Laurus Labs IPO: Quality is Indeed Pricey

I couldn’t do a detailed study of this as it requires a great deal of time to study a pharma player. But it is looking good although somewhat pricey which i feel is justified for a high quality player like Laurus.

But it has a great promoter Mr Satyanarayana who is a veteran of almost 25-30 years. He has taken Laurus from nil in 2007 to 1800 cr in 2016 which is a great feat indeed. But it has low margins of below 10% as compared to high 20's of other players...but i think this is well explained by unused capacity, capacity under construction and high investment in R&D. It invests around 5% in R&D which is a unique feat for any Indian pharma company. But it has some credits due to high R&D focus. Efavirenz is an active pharmaceutical ingredient (API) in many anti-retroviral or AIDS-treatment drugs. And half the Efavirenz in the world is made at the Hyderabad-based Laurus Labs. In early 2008, they achieved another feat by replacing, In one anti-retroviral, a reagent called di-ethyl zinc, which was used to be imported from Europe costing $60-70 per kg, with a mixture of sodium hydride and zinc chloride, which cost just $6 a kg. 

Of top five Active pharmaceutical ingredient (API) worldwide including Efavirenz , Laurus has around 30 to 35% share. Due to this superior built up, it counts the global giants of the likes of Mylan, Aurobindo Pharma, and Strides Arcolab in India, Hospira as their biggest clients. So I feel any R&D focus company whether it is Biocon or Advanced Enzymes deserves premium valuations as they are doing something which not many Indians can dare along with the fact that they have the results to support their adventures in R&D. So at a valuation of 32 although it looks pricey as compared to some of the listed peers but strong brand strength and R&D supports this. It owns 32 patents and has 150 pending patent applications, in several countries, and has commercialized 59 products since its inception. Its Research-first approach puts it in unique orbit.

Although it is now an API player but it is dealing in high entry barrier and high growth oncology and anti-retrovirals (ARV) segment which is very different from other players. It is now focussing on formulations business to leverage its technology and capacity.  Also out of IPO proceeds of 1300 cr, around 1000 cr is going to PE investors and 300 cr for debt payments. It is good that company promoters are not selling anything which shows that they are seeing something much better. So far it has received only one warning from US FDA for its Vizag facility and successfully responded and closed the same.

So i think it is worthy for investment but in case of any fall...just buy more. Good things are always beyond and above short time variables....and it is never too late and too much of a good thing. It is a good buy even at 500 (In case it lists at some premium) and i am going to buy it from the very listing day itself. I think Laurus will be one of the few winners from Indian Pharma stocks. There is going to be high competition in simple generic medicines in USA but entry barriers in complex medicines like for Cancer are very high and margins are also strong. So i think complex generic medicine will see high growth and we'll see Laurus seeing high growth. Another area is Bio-similar where entry barriers are extremely high as developing a Biosimilar is just like developing a new drug from the scratch and we'll see our Biocon witnessing even strong growth. Biocon is already trading near 960-970 more than 3 times from our entry price of 300 but it can still achieve even higher growth.

(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing. I am not a certified Sebi Analyst and applied for the IPO of Stock discussed in this Post)

Tata vs Mistry: Glass vs Mirror

A Glass doesn’t hinder our view of the world and we can look through it; it never gives back anything to us. But you paint the glass from one side and it becomes a mirror. But a Mirror can be irritating as it shows us our ugly face. It just reflects the reality. And in the moments of despair and madness we can break the Mirror. So Cyrus Mistry is broken. But I am really at shock over what has happened with TATAS...i can't expect this type of nasty fight from Tatas. I am feeling bad for this guy Cyrus...i don't think that he was doing a bad job with all the heavy load of expensive investments at wrong times. I don't think that decisions regarding sale of Corus and fight with Docomo for denial of buying of right issue was entirely of Cyrus....what was Board of directors doing?

So Cyrus has left a bomb over Tatas...but i hope it is not a time bomb and will explode now only to have the momentary impact. But there is no need to panic and pressing the sell button. Just hold on to your fronts and no need to make any surgical strike either (Buying). Let time clears the clouds.

But it is always not hard to fathom your wrong turns; the hardest thing is to accept these-especially publicly. In the dream world of becoming hard core Indian MNC, Tata made some nasty investments that too at the peak of commodity cycle. Tata's bought Corus at mighty price of $12 billion. I can't understand how they couldn't see the coming over-supply in the steel world....China couldn't alone drive the world steel demand and if it was doing it could never be forever and not sustainable at all. Now China is fearing the heat of huge amount of melted steel used by it for creating unnecessary redundant infrastructure. How our so called highly paid economists/CFO's can't take precautions while going for expensive decisions if they can't predict the over-supply or lower demand.

Jaguar buy saved Tata although Jaguar has sparkled because of high china growth and only Tatas can tell whether their decision to buy Jaguar was due to this china story or they were trying to buy a premium prized asset for western markets. Indian Hotels bought some costly international properties when growth in Indian market was the visible choice. Global MNC giants were investing in India but Tata bought international properties. I think Cyrus was right in shedding the Fat when he sold some of these high prized hotels.

But we all do mistakes...it is our right to make mistakes in our path to success and glory. But when we make some mistake and later when we realize it, our focus should always be on solving it and finding the solutions. But what is Tata doing off late....it is investing into Airlines business which is also a high capital intensive business and prone to high losses for 5-10 years. That can't be the right approach...Tata should have been concentrating only on solving the mess of Mundra plant, Corus deal etc. Tata global still needs to find a way to grow its Himalayan Mineral water business for long....Starbucks JV is operating in dangerous price conscious Indian Market. So Tata is at inflection point and some tough decisions are required-no point in clinging to your faults.

I remember how Kishore Biyani is trying to save his retail business. In this quest he has sold so many of his prized dream assets like Pantaloons, Capital first etc. Jain irrigation has taken some tough decisions and they have really saved the day for themselves.

So i think this fight my turn ugly and we'll see more pain for Tata stocks although i think recent 10-12% fall is already severe and more than enough. But i don't find anything fishy and material in this 1.18 lac crore loss in the value of Investments in Power, steel business. Businesses do witness prolong periods of downturn due to economic and industrial slowdowns or over-supply. The only option and strategy is to pass/live through these difficult times gracefully. I think Tata can solve the mess of its power, steel and tea businesses.

I am still having the faith in Tata group...but the only thing i am worrying is whether they can do this Gracefully?

