I have been barking about the stock market in India and globally for
a long, long time...if you have been listening, then you are safely
invested in fixed term deposits at a Bank, have no equities and no
mutual funds. There are good companies out there; but the short sighted
accounting wizard owners of some companies are ruining the environment
for good companies.
How else do you explain the situation in
India today? Forget the Satyam/Raju saga...I am sure there are a few
others out there that will be exposed, hopefully not of the same scale.
I am talking about the real estate companies...
If you have
followed my blog, there are innumerable "barkings" and warnings re :
Realty companies. Parsvnath reported earnings are down 95%, Unitech is
down 85%, DLF is down 75%. This is sheer nonsense...their earnings are
not down on this scale, it is their previous earnings which are obviously wrong.
These
companies are dominated by their owners..I hate to tar everyone with
the same brush...but isn't Satyam/Raju's fraud as a result of a
dominating owner...who determined the accounting process.
So,
while I continue to suggest 2500 Nifty as a fair value to buy the
Indian economy and market clearly the risks on the downside have risen
dramatically...it is the trust factor. There will be very few investors
willing to make quick decisions on India investments and before they do
there will be questions which management in India will have a difficult
time answering.
Which brings me to some anecdotal evidence...in
5 star hotel restaurants around Delhi/Gurgaon there have been many
large teams sitting down to dinner together...many foreigners, some
quite young. As I observed some of these dinners, it was clear that the
foreigners were not the typical investment banker/private equity
types..some of them looked geekish. It turns out that these teams are
not scouting new investments, but have been sent to audit the value of
their current investments...a result of the Raju debacle.
Which
brings me back to the title of this post...to bring back trust clearly
we need to blow the whistle on shady accounting practices and shady
marketing of results. So a whistle blower is required...
If
anyone has a story to tell which is compelling regarding malfeasance at
any company...send me a message and i will publish it on this blog
without any reference to the sender.
