Category Archives: Predictions

Dish TV India Analysis- Bright Future ??

Dish TV India – A Critical Analysis

Why would a Senior Management Personnel Not answer what is Debt/Equity ratio of company

I was randomly just watching business news channel (whenever I want some fun I put on Biz channels in morning at around 9 AM when guys give ways to make money in next 3-4 hours!!!) and came across startling fact whereby a Dish TV senior management personnel on TV did not answer – what the debt to equity ratio of the company is and gave an evasive reply . (Early week of December)

Couple of days later I heard same thing from someone senior from a company WWIL refuse to answer the Debt to equity ratio question . It was amazing and that led me to dig a bit deep into what are these companies where the management just DOES NOT answer the most basic question – What is the Debt Equity Ratio of your Company ?

Ben Graham’s Advice

I will start off this analysis by quoting the real Guru (Benjamin Graham) who laid down rules of investment around 80 years ago which are:

 “You may take it as an axiom that you cannot profit on Wall Street (or Dalal Street) by continuously doing the obvious or the popular thing.”

“What seems to be obvious and simple to the people in Wall Street, as well as to their customers, is not really

Obvious and simple at all . You are not going to get good results in security analysis by doing the simple, obvious thing of picking out the companies that apparently have good prospects — whether it be the automobile industry, or the building industry, or any such combination of companies which almost everybody can tell you are going to enjoy good business for a number of years to come. That method is just too simple and too obvious — and the main fact about it is that it does not work well.”

  Read why Dish TV does Not have Bright future for Investors !!

Organized Retailing in India – A critical analysis

Organized Retail will NOT be as successful and profitable in India as is projected by Everybody

Now that is a very bold(someone will say stupid) prediction to make when everyone sees 100s of malls seemingly springing up every corner of town and full of thousands of shopping hungry people .

I have not come across any article on net which even remotely says that Organized Retail in India will NOT really be that successful as it is generally predicted to be. In fact after FDI in multibrand retail has been increased to 51% not one article came in any prominent newspaper which said that  the Walmarts , Tescos of the world may not succeed in India . Everyone just automatically does following conclusion from some facts –

  • India Growing country ( 7-8% + GDP growth)
  • Has young population and a huge middle class who are earning a lot
  • Organizedretail is just about 5%
    •  Directly implying that when Organized Retail becomes at least 15% there will be so  many players who will make tons of money .

But I doubt anybody really has thought that may be India’s Organized retail will at least for coming 2 decades will NOT have a penetration level as it is made out to be . Even if  penetration level does go up considerably still it will NOT be profitable enough for the players/investors in the market .

Business Consultants if they read this post are not going to like my thoughts at all. But I am writing this mainly warning to the prospective foreign retailers who plan to be entering India in coming months and years in the hope of growing profitably based on ONE SIDED ppts/docs given by the so called retail experts/consultants from India. I hope I am proven wrong in coming decade or two.

Read complete analysis on why Indian Organized Retail Does NOT have a Rosy future

Fitch Ratings comparison India and Iceland Ratings in 2006 and 2011 (Unbelivable)

Came across Fitch ratings on India in 2006
Rating of India — BB+
Highlights (Heading of arcticle was Fitch warns India on mounting debt/GDP ratio)
Despite rapid economic growth of 8.1 per cent in the first half of this fiscal, global credit rating agency Fitch has warned India’s “weak public finances” will constrain higher growth in medium term.

The international rating agency also forecast a current account deficit of 1.6 per cent of GDP for 2005-06

n a latest report, Fitch was of the view that changing household savings behaviour, coupled with rising private sector demand for investor funds, suggest that in absence of a fiscal correction higher growth in India was going to become increasingly dependent on external financing.

“We do not believe that India’s public debt dynamics are explosive. Nonetheless, the fact that the debt/GDP ratio has continued to edge up to over 85 per cent even as growth has accelerated to 7-8 per cent indicates that India is unlikely to simply outgrow its debt burden,” Rawkins said.

Iceland Rating by Fitch in same year .

The long-term foreign and local currency IDRs are affirmed at ‘AA-’ (AA minus) and ‘AAA’ respectively. The country ceiling is also affirmed at ‘AA’ and the short-term foreign currency rating at ‘F1+’.
Thus, credit growth of over 30% per annum continues unabated, the current account deficit expanded to 15% of GDP in 2005 and net external debt has climbed to well over 400% of current external receipts.

Private consumption and investment have been slow to respond to policy tightening and the current account deficit will breach 20% of GDP this year, up from 16% in 2005, driving gross external debt up to some 360% of GDP,

Fitch acknowledges that net external debt ratios are lower on account of a rapid build up of financial assets abroad, but says that at 357% of current external receipts in 2005 Iceland remains the most heavily indebted of any Fitch-rated sovereign.

Infact at the height of borrowing binge the Debt to GDP was almost 10 times . Can you believe that

Of course after the rating India has had almost 7-8% growth per year for last 6 years and Iceland got bankrupt, bailed out by IMF and countries are still suing Iceland for recovery of dues, Negative GDP growth for 3 years –all within one and half years of being rated AA by Fitch .

Of course that does not mean that Fitch has improved itself .
Even today
Iceland Rating — BB+ (
India Rating — ‘BBB-‘ (avg India GDP growth over last 10 years — 7+% with forex reserves in excess of $300 billion )

Iceland had to take a loan of $10 Billion from IMF and other countries which was almost equal to its GDP to be bailed out . Can you imagine if India had to do that ?? Who will provide almost $900 billion to India ?? or indeed a case where this might happen ??

