the country the “Rs 1 lakh car” will make, and the impact it will have on our fuel import bill, emissions/carbon footprint etc. I do not feel any more reassured on these counts having seen the picture of the Nano or having read various reports. If anything, the prospect of having a 100,000 Nanos on our roads in the next 18-24 months is terrifying. But even so, kudos to Mr Ratan Tata’s vision and perseverence.

Given its fuel efficiency and supposed compliance with Euro IV emission norms etc, I wonder how the Nano would do if it is exported (assuming of course that a dealer and service network are in place and it meets the toughest safety and emission norms). Think of the large number of Indian students or IT professionals who live in the US and Europe. Especially in the US, an automobile is an absolute necessity. Rather than spend $3000-$5000 for a used car that has clocked 100,000 or more miles, would it not make sense to buy a new Nano for close to the same price? Perhaps the Nano, with its 600+cc engine can’t negotiate US expressways as well as that second hand Toyota or Honda can. But for city driving, it may just be what people are looking for. And if I am not wrong, the first Honda cars launched in the US all those years ago were also around 650 cc. Strange coincidence, eh?

For the reasons above (and the fact that India does not have a very well-developed used car market), the Nano might also make a huge dent in the prices of second-hand small cars. A second-hand car has an awful lot of information asymmetry stacked against the buyer in India (or anywhere, I guess). Therefore, why risk a lemon? Be safe with a new Nano.

Think about it…..

For years, Indians have shone as doctors, engineers, professors and even management gurus. And while we had an Indian heading  major US airline companies (Rakesh Gangwal was Chairman of US Airways and Rono Dutta was President of United Airlines in the mid 2000s), the financial services sector in the US has not seen any Indian in the C-suite. But that has changed, with Citigroup’s Board selecting India-born Vikram Pandit as the CEO after Chuck Prince resigned some weeks ago. Chak de India!

Here’s wishing Vikram a very successful stint as CEO of one of the world’s largest financial services conglomerates.

As a struggling Ford Motor Company looks to sell some of its crown jewels to raise money and remain competitive (afloat, the cynic might say), there are signals that 2 of the 3 bidders in the fray are Indian companies. Tata Motors and Mahindra & Mahindra are both said to be among the most serious bidders.  US dealers are reportedly concerned that such premier, venerated brands might be sold to an Indian company, and this might make the brands lose their sheen. This argument, is downright racial. The underlying thought process is something that runs thus: India is a poor country and not one known for its cars. As such, an Indian company cannot own what are largely aspirational brands. Further, if an Indian company buys these brands, future automobiles coming from this stable will be shoddy and cheap and hence unworthy of being marketed internationally using brands that have for decades, been prima donnas.

To people that think this way (and to those that buy this line of thought), all I’d say is “get real, folks”. It’s a flattening world out there and just in case you have not noticed, Toyota has overtaken GM as the biggest automobile manufacturer in the world. A lot of new cars are being designed specifically for emerging markets like India- because that is where the money is to be made over the next twenty years or so. And if Ford had been really about superior technology, engineering, manufacturing, supply chain, marketing, HR, Finance and everything else that goes into making a business successful, perhaps it would not find itself in such a pickle now.

It is expected that the successful bidder’s name will be announced sometime early in the new year. There is a private equity buy-out team that has also submitted a bid (reportedly not the highest)- so it is by no means assured that the Tatas or the Mahindras will be the new owners of Jaguar or Land Rover. But even the possibility of this being true is such a refreshingly chak de thought.

And btw, M&M plans to market its Scorpio into the US soon; its tractors are already doing well in that market (even Americans found the M&M tractor quite useful in the relief operations post Hurricane Katrina). And Tata Motors already exports quite a good number of its cars to Europe.

A decade from now, Indian auto-makers may well become major players in the global automotive sector- just as we today dominate the outsourced IT services domain.

Time was when Indians only had hand-me-down car designs from the west. The Ambassador was based on a Vauxhall design from the 1950s (if not earlier), while the Fiat (and subsequently the Premier) was based on Fiat’s old designs. Both these car-makers had just one basic model and “new models” only meant cosmetic changes to the grille or tail lights or maybe the seating.  Little wonder that Maruti, which was born in the early 1980s, and after about 10 years of focusing on 2-3 models, began launching a new model every 4-5 years, was a big hit.

Things changed swiftly in the last 10 years or so, with many more global car makers setting up shop in India and launching new models almost every year. But even so, not every carmaker offered new models on every car. India was labelled a “small car” market.

