Fund Management at SPJIMR

HIGHLIGHTS - 2009/10 Budget

2009-07-08T03:56:00.000+05:30

- Govt to sell stakes in RITES, Manganese Ore

- Infrastructure investments to be 9% of GDP.

- Increase agriculture growth by 4% every year

- First challenge is to lead the economy back to the 7% GDP growth

- NHAI support up by 23%

- To hike private partnerhip in all PSU's

- Budget makes subvention of 1% as incentive to farmers

- NREGA Outlay increased by 144%

- IIFCL, banks can support projects worth Rs 1,00,000 crore

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India is now flooded with $1 bn per week

2009-06-08T00:34:00.000+05:30

In April, foreign institution investors (FIIs) poured $1.3 billion into Indian equities. They poured another $1.87 billion in the first half of May, before the election result. For May as a whole, the inflow was $4.14 billion, or a billion a week.

This is part of a global phenomenon. Since April, $20 billion has flooded into all emerging markets. The Sensex is up 50% in 2009. But Russia is also up 63%, China 57%, Brazil 60%, and Argentina 45%. So, the dollar flood is not India-specific: it is part of a global rush into all emerging markets, especially the BRICs (Brazil, Russia, India and China).

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GM shareholders lose $10 bn in one year

2009-06-02T00:47:00.000+05:30

As the century-old auto maker General Motors negotiated many a road block in the past one year, investors bore the brunt of the financial rage as they became poorer by a staggering more than $10 billion.

General Motors is now worth just a few millions in stock valuation whereas the auto maker boasted of a market capitalisation of nearly $11 billion, exactly a year ago.

The steep slide in share prices in one year has seen investors lose paper wealth to the tune of more than $10 billion. The stock price of 750 cents on May 29 is also the all-time low for the company in more than 70 years.

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Railways offer Rs 2.7 tn investment opportunity: BNP Paribas

2009-05-25T00:44:00.001+05:30

Indian Railways sector offers an investment opportunity of a whopping Rs 2.7 lakh crore over the next five to eight years, a report says. "Opportunities in the Railway sector are close to Rs 2.7 trillion over the next five to eight years, of which the Rs 800-900 billion will be awarded in the next two years," global financial services provider BNP Paribas said in a report.

The BNP Paribas report further said that out of the entire outlay Dedicated Freight Corridor (DFC) project, which envisages construction of 2,800 kms of rail corridor spanning seven states poses the largest investment opportunity of Rs 68,000 crore.

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Warning signs: Acceleration in 483s, Warning Letters

2009-05-23T19:44:00.000+05:30

The US FDA’s grip around drug manufacturers is getting tighter. While Form 483 observations were common earlier on, Indian players enjoyed a comfortable period of plant validations. In recent months, however, the FDA has pulled up several frontline Indian manufacturers, raising concerns on generic exports to the US. The US is one of India’s largest export destinations for generics and adverse reactions from the regulator carry the potential to dent medium‐term

revenues. With the US FDA strengthening its base in India, the pace of 483s and Warning Letters is unlikely to slow down. Considered a primary agency, actions by the FDA also often lay the path for crossborder regulatory alerts. On the bourses thus, these companies have felt the brunt of FDA setbacks. The FDA hiccups add a new dimension to the already challenging environment for generic companies.

In recent months many generic companies, including frontline Indian companies and their subsidiaries have been at the receiving end of the US FDA’s 483s and Warning Letters. While two companies – Caraco and Cipla ‐ have not proceeded beyond 483 observations, two – Ranbaxy and Lupin ‐ have snowballed to invoke Warning Letters. As the US FDA strengthens its base in India, the pace of 483s and Warning Letters is unlikely to slow down.

Sensex creates history; two upper circuits in one day

2009-05-18T18:22:00.002+05:30

Sensex and Nifty hit upper circuit twice today and trading had to be halted for the day.
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DLF raises Rs 3980 cr by selling 10% stake

2009-05-13T19:56:00.001+05:30

The founders of fund-starved DLF Ltd on Wednesday raised $783 million through a share sale in India's top listed property firm. Two banking sources said the shares were sold to about 30 institutional investors.The company said its founders would use the proceeds from the sale of 168 million shares to inject capital into property trust DLF Assets Ltd (DAL) and also to buy private equity D.E. Shaw's stake in DAL.
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Chrysler to file for Chapter 11 bankruptcy

2009-05-01T13:57:00.001+05:30

US President Barack Obama confirmed on Thursday that auto maker Chrysler LLC would go into Chapter 11 bankruptcy and enter a deal with Italy's Fiat to survive.

"Today I am pleased to announce that Chrysler and Fiat have formed a partnership that has a strong chance of success," Obama said. "As part of their agreement, every dime of new taxpayer money will be repaid before Fiat can take a majority ownership stake in Chrysler," Obama said.

