Saturday, October 25, 2008

Indian Corporates Update = I.C.U

Things got a little rough this friday.

Patient long Term Investors got a bit worried.. in fact Luddic Research has long laughed straight into the face of anyone who introduced himself (don't see many chicks in this game) as a long term investor.. so geddafuggoutt been the standard response followed by uncontrolled mirth whenever some pompous (and always bearing a loss on his investments) schmuckturd announced he was not worried.. it will recover.. he is in it for the long term.. fundamentals are still strong..

.. but even we were getting tired of laughing at these dull, pitiful fools and finally the Gurkha watchman downstairs was given strict orders not to let any long term investors in.. one grows sick of same old.. and these dullards could drive the Dalai Lama homicidal.

So, as I was saying these (formerly) amazing long term clairvoyants' simple minds got a little jolt in terms of faith and most promptly lined up at their favorite temples and deities' feet for a frenetic chanting session with bleets for mercy between every shloka.. O' mighty protector.. why this great test you put me through.. you know I suffer.. give me just one chance to breakeven.. I will never play the markets.. never watch cnbc.. never average down.. O' Lord.. just this time.. OK.. atleast give me a little bounce to exit least this much?

But what brought this sorry state about? Luddic Research points out to a deep underlying white man conspiracy to undermine the growing BRIC and especially the quickly emerging, brown global clout.
This became even more worrying to the western business world when even half witted, semi literate Indian promoters like Tulsi Tanti ( Suzlon) ,Kishore Biyani (Future group), G.Mallikakrjuna Rao (you guess right GMR), plethora of Real Estate tycoons.. as well as businessman Daddy's progeny like Ambani wunderBrothers, Kumarmangalam Birla, Ratan Tata, Vijay Mallya, exhibited multiple talents and core competencies far beyond any business leader ever to run Intel, GE, Microsoft, ABB, Unilever, CocaCola, IBM kind of small cap, small vision companies could fathom(leave alone envision and execute)..
..well these westerners plotted long and careful how to bring down these Incredible Indians crowding out the rest of the planet on the 10 richest persons list.

According to some reliable sources, these boys just plain pulled the money out when they knew it would hurt the brown man most.

And all along this country was jiving to the most popular tune in the nicely appointed offices of fund "managers" of various shapes, sizes and amazing hand shaking/networking techniques..

..the Indian growth story is Intact..the Indian economy is decoupled.. the Indian markets are decoupled.. the Real Estate prices go only Up in India..the growth rate will only get higher from now on.. the Index is going to 25,000.. and then to 28,000.. and finally 50,000 is now visible in the imminent future.. we will be rich and mighty and brilliant..we are decoupled.. we are decoupled..
.. this tune had everyone dancing and clapping and tears of sheer joy streamed down the more emotional fund managers cheeks.. privately, most of these fund managers realised they had underestimated their own worth in the previous plebian years.. Oh why did I live less brilliantly all these years.. anyway now I will not be denied my destiny.. yes, there will be a private jet someday(even that fool G.Mallikarjuna Rao has one)..oh yeah!!

Heady days to be in the fund management business in India, those were.. it did not matter what type of fund.. Hedge, FII, Mutual, PE, Prop,..hey even the local committee Fund you formed with your neighbours and uncles.. you were part of that WASPish(though brown) mastersOfUniverse you'd seen in Gordon Gekko.. and you worked hard to look the part..even their spouses started wondering if was the same dull sap she'd married!

(It got so bad that ordinary hand pumping, social networking, schmoozoids like our bearded accountant Ashok Wadhwa(Ambit) felt left out of the loop entirely, quickly floated a money management gimmick and felt it important to pull favors with CNBC to announce his view (..whotf is really interested in that, really) that the market looked close to bottom and would not go below 14,000 in any case.( looks like a bad start Ashok, eh?)

No summary of Indian Fund managers is complete without mentioning the sheer number of fools ICICI has released into the Indian fund management scene where their bull market genuis just pyramided incessantly into higher and higher positions( and a rather faster rate of higher self esteem and self worth) that made these gaboons some of the largest participants in the Great Indian Funds story permeating every organisation in some position and cluelessness.
(The latest and greatest example is JP Morgan's new CEO.. of course not to blame for it's coming ills ..she just joined for crisssake.. but she was heard expounding immediately on her plans to grow JP Morgan as far as her eye could see double true ICICI alumni fashion).

