Wednesday, December 12, 2012

Wrong said Fred!

$99 billion purchase of ABN Amro – suicidal!

To every proverb, there is an anti-proverb; and in capitalism too! Here’s what Fred Goodwin (CEO, RBS) said about the October 2008 purchase of ABN Amro, “We are happy we bought what we thought,” and this was the anti-statement from Philip Hampton, Chairman, RBS, “The ABN Amro acquisition can’t be undone… it was the wrong price, the wrong way to pay, at the wrong time and the wrong deal!” The two contradictory statements in a way, say it all. The consortium (RBS, Fortis and Santader) with synergy expectations of €2.28 billion annually, ended up overvaluing the financial entity and paid 3x of book value, a blood-freezing $99 billion; and this came at a time when other banks were trading at book value! ABN Amro had sold its LaSalle Unit to BofA, therefore it made no sense for the consortium to pay such a hefty sum for the under performing bank with emaciated Asian operations. It all came down to one reason – ego; of not allowing Barclays to win. Wrong price, wrong value, wrong time & well... a completely wrong deal.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Sunday, December 9, 2012

Hotel Riga (riga)

Overlooking the picturesque Opera Garden, this magnificent hotel is located in the heart of Riga, and is adjacent to the National Opera and Freedom Monument. Offering ease of communication, courtesy its prime location, the hotel is a short walking distance from most tourist spots. It’s probably one of the few elite hotels which cater to the need of those who love travelling with their pets. With its distinctive charm and hospitality, Hotel Riga would offer an unparallled experience of heritage, luxury and warmth.

The view: Hotel Riga provides a wonderful view of the city. It offers a beautiful sight of artistic buildings, which speak volumes about the city’s cultural heritage and a more than keen inclination toward art and architecture. Archi type: In the early days, the hotel’s building was destroyed during the war; it has since been refurbished and artistically done-up. The Latvians have restored the true essence of their art and have selectively depicted it through choicest furnishings throughout the hotel. Bon appétit: Fine dining and sumptuous meals can be savoured at the signature restaurant Palm Garden, which serves exquisite European cuisine. Other restaurants such as the Palm Terrace and the Lobby Bar are ideal for a drink and a light snack.

Around the corner: The hotel is well located and connected. It is no more than 500 meters from the central train station and even closer to the bus and tram stops. Paying a visit to a nearby art gallery or a museum would be the ideal experience. From under the carpet: People here are not very fond of outsiders and do not mingle a lot. The vacation would be a lot more fun if you go with a group of friends.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Friday, December 7, 2012

And ‘Sam sung’ a new song!

Shin brings useful capabilities to the job, but he will have to drive a change in SEIL’s positioning strategy

Thrift is a virtue on the fag end of the business cycle. So is multi-tasking, as that is the standard way of providing more value for the company. The leaders at Samsung seem to be leading from the front in that regard, if the recent leadership change in Samsung is anything to go by. After a stint of two years as President and CEO of Samsung South West Asia, H. B. Lee has moved on. Lee, who was a major in Business Administration from Seoul National University, had a prior experience of 31 years at Samsung Electronics. Under his leadership, the company was able to flex its muscles in the LCD segment and also captured the number one spot in the colour laser printer category (the company itself claimed a market share of 30.9% market share in India in September 2008). He has been replaced by Jung Soo Shin as the President and CEO of Samsung South West Asia Operations. However, unlike Lee, Shin would be multi-tasking, as he would also take in the responsibility of CEO and President for Samsung India Electronics Ltd. (Lee had no direct executive position in SEIL).

R. C. Chopra, senior adviser, CII, believes, “This is a proactive step and would enable SEIL to reap in the benefits of optimisation.” But one should not overlook the fact that India is a challenging market. Undeterred, Shin claims, “It will be my endeavor to leverage on the success achieved by my predecessors in this high potential Indian market and lead the Indian team to make Samsung a top electronics brand in the country.”