Crop Insurance and Commodity Trading- Farmer will See the Sky-Finally..................................................................... Stocks Covered: MCX India, Tube Investments, Sundaram Finance, Max India.

Farmers don’t see the sky…they just WATCH it…with hope and most of times with despair. The sky as we know (and enjoy) isn’t known to the farmers. They see a different sky…for them it is from where their lives flow…water. We may be enjoying the falling sky…but for our poor farmers every fall is not a water fall. We may have placed satellites beyond the sky but our farmer is watching the sky for thousands of years…for them nothing has changed…satellites broadcasts entertainment shows for us…but sky is always a broadcaster of horror for farmers.

India is a farmland…we have vast length and breadth of farmland with 60% of our people are sky based. The average size of farm land holding is around 3 acre. 85% of the Indian framers are cultivating the 70% of farm lands which are below two hectares each, more than 60% of the farm produces come from the small farms only. So we can’t think about economy of scale…and with low productivity from smaller farmlands; no doubt our farmers are vulnerable and terrified by the sky. But if India wants to touch the growth sky then we need to free our farmers from sky. I have no doubt that next leg of Indian growth will come from rural India. Rural India is neglected for so long…we think that high growth in agriculture in past decades should have brought prosperity all over the villages; but it is not as farmers aren’t able to earn the biggest pie which they should but the same has gone to the middlemen.

Poor small farmers are still poor…they still know moneylenders not banks. Farmers can’t store their produce due to lack of warehousing…they urgently need cheap electricity (Not free and subsidized; we need to produce cheap but profitable electricity), they need roads to carry their produce (although their small produce makes it costly to transport it to point of demand), they need timely advise for cropping. The list of things which can remove the variability from the farmers’ income is still long; but the factors bringing this variability are even bigger and most of the times beyond the reach of farmers and policy makers like floods, hailstorm, and fire etc. So apart from policy paralysis induced infrastructure deficiency they face the agony of the nature helplessly. 

That’s why when somebody says that power sector is all but gone in India; i find the statement and logic powerless. There is huge unmet demand for power in villages...one bulb lighting at home is not electricity. We are yet to see the real growth of the Indian power sector. The current lull will force out the inefficient ones and only mighty will remain (I see Tata power as the next biggest after NTPC, a great long term play).

Certainty of stable long term income/cash flow is the biggest decisive factor  whether you are planning for domestic consumption or taking any investment decision…the moment you have any surety of long term stable inflows…you can take the decisions as you can plan with assured cash flows. Hence I feel, insurance of farm income will make the Indian growth story comprehensive. Right now there is high distortion in the spread of income. In one season, they earn bumper but in the very next season they are ruined to the bottom either by Nature or by market forces like slump in the prices.

So now we need to see which factors can bring the stability in the farm income. Apart from policy based decisions I am seeing some niche solutions which can play very important role in the development of rural India. Let’s see these:

Crop Insurance: India, due to its huge reliance on agriculture, should have a strong crop insurance structure but only for complex structure of Indian agriculture. Crop insurance is one thing which is not in the radar of many but it is some serious business opportunity. Crop Insurance is a part of general insurance which I feel is even better opportunity. Indian equity markets will take some time to understand the valuation of Life and General insurance companies when more IPO’s of insurance companies will come. But I still feel insurance is the business which is not easily understood by many because it is indeed very complex.

Understanding Insurance Business

Profit and loss account and balance sheet of an Insurance company is very different from any other company we understand. Let’s have a short glimpse; Insurance companies have two main sources of revenue first is Underwriting profit which is the net excess of premiums received over claims paid. Like in a term plan, Life insurance companies collect the insurance premiums from policyholders (in case of endowment plans, a part of premium is towards Life insurance which is treated as income and the balance is kept for investment purposes on behalf of the policyholder) and in the event of death it pays the sum insured as claims…so any net premium excess is underwriting profit. Indian Life insurance companies are now making underwriting profits but General insurance companies which deal in Motor, marine, health and Fire insurance etc. are not making any underwriting profits at all. General insurance companies in India are selling policies at low premiums to get more business due to fierce competition and future growth strategy. First private General insurers started the battle with four public sector giants having 100% market share. During this fight which started in 2000, the four state-owned companies - New India Assurance, National Insurance, United India Insurance and Oriental Insurance - have seen their combined market share fall to 55 per cent from 100 per cent. This fight is keeping the general insurance premium at low levels. So right now every general insurer (Private/Public) except Bajaj Allianz is incurring underwriting losses in India.

So how these General insurance companies are making profits? With the answer, we move to the second source of revenue for the Insurance companies and this is-Investment Income. Insurance companies receive premiums and pay the claims against premiums received. But there is time Gap between these two events…they are not paying claims immediately…there is always a time gap between premium period and claim period during which Insurance companies can use this float to earn investment income from the premium amount. Float is the money that doesn’t belong to Insurance companies but which they temporarily hold. So Insurance companies invest this float money into so many investment options like Bonds etc. and earn investment income. Indian general Insurance companies are profitable only due to this investment income.

But things will change when these insurers will target underwriting profits after the consolidation in the Indian insurance sector. IRDA has also directed for compulsory listing of general insurance companies operating for more than 8 years and 10 years for Life insurance companies. The insurance regulator has said that all companies meeting the stipulation on minimum years of existence for listing should initiate steps to get listed within a period of three years from the date of issue of directions under these guidelines.

After listing there will be pressure for underwriting profits. Also amid falling interest rates, I think insurance companies would need to look beyond investment income. But general insurance is a great business opportunity in India as penetration levels are still very low in India. General Insurance business, once it achieves a scale, is a highly profitable business with very strong brand loyalty. Return ratios are very high in general insurance which is more like a necessity than a choice like Life insurance where people are literally chased for taking up the life insurance. Motor, Health insurance are among the necessities of the life these days. We can’t take a chance to avoid these.

So I think we’ll be seeing some of the most profitable business opportunities when the IPO’s of these general insurance companies will come. But as we have always done; it is way better to pick these before many are aware of this. So I am continuously buying the stocks like Tube Investments of India (Cholamandalam MS general insurance is the Subsidiary), Sundaram Finance (Royal Sundaram General Insurance), Max India Ltd (Max Bupa Health Insurance).

Crop Insurance is another big opportunity

History of unsuccessful attempts for Crop Insurance is very long in India. Unsuccessful is due to the complexities involved in the crop insurance and strained financial position of states/center Govt to fund the crop insurance. Unlike other forms of Insurance, crop insurance claims happen in heaps as it is not that floods will destroy only one or two crops in a Village. Entire village will be affected but again the impact of floods will be different on every single standing crop which necessitates measuring the loss of every individual farmer. However small land holdings of farmers in India make the administration of this task very costly which only raises the cost of insurance.