Now, automobile manufacturers around the world have begun focusing on small, fuel-efficient cars because oil prices at $100/barrel and steadily climbing will make gas-guzzlers unafordable. And also, there is the worry around emissions and global warming. Even if individual cars reduce emissions because of better engines and fuel, the sheer increase in the number of cars means an alarming rise in the world’s carbon footprint.

But what this has done for India-which is expected to be one of the largest markets for small cars- is to embolden car-makers enough to launch new models in India BEFORE anywhere else in the world. So far, only Hyundai has done this with its i10, but I am sure the trend will catch on. Surely another chak de milestone for India!

In spite of the recent volatility, Indian stock markets have registered the best performance in the world (in terms of returns over the past 3 months). This is according to analysis by the firm MSCI Barra.

Indian stock markets have delivered returns of over 33% (in USD terms). About 5% lower are returns from the second best markets of Qatar and Egypt.  Of the developed countries, Spain and Hong Kong delivered returns of about 18% (a tad more than half of our returns), while advanced economies like the US, Japan etc. have yielded negative returns.

Another chak de moment for India!

Read more at:

 http://economictimes.indiatimes.com/Market_Analysis/India_Worlds_best_performing_stock_market/articleshow/2559788.cms

According to the second Asia Pacific Wealth report published by Merrill Lynch and Cap Gemini,  the number of High Net Worth Individuals (HNIs) in India increased by 20% in 2006 to touch 100,000. About 0.85% of them are Ultra HNIs (people with net worth in excess of US$30M). A majority of the HNIs are in the 41-55 year bracket.

So who is an HNI? The study defines an HNI as someone with net financial assets of at least US$1 Milion (excluding their primary residence).

To put things  in context, Asia Pacific is home to just over 27% of the world’s HNI population and India is the second-fastest growing HNI population in Asia Pacific.

Another chak de moment for India….. is it not?

As the stock price of Reliance Industries continues its rapid ascent, it brings its chairman, Mukesh Ambani, that much closer to becoming the “richest man in the world”. It is not possible to get a 100% accurate picture of Bill Gates’ wealth or Warren Buffett’s net worth. But be they what they may, there is no denying that an Indian is pretty darn close to being acknowledged as the wrld’s richest man. The title may not sit well with Mukesh (and RIL has already taken pains to let the media know that the estimate of Mukesh Ambani’s wealth may be inaccurate). But India’s galloping stock markets and the oh-so-close race for Mukesh to rightfully claim his spot as the “world’s richest man” are surely a “chak de India” moment. Don’t you agree?

I think the Future Cup ODI series that ended yesterday is India’s worst ever home series- and not just because of our cricketing performance. We’ve been walloped before but what is distressing on this occasion is the persistence of issues related to spectators taunting the Australian players and the verbal exchanges on the field between Team India and Team Australia.

India has always prided itself in treating its guests well- remember the ancient Sanskrit saying “atithi devo bhava”- which means “guests are like Gods”? For the good part of the past 30 years, the Australians have  been known for their banter on the field that often borders on the offensive. It may be labeled “aggression”, or it may be accepted as “the way the Aussies play cricket”- but this is not what we expect from India. If we stoop to their levels, what, then, is the difference between us and them?

Many may see nothing wrong with this “eye for an eye” policy that our younger cricketers are adopting. After all, isn’t that, in some way, the “chak de India” philosophy? Remember the hockey player from Punjab, who, in the movie “Chak de India”, is quite willing to fight fire with fire, and takes on the Argentine hockey team at their own rough, “physical” style of the game?

Call me soft or old-fashioned. But I still think that competing in sports should be based on skill (and fitness, endurance, temperament and so on) and not abusing or going beyond the normally accepted boundaries of the game.

I am sure this animosity will carry on into the series we play in Australia in a couple of months. Symonds has in fact already upped the ante and has warned Team India to expect a “searing summer” when they visit Australia.

I think the way Uthappa, Harbhajan, Zaheer and Murali Karthik batted yesterday is the kind of stuff needed to counter any verbal assaults. Breet Lee said something to Zaheer, who responded with a well-timed six off the very next delivery. Didn’t that shut Lee up?

I hope the Pakistan series and the few weeks before Team India sets foot Down Under will cool tempers down- or at least channelize the team’s energy to playing a superior game of cricket and not get dragged into energy- and focus-sapping verbal duels on and off the field.