But what about the real drivers of the great Indian Growth Story?
The assorted bunch of "promoters" and "family run" tycoons who leapt from oblivion into global "smart" money destinations .. who were shown charts extrapolating their growth well into the ceiling by the very westernised "smart" money smooth knowalls.. slowly it is dawning on these yoyopreneurs their go getting drive is got up and gone.. and it is time to take a hard look at the books. The books are suddenly looking increasingly messy and piled with large debts and much larger urgently required (and completely unavailable) funding.. and the fact the asset side is piled with such crap at such valuations that only blind monkeys who passed accountancy are willing to sign off these books(though extracting dozens of bananas more now).
Seriously denting the announced growth plans of the "promoters" is that the only believers left in company balance sheets are the research analysts from vernacularly headed and named brokerages or the public transport commuting regulatory officers.

You know things are bad when you realise the Ambani boys have not announced a single multi-billion project in a completely unconnected industry for the past 10 days.. that is scary..

It is shocking that the market did not get weak kneed with schoolgirl delight when Reliance Industries unveiled the latest cooking extravaganza of profit growths etc. etc. at twice the industry average with lovely chutzpah.. the bovines actually got selling this stock..never fear, Muckesh is gonna settle some scores monday.. we hear he was forced to fork out Rs.1400 for a chunk of carefully planned increase in stake (as usual, much lower than market price for instant gain, when it was decided by the board) and cannot stand being played at his own game market puts him out of pocket by Rs. 400 , eh.. he is gonna show who's the Daddy now.

Junior ofcourse has his work cut out after bravely announcing Reliance Energy(now Infra) buyback at Rs.1400 a while back .. being forced to buy at Rs.1100 + as they had to sheepishly confess and blink back tears as shares disappeared below Rs.400.. all that buyback cash gone poof.
A-nil is ofcourse dodging calls from a certain Spielberg over at Hollywood who wants to know when is the $500 million turning up and recently making unflattering comments about third world wannabes trying to get into the white glamour scene..when they cannot pony up the cash.. what else you need these suckers for.

Also looks like Junior's plans to buy an English football club may have to be postponed till be can run up his various ventures' share prices up.. it's not easy to stay in the 10 richest men of the world .. that this wunderbrother pair have realised.

About our Real Estate "promoters" and their comical overseas moneybags .. let's just say "Property prices in India are not coming down" is the official word and these orangutans are giving sleepless nights to the usually smug and confidently forging ahead Private Equity types whose grasp of ground realities is scaring the privates out of them.

The captain of this floundering ship, our own Finance minister has taken to putting on his best starched whites, shawl on his shoulder , hair dyed a debonair black and spending long hours in TV studios rather than the minstry trying to exhort the unwashed masses to buy some stocks .. or at least do not sell.. as he put it plainly.. every seller should realise that each time he sells someone is buying.. ( well greatIndianGrowthStory types have been buying intelligently all the way down from 21,000 index levels).
His latest ministerial feat, delivered with his customary elan was this account on thursday.. that he'd personally called the (shaking with adulation) Chiefs of 7 main public sector banks and told them to "lend aggressively".. to anything that had a pulse.. and the Chairmen had assured him to a man .. they were just waiting for a potential borrower to walk in ..Oh yes Sir,yes Minister.

As usual .. this is the bottom ..yup, the fundamentals of this country remain strong.. yawn.

p.s. coming soon..
Indian Funds Update = I.F.U

Sunday, October 12, 2008


This amazingly clear thinking article was written in sept 2003!!

Today, we realised how many quadrillion times more painful it has been for the (very small percentage..very) thinking Americans than for us thinking Indians to watch the fools run our respective countries and economies amok... we are after all third world..and probably deserve such bankers/RBIs/SEBIs /Finance Ministers/ Mutual fund managers/ Portfolio managers/ Financial advisors etc.

Sometimes you feel the financial rewards of separating these fools from their money is not reward enough for being right.. compared to the anger you feel at the clueless schmucks still spouting drivel from their behinds..
Oh yes, the worst is over !!.. again!!

2 points from the article:
1. The Great Indian Growth Story seem to have taken off largely due to US Fed's largest monetary expansion in history.. and at the worst possible stage of a Big Kondatrieff cycle.
2. The Great Indian Growth Story now starts looking like the Great Indian Rope Trick.