Also, as I have mentioned earlier, poor infrastructure in Indian Villages for Farming like poor irrigation, low use of Pesticides, Inadequate storage facilities, low quality seeds etc. further aggravate the situation as these factors increase the vulnerability of the crop loss to the farmer even in case of a low level calamity. All these factors impact the calculation of Actuarial Insurance premium which becomes very high due to these constraints and risks. So we can see how things are intertwined…bad infrastructure is also impacting the decision making at other fronts. Farmers can’t bear this high premium which sometimes is 20-25% of the sum Insured….even 10-15% is a high sum. If a farmer wants to insure his Kharif crop for Rs. 40000 per acre then at a normal premium rate of 10-15%, he has to shell out Rs. 4000-5000 which is very high for a poor farmer. Even Government can’t subsidize it fully. So all this resulted in payment of Low Insurance premium both by farmer and Government Subsidy which only resulted in low Sum Insured. In most cases, sum insured barely covers the cost of cultivation.

New Crop Insurance scheme can be a game changer

But current Government in Jan-2016 introduced a New Crop Insurance scheme; Pradhan Mantri fasal Beema Yojna (PMFBY). Here, premiums are fixed for farmers at 2% of the sum Insured in case of Kharif crop, 1.5% in case of Rabi and 5% in case of Horticulture crops. Sum Insured is kept at high levels on the basis of average per acre yields in last seven years (excluding calamity years) of a village. These average yields are then multiplied with Minimum Support prices to get the figure of sum insured. Actuarial insurance premiums are calculated for each village. After the contribution from farmers as mentioned above, the balance premium is shared equally by state and central governments. Hence there is no cap on the sum insured because there is no cap on the premium payment. All depends now upon the will of state and center government.

Due to high cost of Insurance earlier, only 20% of farmland is covered under insurance (Out of 200 Million hectare only 40 Million is covered). Although under coverage is not the only problem; inadequacy of the coverage is even bigger problem. But PMFBY is trying to sort out the both issues. Here as sum insured is kept high at actual loss of crop value hence there is no upper limit on the premium subsidy to be provided by state and central governments. But it is still far better than shelling out compensations after the calamity…waiver of loans etc.

One insurance company will be selected for one state on the basis of lowest premium quoted. That company will execute the crop insurance in the state. It can reinsure the crop insurance provided if it feels that risk is getting higher for its capability.

Technology is the key for crop Insurance success

The real test in Crop Insurance is how fast and accurate insurance claims will be processed as during earlier avatars claims took 3-4 years for settlement which becomes a joke on poor farmers. So here, supporting infrastructure and technology will be the key for successful implementation of the crop insurance. So farmers may see drones flying near their farms to capture the data for processing their claims when earlier assessment of loss was done by local Patwari by using Eye which was never credible and lead to corrupt practices.  Hence government needs to establish supporting infrastructure like weather stations in every block, use drones to assess damage and low earth orbit satellites to geo-tag plots to identify farmers.

With all this in place, if, say, a hailstorm flattens crop in a district in Madhya Pradesh, the satellites could pinpoint the plots and the geo-tags could identify the owner of the land. The weather stations would have already reported the hailstorm and drones would assess the damage more closely. The data is enough to make a quick assessment and the insurer can identify the farmer with the geo-tag and pay the claim directly into her Aadhar linked bank account. I think, drones and satellites (Remote sensing) can be easily implemented but weather station will require huge time and investments.

Actually, we’ll see more and more use of satellite technology in our day to day life in the near future as costs are coming down. Satellite internet is the biggest opportunity. Low earth orbit satellites will improve the internet speeds to compete with broadband. Reusable rockets will lower the costs of satellites even further. Broadband is a very costly affair especially in remote hilly areas where small users are scattered far away. It is very costly to dig lands and laying cables, mobile towers are a big nuisance and costly as they need continues power and high initial investments. So things are happening fast in the sky. That’s why the likes of Elon Musk of Tesla and Brenson of Virgin airlines have grand plans for Low earth orbit satellites. They are planning for around 4000 small satellites in the coming decade with around 600 by 2019 to provide speedy internet to remote parts of the earth where demand is strong and people can pay. Cable tv and broadband can’t stand on its feet in these remote areas. My main reason for buying Nelco was due to this coming of satellite internet. Tata communications is also going to be a big player in this arena.

General Insurance and Crop Insurance will see high growth in the near future

Indian General Insurance sector is Rs. 80000 crore story so far…out of which around 45% is Motor insurance and 25% is Health Insurance. So we can see with rural growth and demand for cars and bikes will result in high growth of Motor insurance although I feel in Motor insurance biggest growth will come from increase in the premium amounts. Health Insurance will see the high growth and will be the sector to watch. Indians are paying high health care costs out of their pockets which is a big negative and with more awareness people will realize the benefits of health insurance.

MAX India Ltd: My pick for Health Insurance is Max India ltd at 140…its main business right now is max healthcare which is growing fast but premium income of Max Bupa is good at 500 cr. Max Bupa now has strong brand positioning. Max Bupa and Max Healthcare will provide the high synergy to each other.

Crop insurance will be a big business within a year or so. General insurance which was on slow footing in last few years will see high growth in tandem with good economic growth. Actually the signs of growth are visible. In sep-16 alone, General insurance companies posted a growth of 88% yoy in gross direct premium.  In September, the general insurance industry saw gross premium income at Rs 15,087 crore against R 8,029 crore in September last year. Health insurance companies saw a 48.2% surge in their premium income in September. One of the factor of high growth in Sep-16 is crop insurance growth after good monsoon this season.

This year General insurance sector will touch Rs. 100000 crore premium collection figure as so far up to Sep-16 figure has already crossed 60000 cr. So we’ll see General insurance companies witnessing comprehensive high growth from this year. Market forces are sitting unaware of this big opportunity. Only when IPO’s will come then market will get a feeling of the business strength of General insurance industry. Hence I am regularly picking:

Tube Investments of India: Earlier advised at Rs. 400 last year but still way undervalued at CMP of Rs. 592. I have already posted a detailed blog post on Tube Click here. But i still feel it is a stunning stock to have; I am still buying it. So i am just revisiting it again:

 It is the owner of BSA cycle with 1500 Cr turnover and profits of around 70 Cr....its other businesses which are of substantial scale are tubes for various industries and metal formed products like door frames, chains etc....its clients includes the likes of Toyota, Tata etc. It is having around 70% share in Shanthi Gears. BSA cycle  has  a huge premium brand positioning in India....i see this business growing big in India. Its standalone business is around 4000 Cr with np around 250 Cr but will see it around 400 Cr  in near future due to recent capacity additions. So this was standalone.