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Wipro bags Rs 2,500-cr Unitech Wireless deal

2009-05-01T13:47:00.000+05:30

Wipro has won a Rs 2,500-crore contract from Unitech Wireless to provide IT services to the fledgling mobile operator, pipping rivals including IBM, Tech Mahindra and Tata Consultancy Services, which were vying for the 10-year deal. Unitech Wireless, controlled by Norway’s biggest telecom company Telenor, has licences to provide telecom services in all of the country’s 22 telecom circles, but is yet to start operations. Telenor bought a 67.25% majority stake from Delhi-based cash-strapped real estate group Unitech in two tranches.

Indian telecom companies have been aggressively signing similar outsourcing deals with IT vendors to help them focus on their core operations. The country’s top mobile company, Bharti Airtel, kicked off the trend by signing a $750 million multi-year contract with IBM in 2004. That deal has now grown in size to $2.5 billion. Other telecom operators including Vodafone Essar, Idea Cellular, and Aircel have also outsourced their IT requirements.

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Bharti to Outsource Landline Business Operations

2009-04-30T12:00:00.002+05:30

India’s largest telcoms company has finalized an outsourcing deal where French-American networks major Alcatel Lucent will manage, build and operate its (Bharti’s) landline business. The deal size can be upwards of $500 million spread over a 10-year period. Alcatel-Lucent will also take on over 4,000 Bharti employees who currently handle its landline business on to its roles.
Bharti has over 2.7 million landline users spread over 95 cities. This segment had a profit margin of 42.1% for the quarter-ended March 31 and 42.4% for the year-ended March 09. Besides, it also contributed revenues to the tune of Rs 8,585 crore for the quarter-ended March 09 and Rs 33,517 crore for the year-ended March 09. This segment also accounts for about 9% of Bharti’s total earnings. The average revenue per user for Bharti’s landline business is Rs 1,071 per month, which is three times higher than that of the telco’s average mobile customer.
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China Unveils big pot of Gold

2009-04-25T00:36:00.001+05:30

China revealed that it had secretly raised its gold reserves by three-quarters since 2003, increasing its holdings to 1,054 tonnes and confirming years of speculation it had been buying. Hu Xiaolian, head of the State Administration of Foreign Exchange (SAFE), told Xinhua news agency in an interview that the country's reserves had risen by 454 tonnes from 600 tonnes since 2003, when China last adjusted its state gold reserves figure.
By a Reuters calculation, China's holding of gold would be worth around $30.9 billion at current prices. That accounts for only about 1.6 per cent of China's total foreign exchange holdings and is little more than one-tenth of the value of the US gold reserve, the world's biggest. It also means gold has slipped as a share of China's total reserves from about 2 per cent, based on end-2003 prices.
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India, China drivers of global economic growth: World Bank

2009-04-23T20:49:00.001+05:30

"China and India have emerged in recent years as drivers of global economic growth, accounting for 2.9 percentage points of the five per cent growth in global output in 2007," the World Bank said in its latest World Development Indicators (WDI) 2009.
While low- and middle-income economies now contribute 43 per cent of global output, up from 36 per cent in 2000, the report said China and India account for five percentage points of that increased share. According to the report Brazil, China, India, and the Russian Federation attracted the largest shares of capital flows among developing economies.
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Indian bank NPAs to triple by 2011' sector safe- Crisil

2009-04-23T20:46:00.001+05:30

"The increase in NPAs will be driven by delinquencies in corporate loans; this asset class accounts for about 56 percent of banks' advances," said Raman Uberoi, Crisil's senior director. Banking sector advances have grown about four-fold over the past seven years to an estimated 27.7 trillion rupees. Crisil projects that, by end-March 2011, the sector's gross NPAs will increase to around 5 percent of its advances. This will mean a tripling of NPAs to 1.9 trillion rupees, Crisil added.
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BPO sector likely to log revenues of $225 bn by 2020

2009-04-22T19:08:00.001+05:30

The Indian IT-BPO industry is likely to touch revenues of $225 billion by 2020, of which exports will account for about $175 billion, as per a new report. The industry also has the potential to generate an additional $150 billion in revenues, provided it takes some measures to transform the business environment, infrastructure, talent development and innovativeness.
The projection of $225 billion in revenues is based on a few assumptions, McKinsey partner Ranjit Tilankar said. These include some basic academic reforms such as collaboration with industry on curriculum, increase in employability of graduates from the current 10-15%, at least a 5.5% GDP growth and no impact of protectionism.
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Apologies for Error in NAV

2009-04-21T19:45:00.003+05:30

Dear All,
We apologise for wrong reporting of NAV on 16 April, 2009 as 12.22. The Error was a result of formula mistake in Database. The NAV had not crossed 12. We assure to not repeat the same mistake.
Team Crecer Capital

RBI announces Reverse Repo and Repo Cuts.

