Investor grievance redressal

If you are an investor in India where shareholder democracy is a still born child and companies frequently ride roughshod over the rights of investors, we need some activism. While class activism took off in the west long ago, India is yet to see anything of that sort. Hedge fund activism is now the inthing. Funds like Efficient frontier ( not able to find the link) have forced a discussion about the leverage being carried by vodafone and are atleast forcing a discussion.

The regulatory mechanism in India has improved by leaps and bounds in the last decade. But have we achieved anything for the individual investor is the question. And when I mean by investor here is not just the equity investor but also the debenture instruments and public/ company deposits. Debenture trustees have failed their mandate in India, rarely have they been able to carry out the duty that their role envisaged.

In case of equity investors multiple avenues exist - you could complain to the stock exchanges ( which have a investor cell - funded by various internal sources), or SEBI. Complaints like non receipt of dividend, demat requests, bonus shares, annual reports ( its your right as a shareholder to receive them!!!) and such others. You could also write to the cells of NSDL and CDSL and try to resolve this.

In case of public deposits, the authority for this was (is?) the Company Law Board (CLB) which passes the orders. NBFCs and for those who are old enough those teak, sheep, plantation companies ( remember guru kiran, Anubhav et al?? ) are regulated by RBI.

But there is another glimmer of hope, check out www.investorhelipline.in its run by a group called Midas Touch investor association and supported by the Ministry of Company affairs , Govt of India. While the government has nothing much to do and has no association to this site, I think the group has done a wonderful job of helping investors out. Till date they have helped resolve 730 cases, which is remarkable. While it might seem very small, remember this is when they have no legal power ( as in punitive) to pursue the cases but still ave managed this. Good show guys, keep up the good work.

So if you ever get stuck with some issue and company is playing hardball, you know who your friends are.

"Development of a fair, transparent, efficient capital market having a participative, enlightened and an empowered investor." is what investorhelpline says its mission is, lets clink glasses to that

Responsible blogging

I did not think my blog would be visited by people who do not know me. So if you look at my posts on portfolio advice, they will seem not too deep. I was analysing the page hit statistics and realised 7 of the 10 hits I had till date was when peoples searched for Bhavishya Nirman bonds. I am not sure I gave enough data to people to decide if they were looking for this. Notes to self - I will write slightly detailed posts and post my analysis also. I think I owe it to my readers. Leave a note if you want to see some detailed analysis of the deep discount bond.

Alternate careers?

some days I ask myself if I had not chosen the current path what would I have done ? hmm... I love law - I think its quite interesting but realised it will never fit the scale of my ambitions, I never had any aptitude for the artistic variety ....

I think I would like to do research but yes, It has to wait till I fulfill my wealth creation ambitions - its not the selfish for self kind but to reach levels like the robber barrons or maybe the old wealth families in India but that I think would take a lifetime :-) but just in case, I want to get into academics , but it has to wait.

I will resume my post about portfolio building again , as promised I will check out fixed maturity plans. I was asked by someone what are the good company deposits available now - I think Bata and Raymonds are offering about 11% pa, but I would refrain now as banks like ABN Amro and Karnataka bank are offering 10.25% and 10% respectively for 400 days ( pl refer to the disclaimer in my first post!!!!) , so its not very prudent to go for an unsecured instrument for 75 basis points.

Inbound consumer markets , outbound manufacturing....

someone asked me what kind of organisations are using consultants for market entry strategies in India - my two bits worth

Inbound companies into India are in the consumer markets - the current flavour is retail - people trying to see how to benefit from the fabled ' middle class' ( this seems to be the second coming for the great indian middle class - most FMCG companies fell for the per capita consumption growth story the last time !!) , so most of the companies in consumer markets are inbound stories - luxury retail ( designer jewellery, accessories et al), branded retail

On the other hand the gut wrenching efficiency drive that the Indian manufacturing companies went through in the 90s has left them lean and mean, low debt :equity ratios, access to cheap capital for the first time (???), strong domestic growth and sights well set on the foreign shores.... so they are aiming at the 'developed' markets - buying goods 'higher in the value chain' , buying brands, buying products at a higher stage of evolution ( flavoured water anyone? ) to understand how the business dynamics work or trying to be global players trying for value. So most of these industries drive the outbound market entry strategy.

