The Launch Of Wonder Home Finance, The RK Group’s Newest Venture


Grains, edible oils, utensils, fuels,aromatics, printing, moneylending, cinema,ship chandling etc.etc, a whole hodgepodge of seemingly unrelated businesses of the PSTS, PSTP, PSTC family meant I always knew it was possible for people to be simultaneously present and successful in widely divergent businesses.I also knew that if I listened carefully enough to the insiders,I’d understand the method behind what to outsiders looks like madness in these ventures.Ask me too how PSTS,PSTP&PSTC became shadows of themselves,and I have my views.Unfortunately such study is only good enough to tell me what not to do,what to guard against or insure.And all brakes is no good when you are setting out to build.What I really need in my position today are insights into the habits of P,S &T to which I could attribute their success.And to figure that out,I have nothing more than a few old papers and familylore affected by a few generations of retellings to rely on.And perhaps rely a bit on my gut instincts bred by the DNA we share.

So as luck would have it,when I heard of the story of another family of three brothers,in another small town,in another far corner of the country, that in contemporary times rose from grain to become the largest producers of marble in the world and then went on to set up a state of the art cement manufacturing unit in collaboration with ThyssenKrupp and Pfeiffer with the aim to become the foremost name in premium cement in the country and was now venturing into housing finance ,I simply had to attend the Wonder Home Finance launch event in Jaipur on Aug1 and try to learn as much as I could by keeping my eyes and ears open. Read more of this post

Beware Of Bad Debts.


wealthymattersAs per RBI figures, a debt of Rs. 5.65 lakh crore (a fifth of the total debt in India) was shared by 67 of the 441 top indebted companies in India at the end of the year 2014-2015. This theoretically makes these companies financially insolvent, which means that the company is no longer able to meet it’s financial obligations.

This number has increased from 49 in the previous year to 67 in 2014-2015.

The return on capital employed has hit 7.4%, barely a few basis points ahead of the average interest cost of 7.1%.This is the lowest value recorded in the decade; in 2004-05, the reported RoCE was about 18% while the interest cost was 6.9%. Read more of this post

MIPs – Monthly Income Plans


MIPs are hybrid debtoriented mutual fund products.They are great places to park money if you have a 2-3 year horizon.The majority of the money in this case is invested in debt and the NAVs fall when the interest rates rise.Currently the equity  markets are showing some weakness and the interest rates are high,so MIP NAVs are low.So its a good time to pick up MIPs .HDFC and Reliance are 2 fund houses that are known for their treasury management operations.And HDFC and Birla Sun Life MIPs have perfomed well due to superior management of the equity component.

Here is a video that walks you through the ABCs of MIPs:

Liquid Funds + USTBs Vs. FDs


Here is a video laying out the pros and cons of investing in liquid and liquid plus funds vs FDs.Where you invest will depend on the guarantees you seek,the amount you wish to deposit,the interest rate scenario in future,prevailing interest rates,tax liabilities,the use you wish to put your cash to in future etc.Do watch the video before you decide either way.

Personally I have found that sometimes you get short term FDs that offer better rates for senior citizens than the mutual funds.And the most important takeaway from the video is that FDs can be used to lock in high rates in a falling interest rate scenario.

Economic Life,Sinking Funds,Amortization and RDs


wealthymatters.comHaving an abundance of material resources and never having to hustle round in the last-minute to find the funds to do what we want to do is a good indicator of wealth.

I first came across the concepts of economic life,sinking fund and amortization as an engineering student.Adapted to our personal finances and business these concepts help us to always have enough money at the right time.

Economic life , a.k.a useful life is the period of actual usefulness of an asset.Beyond this period it is cheaper to replace or scrap the asset than to continue maintaining it.

A sinking fund is a reserve created by periodically setting aside certain sums in an account to replace  an asset in future or to repay a liability.

Amortization refers to spreading an asset’s replacement cost over it’s economic/useful life. Read more of this post