Tuesday, March 11, 2014

A Travelers Memory of Kerala 'Gods Own Country'

For the past several centuries, Kerala was crisscrossed by travelers from East and West. Some the travelers included Ibn Bathuta, Marco Polo, Gundert , etc.

Financial thoughts is impresssed by the memory penned by Davin O'Dwyer. He has written an article summarizing his visit to Kerala, which is reproduced below 
  

Kerala, India: They don’t call it ‘God’s Own Country’ for nothing

By Davin O’Dwyer,


As grandiose slogans go, Kerala has one of the best: “God’s Own Country,” they call it, an assertion of divine provenance that’s loudly proclaimed on countless signposts and bumper stickers across the state. In most corners of the planet, such a boast would sound unbearably self-satisfied, tourist-oriented branding at its tritest. But here in this prosperous state on the southwest coast of India, it doesn’t sound smug so much as sincere, precise even. “Rest your eyes on our natural splendor,” it seems to say, “and believe.”
The phrase invokes the stunning natural beauty for which Kerala is renowned, of course, but also alludes to the variety of faiths that thrive here: The coexistence of Hindus, Muslims, Christians and even some Jains is apparent in the busy juxtaposition of towers, minarets and spires that sit cheek by jowl in every city, town and village. If for no other reason, the state can lay claim to the title of “God’s Own Country” because there are so many gods who might be inclined to choose it as their own.
My girlfriend and I arrived in Fort Kochi, a famously quaint heritage city filled with the vestiges of its Portuguese, Dutch and British colonial past, just before Christmas. One evening we stumbled upon aSunday school concert in front of the Santa Cruz Basilica, a grand edifice with a dazzling white facade and twin spires reaching to the sky.
It was an arresting sight — glowing paper star lanterns hanging over a large, busy stage where a choir of small schoolgirls dressed as angels performed Christmas carols for a rapt audience of hundreds. “Silent Night” has never sounded so out of place and yet so universal. This was followed by a troupe of teenage girls in colorful Indian dress who performed an elaborate folk dance, arms and torsos waving in intricate patterns. The contrast of Christian hymns and traditional pageantry should have seemed jarring, but instead it appeared to be a seamless expression of multifaceted identity.
That identity extends to the countryside. From the stunning beaches along the Malabar Coast to the maze of backwater canals cutting through huge rice fields to the glorious rolling hillside tea plantations in the Western Ghats, Kerala’s landscapes are almost as diverse as its people.
But the most abiding quality of those landscapes is the way they unfold in varying shades of lush green, as though the color spectrum had been forced to expand to accommodate the state’s spectacular fertility.
The name Kerala is derived from kera, the local Malayalam word for coconut, and there is an abundance of palm trees across the state, the spiky dark green fronds acting as natural parasols against the glare of the sun. The coconut doesn’t just lend its name to the place, but also acts as a ubiquitous and adaptable natural resource from which countless products, such as coir, a versatile fiber, and toddy, a famous — and potent — local brew, are derived.
Mountains of tea
It’s the plant behind another beverage that gives the area around the hill station town of Munnar, in east Kerala, its famously vibrant shade of green. In this part of the Western Ghats mountain region, the steep hillsides are covered with about 60,000 acres of tea plantations — an industry begun by the British, who established the plantations in the late 19th century.
The result is a stunning vista: The vast swaths of tea bushes cling to the hills like a soft emerald carpet. The narrow pathways between the bushes, the trails followed by the tea pickers, lead to patterned grooves accentuating the topography, appearing from a distance as if some godlike cartographer had inked contour lines onto the mountain slopes.
We normally think of a physical colonial legacy in terms of architectural styles and urban design — the distinctive angles of the roofscape, the width of the boulevards, the patterns of the brickwork. But the colonizer doesn’t leave an imprint just in the city streets, and in the hills around Munnar, we see a different type of physical legacy, a landscape radically altered by the British.
The emerald sheen of the hillsides comes courtesy of the empire’s insatiable appetite for tea. Intrepid colonists such as John Daniel Munro and A.W. Turner made their way up to the High Ranges, as they called them, and discovered that the altitude, gradient and orientation of the slopes were particularly suited to the cultivation of tea.
And that wasn’t the extent of their impact. To provide enough wood to fuel the tea production process, eucalyptus seeds were smuggled in from Australia, and now the hilltops are covered with fast-growing, ramrod-straight eucalyptus trees, standing as if in severe vertical rebuke to the natural curves all around.
As a town, Munnar has been blighted by thoughtless overdevelopment, with large hotels springing up in shambolic fashion. But traces of its history as a hill station, or colonial mountain town, remain, such as a few Christian churches and the High Ranges club, the latter persevering as if the sun had never fully set on the empire.
As has happened so often in India, the imposed traditions of the occupier, from the Mughals to the British, have been subsumed into the local identity, assimilated with ease into the larger national narrative. Thus, Indians drink copious amounts of “chai,” usually sweetened beyond recognition, and the tea landscape, too, becomes absorbed into the local tradition, a proud part of the heritage rather than evidence of an alien legacy.
