Friday, June 20, 2008

Indian Corporates face waning Libido

As Luddic Research has long identified, the Indian bull story was unique in that it was essentially fueled by a bedroom revolution rather than the conventional boardroom revolutions that have marked lesser efforts in the developed world.

From the origins in the financial centers of the country where brokers, bankers, FIIs, Domestic funds, PE funds, Hedge funds (essentially any funds etc. which were populated with smallish, shape/looks challenged individuals, having mostly suffered bullying in their growing years and virtually no success with women till *after* getting employed and even after.. minimal).. well these financial players suddenly discovered an activity that seem to enhance their self image and sense of manhood wherein they could see some of that alpha that males of their category needed to prefix .

Quickly their proclivity for announcing higher valuations, bigger portfolio/private investments (for smaller stakes) , growth projections, target prices etc. etc. spread to the industrial and corporate sectors where innocent semi literate "promoters" started seeing themselves as the second coming and soon swapped their long favored traditionally tailored, striped underwear with Jockey shorts (much to the amusement of their portly traditional wives).. but the point is, they drank the "projected" kool-aid and we all know when the rustics partake a drink they can quaff long and steady without stopping for breath.

And that is what essentially happened in the spread of the new everyStreetPavedwithGold gospel.. from the long suffering financial types' need for a moment in the Sun to the RealEstate Builders and other such sharpies recently taken to making windmills ( literally and in the stock markets ..till the blades cracked) they all took note of the ever green, young strapping looks (mostly because of jet black hair) MV Kamath(ICICI) and Mukesh Ambani(Reliance) and quickly concluded the fountain of youth springs from growth plans 3 times a day and even more grandiose growth plans next morning.. and the Indian Growth Story was on.

Most Indian business promoters knew they had an innate talent and ability to get into practically any business and quickly announce a few tens of billions of planned investments in the next mornings press. Their abilities and talents which by now spanned Telecom to Energy to Real estate to Retail to Infrastructure to Brokerages to Movies to Fund management to Private equity .. basically if they had heard of a business.. they were up to it.
Our Research shows that the mere occurance of so many talented Business Stalwarts( with the ability to straddle and excel at multiple unrelated industries) and all of them coincidentally born in the same country in the same century is a 1 in 100,000,0000,00000 chance (for the modelers - about a 37 sigma event give or take).

In fact in entire mankind's history we have only GE (GenElectric) which has even come close the emulating this kind of multi industry spanning talent that seem to be commonplace in the Indian Business houses..and passes effortlessly to their equally multi-talented progeny.

We are indeed living in the Golden era of Indian Business and it is a no brainer these wunderkids will soon be able to overcome these blips and continue with their stratospheric growth plans as planned and the current negativism in the markets will die out on the realisation this is just a little, temporary, short term pause in the overall growth trajectory being ably orchestrated by the dream team of our bedsheet wrapped Finance minister, guided by our economist Prime minister, who is in turn guided by our Italian Non minister..this trio is good at winning economics awards, elections and farmers.

But coming back to the temporary predicament of business "promoters" who have not been able to raise fresh equity, fresh debt, business prospects, confidence, in fact haven't been able to raise anything the past few weeks and prospects are only looking glummer going by the survey of male oriented grooming /manicure retailers, hair dye manufacturers and men's salons.

The younger Ambani of the amazing wunderBrothers, concerned with the collapsing equity market for his offerings ( has a boatload to sell yet, if he has to cover even 5 % of his "announced" plans, given that exactly zero of his companies makes any money at all), no much happiness, as in past, from bankers to be allowed to participate in his dreams, awkward questions about the fate of Rs.100,000 crore ($25 B) of happy "investors" money put to play in the stock markets by his sharp, far sighted team at the Reliance Mutual fund in the boom boom months.. all these developments would a lesser man, put on the back foot.. but that's the lesser man..
A-nil fired back with a mega Billion deal to hock off his loss making( for entire forseeable future) RCom to the South African ingenues, renaming Reliance Energy to Reliance Infra to participate in every other industrial ( and domestic/household too if has "growth" potential) activity undertaken in this country.. and called up Spielberg to fund his studios's sagging fortunes and build a global name for himself this lifetime.