However, these are turbulent times and even Samsung Electronics Co. Limited is grappling to come out of it. It posted its first operating loss – a whopping $682 million for Q4, 2008. “The major reason for the loss was its memory chips unit, primarily due to massive falls in prices in October, November and December,” informed Kim Geesoo, Principal analyst, Goodmorning Shinhan Securities.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Thursday, December 6, 2012

Rs.3,600,000,000,000; and in just a month?!?

Will MCX continue to rise along the hyper-growth trajectory it currently is on? deepak patra explores...

While investment in commodities across world exchanges has reached sky-scraping heights, the same in India is just breaking through the ground! Having said this however, it is also a matter of truth that the growth of the segment, in the country, has been phenomenal over the last couple of years; much credit for which goes to the Multi-Commodity Exchange of India (MCX), which developed a ‘quality’ platform to enable commodity trading in India, while at the same time ensuring a healthy incremental advancement and maturity. But, the question in everybody’s mind at the moment remains – will MCX be able to live long and strong on the radar of global commodity traders, in precisely the fashion that Indian stock exchanges have managed to make that thumping impact on global investors?

Since inception in November 2003, MCX has come a long way to become the number one commodity exchange in India, clocking a mind-boggling monthly turnover of Rs.3.6 trillion on average, and garnering a total market share of 72%. No doubt, MCX has added the much-needed user friendliness and global linkage to the Indian commodity trading scenario, thereby widening options and offerings for the traders. But this is just the start of a long journey, as Joseph Messy, MD & CEO, MCX tells B&E, “The Exchange has taken pride in providing the necessary support and regulatory infrastructure for orderly use and functioning of the market. In that respect, considering the size of Indian physical market, we have a long way to go to ensure that benefits of this market percolate to all sections of the supply chain.”

Inorganic growth strategies have always been key to MCX’s rapid growth. The comex never seem to miss an opportunity to forge a tie-up with a global comex – be it in any symbiotic form – and therefore, this either helps in increasing its product portfolio or grants it an easy entry into foreign territories. 
 
 
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Wednesday, December 5, 2012

A risky cover?

LIC’s market investments are well timed, apart from IRDA norms

The flickering diya, embalmed by two hands continues to be trusted by millions. It is perhaps this power of trust bestowed upon LIC (Life Insurance Corporation of India) that has given it a strong competitive edge over its peers; reasons enough why it continues to successfully dominate the insurance sector, despite so much of private and foreign money flowing in.

Policy holders normally associate LIC with safe, secure investment and risk cover. So it would come as a surprise to many that LIC, the ‘black horse’ of the stock market (interestingly, whenever the stock market is in a problem, LIC is one of the companies approached by the government to infuse liquidity) has decided to invest a whopping Rs.170 billion in the market when the Indian equity market is perhaps in one of its worst phases; given that FIIs have deserted it (for the last one year they have been net sellers to the tune of Rs.572.5 billion) and the Sensex has plummeted by almost 55%. Insurance instruments are often known for their aversion to markets, and this move might have caused many policy holders to wonder if LIC is actually taking a step in the right direction.

Well this has in fact been the trend for quite a while. T. S. Vijayan, Chairman, LIC comments, “Yes it (LIC’s exposure to equities) is continuously growing. I believe, of all the listed companies’ market capitalisation, there may be around 4% with us. It is huge money.” Actually, the current market scenario presents a unique platform to build a robust portfolio and hold stocks for two to three years. LIC has always been a ‘long term player’ and considering the fact that valuations are attractive, LIC is leaving no stone unturned to buy at the current lower prices.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Monday, December 3, 2012

WORLD: RECESSION AND HYPE

Tell us please, where is recession?

So while NBER struck panic buttons and started calling some economic activity a “recession” somewhere in the middle of 2007, data was strangely not supporting their claims circumstantially.

