Today's News

Today when i jus came into my office two of colleagues litrellay thumped me on to my chair and ask me to log in and get into the official website of airdeccan, the low cost airline carrier. Then it was a frenzy of searches with different combination of locations, clicking search, waiting fr 5 mins, clicking book tkts waiting for 5 minutes and all kina hallabulla for solid 1 hour. No official work was done. Incidentally the most active man to induldge in this waas none other than my manager. He is a man fro Delhi who was quite happy to get a to and fro tkt to Delhi for less than Rs.2ooo. The normal fares can go up to a maximum of Rs.7ooo (depending on the day and timings of the flight) in Indian airlines for a one way journey iself. So where other coleagues who managed to get their tkts booked to delhi, Jaipur, Bhubaneshwar etc...In all almost 10 tickets where booked from my office. There are some interesting things to note from this incident. Well sorry for not giving the news was at all. The news was that Air deccan celebrating its third Anniversary has announced to issue 3 lac tkts for the months of Nov,Dec and Jan for a meagre Rs.3 and the interesting things to be noted here are

1) Out of the 10 tickets booked (5 members) 4 members are first time fliers. With 1 member jus grabbing the opportunity to travel by an airline with no solid travel plans. Others atleast were heading to their home towns. this is jus a case in our office of 10 members. So a clear expansion of market share forAir deccan. Which incidentally willbe reported in the subsequent quarterly letters in Bold that Air deccan has surpassed Indian Airlines in garnering the market share.

2) The 4 first time fliers could very well receptive to the services of the airline and continue being fliers. In this case air deccan has really succeeded in adding new customers which will stand fact to the quarterly bold results they may publish.

3) Air Deccan is a replica of the South West Airlines of USA. Herb Khelleher started this airlines with one simple notion that if we can make people reach their destinations at the right time they wanted at the lowest cost, thenthey will surely fly your airlines. the key they used to turn down costs was to use second rung airports, fly shorter distances and point to point flights between lesser and specified location, etc. It was a huge success in US. But in the case of India it is a different scenario. Though the model and intentions remain to be same the competetive factors these days are not the same. One strong proof to this is that Air Deccan never feels that another low cost carrier is its competitor. rather it competes with the Indian Railways. Thatz the sort they brand themselves. Something sort of every one can fly. The idea of evryone flying has taken over the minimum qualities required of such low cost airlines.

4) Indian aviation industry still is a very risky industry. This move by Air deccan will only create unwanted panic and imbalance in the industry. Sure the financials of Air deccan are not going to improve in the long term by such gimmicks. So a perceived leader of the sort of Air Deccan must think of other long term strategies. Tactics like these are suicidal and incidentally they are taking the whole industry to suicide along with them.

5) These are not valuable business tactics. Sure they will reap great benefits in the short term but not in long terms. low cost airlines must work more on handling airports, baggages, passenger convinience, flight rage atc. Rather than just making everybody fly. Because the thing is to cut cost not to increase revenues.

Naren

Accidents cause History.

If Sigismund Unbuckle had taken a walk in 1426 and met Wat Tyler, the Peasant's Revolt would never have happened and the motor car would not have been invented until 2026, which would have meant that all the oil could have been used for lamps, thus saving the electric light bulb and the whale, and nobody would have caught Moby Dick or Billy Budd.

-- Mike Harding, "The Armchair Anarchist's Almanac"

Post by Naren

IDEA-Innovation that Drives Excellence & Action. An Idea is all what matters? However frugal may be its genesis or relevance to one’s background a right idea, pursued with the right intentions, commitments and Vision will sure find the daylight. We understand that starting from Adam Smith there has been various theories and understanding of the word ECONOMY. But the basic understanding remains the same. Economy is about Creation of Wealth. In any country entrepreneurs are the one who are solely responsible for this. There may always be a support system like government policies, robust natural condition etc. At times they can be disgusting too. But history shows how celebrated entrepreneurs have skillfully overcome them to create empires and history. If we could only replicate just a meager proportion of their aspirations we can create much wealth in such an exciting economic scenario in India. IDEA is the key model driver ininitial stages. Then we need to pump in funds and loads of operational efficience undeniably with our USP (Unique Selling Proposition). There is no way we can sustainin a business jus because we r blindly passionate or we can risk some money at our disposal. That is not value investing. It could well be some kind of Ego Massaging. Neverthless the perceivable differences are only sparse. So lets start on a clear note that we want to do value investing. Value realisable in terms of Money in the short run and other macro factors (the real factors) in the long run. I do putforth that this could be a rigorous experience. But anything cpuld be acheived by a disciplined, systematic approach. Now are these traits really prevelant with us?....chumma kidding.... ok catch up guys in some other posts with some hard facts. By the way sukri i will be in chennai this weekend..vettayadu vilayadu try pannalaama?