Finally a little comfort:
Finance minister P.Chidambaram is working on urgent Govt. bailouts for the following key pillars of Indian La-La Land on whom the growth story hinges:

  • Real Estate Companies: All firms with more than 2000 half-finished, semi-finished or even half planned projects across the country whose old loans are long overdue and cannot get fresh loans and have no more PE suitors and whose share prices have fallen over 70 % and who haven't sold anything in last 2 months BUT who have not reduced prices at all.
  • InfraStructure companies : Who have projects in every nook and corner of the development phase and have no lenders in sight and whose PE investors come for meetings in wheel chairs and who have no basic qualifications and who have lofty aspirations for Nuclear projects and (this one is strange) who belong to Andhra Pradesh state (as our hero G.Mallikarjun Rao of GMR).
  • Private Sector Banks: All banks in this sector who have been worthy pillars of the immense wealth creation last year who unfortunately now need to show some profits(or hide losses better) and whose growth is coming back to bite their butts and whose global plans show distinct bag holder status and whose management is infested with ambitious, equal oppurtunity program fallouts and whose loans dot the countryside with worthy borrowers and whose CEOs exhibit youthful good looks.
This step is reqd as the global FIIs and PE funds have been complaining about their horrible, horrible losses due to unsophisticated "investor" behavior lately..making it difficult to keep their faith in India's Growth Story (and more importantly their jobs).

..Who can forget the swelling of pride Indians felt when the minister sagely dissected the US financial turmoil at Davos .."It was a regulatory failure."
..and promptly proceeded to get Indian banks to cut Interest rates on his return.

Lastly , from our DRIP stable .. comes the reassuring sounds of the far thinking Chanda Kocchar of ICICI Bank pronounces yesterday:
"The NPA levels continue to remain where they have been even in the last quarter. Even as we report earnings for Q2, you will not see anything untoward as far as the NPAs are concerned."

"As far as NPAs are concerned, we are not seeing any increase in it, and the corporate sector profitability is still holding up and the repayment and payment obligations are all coming absolutely on time. So, on that count there shouldn’t be a worry at all.
..All I can say is if the legal framework was halfway as effective as the US .. she would have thought twice before incriminating herself like this.

But this is India and the Growth stories remain Intact for very long ..thanks to the Decoupling.

Also as usual .. Again it is too late to sell now.. let it recover a little bit.. just a little.. pls GOD!!

Monday, October 6, 2008

The Sarah Palins of ICICI bank

The current banking turmoil has been especially hard on western female bankers who had built stylish little careers and lifestyles wafting cluelessly amongst less pretty male counterparts.

..but alas, style and intelligent sounding drivel only works in bull markets when quite a few bankers are diagnosed with abnormally large brain cells that explains their enhanced financial acumen.. and such visions somehow evaporate at the end of bull markets.

Lovelies such as Erin Callan, Zoe Cruz, Sallie Krawchek.. are sorely missed for their exceptional skills, strategic vision and grasp of this faltering sector.. but even more for objective reasons.

Let us be clear.. these stylish things are confined to the banking world and their skirts have graced no trading seats except as talented "managers" of trading teams and stunning, exciting meetings they presided over. It was all very very stimulating.

Luddic Research reports an interesting analysis of the factors that make women get raises (and in turn makes them rise) in Wall Street's "high" finance and present a convincing argument how Sarah Palin would undoubtedly have risen far above three and possibly higher because of her (GodBlessHer) disconnect from reality and simple questions.. also her "doggone it" style would make it virtually impossible to fire or demote her.. since his decisions were mostly God's will.. and there is a litter of five(and a sixth derivatve) to feed..

But she has the rallyTheTroops talents to boldly make Grand asinine decisions and megalo visions that would put many a banker to shame.

Coming back to our local banking femmes, who though severely looks challenged have nevertheless dutifully tried to grace the financial pages with their vision and grasp of the banking /financial exploits and achievements.

Few months back Luddic Research had identified ICICI bank as a worthy torchbearer of the Great Indian DRIP Story that would eclipse the BRIC folly in short order .

There was this truly gifted leader KV Kamath of many talents and evergreen matinee idol looks who by some strange twist ended up running a bank instead of singing/ dancing around trees in romantic Bollywood musicals.

