Great

Eternal words that make you feel cherished!

I got a card from CaratLane with these lines...they were lovely enough to share.

Wednesday, June 03, 2009

1991: When India made history

Born in the United Kingdom, growing up in Sudan, residing in Hong Kong and investing in India. His father was an Icelandic and probably the only one in Sudan, which must have made him stand out, quite a bit in the community! But what memories of Sudan that stick with Jon Thorn is the dire poverty and the famine, which left an indelible impression on him.

He went back to the UK, when he was around 9 years old and studied there. He got his doctorate from the London School of Economics. So, when he finally started working in the 1980s in the US, there were investing big-names like Michael Milken and Sir John Templeton gauging the global markets and investing in unknown markets and asset classes.

Managing Director & CIO of India Capital Fund, Jon Thorn told CNBC-TV18, "Mike Milken is somebody who invented a whole class of securities - junk bonds. He invented it as an investable class, and it's very rare - there were only 4 or 5 people in the century - who have truly claimed to invent a whole asset class."

Templeton saw potential in India but in the 1990s, it was undeserved as a lot needed to be done in the country to attract foreign investments. As Thorn describes it, it was more of an "intellectual conviction that there was potential and possibility. But none of is actuality yet."

"So in our view anyway, it could so easily have happened. So it was a very a tough decision - it was quite a difficult to sell. We had a lot of problems convincing people, that India had possibilities."

He's also had experience of writing for a food and beverage industry magazine, which also gave him a bird's eyeview of how managers managed and sold their products, and made money for their shareholders.

Thorn says that his convictions paid off and India is destined for greater things. So much so, that in 2005, his fund, India Capital Fund won the best 'Single Country Fund' award in 2005 from Asia Hedge.


His investment philosophy is "extraordinary change leads to extraordinary crises, which leads to extraordinary opportunity." And he was proved right, when in 1991, India's Reserve Bank of India ran out of gold and the World Bank came to the rescue on the condition that India liberalised its economy.

Thorn feels that when China and India decided to join the economy, that was a truly momentous moment in history, as opposed to the breakup of the Soviet Union or even the fall of the Berlin Wall.

He explains, "The thing about China is that they industrialised or re-industrialised I may say, much earlier than India. But more importantly, this has been a very single political structure to get things done and that makes things happen faster. I don't think one is certainly better than the other, but that's how it happened. The other thing is, investing capital in China has created the manufacturing base."

"In 2003, China was the largest single recipient of investment capital in the world -more than US - and there has not been any other country apart from the US since 1880 which has received so much investment capital. Now this fact alone, changes similar assumptions about what the future will be like for China and for India as well."

India being a democratic country, and with as many rules and regulations, beginning a new business or setting up a plant, was tough going for the foreigners, who came in during the first wave in 1991.

Thorn explains, "I personally always felt that the theoretical prospects were unbeatable for India. The labour force, the language, the sheer demographic profile being among the youngest population of the world, all these things I profoundly believed would pan out and would actually be successful in the end."

"But I believed that the timeframe would be much shorter but it extended. I won't say that we became desperate, but we did rather wonder and become a little impatient. I believed these things were fundamental and would ultimately come right."

Thorn says that his convictions paid off and India is destined for greater things. So much so, that in 2005, his fund, India Capital Fund won the best 'Single Country Fund' award in 2005 from Asia Hedge. But he believes more must be done on the privatisation front - to ensure that competition pushes GDP growth higher, thereby giving people higher standards of living.

Thorn concludes, "The government should govern and not manage the companies. I think it's very clear that when you get the government away from running economies, GDP increases. But it's a political decision for the citizens of India and the government of the day to make."

Written for moneycontrol.com

Pitching India to foreign funds the Quantum way

Chief Executive Officer, CEO and chief investment officer, Quantum Advisors, Ajit Dayal seems to have known what he wanted from life, very early on. Though, his father was a doctor and it was expected he would follow his footsteps, he chose to play the equities game because he didn't find the prospect of making house-calls at 3am in the morning very appealing! So he went off to the University of North Carolina at Chapel Hill to get an MBA degree.