Grasses and goats
On Christmas morning, we made our way to Eravikulam National Park, about eight miles from Munnar, which stretches over some 37 square miles above the line of vegetation, the green giving way to yellow-tinged, tough grass and exposed rock.
The treetops and tea plantations are arrayed on the hillsides below, and from here you get an unrivaled view of the rolling countryside, with pockets of mist occupying some valleys while occasional lost-looking clouds skim the highest peaks. Looming over the reserve is Anaimudi mountain, which, at 8,842 feet, is the highest mountain in southern India. It’s a forbidding hunk of rock, earning the nickname Elephant Head with its imposing outline.
One of the chief attractions of Eravikulam is the Nilgiri tahr, a rare mountain goat that was nearly extinct a century ago but now numbers approximately 3,000, about half of them in this reserve. Unlike the wild elephants that you can glimpse in certain wide pastures in the valleys below, the Nilgiri tahr are happy to approach the pathway, mingling with visitors in nonchalant fashion.
Signs warning people not to stray off the track are in English and Malayalam, which uses a script peculiarly apt for this part of the world. The voluptuous letters, all round curves and looping twirls, beautifully match the landscape. Fittingly, the word Malayalam itself means “hill region.”
Every dozen years or so, the tough grass suddenly turns bright blue as the native Kurinji flower blooms across the hillside, adding another dose of color to the landscape, almost as if nature is offering occasional respite from the pure greenery below.
In the backwaters
Quite another shade of green characterizes the famous Kerala backwaters near the coast. Although the tea plantations are closer to emerald, the vast rice paddies of this area are an almost luminous jade, fringed with palm trees and banana plants. The wetlands area around Kuttanad is a dense maze of canals, rivers and lake, largely south of the Vembanad lake, one of the largest in India. The mythology has it that Kerala was created when Parasurama, an incarnation of Vishnu, threw his battle axe into the sea, resulting in this conflicted countryside, neither all water nor all land.
A voyage along the backwaters on one of the traditional thatched boats is one of the quintessential Kerala experiences; the kettuvallam, as they are known, were once used to carry rice and passengers around the waterways and are now being adapted as houseboats, many extremely luxurious. They come in all shapes and sizes, the roofs usually bowed, curving gracefully toward the water.
We take an overnight cruise, meeting our charming crew of three at the busy coastal city of Alleppey. It is one of those chaotic, choked Indian towns that thrum with an anarchic energy, where speeding rickshaws and mopeds play real-life dodg­em on the streets before being held up by the occasional elephant progressing along in stately fashion.
The contrast with the waterways couldn’t be starker. Once you’re on the water, the delirium of Alleppey fades to a dim memory, replaced by a pervasive calm. A cruise along the canals is captivating — so serene, so tranquil that it weaves a kind of meditative spell, like a deep-tissue massage for the soul. We slowly glimpse the quotidian charms of local life here — the beautiful little cottages along the waterways, with moored boats instead of parked cars; small shops and toddy bars; numerous churches, some daringly modern in style, others tracing their roots back to the time of St. Thomas, the doubting apostle, who is said to have arrived in these parts in the 1st century.
As the houseboat chugs along, we regularly hear the slap-slap-slap of cloth smacking against stone as mothers do the family laundry by the water’s edge while children pause in their games and wave in our direction.
The captain docks the houseboat beneath some palm trees as we stop for lunch, and we become distracted by a most unusual sight: A lone duck herder on a canoe is expertly chaperoning a flock of hundreds of quacking ducks along the water, steering them this way and that with the use of a very long stick, both paddle and conductor’s baton, with which he propels himself and splashes the water to keep his charges on course, corralling them toward his colleagues on the riverbank. With the ducks safely home, the herder moves on to do it all again with another flock, an act of Sisyphean patience.
Later, we pass a cramped cricket game unfolding in the space between some palm trees, a scrawny wicket worn on the wiry grass. The boys wield their bats expertly, accounting for the tree trunks as if they were rival players. They, too, stop and smile and wave, the sense of hospitality boundless.
As the afternoon draws to a close, we take a canoe along a narrow canal, passing small, pretty cottages, and then walk along the small dams near the rice paddies, bending to duck beneath the broad leaves of banana trees. With the sun setting to the west, the rice paddies before us glow an iridescent green. It’s a dazzling sight, a vivid example of Kerala’s natural beauty.
We return to the houseboat as darkness falls and the vibrant colors fade to black. Whirring bugs accumulate in the air around us, and we catch a faint call to prayer echoing from a distant minaret and enthusiastic singing drifting over the water from a nearby church.
God’s own country, they call it. We close our eyes on the natural splendor, and believe.
O’Dwyer is a freelance writer based in Hamburg, Germany and Dublin. His Web site is davinodwyer.com.

