Monday, February 07, 2011

Can they unravel this funds mystery

INDIA'S BEST COLLEGES, INSTITUTES and UNIVERSITIES

Structural changes in business models are what AMCs now require if they want to sustain profitability.

When viewed from over 25,000 feet above the ground, the pace of change in Indian asset management industry appears almost miniscule. Year after year, it seems, industry turn out the same old products with growth showing no superlative jump. But that's only the bird's eye view. Drill deeper, and a very different picture emerges ' one in which a handful of mighty forces are spurring some dramatic changes, in an industry which is considered dormant till date.

In fact, apart from dramatic stock market performance, the year gone by was the year of reforms for mutual funds (MFs) in India. The key changes included elimination of entry and exit loads on purchase of schemes, the government allowing MFs to be traded on the bourses, et al. While some were in favour of investors, others pampered the industry. Whatever the situation may have been at the start of 2009, most investors definitely seemed relaxed and happy as the year ended. But the question stayed ' how will the year 2010 unfold for this beleaguered industry which is still adjusting to the regulatory changes? Will the promise of growth sustain in future? Well, it's already halfway through 2010, and the questions still remain unanswered.

Despite clocking growth rates that are amongst the highest in the world, Indian MF industry continues to be a very small market comprising just 0.32% share of the global assets under management (AUM) of over $20 trillion. Though the ratio of AUM to India's GDP has gradually increased from 6% in 2005 to 11% in 2009, it's still significantly lower than the ratio in developed countries, where AUM accounts for 20-70% of the GDP. Even a recently released report by PricewaterhouseCoopers (Indian Mutual Fund Industry ' Towards 2015) states that although the Indian mutual fund industry has weathered the financial crisis with AUMs posting a year-on-year growth of 47% in FY2009-10, retail participation has witnessed just a marginal increase to 26.6% from 21.3% posted during the previous corresponding period. In fact, the net sales of Equity and Balanced funds in FY2009-10 have been one of the lowest in recent years. Further, if statistics are something to go by, AUM as a percentage of GDP is still less than 5% in India as compared to 70% in the US, 61% in France and 37% in Brazil. This obviously means that low penetration level is a bottleneck in spurring industry growth. What's more? Since the crisis of October 2008, the domestic fund market has seen the steepest fall. As per a recent data from the Association of Mutual Funds in India (AMFI), the industry's average AUM plunged 15.89%. Further, the dependence on the corporate sector is still pretty pronounced at 51% when compared with economies like US and China where investments channelised through corporates, comprise only around 15% and 30% of the AUM, respectively. This under volatile market conditions sound a note of caution for the industry as high dependence on the corporate sector may result in the fund houses being prone to unexpected redemption pressures. Considering the untapped potential, competition too is all set to gain momentum in the MF industry, which is making dominant desire to progress, a reality, through wealth creation. Can they unravel this funds mystery? As such the regulator now seems to be paying heed to ensure that MF industry sustains its profitability. In fact, Securities and Exchange Board of India (SEBI) has recently issued directions for the mutual fund industry stating that no business houses without five-year financial services experience will be permitted to own stake in an AMC, with an aim to enable only the serious investors to get into the business. 'As MF business has a long gestation period, therefore the regulator is now looking for shareholders who can stay for long and are experienced in the industry,' spokesperson of Edelweiss AMC tells TSI.

With 22 AMCs, including Schroder Investment Management (Singapore) Ltd, Union Bank of India-KBC Asset Management, Global Investment House and Enam Asset Management, seeking regulatory approval to start mutual fund businesses, the fight to sustainability becomes all the more important for the existing players. Not to forget, AMCs are also grappling with other issues including direct tax code, documentation apart from no additional management fees on schemes launched on no loan basis. SEBI's recent instructions to scrap entry loads on all mutual fund schemes launched on or after August 1, 2009, too has increased problems for the fund houses. It now remains to be seen what new ways and means are evaluated by AMCs, channel partners and regulator to sort these issues.

Even the restriction of entry load on existing and new MFs, that marked a turning point in the functioning of the MF industry last year, is spelling out a huge impact on the commission structure of distributors, leading fund houses and distributors to restructure their business and operating models in order to arrive at a profitable solution. In fact, structural changes in business models of AMCs are now required to sustain profitability. Though partnering with banks may be a possible solution to improve distribution as well as profitability, but banks in India still lack the expertise to offer investment advise. As such the only option left with them is to explore open architecture platforms or aggregator models for conducting business.

