The Richest in the Poorest Country

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forbes_india_rich_listForbes India has released their list of 100 richest Indians and the Top 10 played out as expected with the Ambani’s, Ruia’s and Mittal’s on the list.  More interesting were some notable people missing from the list such as Ratan Tata, Pallonji Mistry and Raghav Bahl – who are these people you ask?

Ratan Tata is the head of the Tata Group and for someone who has the authority to buy companies such as Corus Steel, Jaguar and Land Rover, I’m surprised he’s not on the list. Not to mention he is building a bungalow on Altamount Road – blocks away from Mukesh Ambani and Kumar Mangalam Birla.

Pallonji Mistry is the head of the Shapoorji Pallonji Group which owns over 18% of the Tata Group and therefore it’s single largest shareholder.

Raghav Bahl who runs Network18 a massive media conglomerate which includes many TV outlets and magazines such as Forbes India.

Part of the omission for the above 3 is that they may not be Indian citizens and hence excluded. Pallonji Mistry is an Irish citizen.

But, the big 800 pound gorilla in the room is the fact the list does not have a SINGLE politician from the Indian government on the list. Of course, we all know the money was gained illicitly but THAT would be the list everyone would talk about.

Getting back to the title of this post, Indrajit Gupta, Editor of Forbes India, summed it up best

Should we be celebrating the individual wealth of a 100 Indians in a country where more then 75% of the people earn less than Rs. 20 (50 cents) a day?

Not So Mutual

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sebi-logoThe average mutual fund investor in India must be celebrating since the Securities and Exchange Board of India (SEBI, it’s like the SEC) is doing everything in its power to bring down the costs of mutual funds.  The speed in which SEBI is mandating these changes is fast and furious…nice to see for a change.  On the flip side, many of the asset management companies (AMC’s) and banks that offered mutual funds are taking a hard look at their business model.

During the past 4 years what drove the mutual fund industry was the “entry load” that was paid to distributors.   The fee was as high as 2.25% paid by the consumer and then sometimes the AMC would throw in some additional coin to generate more sales.  The biggest distributors were banks and independent financial advisors (IFA).

The writing is on the wall, most of these AMC’s will have to steamline their operations and look at technology to enable their sales growth. I see two options:

1. Go directly to an AMC’s website and get their products, such as Fidelity.co.in

2. A low cost mutual fund online aggregator, which makes money directly from the AMC or supported via advertising

Both have potential but India has a small number of internet users, the reason the mutual fund industry grew was because of the IFA’s in the Tier 2/3 cities and villages.

To be honest 2.25% upfront was a complete joke and really lined the pockets of everybody but the consumer.  And when the markets were going up, many financial advisors were telling customers to switch to Product X because it was better.  In reality, the advisor wanted to get the 2.25% entry load on Product X – not much of a financial advisor.

The real winner in all of this could be brokerage firms. SEBI recently issued guidelines which allow mutual fund products to be bought and sold through brokers. The real losers will be the independent financial advisors who in a span of 9 months have gone from gravy train to derailed train.

NOTE: The above image is the SEBI logo, which could possibly be the worst logo ever designed.

Smartphone OS Battle

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phone_osThe smartphone OS battle is finally starting to take shape and I’ve decided to take a closer look at what the marketplace has to offer. Years ago the most critical thing that people would store on their phones were the actual phone numbers and most likely that got saved to a SIM card. Now, phones a have a wealth of info on them and utilizing some sort of smartphone OS is a must. There is no point in getting a cheap phone and then realizing you can’t sync your data, if the only option is to manually enter in the data…that is a major #FAIL.

From my perspective there are 6 players in the battle to be Number 1, I’ll go through each one:

6. Nokia/Symbian – Wow, these guys have really lost there way.  10 years ago Nokia was the phone to have in Asia/Europe but now they are quickly losing market share.  Even more pressing for them is that their Symbian software is withering, no real programmer is programming for the platform. And in today’s environment it’s all about the apps that run on a phone. Symbian reminds me of the IBM OS/2 days – Big company, no new customers and zero apps.

