"It's the last thing a
man will admit, that his mind ages."
—Will Durant (American,
1885-1981)
Word for the day
Dorp (n)
A village; hamlet.
Malice towards none
Who should be most concerned
about the success of Amit Shah's Mission 2019:
(a) Congress party
(b) Sundry socialists like
Mulayam Singh, Lalu Yadav, Mayawati and Mamata Banerjee et. al.
(c) BJP's partners in NDA
(d) We the people of India
(e) None of the above
(f) All of the above
First random thought this morning
While people are busy with structural
reforms in elimination of subsidy from Kerosene and LPG, no one has highlighted
the following structural destruction:
The government has already
allotted 2.5cr LPG connections to BPL families under the UJJAWALA Scheme. The
target is to reach 5cr households by 2019. 5cr households in Indian context
mean 12-15cr voters and Congress got around 19cr votes in 2009 elections.
I bet someone like Rahul
Gandhi, Mulayam Singh, Mayawati, will get up someday and announce that all
these households will be provided 1 LPG cylinder free every month. That is a
subsidy of close to Rs1000/month to 5cr households!
Factroing Japan in investment strategy - 4
Earlier this week, I briefly highlighted (see
here) the fact that the commitment of Japanese investors (both public and
private) towards India is very strong and may strengthen further in times to
come. This commitment certainly transcends the politics and political leaders;
though the personal chemistry between leadership does provide some impetus.
Furthermore this commitment has a strong foundation at policy
level (see
here) and has started to reflect in action in past 5-6years only. The
exposure of Japanese investors and businesses to India is still very low, when
compared to other Asian countries like China and Thailand. It is therefore most
likely that the role of Japanese investment in India shall grow meaningfully
over next couple of decades.
In terms of Investment strategy implications, I would like to
consider the following:
(a) The return expectations
of Japanese investors are amongst the lowest in the world, given their domestic
environment and miniscule cost of funds. Hence, their valuation matrix may be
very different from, say, the aggressive American investors.
(b) While transportation
equipment and infrastructure may remain a key focus area, other infrastructure
areas, especially roads and power (including nuclear), may see higher
participation from Japanese corporations.
(c) In transportation
equipment area players like Suzuki, Honda, Toyota, Nissan and Isuzu already
have sizable presence. Many of these businesses may not be available to Indian
investors for investing. Investing in their Indian ancillaries may be a good
idea.
(d) One area where we could
see significant rise in Japanese participation is Marine transport and
equipments. I shall keep an eye on ports and shipyards for strategic Japanese
investments.
(e) The engineering
companies like Panasonic, Hitachi, Mitsubishi, Toshiba, Sony have materially
increased their presence in India in past one decade. In my view, this trend is
likely accelerate in the years to come. Again since not many of these companies
may be available for portfolio investing in India, I would look for their
Indian ancillaries.
(f) In consumption space,
premium textile and household products, packaged food (especially seafood),
wellness products could attract material Japanese interest in my view.
(g) On the negative side,
I would like to avoid direct exposure to most of the businesses that compete
directly with the Japanese. Though Japanese are not particularly known for
predatory pricing, competing with them would essentially mean lower margins and
market share for Indian players, given their lower return expectations and
relatively superior quality.
I might have oversimplified my thoughts here. Nonetheless, I do
believe in this opportunity, and urge the readers also to explore it at their
level. All thoughts, views and opinions are welcome.
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