But real gems are its holding of Cholamandalam finance which is a listed NBFC with market cap of 12000 Cr....Tube is having 46% of it. Another feather in the cap is its unlisted general insurance company Cholamandalam MS general insurance co.  Tube is having 60% share with balance with Japanese MS. Last Dec it sold of 14% for 900 Cr to MS which is lying with standalone arm. Cholamandlam MS General is having NP of around 170-200 Cr....but it is just the beginning. As explained earlier, all General Ins companies in India are incurring losses in underwriting business as they are in expansion mode and charging aggressively…they are earning NP from investment business only. But this will change soon and general insurance will grow big in India.

At CMP of Rs. 592 market value of just 11000 Cr.

Sundaram Finance: Pertains to top class TVS group. I have great regard for TVS group for their high class management skills. Just great people they are...TVS has never faced labour problems in their 100 year history. They keep their employee happy at any cost...Medical costs, including that of employees' family members, however high, are borne by the company. It also offers scholarships to their children. If an employee dies while in service, his dependents get not only his dues, but also the proceeds of a 'death fund' created for him.

Unions have best relations with TVS management which is seen seldom in India. TVS Management avoids top/senior level recruitment from outside...they try to give more chances to their employees.

Sundaram Finance has strong NBFC and Housing finance business apart from Royal Sundaram General insurance business. They are also having some other small but growing businesses like BPO and IT management business. Their general insurance has gross written premium of 1700 cr in 2016. Underwriting losses were Rs. 167 cr while investment income was Rs. 162 cr…so it is making losses but last year Net income was at 27 cr due to lower claims. In 2016, they paid higher claims due to Chennai floods. But there will be high growth in the business this year.

Sundaram is always proactive in making its books as clean as possible. It has done something remarkable in ensuring the quality of its loan assets. RBI in 2014 with a view to bring NBFCs at par with banks, had mandated that bad loan recognition happens at 150 days by end of March 2016, 120 days by end of March 2017 and 90 days by end of March 2018. This has impacted most NBFCs that have had to make additional provisioning for bad loans, in accordance with the new norms. But Sundaram Finance had already adopted a 120 day norm since 2012-13.

In 2015-16,the company has, in fact, moved to the 90 day norm, two years ahead of the regulatory norm. Despite this, Sundaram Finance’s gross NPAs are at 2 per cent of loans, when others such as Shriram Transport Finance (at 150 days from the March 2016 quarter) and Mahindra and Mahindra Financial Services (at 120 days) have higher gross NPAs of 6 per cent and 8 per cent respectively.

So these are the types of companies which we can hold for decades. At CMP of 1350 it is a good buy.

Commodity derivatives: Another big step in insuring Farm Income

MCX India Ltd: This is another innovative solution which can ensure the stability of the income of the farmers. Our farmers are ill equipped with the data to take the decision regarding which crop to sow. They mostly take their decision with rear mirror…they look at the prices of past season and crop accordingly which most of the times turns out to be a bad decision due to supply glut as every farmer is cropping the same crop which results in big price fall. We are seeing this all the time with prime victims are Tomato, Potato and Onions.

But if farmers can use agri commodity futures to hedge their produce that can solve their biggest worry. In fact, banks these days are asking and educating farmers while disbursing loans to use the hedging to safeguard their crops. Using commodity trading, a farmer can presell his produce at the commodity exchange thereby locking his sale price and saving his crop from any adverse price fall in the future. Futures and options can be used for hedging purpose. The only thing here is the awareness and education of the farmers and supporting policies of the government to promote commodity trading. Users of agri commodities like Pepsi (Potatoes for lays chips) also need these for locking their purchase price although they also resort to contract farming to mitigate the risk of high price variation. So this can be a win win situation for both.

There are quite a few real life cases in the past when farmer groups used commodity exchange to sell their produce and later price fall saved them big time. Commodity exchanges have also taken the task to educate farmers in commodity trading. In delivery based commodity trading, a high class certified warehousing is a must and we can recall many of our other picks like Snowman logistics, Balmer Lawrie, Concor, Redington, Gateway Distripark and Future enterprises (For Future supply chain) which are into high technology based warehousing and logistic business.

So I was looking for a commodity exchange for agri commodity trading. NCDEX is the leader in India with around 90% share but it isn't listed (but NSE, IDFC are the shareholders of NCDEX). However agri commodity trading is very low in India as compared to non-agri commodities like Gold, Oil and other metals where MCX is the leader at 90% share and it'll remain the leader due to NETWORKING effects. I think it is a great fit for the future; top management, monopoly, high growth in the future scale, big margins etc. are the key factors. No need to look at the high PE...it will change with the high growth in the future. MCX was blazing earlier but its turnover/profits were stalled due to imposition of CTT (Commodity transaction tax) by govt on Non Agri commodities in order to curb the speculation...although i think there can be some better solutions than just imposing tax every-time for every economic issue.

The things like CTT has resulted in high transaction costs for commodity trading in India forcing the likes of Hindalco/HZL to hedge their products in foreign commodity exchanges. If Government scraps the CTT in the near future then MCX will just blast.

Although at present, Agri commodity trading is a small part of turnover of MCX where NCDEX is the major force but MCX is taking steps for increasing its market share in Agri-commodity sphere so as NCDEX for Non-Agri commodities. Any positive outcome in this regard will be the biggest game changer for MCX. Also I hope NCDEX comes with the IPO.

I picked MCX recently (21^st Sep-16) around Rs. 1000 and it just started blasting after that. I made further buying at 1055 and 1160. It is now at Rs. 1300 after touching 1400 in just 10 days. The same was shared via email...but this time as more readers of this blog has subscribed to the email of this blog so i hope most of us are having it. But It is still a good buy and should be added at every fall.

