Innholdsfortegnelse for 20-Sep-20 i Business Today

You earn. You manage. You protect. That’s easier said than done though. Especially under the circumstances when businesses and individuals alike have their eye set on wealth erosion and wealth protection rather than wealth generation. But wealth is really in the eye of the beholder. Nothing is more awe-inspiring than super wealth generators. They remain THE role models to emulate in democratic, free economies. In the past five years, Reliance’s Mukesh Ambani, Bajaj Finance’s Sanjiv Bajaj, Minda Industries’ Nirmal Minda and GMM Pfaudler’s Ashok Patel have made investors and themselves far wealthier than their peers. Coupled with some equally impressive wealth creation at HDFC Bank, The Titan Company, Deepak Nitrite and Alkyl Amines, they represent the cream of the money spinning super-large, large, medium and emerging enterprises in the country…

“OUR VISION HAS BEEN TO BRING ABOUT MEANINGFUL CHANGE. WE DID THIS BY ADOPTING TECHNOLOGY TO POWER DIGITAL TRANSFORMATION IN BANKING, FOCUSING ON SEMI-URBAN AND RURAL AREAS TO DRIVE GROWTH”Aditya Puri, MD & CEO, HDFC Bank, in a message to shareholders The best of our bank is yet to come,” wrote Aditya Puri, Managing Director and Chief Executive Officer of HDFC Bank in his farewell message to shareholders. The 70-year-old ex-Citibanker's words carry a lot of weight in the market — after all, in the past two-and-a-half decades, Puri had built a bank with market leadership in products, including car loans, credit cards and personal loans from scratch. The bank has one of the biggest and the strongest balance sheets in the industry with a size of ₹15.30 lakh crore,…

“WE FOCUSED ON DOUBLING OUR REVENUE AND TRIPLING OUR PROFIT IN THE PAST FIVE YEARS. OUR KEY STRATEGY FOR THIS WAS TO MAKE GREENFIELD AND BROWNFIELD INVESTMENTS WHERE RETURNS WERE HIGH”Maulik D. Mehta, CEO & Executive Director, Deepak Nitrite Launching new products, diversifying the business, getting the perfect product mix and growth in exports. Few companies get all of these right and that too over a long period. Those that do, such as Gujarat-based chemicals company Deepak Nitrite, create huge wealth for their investors. “We focused on doubling our revenue and tripling our profit in the past five years. Our key strategy was to make greenfield and brownfield investments where returns were high and garnering largest market share,” says Maulik D. Mehta, CEO and Executive Director. “We invested ₹1,700 core…

"IF GDP GROWS AT 5 PER CENT, THE CHEMICAL INTERMEDIATES INDUSTRY WILL GROW AT AN ESTIMATED 7.5 PER CENT. WE HAVE BEEN CREATING CAPACITIES IN THE PAST FEW YEARS"Kirat Patel, Executive Director, Alkyl Amines Chemicals Veteran investment banker Hemendra Kothari's family has been in the financial services business for over 100 years. His great-grandfather was one of the founders of the Bombay Stock Exchange. But when Hemendra Kothari's younger brother, Yogesh, a chemical engineer, returned to India after studying in the US in the late 1970s, he had other ideas. He wanted to get into manufacturing of some key specialty chemicals and import substitutes. At that time, public sector fertiliser major RCF was producing methylamines from ammonia and methanol. India lacked manufacturers. It was then that Yogesh zeroed in on…

Creating wealth is easier than managing wealth, says Raamdeo Agrawal, Co-Founder & Non-Executive Chairman, Motilal Oswal Group. Fortunes are made — and destroyed — often within a generation. But when businesses do survive beyond the first, expanding families and conflicts of interest among family members could potentially implode businesses and destroy wealth. “When the size of the economy doubles, the wealth of business families increases manifold. Assigning Family Offices to protect and utilise the wealth according to the wish of its founders will help avoid mismanagement of assets,” says Agrawal. Several business families in pre-liberalisation India disappeared because of a lack of focus on wealth management and preservation. However, an institutionalised wealth management system through Family Offices is gaining popularity at a time when assets are appreciating faster than ever.…