As expected, not one to let dull banking offices dim his magnetic attractiveness, he quickly embarked upon a mission to surround himself by female managers of all hues and their vision to think beyond their makeup and saris. It greatly helped that the bevy of financial birds surrounding his jet black hair added zest to all official gatherings, conferences and Industry meets that this visionaries from ICICI came to spend most of their waking hours gracing.. sure beat dull number crunching back in the cubicle.

So the growth trajectory of ICICI was clearly dominated by market share/growth/ think Big kind of excitement that just saw opportunity in any thing that walked or had a pulse .The game was to grow so fast and furiously that the nobody could ever calculate how much bad loans, capitalized expenses , NPAs etc. were buried under the ever piling books.
.. the rate of growth had to ensure nobody within the bank(much less a regulator or analyst) would ever be able to figure out the real profit (using the term very loosely) since inception.

This bank quickly caught the fancy of young and old, big and small, native and foreign.. wow.. what a growth trajectory and, what a visionary (and youthful) management team..The Indian growth story soon became synonymous with this bank and its conspiciously feminine Generals who rushed in where male bankers feared to lend.

The assortment of Chanda Kocchars, Kalpana Morparias, Renuka Ramanathans and such became household legends in this country for their far reaching insights and ability to shovel cash out into the countryside..

The corporate strategy meetings were fairly brief and everyone was totally on the same page:
.. mostly a session of complementing the management on their looks , jewelry and dresses(where did you get that.. very pretty!!) was towards the end punctuated with the agenda..
..OK that's decided now 12,000 new ATMs this year, 4500 new branches this KingFisher airlines to go global (airlines are the best users of our cash, we loooove Vijay Mallya .. he's dashing and dashes we couldn't find a bigger lemon than this airlines) .. lend to every car, house, salaried, two wheeler, Freddie, Fannie, Lehman , Builder, Construction company, SME this country has or if the growth targets falling short .. create these borrowers from the country side.. India is woefully under borrowed.

.. it got to a point that if anyone in the world (yes word got out) wanted to borrow and had difficulty answering some fairly simple questions .. he knew some ladies in India who had growth plans to match and cash to burn.. all he needed to do was answer some fairly simple questions at Sarah Palin's altitude and walk out with the cash.

Small wonder the bank seems to be involved in "offshore subsidiaries" who seem to have a little subPrime problem..

.. and the bank seem to be holding realEstate assets and such loans (at cost ofcourse) that reach into the furthest corners of the India.

..and the bank seems to have millions of lovely grass roots type of two wheeler and small loans which will likely pass on to next generation of original borrowers(and collection agents) before fully repayment.

.. and of course the housing loans book of ICICI bank across the country to strictly deserving applicants has proudly been hailed as the single biggest reason for unlocking the value in the Indian Real Estate sector which had for previous 50 years remained locked and hidden .

But sadly , the current turmoil has not gone down well in the envisaged growth plans of the Bank and unless quickly rectified by large Govt. bailouts, threatens to reveal certain accounting gymnastics at ICICI that could quickly disturb the composure and the hairStyle of KV Kamath.. and the confident noises Ms.Chanda Kocchar has been making to scotch any rumours.

For starters Ms.Kalpana Morparia has hopped across to JP Morgan (good timing surely!) and quickly announced grandiose ICICI style plans for expansion there.. much as in fashion of clueless American firms trying to monetise the enigmatic growth story of India that every one is sure of and can sense but nobody can actually pin it down. (When was the last time a white man actually took some profit out of an "emerging markets" ?.. tho we are not complaining ;)

So as all the other DRIP pillars have wilted these past months .. ICICI in that ingrained, go-getting manner has gone for the floodgates where others merely dripped.

What Kamath missed in his zest for youthful self-image and quest for visionary sounding legacy, was that you just cannot rustle up girls from the countryside and perch them in nice offices in Mumbai to do anything more useful than answering the phone or adding color to offsites.. no matter how debonair your looks or how dark your hair.

As per Luddic Research , the true measure of robust health and vitality in any company ( especially Banking) is inversely proportional to the percentage of top management coloring their hair artificially to bolster market share through misdirected Libido..

..just don't work.

Lastly, there is a rumor gaining ground here that ICICI bank is really an American Bank.