5. Palm WebOS – Not even former Apple exec Jon Rubinstein, current CEO of Palm, can save them.  The OS is stunning and slick, but they don’t have a chance with some of the bigger players down the list.  They should just open source it and work with the smaller cellphone makers.

4. Windows Mobile – Bloated.

3. BlackBerry – About a year ago, I was singing the “BlackBerry will die in 18 months” song, but I’ve changed my tune.  BlackBerry seems to have really put the pedal to the metal and appears to be doing well. I recently had the chance to configure a new BlackBerry for email and it took me 5 minutes, compare that to the first BlackBerry I bought 5 years ago where it took me 30 minutes and my current iPhone which takes about 7 minutes.  Kudos to the kids from Canada…welcome to North America.

2. Android – 2009 was supposed to be the year of the Android, that didn’t really pan out. The recently launched Motorola DROID phone is a customized version of Android and is said to be making waves. I expect a ton of new phones from Samsung, LG and HTC to flood the market and bring the prices down, which are currently hovering around USD 400-500 for a phone. The Android Marketplace has not taken off but that’s also driven by the fact that not many Android phones are in the hands of the consumer. 2010 seems to be the year for the Google Gang.

1. Apple iPhone – Beyond being an Apple fan there are some real business justifications for it being the king of the OS. First, they completely changed the game with the app store, this is not only a way to keep people on the iPhone platform but also another revenue stream for them – 30% to Apple and 70% for the developer.  Symbian, BlackBerry and Windows have been around for years and not one of them thought about offering a store but once Apple announced, they all announced their intentions.  Where Apple excels is that developers not only create programs for the iPhone but also the iPod touch (I believe over 80 million devices combined). Since both devices have the same screen size and resolution the user experience is the same and saves on development costs. Whereas, if you program for the Symbian/BlackBerry/Windows/Android every device is different – screen size, resolution, physical keyboard, etc…which leads to long development timeframes. The iPhone OS still has a way to go in terms of features but is quickly gaining and in the meantime grabbing hugh chucks of the market share.

Once again, with all these options the consumer is the real winner and should lead to lower prices and more features in the future.

Building Sand Castles in the Sky

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Indiabulls_logoWell, that didn’t take long for Bombay real estate developers to go from building “affordable housing” to overpriced properties.  Back in March 2009, at the height of the financial crisis every real estate developer was talking about changing their business model and going after value for money projects.  Now it seems many are scraping that residential business model and back to building massive properties, case in point – Indiabulls Real Estate (IBREAL). They recently kicked off their advertising campaign for Sky, Sky Suite and Sky Forest, all 3 properties are located in Lower Parel.  According to a sales rep I spoke to at IBREAL, Sky is sold out and their managed residences at Sky Suite are 20% sold. Sky just came onto the market about 6 weeks back, so that is either an incredible sales effort or excellent marketing to say “you can’t buy, go away.”

The latest building to go on sale is Sky Forest. The marketing info talks about 10,000 to 22,000 sq/ft for either a duplex or triplex.  I called and asked about pricing, it starts at Rs. 20,000 a sq/ft plus Rs. 50 per floor rise and Rs. 1000 sq/ft for a Worli view. So the math for a 30th floor 10,000 sq/ft pad is:

Base price = Rs. 20,000
Floor rise @ Rs. 50 x 30 = Rs. 1,500
Worli view = Rs. 1,000
Total 22,500 x 10,000 = Rs. 22.5 CR (approx USD 4.7 million)

The kicker is that the 10,000 sq/ft is really super built-up area, whereas the livable carpet area is more like 4,430 sq/ft. Why such a hugh difference? That’s because of the crazy Bombay real estate math that includes things like the lobby and other common areas of a building and quoted as “super built-up”, exceptionally stupid I must say.

So the price is really more like Rs. 45,000 sq/ft or around USD 1,000 which is quite spendy.