Saturday, March 1, 2014

Letters to Investors by Warren Buffet

The much awaited 'Letter by Warren Buffett to Shareholders' is out. Such letters are famous for its education content and insights:

Some of the highlights of 2014 Letter are: 
  • Whilst many equity managers found it impossible to outperform the S&P 500, the two portfolio managers of the Berkshire Hathaway (Todd Combs and Ted Weschler) out performed S&P 500. Each manages a portfolio exceeding $7 billion. 
  • Berkshire Hathaway increased its ownership interest in the following companies
- American Express, 
- Coca-Cola 
- Wells Fargo- (increased ownership to 9.2% versus 8.7% at yearend 2012)
- IBM (6.3% versus 6.0%)
Stock repurchases at Coca-Cola and American Express raised their % ownership
  • Berkshire book value per share gained 18.2% in 2013, underperforming S&P 500 by 14.2%. Berkshire’s gain in net worth during 2013 was $34.2 billion. 
  • Over the last 49 years (that is, since present management took over), book value has grown from $19 to $134,973, a rate of 19.7% compounded annually.
  • The letter says that Berkshire’s intrinsic value far exceeds its book value. They repurchase of shares at 120% of book value . However, they did not purchase shares during 2013, however, because the stock price did not descend to the 120% level. If it does, we will be aggressive.
  • They made two large acquisitions during 2013, spending almost $18 billion to purchase all of NV Energy and a major interest in H. J. Heinz. 


Friday, February 28, 2014

Moneyscience Interview

Moneyscience, London, UK had interviewed me on ' Advanced Credit Risk Analysis & Management'. Please see below: 

Jacob Bettany: Could you begin by telling us a little bit about your background and how you came to write this book?