(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing. I am not a certified Sebi Analyst and holding the shares discussed in this Post)

Stock Market Warriors: Bravery is the only Virtue Covering: Agro Tech Foods Ltd, Kaya Ltd, BASF, Clariant Chemicals, Nelco Ltd, Navneet Education, Kokuyo Camlin, Atlas Cycle

A warrior is always calm; this is quite contrary to the common belief which pictures a warrior as an angry and violent fighter. But a warrior isn’t easily angered as he has no fear for he understands the grand schema of life forces. Our life here is always dictated by Fear…we are just a shiver most of the times in our life…we select our path only out of fear…we make our choices only out of fear…we are Fear. For us, Fear always leaves us with two choices growth or survival. This is what we think about fear; by following it we can survive. But survival in fact is the biggest delusion…it is the biggest lie we are telling ourselves. We can’t survive…we are dying every second…something is ending all the time…and in the end this game of fear will lead us to the ultimate…we’ll be no more…no survival…only death. Growth is the only possibility and can be the only reason for ours being here-in the realm of dead. Whatever we may think or try or evade out of fear…we can’t survive from fear…growth is the only survival.

Bravery is the only virtue which one can have…this is the attitude which results in our growth and fear becomes worthless in our life. Bravery is the fight in the face of adversity and fear. All other attributes like honesty, kindness, truthfulness are just variants of bravery. Only a brave can have the strength to leave money for honesty…only a brave can stand for truth and justice. Fearlessness is not bravery but when we have the will power to counter our fears…there may be some doubts…we don’t know the unknown…something inside us may be shivering but this is bravery; the will to face the unknown. And when we face our fears with straight eyes…we grow…we feel the working of forces of life. Fearlessness is the final stage of bravery; when we understand the phenomenon called life where we do not exist to GET something but to BE something. Then we become calm…a strange stillness descend onto us…we have still half closed eyes…stimuli don’t affect us…we have the strength to absorb all the pains of life.

The brave and fearless at last welcomes the biggest quest of his life with calmness and eagerness…after living a great life full of actions (not reactions out of fear) and energy he is ready for the biggest fight with the unknown; Death. He never trembles while facing death for he knows death is the door to ultimate reality...this is the way of a warrior…warrior path.

Our consciousness is our true self; when I say consciousness it is the “me who decide the course of action” not someone who is aware. We always behave as we are whatever may be the situation; whether saving a girl from rapists, while giving interviews, while giving food to a hungry, while not taking bribe for doing something wrong…every action of ours is just a loud pronouncement of our real self. We do what we are…it is never we are what we do. Our warrior is still calm when he is doing business, when he is in stock market. He understands that fear is not an enemy but FEARING from fear is…fear from taking risks, accepting challenges. Fear makes us aware of the danger and we become alive. Business and stock markets are not for those who fear from the fear…it is for those who are ready to take the challenge in their quest for growth. It is not for those who tremble at the slight adverse moment.

A person who is fearful in his normal life, he’ll behave the same way in stock market. The moment he sees stock price falling, he’ll quiver out of fear and will move out due to panic. But stock market is about staying calm when there is a fall in the stock prices as most of the times it is time to buy more.

So today, we’ll focus on those companies who have the guts to face the challenge in their path to growth. They have taken the biggest risks as they yearn for growth…jumping out of their comforts zones they have tried something novel to find their growth path. These stocks are strictly not for those who seek survival but for those who yearns for growth.

Agro Tech Foods Ltd: This one is from the house of 20 billion USD global food giant Conagra Foods. It is the owner of Sundrop brand which is into Edible oil (premium brand) and peanut butter. Peanut butter is the staple food in western world just like our dairy butter but peanut butter is remarkably healthy with great amount of protein and essential vitamin E, bone-building magnesium, muscle-friendly potassium, immunity-boosting vitamin B6 and heart-healthy monounsaturated fat. Peanut butter can decrease your risk of heart disease, diabetes, and other chronic health conditions. But Indians are yet to develop the taste for peanut butter…the product, even after 8-10 years, is still in promotion state. The domestic consumption of peanut butter in India is very low at around 1,000 tons per annum while production is around 13000 tons out of which around 12000 tons is produced in Gujarat which offers, availability of quality groundnuts, excellent roads, rail and port infrastructure. So India is exporting the Peanut butter of around 12000 tons.

It is also the owner of ACT II popcorn brand which is biggest and growing fast as it is healthy and new age snack. One can munch it in large as it is high in protein with no fat quite opposite to other unhealthy snacks which has feeling of guilt as the outcome every time we eat these. No doubt, demand for popcorns is rising fast in India…in fact companies like Agro tech are importing popcorn grade corn from USA after paying 50-60% import duty. Indian corn is mainly suitable for poultry and starch industry. But now even Indian farmers are getting aware of the demand of high grade corn and a high acreage has been shifted to grow American corn.

Agro tech was doing fine in its edible oil business with Sundrop as a premium brand and Crystal as mass oil brand. But then they decided to invest big in setting up manufacturing units for Peanut butter and Popcorn business in India in their drive for growth. Initially they were sourcing peanut butter from their other Asian units from Malaysia but then they invested for a new plant in Bharuch, Gujarat. Earlier it was having two manufacturing facilities at Kashipur (Uttarakhand) and Hyderabad (Andhra Pradesh) in the country for producing Sundrop and Crystal brand of edible oils and Act II popcorn. But now with recent expansions, total number of production units has been increased to 5 and another one is near completion in Chittur (AP). Oil business is contributing around 77% of turnover with food business 23% (which was 15% 2-3 years back). Company has plans to move out from the league of commodity business and to be a branded FMCG player with turnover from food business at 50% in future. It has ventured into other branded snacks like tortillas, Nachos and peanuts.

Taking the challenging route for growth they have invested around 150 cr in recent times for the expansion. The investments are sourced entirely from internal sources. The debt of around 100 cr in its books is mainly for working capital requirements for sourcing corn and peanuts. Its parent, Conagra foods is the global giant in the trading of corn worldwide.They stock the corn for around two years. Agro tech has turnover of around 800 cr with around 600 cr coming from oil and 200 cr from food business. ACT II is a 170 cr brand at present and the company intends to make it a 500 cr brand in the future.

Why Valuation looks stretched at PE of 50 but they aren’t.

So now they have an assets base of 225 cr but majority of these newly created assets are still to contribute to the top line. Another 35 cr is in work in progress for its new plant in AP which should be completed this year. But these new units have just started production and it will take time for these to work at full swing. But depreciation impact of these units is affecting the net profits along with other associated costs in running a new plant like interest, overheads and employee cost. Its depreciation is increased to 16 cr in 2016 from 6 cr in 2012. Interest costs are at 6 cr from nil in 2012. These interest costs are due to the fact that now they are buying their own raw material as earlier they were just trading the imported products from their Asian units. Its working capital requirement for inventory has been increased to 146 cr in 2016 from 64 cr in 2012. Due to these its net profits have fallen to 23 cr in 2016 from 40 cr earlier.