Dharmesh Solkar, a Mumbai-based middle-level IT professional, decided to go for a week-long summer vacation to the Maldives when he got promoted in November last year. He and his wife Surabhi, a home maker, had been planning the trip for years. They had to cancel due to the Covid-19 outbreak. Soon, he started worrying about the future when he heard about jobs cuts across sectors. In 12 years of his working life, he had saved little. The ₹2 lakh he had set aside for the trip was lying in his savings account when he got a call from a jewellery chain’s executive, who gave him gold price data from as far back as 1923 to March 31, 2020. “Since 1925, when a sovereign of eight grams was priced at ₹13.75,…

Investment is a process of allocating money to assets for creating wealth and achieving financial security. There are several investment options. Each comes with ample risk. Selection is largely based on the investor’s risk appetite. Also, traditional belief is that age determines an investor’s risk-taking capability. Is that true? Should we manage our portfolio based on age? Risk Vs Age Investing in equities can fetch great returns. However, the risk involved is high. According to the traditional school of thought, a person should reduce exposure to portfolio risk as he grows older. Here, risk primarily refers to equity risk. According to a thumb rule, the proportion of equity in your portfolio must be equivalent to 100 minus your age. For example, if you are 30 years old, your portfolio can…

This is the first edition of the BT Wealth Issue where we have identified companies that created the most value for owners and individual investors over five years. We started with companies in the Nifty 500 list. As a first step, we eliminated all companies that had incurred losses any time during the five-year period. We divided them into four categories on the basis of gross sales: Super Large (₹75,000 crore or more); Large (₹7,500 crore to ₹75,000 crore); Medium (₹1,500 to ₹7,500 crore) and Emerging (lower than ₹1,500 crore). As part of the initial screening criteria, we applied a filter of minimum four-year CAGR of 15 per cent in gross sales for all categories except Super Large. The top players were identified as best combination of four-year gross profit…

India is celebrating 25 years of Mobility. A journey that is nothing short of magnificent - from wired telephony to mobile and data connectivity, time-consuming trunk calls to speed dials, and high call charges for incoming and outgoing to the lowest tariff plans in the world. With over 1.1 billion mobile subscribers, we are now the world's second-largest internet user base. Since the beginning of this millennium, the Internet has gradually seeped into every aspect of our daily existence. The current pandemic has reemphasised the need for ubiquitous connectivity. Today it is the lifeline for individuals, businesses, and governments. For most of us, it has become as essential as food and electricity. As a wide range of services such as education, health, and governance have gone digital, this sudden shift…

It is a good idea to take professional help to manage your wealth. The experience during the lock-down due to the COVID-19 situation explains it well. People began by thinking about the implication of such a development. A lot of thought went into actions that followed. Family offices in India, by and large, did the following things: REALIGN ASSETS QIICKLY: They allocated more money toward contingency. Yes, the family offices scanned the situation and decided to provide for any emergency. They moved their money into gold in early March and April through gold bonds and exchange-traded funds. The allocation was higher than usual of the fresh cash too. They increased allocation towards bonds through exchange-traded funds and fund of funds. In case of mutual funds, they moved quickly towards dynamic…

A large number of investors are looking to identify the best asset class to be in for now. The aim is to move in and out of asset classes in a swift manner, so that they can generate highest returns, with minimal risk. The challenge is that most do not get this right, and thus set themselves up for disappointment. Most investors at the end of March 2020, for example, would not have believed that global equity markets will be close to their all-time highs in just a few months, despite the biggest lockdown in the history of the world. Thus, having a well-defined mix of assets, put together scientifically, is critical for long-term investment success. In order to decide the right mix of assets, or asset allocation, as many…

↘ Indian Railways carried 95.2 million tonnes of freight traffic in July (1.7 per cent more than in June) ↘ There has been a sharp recovery after the 36.6 per cent dip in April when goods movement was badly hit due to the lockdown RAIL FREIGHT TRAFFIC (Million Tonnes) Crude Oil Usage Down 22% ↘ While domestic crude oil output was down 6.9 per cent in Q1 FY21, consumption slumped 22.2 per cent due to the lockdown, as opposed to a 2.3 per cent fall in the previous year ↘ One reason for low output was massive fire at Oil India’s field in Baghjan in Assam Y-O-Y CHANGE (%)…