Allan Border has already said what he thinks of Symonds’ outbursts and I would be quite interested in knowing what Sunil Gavaskar has to say as well. I hope media on both sides does not keep this fire kindled to serve their vested interests- for them, it a game of TRPs and readership and not cricket.

And for what it’s worth, I also appeal to fellow Indians fortunate to be able to watch the T20 match live in Mumbai on Saturday to be on their best behaviour. Remember that the entire nation will be judged by what the rest of the world sees. And media will be gleefully watching out for anything that can be portrayed as racially motivated.

Good luck to both teams and as always, may the better team on the day triumph.

Marion Jones, move over. The Indian stock markets are on steroids…. and how! In less than 2 years, the Sensex (BSE index) has more than doubled- from around 9000 in November 2005 to 18658 today (October 10, 2007)- a 100% increase.

Here is how the Sensex has risen over the past decade or so. To put things in perspective, during the same period, the Dow Jones index (a measure of the performance of index stocks on the NYSE) moved roughly from about 11,000 to around 14,000- about a 27% increase.

Unsurprisingly, emerging economies such as India have been the darling of the international investment community for some years now. But the multi-billion dollar question is how long this bull run will continue. If there are n analysts, there are likely to be 2n opinions, because each one will talk through both sides of his/her mouth. Shorn of jargon such as “economic funamentals”, “market sentiment”, “attractive valuations”, “robust growth earnings”, “India growth story” and the like, nobody really knows!

But clearly, the stellar performance of our equity markets is another reason to say “chak de India”!

I’ve been thinking of the top 5 things I’d like us as a nation to stop doing, to make the country a much better place to live in. In other words, my top choices for things India should “chuck de” would be:

1. Using roads as a trash can, spittoon or worse- as bathrooms. Even the “educated” citizens of our country indulge in such disgraceful behaviour. How often have you seen trash been thrown out of a car?! Just as bad, have you seen people nonchalantly blow their nose and “wipe” their hands on whatever happens to be close by? Ugh!
2. Not sticking to lines at public places- including when waiting to board a flight or getting off. For God’s sake, if you have checked in, the flight will not take off without you on board!
3. Interrupting someone else in the middle of his/her sentence. Strangely, this is just as common in the corporate world as anywhere else in the country.
4. Talking at the top of your voice on your mobile phone- especially when you are in a public place. Trust me when I say that most people around you couldn’t really care about the stuff you are talking about.
5. Demonstrating basic driving discipline- sticking to one’s lane, respecting the concept of “right of way”, realizing that the logjam resulting from everyone breaking the rules will impact everyone. And I would be remiss if I did not mention treating pedestrians with some respect (and vice versa as well- how many jaywalkers have you seen trying to cross the road simply by showing a lazy palm to oncoming traffic)? And of course, realizing that honking is not actually required for the vehicle to move. Sometimes, I strongly believe that honking is a reflex action triggered by the driver’s breathing or some such activity- given how regularly drivers in India honk- even without provocation.

In September 2007, Airtel crossed the 50 Million subscriber mark and reportedly, the company has become the 10th largest mobile telephony company in the world (based on number of subscribers). The mobile telephone revolution in India is nothing short of amazing. In just over 15 years, our mobile phone penetration is far higher than that of fixed line telephones. I remember that 1 minute of mobile usage cost Rs32 when mobile telephones were first launched in India- sometime in 1992 or so. The prices halved about one year later and have been steadily declining ever since. Another “chak de” moment, would you not agree?

Almost 7 years after he first became world chess champion in December 2000, Vishwanathan Anand has again become world champion. The icing on the cake is that he is now also ranked #1 in the world. Chak de India!

Turns out that over the past 6 months or so, the market capitalization of Reliance Industries has more than doubled. With this, Mukesh Ambani’s net worth too has gone up from being around $20B in March (the Forbes list of the world’s richest men) to around $45B in September. Not bad, eh?

So now we have L N Mittal and Mukesh Ambani featured among the world’s five richest people. If you are wondering who the other three are, well, it’s Bill Gates and Warren Buffett from the US and Carlos Slim from Mexico. 

Forget the billionaires. Even in terms of millionaires, India has the fastest growing number- thanks to rising salaries, eye-popping bonuses and stock options. And in turn, this financial independence is enabling many professional managers are turning entrepreneurs. This is good, because new business models will emerge, new ideas will come out- and collectively, all these will propel India to become one of the world’s top 3 economies in the next 15 years.

Surely, another “chak de India” moment, would you not say?!