Also, earlier its tax outgo was lower due to 10 year tax holiday for its old plant which is ended now...so tax outgo is affecting the NP also. As it is trying to establish Peanut butter business in india, so margins are low due to low pricing, high dealer margins and brand promotion expenditure. I am using its peanut butter for last 9 years. Also in order to promote the brand and let Indians to acquire the taste for Peanut butter, it has reduced the prices of peanut butter….if I can remember from Rs. 200 (300 gm) to Rs. 150. All these factors further pushed down the Net profits. Hence as we can see, it has been transferred from stable growing firm to high growth investment grade firm.

So for it for now, historical performance is not of much importance as it is in transitional phase. Its PE is irrelevant as it is yet to achieve the scale relevant to its recent investments and strong brand power. Now ACT II popcorn are available in small towns and villages also. Indian customers are getting aware of healthy snacks and foods.

It has recently launched a new product – the ACTII Popcorn Pop ‘n’ Serve Tub, which is a large tub, which, when placed in a microwave for three minutes will produce hot, ready to eat popcorn. Consumers can then eat from the tub itself, recreating a cinema like experience. It is available in Pan India from Aug-16 with two flavors-Natural and Movie Theatre Butter. It is priced at Rs. 92…much lower than Rs. 300 we forced to pay at multiplexes these days. So we’ll see more such innovations and high quality products in the near future.

Brand Promotion is the last Catalyst

This is the thing which is missing from the armory of Agro Tech foods; focus on media brand promotion. Stock market may think otherwise but I think there was a reason for this and that was justified and I think we’ll see Agro tech upping the ante for media brand promotion of its strong brands of sundrop and Act II. It was in Investment mode for last few years…as majority of expansion was funded with internal sources hence funds were limited for branding. Moreover as the production lines were not started, new products launches were pending, supply and distribution channels were being established…hence there was no point in spending money for media brand promotion when there was no product in pipeline and supply and distribution lines were not established. That’s why I think it will start spending on media advertisement very soon in the near future.

I am a firm believer of Branding…in today’s competitive world good brand image is the vital factor in establishing the loyalties otherwise customer today has way too many options. Media advertisements are never the Brand builder…media advertisements just create the Buzz about the product. They just create the noise about the product so that the customer becomes aware of the product. But it is only great products and service, customer focus and preference, promptness/awareness to customer’s needs etc. which really create the strong Brand image. Media advertisements work much better for positive products which are good for our health. But as most of times consumer is unaware of the benefits hence communicating the same to the consumers is more vital than any other strategy. Agro tech’s products fall into this positive category. Hence I am waiting for the day when we see them investing into branding more aggressively and that will be the most important and last catalyst for its phenomenal growth.

A good buy at current market price of 528. With turnover of 800 cr but market cap of just 1200 cr…it has huge scope of building large scale in its food business which is at just 200 cr.

I was expecting the same strategy for brand promotion from Zydus wellness for its Sugar free and Everyuth brand…which it started doing since last year and results are visible in strong growth in margins and top line…but these will be even better in future.

I am also listing some more stocks with minor details as I’ll post more details about them in the near future. But I think these stocks can run away fast if market gets to understand the story behind them. I have seen this happening with our stocks most of the times. Recent causalities are Delta corp and Shirpur Gold…both were advised via email id of this blog to the email subscribers. Delta has run from 60 to 160 and Shirpur from 110 to 170 in very short span of time. Actually due to shortage of time, most of the times I can’t post the full study about a stock at our blog but I generally shared small details about the rationale about them via emails. Hence I request to all my readers to subscribe to the email ID (oscillationss@yahoo.com) of this blog by sending a request email.

Kaya Ltd CMP 795: It is from the house of Marico and it is into skin care segment with offerings for Hair removal, Anti-ageing, Botox and other skin care products. Again it is a stock which is looking expensive but good things are always expensive especially in stock market. This is another domestic story linked with growth in income levels and growing awareness about the wellness and appearance in india. Company has done all the hard work in the past and is ready to reap the benefits now. It is a difficult business to build reputation and demand as we are a poor country...but future demand will be awesome. NH is trading at 4 times of turnover...Kaya is at 2 times although it has big scarcity premium attached...one of its kind in India. So at 2 times it is very reasonably priced at market cap of 1000 cr.

BASF India and Clariant Chemicals: Earlier advised both ( BASF at  Rs. 850, Clariant at Rs. 690) and both are showing great improvements in their operation. BASF is a great story unfolding. BASF will lead the revolution in Indian building construction industry which will leap forward from cement to specialty chemicals ,admixtures. BASF is a chemical giant operating in diverse fields like agriculture, leather, energy, chemicals etc. Clariant is also into specialty chemicals like dyes and pigments. China is slowing down due to reckless expansions and pollution which will further benefit Indian chemical companies…these both are better placed. BASF has faced tough time in the past mainly due to its expansion of around 1200-1500 cr in india to cater to rising chemical demand at lower cost. But due to this expansion, its depreciation costs climbed to 175 cr in 2016 from 50 cr in 2012, interest costs at 90 cr in 2016 vs 10-20 cr in 2012. Overheads and employee costs of new plants were also the issue. But now it is working at full swing and it is now big into profits in last 2 quarters which will be even better in the future. It was advised earlier at 850 but it is still worthy of buying at CMP of 1145. Clariant chemicals also faced the similar challenges due to expansions and it is a good buy at CMP of 740.

Thomas cook CMP 198: I made my first entry in it at 100 last year and recently bought even more at 195-200. This  now belongs to Prem Watsa which is regarded as Buffet of Canada. Thomas cook has lion’s share of indian money exchange, transfer industry which has strong entry barriers. Thomas cook has some payment transfer related approvals from RBI which no other have in India. It has bought Quess corp and sterling resort also. Tourism and foreign travel will be the big themes in the future and Thomas cook will be the stock of this year.

NELCO: It is Tata Group Company dealing in VSAT (Satellite communication/Internet) business...among top 3 in india. Amid all the hue and cry about telecom with the entry of JIO...i think VSAT will surprise everybody. It is still the preferred mode of communication for Banking/ATM, secured systems like Defence, OIL rigs etc. spaced in far seas. Market cap is 190 cr. I studied it last year around 55-60 but it touched 140 after that. At 86 it is a good buy...but very risky.

