In India, ETFs are relatively unknown and most of the ETFs have been passive index funds tracking the Sensex or Nifty. Benchmark has been the 800 lb gorilla in the Indian ETF space with their Nifty BeES which tracks the Nifty index. The MOSt Shares M50 is one of the first actively managed ETFs in India. Which means that a fund manager, Rajnish Rastogi, is actively managing the money and can tweak the investment model in real time. According to Rastogi’s LinkedIn profile he “developed the first (worldwide) fundamentally enhanced index and obtained regulatory approval to manage an Exchange Traded Fund (ETF) that tracks it.” If you are looking for more details about the ETF you can visit their site and download the mind numbing PDFs.

For me what is interesting is seeing the ETF space grow in India. ETFs typically have a lower cost (known as expense ratio in the biz) and can be traded via your local stockbroker. When people ask for investing advice, I give them my 3 stage process:

1. Absolute beginner – get an ETF or mutual fund that tracks the index (Benchmark Nifty BeES is an example)
2. Intermediate – broadly invest in ETFs or mutual funds (for example: Reliance Growth Fund or MOSt Shares M50)
3. Expert or gambler – invest directly into the stock market by picking the stocks yourself

I will be tracking the MOSt Shares M50 to see how it outperforms against the Nifty. According to them, they will pick the same stocks in the Nifty 50 index but “remix” the index. Would I recommend this product? Potentially, but I need to see how the ETF stacks up against the index and more importantly does the ETF have enough daily trading liquidity.

For more information on how ETFs got started checkout Wikipedia.

In the past 48 hours I have fielded about 20 questions about the iPhone. So this guide is to summarize the challenges/hurdles of getting an iPhone to work in India. I also got sick of hearing the following from people:

- My phone guy said I can get the iPhone in US and he will unlock it. YOUR phone guy is probably some Nokia loving jackass working from Heera Panna
- Damn, the iPhone costs $200 in the US. FAIL…that’s if you sign-up for a 2 year contract with AT&T. Are you planning on living in the US for the next 24 months, didn’t think so.
- I heard the current price for the iPhone 4 in Bombay is $2000….yeah probably, if people are stupid enough to pay $1000 a sq/ft for sub-par home construction they will blow 2 square feet of their housing budget on a phone.

On with the info. Right now, you face 3 challenges and I’ll go through each one.

1. Getting the actual phone. In the US you can buy the phone from Apple, AT&T Wireless and a handful of big box retailers (read Best Buy, Wal-Mart, etc…). The AT&T Wireless Stores sell a “no-commitment” iPhone 4 for $599 (16GB) and $699 (32GB). This means if you are an AT&T customer and want to buy the phone you can. No commitment does not mean unlocked, we’ll get to that in a minute.  All of this assumes there are ample iPhone’s in the supply chain.

2. You got the phone, now how do you unlock it?  The guys at iPhone Dev Team have come out with a jailbreak/unlock for the iOS 4 for the iPhone 3GS. BUT, they have not tested the jailbreak/unlock on the iPhone 4 hardware since it’s been out for only 24 hours. If they can’t issue a jailbreak/unlock right away, you will have yourself a very expensive paper weight.

3. If you have cleared the first 2 issues then the last one is easy.  The iPhone has a new micro SIM card format, which means you will need to cut your existing SIM card to the new format.  Luckily, there are tools that accomplish this and honestly you can even do it without a tool.

So what am I going to do? Funny you should ask. My wife landed into NY on the day of the launch and will spend the next 10 days there, so enough time to try and get an iPhone from AT&T Wireless and hopefully by then the iPhone Dev Team will issue a jailbreak/unlock.  But, I’m not holding my breath…I’m more positive of getting an officially unlocked and non-contract iPhone from the Hong Kong Apple Store and not deal with all this jailbreak/unlock crap I’ve had to “enjoy” with my first gen iPhone.

Update: Apple Store unlocked and non-contract prices:

France – 16GB @ €629 ($750), 32GB @ €739 ($885)
UK – 16GB @ £499 ($722), 32GB @ £599 ($866)

Update 2: Apple Stores in the US are selling without a contract for $599 (16GB) and $699 (32GB). Thanks @pjain

So why am I talking about something that took place 26 years ago? Because the Indian court system last week found 8 people guilty of “death by negligence”….26 years later.

Parts of the media want Warren Anderson, past CEO and Chairman of UC, to be extradited to India to face charges. I’m thinking why not focus on the people in India that are alive and that might be able to shed some light on what really happened.  This happened in 1984, almost 7 years before the Indian economic reforms began.  A company like UC could not exist back then without a boat load of people getting compensated…follow the money trail.

I’m really surprised no one is talking about Keshub Mahindra, past CEO and Chairman of UC India. He was one of the 8 people found guilty. I’m assuming no one is mentioning him because he is the Chairman of Mahindra and Mahindra a very large industrial group.

The media seems fixated on targeting people that can’t hurt them in the future. If they target Keshub Mahindra you can bet they won’t be getting any advertising dollars from Mahindra Motors, Reva, Kotak Mahindra, etc…truly Indian.

Instead, I will be focusing on finally getting a real “voice” with audio. Today, I’m launching a podcast with a co-host that covers business and technology from our perspective of being on the ground in India. It’s called “The DotMatrix Show” – connecting the dot…of biz and tech in India.