"WHEN YOU ARE FAIR TO ALL YOUR STAKEHOLDERS, IT GIVES A FAR BETTER SHAREHOLDER VALUE AND THAT IS SOMETHING THAT WE HAVE CONSISTENTLY DONE"Subbu Subramaniam, CFO, The Titan Company Ltd The Titan Company's watch business was at an all-time low during 2015/16. Despite an over 50 per cent market share, it grew in low single-digits. That had nothing to do with watch-making skills, but analog watches were becoming passé and the company had not been able to react to the change. Titan's biggest competitor was not another watchmaker, but Apple and Samsung, which sold close to 80 million smartwatches, while Titan managed to sell only 15 million watches. Bhaskar Bhat, the then MD of The Titan Company, had admitted Titan watches had lost their attractiveness. The senior management realised the…

Investing is a unique kind of casino — one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favour.” When British-born American economist and investor Benjamin Graham, who was also Warren Buffett’s mentor, said this sometime early in the last century, he was guiding investors on ways to earn good returns while playing it safe. This is truer now than ever before in India where, in a volatile stock market, only a handful of stocks are driving the rally, while most others are refusing to move. Graham was a proponent of value investing, the most reliable way to generate good returns in stocks markets. The idea is to pick good quality stocks trading at a discount…

When it comes to building assets, especially in India, real estate attracts a large section of investors. The reason is that, unlike a financial asset, it is something investors can see, touch and feel. That is why almost three-fourth of Indian household wealth is parked in real estate and only a small fraction in financial assets. “The average household holds 77 per cent of its total assets in real estate (which includes residential buildings, buildings for farm and non-farm activities, constructions such as recreational facilities, and rural and urban land) compared to 5 per cent in financial assets (such as deposits/savings accounts, publicly traded shares, mutual funds, life insurance and retirement accounts),” says a 2017 report by the Reserve Bank of India titled “Indian Household Finance Survey.” However, in the…

The mutual fund (MF) space has grown significantly in the past two decades. However, being a mass product, MFs follow the law of averages when it comes to risk and returns. This works for retail investors but fails to meet the risk and return objectives of high net worth individuals (HNIs). This is where portfolio management services (PMS) and alternative investment funds (AIFs) come into the picture. “MFs are standardised schemes with a lot of investment restrictions. PMS and AIF offer more flexibility,” says Rahul Jain, Head, Edelweiss Wealth Management. The recent rigid classification of MFs by Sebi has made it worse. “PMS managers construct a focused, client-centric portfolio with fewer high-conviction stocks having healthy earnings visibility, quality balance sheets and business leadership,” says Rajesh Cheruvu, CIO, Validus Wealth. PMS…

The momentum of your wealth-building journey could take a hit in case of medical emergencies. It not only has the potential to consume all your savings, but can land you in a debt trap as well. Health insurance offers a wider protection net in such cases. A Critical Factor While you keep saving and investing diligently, you need to guard your finances against incidents that can derail the process. “Health insurance offers complete peace of mind to the insured. The knowledge that in case of an unforeseen event the economic damage will be covered is enough to reduce stress hormones,” says Abhinav Angirish, Founder, Investonline.in. “Even if you are in perfect health, your health insurance should play a critical role in your financial planning as it prevents you from dipping…

Q: What was the problem you were grappling with? A: I started as a software developer fresh out of college in 1995. While I enjoyed being able to create solutions for complex problems, my interests diversified. I wanted to go beyond coding. So, there were questions about when to move, what to do, and whether it was the right move from a career standpoint. Q: Who did you approach and why? A: I have always been fortunate to have mentors and managers guide me. During that period, I reached out to my manager Pankaj Kathuria at my then employer Digital Domain. I shared my aspirations candidly. He acted as my bouncing board and helped me think with clarity in choosing the next steps in my career. Q: What was the…