Navneet education and Kokuyo Camlin: Both have stunning business models with great brand power...primed to benefit immensely from growth in Indian education sector. Kokuyo has just opened a 100 cr factory in Maharashtra to get the benefit of large scale and lower cost of production. Raw material costs of Kokuyo should decline in future with new contracts for raw material as Oil prices are low. These are great managements...compelling buys…Navneet at 104, Kokuyo Camlin at 82.

Atlas Cycles (Haryana) Ltd CMP 252: it was under my watch for a very long time...almost 3-4 years but as there were some issues pending like closure of MP unit, family fight...but now they have sorted out both and are on verge of selling their sonipat unit and perhaps they will manage from their biggest plant at Ghaziabad.

This qtr was a great turnaround, turnover from 130 to 168 cr...Op profit at 3 cr vs loss of 50 lac. They are turning over. It is a 64 years group but their market cap is just 88 cr...just like as i mentioned during our buying of NIIT; brand power of NIIT was much more than the market capital at that time. Brand value of Atlas will be much more than 88 cr. They have cash in the books of around 15 cr...some advances around 30-40 cr. They are a great dividend paying unit. China is slowing down and will be even slower as china is now realizing that their cost advantages is weaning away and they need to take care of massive corporate debt and high pollution.

As i always buy a risky stock belonging to a sound and good management...so it is covering both. Our Tube Investment (BSA cycle) is at 600 now...50% jump from our buying around 400.

(Views are personal and should not be taken as a recommendation for buying or selling a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing. I am not a certified Sebi Analyst and holding the shares discussed in this Post)

GDP: More is not Growth

Here we go again; the news about Fed rate hike and immediately global stock markets crumble…again the debate is alive whether USA is on growth path or in fact if it’ll ever be on growth path again. There is always a noise about economic growth, every other day policies are getting drafted for growth, there are all types of wars (Currency, military, political) to secure the growth….but still the equation doesn’t look like in our hands which are still empty. Sometimes I wonder whether we understand what really is growth most importantly economic growth.

We measure growth by adding all the measurable and measured goods and services produced (GDP) in an economy for a given period. But whether growth is that simple?? Just a summation of things produced…we go on adding and think that we have figured out what we have “Added” afresh into the economy. Is it really that simple!! Even our calculation methodology is faulty and primitive. We add the turnover (Value) of a company dealing in providing “Fresh Air” but we never add the massive fresh air produced by Mother Nature every moment; we add the production of a company producing mineral water but we never add the free flowing mineral water belonging to Mother Nature; We measure and add the value of products produced by entertainment industry like music, movies etc. but we can’t measure the heavenly beauty of mother nature (although we enjoy it); We add the value of work done by working mothers when they leave their babies with baby sitters (and Baby sitters’ work also gets counted) but we never Value the 24 hour hard work by homemaker mothers. We at once realizes that we don’t (may be don’t want to or just can’t) measure all the goods and services produced. Our GDP work is just gross and I sometimes surprise why we value this incomprehensive thing so much.

GDP is not Growth

Just to give you an example; suppose with all the hard work we measure and calculate the value of fresh water of our mighty rivers like Ganga, Yamuna and this value is 100000 cr…great work done indeed. And then the great sons of Mother Ganga start putting all types of Industrial wastes in it, destroying the majority of fresh water. We proudly value the goods produced by these industries to 10000 cr. But when we again value the fresh water of our rivers; the value is dismal 70000 cr…and we’ll realize the pain of Mother Ganga as her sons only understand everything in money. But as we can see this small working can reveal that we haven’t added any industrial value of 10000 cr; in fact we have lost 30000 cr of fresh water due to this production and the net loss is 20000 cr. We can see here that all the figures of GDP are distorted and incorrect.

Pain of Mother Ganga isn’t getting evaluated at any stage but to her surprise Indians are now trying to clean her with massive funds…and you’ll see that this cleaning activity will be measured and added into GDP for which every fool will take the credit. You can see and may be shocked that most of our value addition is just repairing work for the nasty treatment of Never Measured Mother Nature and rarely we are adding any real value to the natural equation. In my previous blog posts I have used the word “Natural capital” for the vital support system of Mother Nature. I am of the firm view that any loss inflicted to this Natural capital (In accounting jargon we call it Impairment loss) should be subtracted from GDP and we’ll see that most of our growth stories will turn into nightmares. So Assets comprising Natural Capital should be treated like Balance sheet items and any diminution in the value of these should be adjusted against National Income account to present the true state of our economic activities.

Now we understand the fallacy and incompleteness of our growth parameter. We are having a National Income account without any balance sheet. So let’s see if we can make something out of it. Economic growth is just like a normal thin frame individual wanting to grow his body. So in order to grow, he starts adding into himself all sorts of foods; he is just eating all the time. Overtime, his size will surely grow; he’ll gain weight. But in his pursuit for growth via over eating spree, he might have wreak havoc with his body as he has grown big but fatty and lacks power and strength. So he is vulnerable to all types of diseases now; any outsider can beat him as he isn’t strong but heavy. We can see the weak points in his being in spite of the fact that he is big; he lacks Resilience and Immunity. These are the most important factors affecting our longevity.

Growth entails being Resilient and Immune

So realizing his weakness, he joins a gym and does heavy workouts….he runs, sprints. After some time, he has shed the excess weight, now he is powerful, sharp, and agile. He has rhythm and balance which can ensure his long journey. Thus we can see Resilience and Immunity are the two most important factors of growth. The same is true for an economy also. Size of an economy doesn’t mean that it is healthy but resilience and immunity do. Just take the case of China which has big economy but it depends upon exports…China has created massive infrastructure just to promote export based economy. But now it has realized its economy lacks resilience and any global slowdown can create havoc in its economy, so now it is trying to build much comprehensive indigenous growth based economy. We can see now that although Oil Exporting countries had big economies but they were not resilient and immune as apart from the fact that they were based on single product, oil, but they were also dependent only on exports. Now the plunge in the oil price has exposed their vulnerability.  Our current growth model wants everybody  over-eating all the time (which adds into GDP) then fall ill; goes to Doctor paying hefty fees (adds into GDP) and consumes heavy dosages of medicines (again adds into GDP). There is no place for a society where people eat wisely, they are healthy and so consumes even lesser medicines. In our current schema, healthy people can   de-grow an economy.