How on earth is Fitch rating ??
This just confirms my immense hatred towards all the rating agencies
Is that a joke for god’s Sake ??

My prediction is that even after 100 countries go bankrupt which will keep on proving Fitch is wrong still they will keep on rating just like they have done above .

Anybody who invests or uses any kind of official rating by these institutions is sure to dig his own grave

Predictions about Tablet sales in India and why they are WRONG

I just came across article in Economic times where we have following comments
“Tablet is essentially a content consumption device than a content creation device… It will never be able to eat into PC sales, especially in emerging markets such as India”
Vyomesh Joshi, Executive Vice President, Hewlett Packard

“Tablet has become an aspirational device for people who possess more than one computer. But India will never see PC sales being hit by tablet sales, due to the sheer low per capita income of the country”
Ashwini Aggarwal, Former Executive Director, MAIT (MAIT, Manufacturer’s Association of IT Industry, is an apex not-for-profit body representing and driving the eco-system of the Indian IT)

Well it just made me think whenever some one senior(and supposedly intelligent and has vision) makes really big future prediction with a word like NEVER .

Well here is an excerpt from HP Quarterly conf call with analysts :
“In Q2, consumer PC revenue declined over 20% year-over-year. Even though our consumer PC expectations had been cautious, the steepness of our Q2 decline is greater than what we had anticipated. We are remaining cautious in the near term .”

Here is tablet sales by Apple only(well in fact only Apple matters when I am talking about tablets):
“Apple sold 9.25 million iPads during the quarter, a 183 percent unit increase over the year-ago quarter”.
Infact apple has sold a total of 25 Million iPads in around 15 months.

Assume all of Apple sales were in Developed markets and NONE in emerging markets like India . Even the dumbest of person can say at least somebody is buying tablet where he might have bought a laptop if tablets did not exist .
Now that somebody need not be from the Developed country only . If someone thinks that per capita income of India and China is very low and hence tablets will never eat into pc sales then he is the most ignorant person on planet earth . And believe me the price of tablets are not too high by any standard at all . They are almost equal to what a full sized laptop costs .

HP(and all computer makers) is dead scared of tablets and hence has brought its own touchpad(other computer makers and mobile phone companies also are trying to copy Apple) in market to compete with iPad.
In India I do not have any sales numbers from any companies which show how many tablets have they sold but walk in to any Croma or ezone store and you would see wide variety of tablets on display from samsung to acer to blackberry and of course Apple . And they are selling though I cannot quantify it .
With all these data I cannot believe that really senior people can think that a product costing almost same as a highest end mobile phone (iPad 1 starts from Rs. 23000 only while a lot of mobile phones cost more than Rs. 23k) will not eat into PC market share .

People just think Indians are so poor that they cannot even afford buying tablets . I absolutely agree with the pathetic state of India’s per capita figure but India and China are so huge that even 0.1% of people (who are really rich and mind you for India that equals almost 9 million people) will be enough for companies with really good tablet offering to succeed and have a good return on investment .

Those companies who will ignore India because they think Indians are poor do so on your own peril . (please learn from Apple who though was late by almost 8-10 months in bringing in iPad 1 to India introduced iPad 2 as soon as it could and boy its selling like hot cakes in India as well .)

My prediction- Tablets in emerging countries are going to eat into laptop sales . How much I dont know but its easy to find out . Any person buying a tablet means a laptop is not sold . Do the math !!!!!

Here is the proof of it :

iPad is now 11% of PC market

According to IDC’s estimates, worldwide personal computer sales excluding tablets were 84.4 million during the quarter .

Looking at it another way, assume that most iPads were sold to consumers, and that overall PC sales are split about halfway between consumers and businesses. In that case, the iPad has already sucked up about 20% of the consumer PC market.

Lets say if iPad was lined up with all the other computer makers it would be the 4th Biggest computer brand in the world –after HP, Dell and Lenovo …oh yes ahead of Acer .
If the macs(3.95 million) were added to iPad’s sales last quarter total will be 13.2 million with apple being 2nd largest computer vendor in the world after only HP (with 15.3 million).

And after this look at the confidence(ignorance) of HP VP saying Tablets will not eat up the market share of PC(laptop) . Its truly Alice in Wonderland Situation .

Planning Commissions Aim(2001-02) for Tele Density Reviewed

I have always wondered whether some people who are supposed to be more knowledgeable than simple mortals like me or may be you get things right when it comes to predicting the future. 

As Yogi Berra said “It’s tough to make predictions, especially about the future. ”

 So I tried looking for what Indian govt or Planning Commission had in mind in early 2000 when it was predicting the future telecom penetration aim .

Have a look at this

I assume that government or Planning Commission is supposed to make really rosy predictions because thats what politicians have been doing from time immemorial(or whenever they started talking ) .
So in 2001 Planning Commission said that its policies are going to be such that India by 2010 will have a teledensity of around 15% (read page number 8 of above link).
To quote “Make available telephone on demand by the year 2002 and sustain it thereafter so
as to achieve a tele-density of 7 by the year 2005 and 15 by the year 2010”.

As of today 25th July 2011 the teledensity is surely above 60% (please i know lots of people having multiple sims and not using them hence I have taken a conservative rounded off value ).

Now to take into perspective the absolute D grade prediction by Planning Commission you have to see that it was wrong by over 4 times that too being too conservative. Amazing .

I wonder where else Planning Commission is going to make such conservative predictions and people of India are going to surprise them by achieveing 4 times better performance in a span of just 8-10 years .
I am waiting for 2020 !!!!!!!