Further, if AMCs want to establish a sustainable model, which yields profits in the long run, they need to deal with cost management with a firm hand. While restriction on entry loads has already spiraled the cost of sales and marketing, a large portion of the assets too is in debt, which actually tends to erode profits. Though it is assumed that as the size of the corpus (AUMs) increases, the cost incurred on managing the fund comes down (as being shared by a number of investors and thus the expense ratios will get ironed out). This premise has been rendered faulty in the more recent scenario where increase in AUM has actually seen a sharp rise in the expense ratios. In fact, the expense ratios of income funds that stood at 1.4% at the end of September 2008 has already gone past 1.58%.

No doubt, the road ahead for the mutual fund industry in India will be paved by the performance of the capital markets. But, before that, it remains to be seen how fund houses adapt themselves to changes in regulations, thereby shaping growth for the future.

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM BBA MBA Institute: Student Notice Board

Monday, September 13, 2010

Nokia N900

Nokia N900Technical Specifications :
Weight: 181gram
Dimensions: 111 x 60 x 18mm
Input: QWERTY
and touch
32 GB internal expandable memory
5.0 mega pixel camera

Gliding the slide: Bogged down by competition from Windows mobile and Android, Nokia has has launched a new Linux based Maemo platform in N900 moving from the good ol’ Symbian platform.The N900 is expected to provide users with a better user interface and user experience. Besides the sassy style, this slider comes with a 3.5-inch responsive touch screen which makes it the best buy for 2010.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here
IIPM Related Links

Detail of all IIPM branches
IIPM - Admission Procedure
IIPM, GURGAON

IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
Social Networking Sites have become advertising shops

Friday, August 27, 2010

Is it time to bid adieu?

As the government finalises the taxation and expenditure proposals for the forthcoming budget, news is rife that the government may exit from the stimulus measures introduced last year to revive growth. In the absence of an exit strategy in an economy flush with liquidity, there could be fresh macroeconomic challenges that could derail the economic recovery underway. And in all sanity no government would like to be targeted for reversing the growth trajectory. However, the billion dollar question, “is it the right time to exit?” is worth pondering over. “Too much of stimulus, when the body is getting healthy, is not good, it can be injurious to health,” says the Finance Secretary, Ashok Chawla. Given the ‘twin fears’ of inflation and budget deficit, the statement gains significance as it could mean withdrawal of fiscal concessions given to industries to overcome the financial crisis. Nevertheless, there are others who believe that withdrawing medication when the patient is still on the path of recovery could prove fatal. They argue that while the government can stop giving other stimulants, especially those designed to help the private sector; it necessarily needs to step up employment by giving concessions to the small scale industries. The strategy therefore should be carefully crafted to ensure that the adjustment does not harm the green shoots of growth and hamper the recovery process.

Gyanendra Kashyap

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here

Detail of all IIPM branches

IIPM - Admission Procedure
IIPM, GURGAON

IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
Social Networking Sites have become advertising shops

Monday, July 12, 2010

Daring to think beyond...

If daring is the way at the Indian Institute of Planning and Management (IIPM), then IIPM has proved that once again by being ranked as one of the best business school in the country. As per a recently concluded survey conducted by Zee Business in a quest to find India’s best B-Schools for 2009, IIPM has been ranked fifth in the overall ranking (two places higher than its 7th position last year and well ahead of three IIMs) out of 30 B-schools. The icing on the cake is that it has topped the rankings in the global exposure category for the second year in the running. IIPM has been credited with placing students in major multinationals abroad, providing enviable global interface for its students through its Global Opportunity and Threat Analysis program, sessions with globally renowned visiting faculties, et al. It has been ranked 8th for placements as it has successfully achieved 2,550 national and 55 international placements for the batch of 2009. “Over the past few years, The Indian Institute of Planning and Management has structurally oriented itself towards fortifying the mandate to internalise internationalism through its strategic academic tie ups (with institutions like University of Cambridge, University of California at Berkeley, University of Texas at Austin, University of Virginia), student exchange programs and global placements. All such initiatives are driven with only one underlying objective and that is to make education at The Indian Institute of Planning and Management – a truly world class experience,” states Professor Prasoon S. Majumdar, All India Dean Academics, IIPM. Zee Business has conducted this survey (featuring the top 30 management institutes in the country) by interviewing faculty members from various management institutes, corporates, recruiters, students, and young professionals on parameters covering course content, global exposure, placement, industry interface, faculty and infrastructure.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
IIPM enters into media education
IIPM makes record 10,000 placements in five years
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here

Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com
IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎
IIPM Related Links

Detail of all IIPM branches

IIPM - Admission Procedure
IIPM, GURGAON

IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)

Thursday, June 17, 2010

Franchising to licensing; the desi way!

Brand licensing promises a bright tomorrow for many brands even in the Indian sub-continent. Will the optimism surrounding the industry transform into reality?

4Ps B&M: How did a company like Franchise India enter the world of brand licensing?
GM:
We realised the potential of Indian manufacturing industry as there are thousands of manufacturers across various industries in the country which didn’t have any brand to associate themselves with. It was then that we realised how a brand could be licensed. It all started from there and when we entered the licensing arena, we witnessed the vast world of brand licensing. We have identified around 6-7 categories which will make sense for a country like India.

4Ps B&M: Can you elaborate on the categories that you think have the potential to make it big in the country in this respect?
GM:
The first & foremost are the corporate brands. There is a certain amount of trust and association with every popular brand name like Pepsi and Ford. Apart from that, there are categories like personality brands where we have names like Harbhajan Singh and Shiv Khera, which have superb potential to ring in revenues. Besides this, we are also constantly talking to many others in the world of fashion designing. But one aspect should be noted when it comes to licensing of brands – a personality or a corporate brand name has to necessarily possess a certain amount of value left unlocked in order to create that emotional connect with the target audience. Clearly, overexposed personalities and brand names will not sell in the market. The other categories which we are very interested in are animation, entertainment and sports. But at the moment, the industry is at a very nascent stage and a lot of things need to be done to match standards of matters at the global level.

4Ps B&M: When it comes to industries like sports and entertainment, are you looking at only the renowned global brands?
GM:
Both. We are looking at global as well as Indian brands. But if you ask me personally, I am particularly interested in picking-up Indian brands. As per our policy, our portfolio will have a balanced mix (50:50) of both Indian and international brands.

4Ps B&M: What kind of international brands are you looking at?
GM:
Automotive is an area which interests me the most, as Indians love cars. We already have Ford in our kitty which is the oldest brand in the history of automotives, under which there are brands like Mustang that have a lot of value left unlocked given that we hardly see any Mustang cars running on the road. Apart from that, we are looking at the established corporate brands which create a sense of excitement amongst Indian consumers.

4Ps B&M: Talking about the Indian market, which is the brand that interests you the most in terms of licensing opportunities?
GM:
I am very keen to pick up Kingfisher. It’s a great name and can be leveraged to other products. There is also Gitanjali Jewels which can be used across various categories like handbags and eye care, et al. I see tremendous opportunities in both the brands.

4Ps B&M: Are you looking at IPL’s third season as a big brand licensing opportunity?
GM:
They have no clarity on what they want to do with their brands till now. But we will be happy to pitch in...

4Ps B&M: How much does License India contribute to the holding company, Franchise India?
GM:
The figure is low at the moment, but in the next two years, we expect License India to contribute to around 30% to the holding company.

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
TSI exposes b school ranking scamsters Mahesh Peri of Career 360 and Premchand Palety of C fore. - For Complete Sting Operation Video Click Here

Pioneer Exposes the fraud called Mahesh Sharma and Mahesh Peri of Career 360 and Barbel Schwertfeger of mba-channel.com

IIPM: An intriguing story of growth and envy
Prof Arindam Chaudhuri of IIPM on MF HUSAIN‎
IIPM Related Links
IIPM - Admission Procedure
IIPM, GURGAON

IIPM 3-year full-time Integrated (MBA BBA) Programme
IIPM 2-year full time Programme (leading to the award of the MBA degree from IMI)
Exclusive In chat with Society Magazine - Prof. Arindam Chaudhuri