GDP is just about calculation of production of New Goods and Services which is not Growth

Again we can see that working population is also a part of the Economic Balance sheet and any damage occurred to the health of these working homo sapiens should again be adjusted into National Income Account and so here too this adjustment will even out any addition made to the GDP due to overeating and medicines. Our GDP activity is just about the calculation of “Production of New Goods and Services” in an economy. But this summation has not anything to do with Growth. Growth is never a Quantitative phenomenon but a Qualitative one. It is not just about the size but about the longevity (sustainability). Our current GDP calculation is just an exercise to measure the production of goods which is not a proxy for calculation of Growth. It is just like if Mr. X has sold one of his kidneys for Rupees Ten lakh and thinks that he has “earned” ten lakh. But this Ten lakh is just the value of one Kidney and it looks like an earning because Mr. X hasn’t provided any value to his kidneys (just like Air, Water) otherwise he has just sold an “Asset” which can impact his longevity. Mr. X can understand better if he has to sell his family Gold for Rupees Ten Lakh; here he won’t regard this as an income. The same mistake is done by us in taking more goods produced as Growth.

The Limits to Growth

Here I remember one interesting book “The Limits to Growth” which was published in 1972 by a group of thinkers called “The club of Rome”. The book was an attempt to forecast the outcome of massive scale consumption of earth’s resources by humanity and the capacity of Earth to withstand such consumption as our Earth is a “Finite sphere” with a limited supply of resources like minerals. The club worked out a model based on five basic variables affecting the resources of Mother Earth industrialization, population, food, use of resources, and pollution. They modeled data up to 1970, then developed a range of scenarios out to 2100, depending on whether humanity took serious action on environmental and resource issues. If that didn’t happen, the model predicted “overshoot and collapse” – in the economy, environment and population – before 2070.

Their main point was Earth being Finite has limited capacity to provide resources for huge growing population. Hence our quest for unlimited growth by over-production and over-consumption of resources will eventually lead to a crash. Although their point was debatable as we never grow only by over-consumption as it is the emergence of new innovative technologies which bring more growth. As we can see much of our growth in last century was mainly related to “Invention of New and Substitute technologies” like the invention of Aircrafts, first telephone and then Mobile phones, Computers and then software. Their theory was largely criticized by eminent names of the economics as being lacking credible data, methodology and conclusions. Their model was not well accepted as it was claimed that Population, capital and pollution grow exponentially in all their models, but technologies for expanding resources and controlling pollution are permitted to grow very marginally.

But in my view, their model has one very valid statement which is-unless we create and discover newer, innovative and efficient technologies we can’t afford to grow by consuming the finite resources of the earth as one day they will be obsolete. So if we aspire to grow then we need to look for new technologies. Like take the case of Oil; Peak Oil is the global fear for decades as end of oil means end of industries. So along with looking for new oil resources, it’ll be more logical to look out for newer technologies which can reduce oil consumption, creating substitutes for oil like solar and wind power. Hence the moment we discover a cheap, long lasting battery to store solar and wind power-there will be a quantum jump in growth as this new technology will shift the balance of resources and consumption will divert from finite to better technology.

USA growth problem is not of growing consumption but newer technologies

USA is facing the same quest of growth; it needs to grow but this can’t be by over-consumption of resources. USA has already consumed much more. They were guzzling resources like anything for past 50-60 years; they used gigantic polluting thermal power resources, agriculture over-exploited the land to feed the over-eating, minerals were exploited uselessly just to make more cars, machines and people were seduced to have more cars with cheap loans, people are living on credit all the time just to be worthy of over-consumption. But this madness can’t go for ever as predicted by Club of Rome. USA is trying to replicate the over-consumption model for last 10-15 years but now people are realizing their chronic indebtedness and in spite of free money offerings from the Banks they are more focused on deleveraging then getting more debt for more consumption. USA needs to find new technologies which can promote more efficient use of finite resources. Although I feel we are at the cusp of a great technological revolution as we have great technologies at our disposal to create even greater technologies. With our current deep understanding of nature of matter, communication technologies, powerful space technology, Enzyme technologies for healthcare, agriculture we can create even better solutions. We can’t claim that we have advanced so much that scope of further advancement is remote. We are still at earth when whole universe is still unexplored.

So we’ll see next wave of growth in USA will be of great technologies like Industrial Internet of things, stellar agricultural technologies to produce big from small farmland, unimaginable healthcare technologies, space exploration etc. Just imagine the impact of billions of dollars if the cure for AIDS is found.

GDP growth model is not credible and primitive

Our current GDP calculation based growth model doesn’t evaluate efficiency while computing the growth. Just take the example of Uber which promotes “sharing economy” wherein we derive maximum value from our productive resources. Uber is clearly providing efficiency and productivity gains. Yet many of the benefits of these new activities are not accounted for in the calculation of GDP, in the same way that private housework and childcare are neglected. In other words, we are increasingly producing and consuming much more value than our economic indicators measure. This indicates that we need a new way of measuring output and productivity, since our current economic models aren’t sufficiently taking into account the value that is being produced in the economy.

Hence our GDP measures are simply not sufficient for measuring the real social, ecological and economic progress. This requires urgent revision in our current productivity growth indicators as most of our future productivity will be derived from more efficient use of our finite resources thus making our planet more environmentally sustainable. We are moving towards a phase where we make better use of existing products rather than merely producing more “stuff”, which while good for the GDP statistics, is not necessarily so for the planet.

So we are not going to see any catastrophic de-growth. We can experience small jitters which are necessary for correcting the past mis-allocation of productive resources like closure of some iron and coal mines due to lower than earlier projected over enthusiastic demand. Past big fierce recessions happened as at that time global supply forces weren’t interconnected. Due to lack of development of communication mediums like satellite and internet, it wasn’t possible to gather and evaluate the date regarding demand supply mismatch so as to press the alarm button to do the corrective action. But today, we are better connected and equipped to foresee these jitters well in advance. Earlier global trade was restricted but today entire globe is like a village where we can shift resources to deficient easily and at the earliest. In fact we are at an inflection point from where, if we can execute well, we’ll see and experience the true meaning of growth.

But growth and development will have different implications for a young man who is faced with a critical situation in a street wherein a girl is being harassed by some street bullies. By choosing to not to fight out of fear he can still contribute towards GDP growth by using his cell for calling police and buying medicines when girl is left wounded or he can leave all his fears and give the fight of his life to save the girl, he will feel a different type of growth when he sees himself in the mirror next morning feeling a strange feeling of bravery and proud and this growth is permanent...within him and around him ALWAYS.