"History is mostly
guessing; the rest is prejudice."
—Will Durant (American,
1885-1981)
Word for the day
Highfalutin (adj)
Pompous; bombastic; haughty;
pretentious.
Malice towards none
Bankelal from Bharatpur,
Rajasthan:
"Maharana Pratap
defeated Akbar."
Rajesh from Agra, UP
(45miles from Bharatpur):
"My history book says
Maharana Pratap fought valiantly but lost to Akbar."
Bankelal: "I hate you,
you are a traitor. Go to Pakistan."
Rajesh: "You bloody,
Sanghi, go to hell".
First random thought this morning
I do not have any data to
support this thought, but my hunch is that in past 10years or so, the weather
pattern in Thar dessert has changed materially. The area has received much higher
than average rains, frequent floods, and cooler winters.
I do not know if authorities
have taken note of it and planned to take advantage of this change in weather
pattern, for example, by way of creating water bodies to store rain water,
planting shrubs etc. that will help recharging ground water. Also is someone
studying the impact of oil field that started production in that area almost a
decade back!
In search of Ideas - 3
As I mentioned yesterday, my
buzzword for Indian businesses is "Re".
While I set out on journey to
discover ideas that fit in my theme, I would like to leave the readers with the
following thoughts:
Re-skilling: In view
of the technological changes in global markets, many of the traditional Indian
businesses, especially technology services businesses, are finding a material
part of their workforce being rendered unsuitable to the new skill set
requirements.
Similarly, the regulatory changes
like GST, RERA, would also leave many workers unsuitable for work. The
accountants and clerks in their 40s and 50s who have managed to work without
computers, may need to be re-skilled to work in the changed environment. The
estate agents who provided services for sale, purchase and renting of
properties may need to pass qualify examination for registering with the
regulatory authority.
In my view, the positive
investment idea here would be to invest directly in small businesses and start
ups which would undertake the onerous task of re-skilling the Indian workforce.
Whereas the negative idea would be immediately exit the ITeS vendors who may
find it tough to bear the cost of re-skilling their workforce.
Re-locating: The
changes like Brexit, stricter H1B and L1 Visa regime and GST may make it
necessary/advantageous for companies to relocate their businesses. Especially
in Indian context, many industrial units and trading companies that were set to
only take advantage of tax arbitrage, may relocate in next 5-7years to more
advantageous locations, e.g., near ports or central India. The real estate in
these areas and logistic companies that will enable this re-location exercise
may worth investing in my view.
Re-structuring &
re-organizing: Restructuring of balance sheets and businesses, is
already a popular investment theme. Business with stressed but manageable
balance sheet; businesses with loads of "non-core assets" which were
acquired in the credit frenzy of the previous cycle; and financial services
companies which have been struggling with poor asset quality would make a good
investment theme.
I shall be looking for (i)
stronger balance sheets which will be out in the market with shopping bags to
lap up the distressed assets; (ii) stressed companies with good quality assets
which could be off loaded to repair the balance sheet, provided the P&L is
already looking decent; (iii) financials where P&L is looking good,
stressed asset are manageable, capital adequacy is decent and valuation is reasonable.
Re-orienting: The
businesses that re-orient fast to be in synch with the new regulatory framework
(GST, RERA in particular) and the companies that will be forced to raise
compliance level to fall in synch may get favorable response from investors and
get rerated. Some sin industries, contractors and real estate businesses will
form this universe.
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