I've given admin rights to the initiator Naren as well as Veda who is always active with the blogs and mails. Expecting some creative touch from Veda.

How to make a crore --- Value Research

Anyone can invest when the going is good. But the tough part is staying on course and investing even the going gets tough. The calculations and the investment decisions are the easy part, it's the self control that will be difficult.
Fact: all of this nerve-rattling action caused by the rise and fall of the Sensex has nothing to do the with the retail investor. To put it more clearly, the direction in which stock prices move should not bother the retail investor.
Invest regularly
The key is to invest regularly. If you had invested every month in a mutual fund -- referred to as a Systematic Investment Plan -- over the past 10 years, you would have been a crorepati now.
We studied the SIP returns of the diversified equity funds over the last 10 years. The question was: How much can an investor earn by this straightforward technique of doing something simple and sensible and going at it for a long time? You'll be surprised.
If you had invested Rs 20,000 a month for the last 10 years in any one of the better funds, your Rs 24 lakh (Rs 2.4 million) could have grown to almost a crore (Rs 10 million). In fact, the best funds could have left you with a stash substantially more than that.
Mind you, the last 10 years were not exactly a trouble-free period. This decade witnessed a fair amount of crisis in the stock market. But, even in a decade filled with regular crashes and scams, slow and steady really does get you there.
If you had invested Rs 20,000 every month in these funds for the last 10 years, this is how much you would have got.
Value: The amount that you would get after 10 years. Figures are in Rs / crore. Rs 1 crore = Rs 10 millionAnnualised returns: The percentage returns every year

-------------------Value (Rs/crore) / Annualised returns (%)
Reliance Growth 2.06/ 40.93
Franklin India Prima 1.87 / 39.05
HDFC Equity 1.81 / 38.46
Reliance Vision 1.71 / 37.38
Franklin India Bluechip 1.57 / 35.71
Franklin India Prima Plus 1.45 / 34.25
Magnum Global 1.18 / 30.39
Prudential ICICI Power 1.18 / 30.39
Birla Advantage 1.10 / 28.95
HDFC Capital Builder 1.05 / 28.07
Taurus Bonanza Exclusive 1.03 / 27.85
Taurus Starshare 0.96 / 26.49
Tata Growth 0.93 / 25.92
Canexpo 0.88 / 24.89
Magnum Multiplier Plus 0.88 / 24.79
Canfortune '94 0.80 /23.07
Magnum Equity 0.79 /22.88
UTI Master Growth 0.75 /21.99
J M Equity 0.70 / 20.64
UTI Master Plus '91 0.69 / 20.37
Cangrowth Plus 0.69 / 20.22
UTI Equity 0.68 / 19.91
Principal Equity 0.65 / 19.31
LICMF Growth 0.59 / 17.32
UTI Mastershare 0.57 / 16.69
Taurus Discovery Stock 0.57 /16.63
LICMF Equity 0.47 /13.19

Start now
But make no mistake, the journey will not be as smooth as you would like it to be. There would be sharp declines. The key is that you should not panic and try to figure out where the market will be in the next week or month or year. Focus on being discipline and consistent.
Let's take a fund -- Reliance Growth.
Investor A began investing Rs 20,000 a month, 10 years ago (August 1996). Investor B began with double the amount every month, five years ago (August 2001).
So, at the end of 10 years, despite investing an equal amount of Rs 24 lakh (Rs 2.4 million), Investor A turns out to be twice as wealthy as Investor B.
By July 2006, Investor A has Rs 2.06 crore (Rs 20 million) while Investor B, Rs 1.06 crore (Rs 10 million).
How did the Sensex fare?
Let's look at different 10-year periods and see how the Sensex, the barometer of the stock market, has performed.
We looked at the data of different 10-year periods and tried to figure out how much an investor would make if he invested a fixed amount every month.
The best 10-year periods were three: those that ended on December 1992, 1993, and 1995. Each showed an annualized return of over 30%.
The worst was the two 10-year periods ended December 2001 and 2002. They actually showed negative returns.
This will come as a shock to many. Yes, you can lose money by investing in stocks even if you invest consistently over time. But, in all the 18 ten-year periods that we analysed, just two have shown negative returns. Not selling then but holding on for a few more years would have changed this dramatically.
Good funds managed to outdo the Sensex. Because the fund manager will keep juggling his stocks and buying and selling to get even better returns that the Sensex.
To summarise the whole argument, we would say that, rather than being hostile to you, the market is, at worst, an unpredictable friend with varying mood swings. But it's unlikely to betray you in the end.
This article appeared in the magazine Mutual Fund Insight brought out by Value Research.