Ciby Joseph: I would like to introduce myself as a veteran risk management professional with two decades of banking experience. My expertise includes risk analysis, credit risk management, derivative risk management, financial analysis, relationship management, Basel regulations and investment management. During my banking career, my focus was predominantly on credit risk.
How I came to write this book is an interesting story. In the late 1990s, when I was working with HSBC Saudi Arabia as Senior Credit Analyst, I was assigned the role of teaching credit basics to new recruits under JODP (Junior Officers Development Program). One of the new recruits approached me and asked.......to read more please see the link http://tinyurl.com/osq7rvt 

Saturday, January 11, 2014

RISK LURKS EVERYWHERE - BE CAREFUL & LEARN FROM OTHERS MISTAKES


NSEL fiasco is now well known. The losses suffered from this SCAM includes large investors to small investors. A few sample is given below:

Geojit BNP Paribas makes provision for the dues from NSEL  See the link http://www.financialexpress.com/news/Geojit-BNP-Paribas-hit-hard-by-crisis--net-loss-at-Rs-94-cr/1195052

Motilal Oswal Group exposure is Rs 254 crores
http://profit.ndtv.com/news/corporates/article-nsel-owes-rs-254-crore-to-motilal-oswal-group-327287


Several small investors also lost..........see below
" I invested my husband PF after retirement with India Infoline in commodities, which is now stuck.So many such reports in media are out to question us, the investors,for not asking so many questions before investing and trying to suggest as this is our fault.What are you all suggesting that now onward anyone travelling should ask for air worthiness certificate from airline before making a booking, check all parameters of railway before boarding or for that matter any thing in life? There are bodies who are suppose to look after all that. Just because no one did their job a small investor should suffer. Where were all these agencies when these people started their business activities?How can Govt ministry/FMC/NSEL/IIFL and all other concened can sleep? The least one expect is, please solve the problem.

" I am also facing the same fate. ..... convinced me to break my FD and invest in NSEL. Now money is at stake......" 

The above comments are taken from the following (well written) article
http://www.business-standard.com/article/markets/nsel-anatomy-of-a-trade-gone-sour-113082600402_1.html

Conclusion
In 1992 it was Harshad Metha and since then, there were almost hundreds of investment scams - big & small - in India. Varying amount of sums were lost. I have gathered a few websites that provide details of such scams

Kindly visit them and learn from others' mistakes.




Wish you Happy & Safe Investing !

Tuesday, December 17, 2013

What will happen in 2014?


Everyone is preparing to say good bye to 2013

What an year from economy and stock market perspective!! Rupee crashed to records low during the year, but recovered. Economy growth recorded sub-5% levels, unimaginable couple of years ago. However, stock market - Nifty touched near record highs; although general market stocks continue to be sluggish. Inflation continues to be higher despite hike in interest rates.

I remember getting a presentation at the beginning of the year from a mutual fund who painted a very rosy picture for 2013. It stated that the banks will have a nice time because the interest rates had reached a peak in 2012. Because of the reversal of interest rate cycle in 2013, the economy growth would recover in India and this would lead to new stock market highs. It also predicted that Indian Rupee will strengthen to Rs 50/- due to the robustness in the economy.

How different or mixed was performance actually we witnessed. The interest rates were hiked as the 'black swan' of current account deficit hit the economy hard. Subbarao tried several tricks; however did n't had much impact.

Luckily, the change in guard in the RBI brought in some fresh and innovative thoughts and the actions taken by Raghu Ram has worked and controlled the devaluation of Indian Rupee.

One of the policies, Raghu Ram is also following is that of 'elevated' interest rates, which really hurts the economy. What is the reason for higher interest rates? Well it is a text book solution for several economic ills. One reason is inflation and the other (to a lesser extent) is the currency related reasons.

Financial thoughts still believe, inflation cannot be controlled by interest rate hike alone.

As we have mentioned in the previous posts in this blog, hiking of interest rates since 2010 achieved only lower and lower economic growth; inflation stubbornly holds its ugly head high. So, the interest rate hike is not a panacea for inflation - or it must be treated with other medicines as well. Well there is one medicine that can work - increase the supply side to ensure that too many cash is not chasing a few goods and services. But this is something the government policies must take care of. However, government is delaying its projects while private sector is not encouraged to take risks when even the reputed personalities like Kumar Aditya Birla is chargesheeted. Many construction contractors and villa project developers are also raided by Income-tax. India is a place of lot of opportunities; but be prepared !