2009-04-21T19:43:00.000+05:30

With the rate cuts announced in the RBI, one this is for certain, that slowdown could well continue into the next year.
The silver lining is, that RBI does expect an increase in the credit off-take in the markets to keep growing by 20%, which in the short run would sow the seeds, which would ultimately leave us out of this rut.

The overall impact on the rate cut is going to be positive for the rate sensitive sectors like Realty and Auto, which would see a lot more flows from the side of the banks.

The banks which were expecting a cut in the CRR, however would be disappointed as RBI has kept the tabs there at 5%.
Since the Reverse Repo rate has gone down to 3.25, there would be an increased buying by the banks into government treasuries, which would see a fall in their yields. The RBI perhaps may also be doing this to support the governments huge borrowing program which may eventually raise the yields to 7% on the 10 year paper.

The overall growth projections for the economy by the RBI stand at 6% for the next fiscal.

Indian BPOs' revenue will be doubled by 2010

2009-04-20T23:54:00.001+05:30

India's business process outsourcing (BPO) industry will double its revenues in less than two years despite the economic slowdown and protectionist measures of western countries, a report by analyst firm Gartner said on Monday. The top 20 India-centric BPO service providers accounted for $4 billion in revenue in 2008, representing 5 per cent of the $80-billion revenue of the top 150 BPO companies in the world.
By 2010-end, the market share of India's BPOs is expected to become 10 percent as many corporates would turn towards low-cost BPOs as part of their cost-cutting measures, Gartner said.
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Indian pharma industry may gain $18.4 bn from global mkt

2009-04-20T01:04:00.002+05:30

Approximately $ 123 billion worth of products are at risk of loosing patents by 2012. Even at a conservative estimate of 15 per cent opportunity, this translates into 18.4 billion dollars opportunity for generics driven Indian drug industry, according to a report of an inter-ministerial task force headed by a Joint Secretary of the Commerce Ministry.
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DLF to surrender 5 IT/ITeS SEZs

2009-04-16T23:21:00.002+05:30

"DLF has nine (notified) IT/ITeS special economic zones, five of them they are dropping ... they have made an application and it will come up after the elections," a senior Commerce Ministry official said.
DLF had earlier surrendered its 40-acre IT SEZ in the central Delhi. Its nine notified SEZs are located in various states. It could not be ascertained which SEZs are now sought to be cancelled.
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GVK forays into clinical trials with Chinese co

2009-04-15T20:39:00.004+05:30

Hyderabad-based GVK Biosciences has tied up with Excel PharmaStudies (Excel), a Chinese clinical research organisation (CRO), to conduct clinical trials in India. GVK Bio president Manni Kantipudi said: “This is a first of a kind alliance between an Indian CRO and a Chinese CRO. The GVK Bio-Excel alliance integrates trial management across India and China and provides sponsors with a single point of contact.”

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NAV crosses 11...

2009-04-09T00:06:00.002+05:30

For the first time since the launch of Crecer Capital in 2007, the NAV has crossed the figure of 11. Yes, you are reading it right, the NAV today stands at 11.07. Todays gain can be attributed to the movement in the Pharma Stocks in our Portfolio. With a 25% gain on the stock till date, it has out performed some of the other high Beta Stocks also.
Hold on for more news on the portfolio. .

Crecer Capital - Today

2009-04-07T21:17:00.003+05:30

Currently the fund is being managed by a team from Class of 2010. The Corpus of the fund is well into 6 digits with a good number of investors from the Batch. The new team took over the fund responsibility late last year and entered the market around the mid of February. A well diversified Portfolio with Pharma, FMCG, Banks, etc stocks the fund has been able to consistently out perform its benchmark index.
Keep watching this space for regular updates on the Portfolio and the NAV.

Crecer Capital - The Start

2009-04-07T00:51:00.000+05:30

It all started with the enthu of a typical B School Student- to do something new and different.
While many of us had exposure to stock markets, still many had no or little exposure. Thus began the urge to add value to all the particiapant's. The motive of Crecer Capital was to learn while doing ( In this case investing) . Considering the importance of stock market in the corporate world, we took the plunge to start a pseudo mutual fund , something we call as a Collective Investment Vehicle – ‘ Crecer Capital’ for the participant’s of SPJIMR. Crecer is a Spanish word which means ‘to grow’ and thus became the funds name symbolizing growth not only monetarily but also in knowledge. Launched around Diwali of 2007 and managed in house, the fund received active involvement from the batch. We at Crecer believe it has been a great step taken forward at SPJIMR and hope it not only becomes an ever lasting culture at the institute but influences it in a positive manner.
After a successful first year, we passed on the responsibilities to the new batch and we are certain that they will do an even better job and take Crecer to bigger heights.....
--Team Crecer, Class of 2009.