Interestingly in the latter case, most firms which were family owned have brought in professional managers to drive this and given the overall level of skill available within the organisation ( quality is available, its the quantity which is an issue) consultants are called in...

what do you think?

Company deposits - a calculated risk

I posted about the deep discount bonds last time, that assumes that you have money for long term debt options. While most people will suggest that if you are ready to lock funds for periods like 10 years, then go for equity, my suggestion is to keep a healthy mix of debt and equity unless you are a very short term investor (defined as 1 year horizon).

I am also assuming that you have already looked at the standard options like the Bank FDs, Post office schemes etc.

The other option available if you are open to a higher degree of risk is you should be looking at some company deposits to bolster your portfolio returns. Keep in mind that most of the company deposits are unsecured in nature and any loss will land you with Zero money in most cases. having got that flag away, lets focus on how you can add this thing to your portfolio - 2 sites which seem to have a good list are moneypore and Bajaj capital. Check only companies which are profit making and have a history of dividend payment and long history of fixed deposits. As per law, a statutory adevertisement is to be released by the company, check this out, this gives information about the company, its history and operational details etc. My personal tenure for most of these is 1 year, I usually review the companies performance and review whether I need to renew or not. Always check the credit rating for the instrument. If there is no credit rating ( not probable) or has not been revealed steer clear.

What can you expect from these investments - maybe +1 to +2 % on interest rate on AAA rated instruments for a year over the bank deposits, but in the current scenario the gap has reduced.

I will post about that new kid on the block Fixed Maturity plans next, keep reading....

Return of the sith with bullshit?

Back from a long break, hoping to blog more often from now on.

I have been reading Bill Bryson - A short history of nearly everything - Dhammo said, hope atleast these people landed in heaven - how true. Some of the guys mentioned have pushed the frontiers of our knowledge to limits which have seriously enriched the homo sapien understanding of the world.

As an aside, I intend to look at investment opportunities in this blog, so if you looking for some investment analysis, keep visiting.

Since I have been a great fan of Benjamin Graham, I believe in maintaining a very balanced portfolio - debt and equity in the portfolio. I still have not mastered the balancing bit and hope to setup some rules for myself, so that I can effectively book profits in a bull market and cash on capital appreciation.

I am trying to build a balanced portfolio and will share some of the instruments I am using to this effect.

Lets start with debt - I will write about some interesting options on the fixed income side and then move to the equity side.

NABARD has launched the Bhavishya Nirman Bonds - the current one on tap has a fairly good yield for a debt instrument of 10 year tenure. It is a deep discount bond/zero coupon bond with a face value of Rs . 20000 and a tenure of 10 years, issued at a price of 8250 if you are a retail investor. Its an unsecured instrument mind you, so maybe the premium is justified. I need to check out the current t-bill yield but locking in a pre tax 9% quarterly compounded yield is fairly good I think. If you can take that kind of a tenure then investing in this makes sense.

Although the option of holding this investment in demat form exists, trading on the BSE is in physical form and in market lots of 50 , which is slightly large. I have not checked the trading volumes of deep discount bonds but the option does mean you have some liquidity. Odd lot trading was something from the era of paper trading and am not most guys understand it today.
Should one invest in a deep discount bond ? The main advantage is that you avoid the re-investment risk, and (need to check on this!) the tax treatment - where the interest is considered capital gain and not income, helps if you are in the higher income bracket.

check it out at www.nabard.org.

Disclaimer : This is not an investment advice, you should speak to a qualified financial planner and tax consultant before acting on this post. This represents my view and my view only, not of my organisation, my parents , my pet fish or any other entity living, dead, fictional or otherwise.