Sunday, August 26, 2007

Micro-finance: Reaching Consumers at the bottom of the pyramid

Suvarna,a frail,49-year old, grocery vendor in the village of Junnar in Maharashtra's Pune district is spoilt for choice in borrowing money, and the local moneylender is at the bottom of the pile in options.She is being offered Rs.15000 at a seemingly still steep, but less usurious, interest rate of 24% by the likes of SKS Microfinance and Share Microfin.

So far, Seven banks have managed to tap over 50 lakh customers across the country in this segment disbursing about Rs.3000 crore.But thats only a tiny percentage of the addressable market size of 6-7 crore potential customers capable of absorbing about Rs.40,000 crore, shows estimates by Micro=Credit Ratings International. It believes the 60 mn low-income households in India can consume credit worth Rs.8000 cr every year.

Banks are putting in place strategies - both plain vanilla and innovative - in order to achieve some aggressive targets.
ABN Amro Bank
Target: By 2009,10 lakh customers and portfolio of Rs.600 crore.
Key Innovations: Taking the perspective of venture capitalist rather than the lender. ABN Amro Foundation is incubating six-start up MFI's now, with plans to do another 50 MFI's start-ups in 3 yrs.

Target: Portfolio of Rs.500 cr in 18-24 months.
Key Innovations: Set up a dedicated MFI branch in Bharuch (Gujarat).Plans to use this as a hub to reach 1000 villages.

Target: To grow at 100% CAGR over the next 3 yrs.
Key Innovations: Opened a dedicated Self-help groups (SHG) branch in Tamil Nadu,which has over 10,000 individual customers associated with SHGs.By March 2008, a dozen such dedicated branches, pan-India,is planned.

Target: N.A
Key Innovation: Floated amicro-finance factory to incubate,churn out and support newer MFI models and provide support to entrpreneurs. Setting up a fanchisee model for MFIs.

Yes Bank
Target: Customer base of 5-7.5 lakh and portfolio of Rs.300 crore by 2012.
Key Innovation: Has identified urban micro-finance as a niche. Plans to disburse loans directly through Yes Microfinance India.

Source: Outlook Business

Saturday, August 18, 2007

How some of the Companies names are formed !

RARE Enterprise - RAkesh Jhunjunwala & REkha Jhunjhunwala
ENAM Securities - Nemish Shah & Manek Bhansali
Ess Dee Aluminuim - Sudip Dutta
Zicom Electronic Systems - The company was initially named ZeeCom since in those days Zee TV was very popular but later changed to Zicom since it resembled Zee.
Dabur - Back in 1884, when physician SK Burman started a firm to sell ayurvedic medicines, he named it Dabur,after combining Daktar (Devanagri rendition of doctor) and Burman.
Motorola - Founded in 1928, Motolrola was a pioneer in car radios.Its name was originally a combination of moto (for motor car) and ola (implying sound).
Voltas - Volkart Brothers and Tata Sons who started the company in 1954.

Monday, August 6, 2007

How to select a Mutual Fund

John C. Bogle writes in the book, "Bogle on Mutual Funds - New Perspectives for the Intelligent Investor" on how to invest in a mutual fund.Here are five points to keep in mind:

1)The immediate past performance of the mutual fund.In most cases, a fund should prove its merit over a period of at least five to ten years.” Chances are that a fund which has performed well for this period of time has seen various phases of the market and performed well across these various periods.

2)The fund manager who is managing the scheme. As Bogle writes “Find out whether the portfolio manager has run the fund for a few months, a few years, or a few decades, and give this information whatever weight you deem appropriate".

3)If the fund manager has changed recently for that Bogle’s advice is “when managers change, a wait-and-see policy is usually appropriate.”

4)Portfolio concentration. “It is not enough to know how many stocks a fund owns, because many of them may represent a small percentage of the net assets and have little impact on the fund’s overall performance. The better test is the proportion of total assets the fund holds in its largest positions. One good measure is to check the fund’s ten largest holdings. In the more concentrated funds, the ten largest holdings may comprise up to 50% of the portfolio; in the less concentrated funds, they may comprise as little as 15%. As a general rule, the greater the portfolio concentration, the greater is the opportunity for the fund to provide differentiated performance,”

5)The size of the mutual fund. Investing in schemes with very small assets under management (AUM) is not advisable, as Bogle writes “simply because of the relatively higher expenses associated with small funds.”
Source: DNA