The co-host is Sahil Parikh who has similar views and passions but also many times we agree to disagree on stuff as well. You can subscribe via iTunes or visit our website to check it out.

What is the national carrier of India – Air India. Compared to other carriers around the world Rs. 17,000 CR (USD 3.5 billion) in debt is not so bad but when you realize their fleet size is small it starts to add up.

Air India recently announced 4 new member to their Board of Directors, most notable is Anand Mahindra who runs Mahindra and Mahindra. In addition, over the past 4 months there have been numerous articles printed about how Air India is going to move forward and change – bullsh@$#.  I think Air India is too unionized and stuck in the government worker mentality. It needs to streamline their organization but no one has the political will to do that. I would love to know how many of the seats are given to political people and their families…again another line item that no one wants to touch.

The merger of Indian Airlines and Air India was another disaster in the making. Indian Airlines handled all the domestic flights while Air-India was the international arm. Many say the merger was done to hide the loses of Indian Airlines and bury them into the books of the newly merged entity which is officially called The National Aviation Company of India (NACIL).

So what needs to get done?  The first step is to start privatizing the carrier just like Lufthansa (article on Lufthansa privatization) and British Airways (BA article) did. This would force the carrier to shed some employees and start to be more competitive. But, I’m sure NACIL will hire a consultant like McKinsey or Accenture and then put the blame of the decisions on the consulting company – business as usual for Air India.

P.S. The 32,000 feet in the blog title does not refer to the cruising altitude but the number of employees – 16,000

I grew up about 100 miles south of Indianapolis (Indy) and looking back on it, Indy is a test market dream. Indy is a good proxy for getting a cross-section of the average US consumer and costs are low. I remember visiting Indy as a kid and wondering why did they need 5-6 electronics stores (HH Gregg, Circuit City, etc…), then I read that Indy was ground-zero for the battle of big-box formats in the 80′s.

India has a similar city – Indore.  It’s right smack in the middle of the country. I’ve visited Indore many times through the years and the more I visit, the more I see similarities with Indy. In both cities, people tend to be more conservative but willing to experiment with new products/services.

For most business the Tier 1 metros – Bombay, Delhi, Bangalore, Kolkatta and Chennai are good enough.  But, if a company is looking for size and scale they will have to look beyond Tier 1 metros.  And that’s where Indore comes into play, if your product/service gains traction in Indore I’m pretty confident you can reach across India.

Come to India and it’s whole different ball game, newsprint is doing well and the number of new magazine launches is insane. In the last few months I’ve seen at least 6 new launches, Lonely Planet being the latest. Lonely Planet is published by Worldwide Media a joint venture between The Times Group and BBC Worldwide. They also publish Top Gear and a yet to be launched home/architecture magazine.

I’m expecting more magazines to be launched as advertisers in India seem to be flush with cash. I’m really looking forward to two types of magazines, one is a Consumer Reports type magazine that will evaluate and rate products/services free of any payola – which is fairly rampant in India.  The other is a personal finance magazine, that can give you the pros/cons for new products and real down to earth advice.  Most of the existing personal finance magazines will never talk about a product in a negative tone for fear of losing advertising revenues.

India is different, when it comes to print media.

There have been many case studies done on this idea and the big urban legend is that someone from P&G came to India because sales were dismal.  After a few days, the exec realized that selling products in single use sachet packets would be the way to big profits….SORT OF.  Funny thing I couldn’t find any case studies or documents about P&G, instead I found some info from a local player that had the idea of selling sachet packets (Scribd document).

This idea of targeting the BoP maybe a decade old idea, but then I realized there are people that have been targeting this demograph for decades – political people. And they have successfully sold people on a vision and hope for years and do it quite well. If anything a case study should be done on the political entities that have been targeting the BoP.  Granted, some of their tactics are probably not for corporate consumption but I do believe there might be a couple things that could be picked up from them and implemented.

BCCL is currently run by brothers Vineet and Sameer Jain* and according to Wikipedia has over 7,000 employees, 5 daily papers, over 30 magazines, 32 radio stations and 3 TV stations. In short, they have a massive footprint when it comes to consumer media services.

In 2005, Sameer Jain came upon a very simple but highly lucrative idea – barter ad space for equity stakes in new and existing companies. I’m not sure this would work in the US, but here in India it not only works but is highly successful. I’m only assuming it’s successful because their portfolio contains over 200 companies (see list below) and there must be something that attracts companies to TPT. I’ve known about TPT for several years but didn’t realize it’s size till I read that AEGON Religare a life insurance company is owned by TPT via a 30% equity stake.   TPT has also begun to advertise in the Times of India about the power of TPT and how it can help young companies reach a wide audience.

TPT can be viewed as a venture capital firm or private equity firm, but instead of handing over cash or providing management guidance they give you a marketing vehicle. And in India, that marketing vehicle is key.  You really have 3 avenues to pitch your product in India:

1. Actor – Bollywood pitch person or as they call them a brand ambassador
2. Sports – cricket player
3. TV/Newspaper/Magazines

With so few marketing avenues, the above 3 get very expensive for a new company and thus TPT enters the picture. So, next time you read the Times of India and wonder how a young company can spend a large amount on marketing dollars, more then likely it has TPT written all over it.

* Disclosure: I’m not related to Vineet or Sameer Jain, although I have requested to be adopted by them…still waiting for the adoption paperwork.

Below is a partial list of the TPT partnerships:

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?