Capital Protected Funds

February 13, 2007

This was the new category of mutual funds doing rounds in the last 6 months.

Nobody in the industry bothered to explain the actual impact of what happens when there is a drop in equities. All of them said a majority stake would be in Debt instruments but minority would be in equities so your capital is protected.

The big assumption which makes an ASS out of every body is that interest earnings on debt instruments are constant while the equities provide the required pep.

Wrong on both counts AMC’s. Inflation has made RBI raise its interest rates and they have invented newer ways to tinker around banks various ratios. Equities returns are dropping to less than 34% from the last 3 years data which was at a prime of 128

So here is my version of a capital protected scheme:

a) Invest in a post office GMIS ( Group Monthly Investment Scheme). This currently yeilds the honourable 8% p.a.

b) Every month the interest earned can be invested in equity markets SIP by SIP [ Systamatic Investment Plan ]

c) At the end of tenure your capital is protected and the interest portion is speculated in equities. Since this is for a 6 year tenure you for sure are a winner.


MNC and Cost to common man

February 13, 2007

A couple of friends who had come to holiday recently got shocked when the saw the price of Hainekan tomoto sauce.

It was being sold at international prices but being prepared locally paying dirt cheap labout, input costs etc but priced at international rates.

When some folks called them up the answer they got from the manufacturer was shocking.

They said the service tax component was at 2% plus other taxes which jacked up the prices to 20%-30% so that it is brought on par with european standards (cost).

They also pointed out that sedens ( the same ones) sold in USA was 30%-40% cheaper than India because of these taxes.

The problem is the Government of India still considers things like soaps, sauces et all are still LUXURY GOODS.

Will the GOI wake up and spare the common man?

MTR Sold out – 443 Crores!!

February 13, 2007

The Mavalli Tiffin Rooms (MTR) of the earstwhile Bangalore era is shortly no more. Reportedly the company has been sold out by the Maiya group for a whooping 443 crores as latest reports came in.

Norway based company which has purchased the same is very interested in piggy backing its own offerings using the MTR distributor channel. They also plan to introduce the famous MTR brand abroad.

Its not clear as to what would be the fate of the MTR brand (chain) of hotels run by one of the brothers. Would it go away too?

Interestingly the MTR spoksmen were not around for comments. Last quarter an American company tried to buy it out but deal fell through due to tussle of management issues.

So there goes our vada, idli, masala dosa, upma et all global. The side effect is we are going to boost some foregin economy when we have our staple diet at MTR. Long live the global village!