So, part of the solution to the inflation also lies in good governance. Indians will get a chance to reduce the inflation by changing the current government and ushering in a more dynamic and proactive government.  It looks like Modi can deliver - although his election may make the minorities uncomfortable; nonetheless this is a risk that can be taken in view of the overall good of the country. Moreover, coming from the place of Gandhiji, he ought to show tolerance.

Then there is imported inflation - higher the devaluation, higher the inflation as 80% of the oil & gas requirements are imported. Hence, currency stability is a MUST. But the tapering threat is real and tapering has to happen. The good news is that Raghu Ram is preparing India for this big event. The defences are almost ready. CAD has reduced to about 3% now (from 6% during April 2013) and he has some more tools for fighting it out should the currency comes under attack.

So what would be the 2014 prospects be? Well of course, mutual funds and other stock market pundits will definitely come out with predictions that will look rosy due to several reasons. Financial thoughts will share the views shortly. 

Saturday, November 16, 2013

Difference in Approach


No one doubts the entrepreneurial ability of Lakshmi Mittal. From a small steel factory in India, he has created a blistering business career in the global steel industry.

After establishing himself abroad as the Steel Baron , in 2005 Lakshmi Mittal came to India to set up a $9 billion investment to build a greenfield steel plant with a 12 million tonnes per annum production capacity. It was his dream project in his home country India. This would have created hundreds of thousands of jobs and would have added a few basis points to the Indian economic growth. However, Indian political web was so complex that after struggling in vain till 2013 (almost 8 years) Lakshmi Mittal surrendered his wish / desire of a 12 million tonnes steel plant. As Financial Thoughts understand Lakshmi Mittal has decided not to go ahead and criticized the Indian politics and decision making system harshly.

Now let us travel half-way across the globe and see how Lakshmi Mittal is treated. 

"I want to thank your CEO, Lakshmi Mittal, for investing in America and the Cleveland area," 

Obama said during his visit to the ArcelorMittal Cleveland Steel Factory in Cleveland, on 16 Nov 2013.

This year alone, the company has invested $70 million, resulting in creation of 150 new jobs. US president himself welcome and thanked Lakshmi Mittal for launching / rescuing steel mills and creating jobs.

Hope Indian politicians will learn from Obama as to how to treat business people who creates job and wealth for the nation.


Wednesday, October 16, 2013

Sharp Recovery in Indian Rupee - does it pose new challenges?


Indian rupee has recovered appreciably from the low of 68.845 on August 28. One of the important reasons is the policies initiated by new RBI Governor, Raghuram Rajan, a former International Monetary Fund chief economist credited with predicting the 2008 global financial crisis. His strategy was to attract substantial dollar inflow into the country through an attractive FCNR deposit scheme. Even banks (e.g. ADCB) in foreign countries such as UAE snatched the opportunity to launch leveraged FCNR deposit schemes which provided annualized returns between 12%-30% to those who opted for such schemes.

While several other nations opted for sovereign bond issue at similar junctures, Rajan prudently shifted the burden away from Govt. It is pertinent to note that the countries such as Italy who opted for Sovereign Bonds landed in trouble years later.

Indian Rupee now stands at around Rs 61/-. It looks like the bearishness in the Indian rupee is gone (at least in the near future) as Morgan Stanley's Kendrick forecasts the rupee will rally to 58 per US dollar in coming months. Whilst Rajan has stated that he is not a 'superman', his actions speaks volumes and he has a lot of proven expertise in the market and this ought to be a differentiating factor going forward.
It looks like those who are nervous about Indian Currency's future can take a sigh of relief.
Soon he may face another (rather unlikely, yet not impossible) problem of too much strength in rupee - because the economy is weak and too strong a rupee may not be good for economic growth.