From Q2 of 2006 till Q3 of 2008, we provide you the running figures of US real GDP growth finally available: 2.6%, 2.2%, 2.5%, 0.1%, 3.8%, 4.9%, 0.6%, 1%, 2.8%, and 0.5% respectively. Technically, the US has still not entered recession. It’s a similar case with Europe. And India and China are another story altogether. It leaves us stumped to the reasons why NBER might have played the soothsayer’s flute when none was required. Mark Mobius, MD, Templeton Asset Management, EuroFinance and some others have confirmed that recession, technically, has never happened. And NBER? They claim that they consider “a wide range of indicators of economic activity [other than GDP].” And how are these ‘wide range of indicators’ weighted against the GDP? Here’s the clincher: “There’s no fixed rule for how the different indicators are weighted.” Ah Shylock, beauty is in the eye of the beholder, and the devil lies in the detail.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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A brief history of character!

On January 20, 2009, Barack Obama was sworn in as the President of the United States; a commentary...
 
With tectonic shifts in the US politics power play, the long-standing question of US competence seems to be resurfacing. Let us clarify. That Bush was incompetent is not a Nobel Prize winning theory. But will US be seen again as an intellectually social nation, is the question! Not only Americans, but the whole world is waiting for Democrats to come to true power and refurbish America’s tainted image. Let’s be honest, US, through decades, has built its reputation on genuine achievements that took years of some prim and somewhat improper planning.

In contemporary history, it all started from the first nuclear weapon US gave to the world, through what is now known as the Manhattan project. Then came their Marshall plan in 1947 [officially the European Recovery Programme], which focussed on fortifying a stronger foundation for Western Europe, and warding off communism after the second World War. Beside these two war-oriented initiatives, the US also proved its competence in the field of science, technology and arts. This is evident by the number of Nobel Prizes that Americans grabbed – a jaw dropping 309 since 1906 [an average of 3 prizes per year] making it the top contestant in the race. America also developed remarkable institutions of higher learning [Harvard, MIT, Princeton, Yale] giving depth to what ivy league defined. Perchance the most appreciable move was the development of a society that redefined the meaning of melting pot. From the criminally racist days of Cassius Clay, most of US transformed uniquely to welcome all ethnic groups, religions and races.

Today, however, the scenario seems different and of course bleak, and the growing acceptance is that nonfeasance is a major risk to America’s global image. The last ten years have been enough to vividly showcase the scars America has received and encouraged. The Iraq war and the much publicised absence of mass destructive weapons was the key.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

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Sunday, December 2, 2012

Call ‘em American ‘Press’idents!

The ‘press’ loves US Presidents... [They’re their favourite victims!]

What comes to mind when the name ‘Bill Clinton’ is shot at you? Obviously, not the 4-day bombing campaign against Iraq (coded ‘Desert Fox’ in December 1998), not even his NATO bombing campaign against Yugoslavia (in 1999), not even one of his well-delivered speeches, and not even his crave for junk-food! So what’s it? (You know it already, don’t you?) But of course, Monica Lewinsky! Even today, the world remembers a nervous Bill Clinton’s interview(s) broadcasted across channels, the photographs of Lewinsky on tabloids, newspapers and posters... and worse, vile discussions everywhere! The ‘press’ overshadowed his reforms and fiscal & legal acts to brand him an ‘immoral’. But was he the only ‘presidential-class’ victim of the press?

For a long time in America’s democratic history, American Presidents, irrespective of their political parties; have condemned the media for being too biased against them. In payback mode, each time America faces a problem, the press blames it on the President. During the Civil War, Abraham Lincoln accused the press of favouring the Southern states, against his corrective initiatives. The 37th US President, Richard Nixon was impeached from office after the press was at his heels for his alleged involvement in ‘Watergate scandal’. Sadly, the press praised him little for putting an end to American involvement in the Vietnam War (having removed all of 543,000 US soldiers from Vietnam, 1973). He later confessed, “I gave them [the ‘press’] a sword and they ran it right through me.” Lyndon Johnson, Ulysses Grant, Harry S Truman, George Bush Sr. & Jr. & ‘all’ modern day US Presidents have faced the ‘negative’ publicity fire. [As per the widely circulated HNN Survey 2008, 61% respondents rated Bush Jr. as the “worst president ever”.]


Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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