The other heroic business "promoter" Luddic Research has pinpointed as one of the future leaders (alongwith Kishore Biyani of Pantaloon /Future group) ..Pradip Jain of Parsvnath Builders ..who despite the having announced Rs.60,000 crore investment plans in the best Indian promoter tradition a couple of months back (when his shares were "guided" into Rs.400 range..sadly Rs.150 range now) .. and having most of his capital raising and other abovementioned raising abilities severely hampered by the crass behaviour of the stock market cretins .. is clear in his faith :

I don’t foresee any softening in demand. I don’t foresee any kind of pressure in end user demand.

Related to prices, prices are bound to go up. There is no way that price can go down. Media keeps talking about softening in prices, I do not agree.

..see why Luddic Research hero worships this man.. this is after a 60% + drop in his share price and projects spread far and wide into the country side which need customers and more importantly funding.The future of this country is in good, steady, confidence inspiring and clear thinking individuals 'hands.

But.. we would also here like to put a public interest request for the good of the Indian "corporate" sector, the economy and most importantly the Promoters and fund Managers who have been caught in this nobodySawItComing downturn that is fueled by temporary inflation blips (no doubt will be remedied by immediate price controls on every commodity and maybe free food rations for the rural Indians for a few months into elections by our astute Fin minister.) who will then quickly be allowed to reduce interest rates as all "experts" had been forseeing such a rate decrease even 2 months back and we will all be happy and gung ho again..this time we will really show them what "decoupled" means.
In the meantime our appeal is to not poke too much fun at the TV "market experts", Portfolio managers and other serious faces who have been entertaining us for the past few months with their well meaning "research" and "support" levels and also please lose no opportunity to put in a " nobody could have seen it coming" into all your conversations with such soldiers .. maybe, just maybe they will internalize this truth and be able to offer some fresh "buy" candidates at this market bottom currently formed..maybe also bolster some flagging libido.

We need these local experts even more as there are signs even the PE funds are wising up to the situation at hand and (after some tough love from investors) will no longer pump cash into Realty and Infrastructure "plays" we had come to love and trust.

As we had advised our clients at Luddic earlier , we are now sure this is the bottom again and of course as we all "experts" know Long Term India is a fantastic opportunity.. we only need to weather the short term corrections and volatility.. no sweat.

..and soon,the Indian bedrooms will swing to the music of testosterone charged promoters and investors yet again..building a bigger, better, growth trajectory.

p.s. A grand, Govt. sponsored, week long, mega Yagna (vedic religious ritual) is being performed in some South Indian state as we write this to ensure the Gods are appeased and kept updated on our efforts.. the Govt is taking no chances this time around, esp with election s around the corner.)

p.p.s. A late report suggests that some muscular officers of the Finance Minister's office have visited the office which released the errant inflation report yesterday for some stern talking to and quick refresher of the patriotic oath these officers need to consider before spooking the entire country and putting at risk the hard work put in by countless "Promoters" over last 2-3 years.( as also personal reelection plans)


Anonymous said...

Your Blog is a breath of fresh air.You hit the nail on its head. I like the satire too. Please keep up the good work.

Anonymous said...

Please tell us what is your investment strategy. Long short ideas. Where do you see real estate, stocks and bonds in a year? I am talking about indian economy? About 5 months ago the indian govt. gave 40% pay hike to govt employees and I knew then watch out for the inflation train coming? I donot trust their cpi numbers . Inlation in india probably 30-40%. Interest rates 7-8%. People with cash in the banks good luck. It is like Germany after WWII where people carry sacks full of money just to buy basics.