FDI in Indian retail – scope and out of scope – will Walmart sign SoW with India

So finally UPA government under Chidambaram found courage to open up retail sector especially in multi brand format for FDI. Now many people are up in arms against and in the same time there are lot of voices in favour of it. Is it going to really destroy kirana shops and no answer as experts are vary of it. We can hope that it will bring professionalism in that sector.

Currently in retail, many say farmers are in the receiving end as they are not able to get good value for their produce. People argue that farmers will get a raw deal as big retails build their logistics and procure directly from them. But even today farmers who are making use of their intelligence are earning a lot. Those who are averse to the current scenario’s sell them to middlemen often called in commission agents locally. So will they really lose their jobs, i say a big no as they can still act like farmers and can still continue to sell them to multinationals since most of farmers are unaware of this process. To make a change first in this highly globalized world education to the farmers on how this process works in a foremost thing.

Next i will come to kirana shops, they always carry a first mover advantage and a good retailer who is not greedy and reputation will still command a set of loyal customers even if walmart is in neighbourhood. Only thing he needs to do is reinvent himself in this changing times. All walmart stores in single brand retail in partnership with Bharti group are yet to turn black and keeps on accumulating losses. They need to pay a lot in getting a decent place in this high real estate prices.

Indians are big discount buyers and even if big brothers give huge discounts to get high footfalls, it will lose steam once discount is over. (In annual walmart discount sale in US, Indians are the one who stand in queue to enter like booking TATKAL tickets). So at the end they are not going to succeed.

Finally even FUTURE group under retail mogul Kishore Biyani is struggling to book profits and under heavy debts it sold pantaloon to Aditya Birla group. So odds are against them and no worry to Indian kirana stores and a happy ending for them.

Who should be rewarded? Employees or Shareholders?

Every Quarter and at the end of each financial year, its the responsibility of all companies to publish their both audited and unaudited balance sheets. I had a chance to go through the balance sheet of a tier-2 IT company. It had reported a profit of 82 crores and for interim dividend alone it allocated 54 crores out of 82. I’m aware that according to stakeholder definition it includes employees and shareholders. But the dividend goes directly to shareholders. So what’s the benefit for the employees who toil hard for the sake of the company. Do the shareholders be rewarded generously for the sake of holding shares? Take the scenario of IT giant Infosys, it missed it revenue guidance and it kept its employee appraisal process on hold stating weak macro economic conditions but rewarded share holders with around Rs.20 as interim dividend.

So all of those who read this article, kindly let me know your opinions on this.

Diesel cars are not cheap..why?? Look below

With the price gap between unregulated petrol and subsidized diesel, we see many people are buying diesel powered cars and their perception is that diesel is cheap and so they will be spending less. Due to this companies are aggressively promoting so called highly pollutant diesel like ford figo, suzuki swift,etc,. But if you look into lot facts its not.

1. Diesel engine cars are more expensive than traditional petrol driven ones. Normally the gap is around 2 lakhs.

2. If we buy cars on loans, we have to pay more interest for them as they are expensive.

3. Traditionally diesel powered cars do have a high maintenance cost.

4. If you drive a diesel powered car for around 20k kms per year, you would be saving around 30,000 rupees with current prices and with assumed mileage of 20kms/litre.

5. You should drive this car for another 5 more years to reap the benefits of buying a diesel car which means by this time car reaches its shell life. Now you will boggled down by the maintenance expenses which will spiral upwards.

6. Last one is important Government of India proposed to levy a excise duty of 60000 rupees for diesel cars which will be huge for small car buyers where as the diesel guzzler SUV buyers don’t worry about this.

How to invest smartly in 2012

Everyone wants to get handsome returns on their investments. But the quantum of their returns varies from person to person. With inflation ruling in double digits, any returns in single digits is not worth.

1. Set the bank interest rate of 10% as the base point since once you invest in a bank FD you are assured of the returns. Its best for one who is very conservative in risk taking.

2.  The golden words are ” High risks and high returns”. Investing in stock markets in cash is for people in medium risk profile.

3. If your risk appetite is high, you can play intra-day, futures and options.

4. I’m not a  very big fan of mutual funds, so no comments on that.

5. Gold is a very hit commodity in 2011 and its time to cash the gold bought in 2011 in low rates.

6. One can also play with silver as price fluctuations was very high and an intelligent investor must have made a lot of money in silver.

7. With market not doing great, its time to play only buy trading in bluechips.

The crisis that is looming large to burst

 After the mortage crisis that crippled American economy i anticipated that next crisis that appears to blow up is credit card as americans are used to spend a lot on borrowed money.With the economic crisis affecting across wide spectrum with companies resorting to massive job cuts which are in the scale which are never heard before,people will be tightening their expediture and they will default their payment to credit card agencies weakening already fragile finance sector were we saw government bailing out banks with taxpayers money.I’m happy because as i predicted some 8 months back is echoed by economic gurus such as Alan Greenspan and others.Carefull spending of money in needed as we see the no of billionaires is in decline as published by Forbes magazine with rich selling their castles,yatches due to tightening credit availability..