He did have the option to work on Wall Street but gave that up to work in India. He sure has made the most of his time here. For instance, he's written the Quantum Year Book and some lighthearted stuff as well - well, like comic books on the stock exchange!

Pre-liberalisation market scenario
He felt there was excitement in the air, of working in a nascent market like India, which in 1984, had yet to see big-ticket players like Franklin Templeton and Alliance come in.

The person who gave him his first break was Ashok Birla. Dayal told CNBC-TV18, "I met him in 1984, and he took me on. He was setting up a company then, with SG Warburg called Mercury Asset Management. The fund was called Birla Mercury Funds and I was the director of the fund. Our role was to get money from non-resident Indians, NRIs, to invest in the Indian stock markets, to help the company develop.

"That was an idea, which was way ahead of its time, maybe 10 years ahead of its time because the first foreign funds actually were launched in India in 1993-94. That's when Franklin came down to India, Alliance came down to India."

But India wasn't ready for such radical business practices then. So, between 1985-89, Dayal did the rounds in New Delhi, meeting with the finance minister and other mandarins who could move the pace of the financial market reforms along.

But, at that point India was fighting shy of allowing foreign capital into the country because the real fear was that the Birlas were gearing up to take over companies and also because of the Swraj Paul episode in 1981.

Dayal recounted, "So people were scared of the foreign flows of money and here we were, trying to sell the idea that NRIs had a lot of capital and India as a country needed capital, there was a perfect match and the bridge for the two was the mutual fund route."

The irony was, that even as early as 1985, foreign funds were eager to come in despite the 40 per cent cap that was prevalent, for any fund launched by NRIs.

He wasn't successful in getting mindsets to change about foreign inflows but he did move to Unit Trust of India, briefly to help them raise money when they ventured into the US market.

He recalled, "I actually joined at the tail-end of the marketing exercise. I helped them to choose stocks for portfolios in India and then I left UTI and went back to the stock exchange, where I was a sub-broker on the floor of the exchange."

But research reports was what he really wanted to do. He admits, "The idea was to get information flowing, to as many people as you could about India and also to begin to let people know, 'what's a share, why should you buy shares', not because it was owned by the Tatas, Birlas or Ambanis but because there is a P/E ratio, price to cash-flow ratio, dividend yield and there is earning."

A time of change...
When the 1991 balance of payments crisis forced the then Finance Minister, Manmohan Singh to throw open the economy, he was ready with his homework. He explained, "That was a day that we were actually waiting for, we started the Quantum Year Book in January 1990 - a year and half before the rules were announced for foreigners to buy shares - so on July 2, 1991 when the rules were announced for foreigners to buy shares, we were just waiting. Every single foreign group came down to India and they met us and we finally did a joint venture with Jardine Fleming."

Working with Jardine Fleming "was fantastic in many ways because they helped me to make Quantum from a 12 person team of research analysts to Jardine Fleming Quantum Enterprise with 180 people, in the course of a year. It was a JV and when I first met with them, they asked me, 'what's your dream for India and what's it going to cost?' when I told them what I had dreamt up and said it would cost $3 million, they gave me a cheque with no questions asked."

This proved a boon for his team's research purposes because now he had access to data flow from across the world. He elaborated, "We could, sort of, position ACC and Ambuja with respect to Holcim of Switzerland and in relation to Lafarge of France. So the data-flows were great. It's not that we actually went and wrote research reports on those companies but we read a lot of stuff on these companies."

There was a lot of action happening on the stock market, around the time, he inked his deal with Jarding Fleming - it was witnessing the Harshad Mehta led spike, so he cautioned Jardine Fleming, telling them. "There will be a collapse but don't worry, the fundamentals of the economy are still solid and they believed it."

Selling India to foreign funds
After his Jardine Fleming stint, he became a local advisor to funds looking to come into India. One of them was a UK fund called Prolific Asset Management and the other one was the California-based Walden Group. He and the Walden Group established the second venture capital fund for India. It was around this time, he had the opportunity to meet his guru and someone who inspired him.

Sir John Templeton
He reminisced, "I met Tom Hansberger in July 1998. He's an absolute genius, he was the co-founder of Templeton, Galbraith, and Hansberger. The first thing Tom told me is that I am going to make you unlearn all the nonsense you have learnt and I am going to teach you real long-term investing and real long-term research and he just changed the time horizon - the way we look at companies, the way we studied managements, the way we look at anything in the market - is really born out of what is happening with, what Sir John (Templeton) and Tom had done in their own enterprise, right from 1979.

"I actually moved to Florida in 1998 and then I was shuttling between Florida and India for the last six years, but I had my team in India. So my team and I, would chose Indian stocks for the portfolios that we ran on Tom's behalf."

Tom Hansberger
"In fact, when I went to Hansberger, Tom liked my work a lot and he actually made me the deputy CIO of the company in March 2000 and I know that he was running a fund valued at about $5.4 billion, till I left last year. Included in that, was the fact that I ran a large fund for one of the largest money managements groups in the world called Vanguard International Value Fund."

Personal investment fundas
His personal investing philosophy is to look at long-term five-year plans and how the management plans to achieve it. He's also a stock picker and does not believe in playing by the index approach. He explained, "When I say value, it means that I must buy a stock which has got profit power or the EPS power more than the market at a P/E ratio, that is equal to the market."

His future goals include running money for large institutions and becoming a wealthy individual! He reiterated, "It is about getting long-term money into India. It's what I always wanted to do - to get equity capital from the hands of big institutions and big pensions in the US to India, not short-term momentum money."

There are some things he cautions about. He stresses on being disciplined about when you plan to get into the market and how long you plan to hold onto the stock. Otherwise, it just hints at the fact that you don't believe in the numbers yourself.

He elaborated, "We are value guys, so by definition we buy shares that no one else wants, and we tend to buy them when they are going down. So it's like catching a falling knife, which is always dangerous. And at the other end when shares go up, we are disciplined. We are not willing to pay what the growth momentum guys are willing to pay."

And what's his advice to upcoming market analysts? "I would tell them that irrespective of nationalities, you can find good and bad people anywhere in the world and don't get fooled by the fact that foreign money, per se, is sort of, angelic in nature because it's not", he concluded.

Written for moneycontrol.com

Tuesday, June 02, 2009

Trendy & earthy handicrafts for your home

Your home deserves the best and almost everyone does go around hunting for that perfect hand-knotted carpet, or intricately woven wall tapestries in vivid colours. Want wrought iron candle sconces or lovely Warli or Madhubani artwork - anything that shouts India and flaunts its rich heritage?

Then head to Nirmitee in Mumbai. Your search for that perfect artifact should end here. This store was set up in 1997 and products are sourced from all corners of the country, which find their way to this store and then into many of the superbly done up Mumbai homes.

Many artists get a chance to showcase their talent and in diverse mediums like wood, clay, metal and other materials here. One will find Odissi brass statues, copper handicrafts from Maharashtra, wrought iron statues from Madhya Pradesh and many other artifacts from Rajasthan and Uttar Pradesh.

You can browse and take your pick - so do leave home with plenty of time to kill - as you wouldn't want to rush this shopping experience. All of these handicrafts are lovingly created masterpieces - one gets a hint of tradition being maintained with a family working to keep their skills alive.

At the store, handicrafts are not priced beyond a maximum of Rs 25,000. Apart from metal work, there are palm leaf paintings, Warli art and Madhubani art. If art doesn't excite you, you could just buy the handcrafted chess pieces from Rajasthan - to get some practice for those boardroom battles.

Nirmitee
4/5 Khosravi Estate, SK Bole Road, Dadar (W)
Tel no: 24229139
Open: 11.00 am - 8.00 pm


Written for moneycontrol.com