Monday, October 16, 2017

BIMAL GURUNG A FEW SIMPLE QUESTIONS ....

A father lost his son, A mother her son and a Wife Lost his all dreams. For a moment forget about the late SI Amitava Malik  who passed away. Many might think that people are trying to attract sympathy and create a sentimental revolution. I better get into asking few thoughts within the readers mind. According to Time of India The recoveries made by the police following the pre-dawn encounter at Bengal-Sikkim border on Friday and consequent raids across the Hills suggest that the Bimal Gurung brigade has stockpiled huge arms and explosives from the Northeast to challenge the state's might. If he is leader then why he has to use weapons. Who funded these weapons and who has given the money to buy the arms and huge weapons?

Those who are supporting particularly the NGO’s and University and college students do they know that their leader has purchased arms and ammunition to create war like situation where they might kill common people of Darjeeling. These are those people who came up on the streets of Darjeeling for demanding Gorkhland. Does Bimal Gurung needs Gorkhaland for creating a arm smuggling business for the adjoining countries and trying to create mass destruction within India. If he is leader did he really need arms and ammunitions? Did any historical leader for demand of land and separate state did assembly of arm and ammunition assembly   

Those who are instigated to support Bimal Gurung about the Gorkhaland demand should be aware about the quality of their leader they are supporting.

Further I heard that many people raised the point that Police went to catch them without wearing bullet proof jacket or neither having helmet.  Well Police did not have any idea that the Bimal Gurung is now having huge mass storage of arms and ammunition. The police might have thought that they have gone to catch a normal leader.

Gorkhaland demand was planned demand to create problem for the Present West Bengal Government. Well when BJP came up in several states it does not mean that every state before 2014 was under doldrums. The act of BJP in instigating several matters in West Bengal in the last 8 months reveals many stories. The Hindu Muslim Riot in Bashirhat was planned game of them. Finally the father had to die for saving his son who shared the FB post. Now this Gorkhaland demand was a planned strategy of getting West  Bengal defamed. Bimal Gurung has been victim who has been planted to access the depth of the present Government of West Bengal’s strength.  

Among all these incidents noble Police officer passed away since they did not might have the information that Bimal Gurung is now next stage of Terrorist. Well Terrorist only store mass weapons for destruction. The opposition parties must understand that each state is not like Uttar Pradesh or Bihar. The honorable chief minister has fought at huge extent to build west Bengal. Opposition parties are no doubt jealous not only about the West Bengal growth but more about the visionary of growth.  
pposition parties are no doubt jealous not only about the West Bengal growth but more about the visionary of growth.  

Thursday, October 5, 2017

MFID2 PROBLEM & DEMAND

MFID2 the name might sound like Nuclear weapon but for financial markets it’s going to be something of that kind. January 3rd 2018 the European market will witness one of the biggest reforms in the financial market. The recession of 2008 gave birth to many new norms to save guard the investors. MFID2 is a similar policy governing many segments of European financial markets going ahead.  The bond market which is one of the biggest markets followed with complex products are going to take a huge toll on the product manufacturers. In Simple terms MFID 2 means transparency in non equity product trading which is herculean task for the EU product manufacturers. At present, there is little data produced on how individual securities trade, leaving many market participants in the dark. The new norm requires publish information on the liquidity classification of financial instruments and the sizes large in scale compared to normal market size and the size specific to the instrument . European bond market will face the heat while selling bonds in 2018.

 Asian and Emerging markets Bonds Demand  to Grow.

After MFID2 is implemented Asian bond markets will become attractive as outflow of capital will increase. Emerging markets bonds will also become attractive and hence inflows will increase in debt instrument. Infrastructure bonds and other bonds will soon find huge demand for the Asian markets in the coming 2018. Corporate bonds and other masala bonds will become more attractive going ahead and also low CAD of India makes it more lucrative followed with stable currency,l ow inflation rates ,high level of reform polices and domestic growth drivers. Data show that the average daily corporate bond investments have been consistently rising since December 2016 and have achieved an approximate 42.3% increase as on date. In mid-September, the percentage utilisation of the limit for foreign portfolio investment in corporate bonds reached 99.99% indicating foreign investors’ confidence in the Indian market.

Very recently RBI shifted masala bonds from being part of FPI limits in corporate bonds to being subject to External Commercial Borrowing (ECB) limits. The additional 18% headroom created will be available for further investments by FPIs over the next two quarters.Currently the Indian bond market raised  of Rs. 6.7 lakh crore in FY17, a 36% jump over the preceding year’s figures.

If you remember recently there have been some hybrid bonds which have been traded and offered to investors and investments were also done. These bonds were of high quality complicated bonds of hybrid nature where the bond indenture was never explained in full to the clients. MFID2 will help to have a very clear transparency about the holding of the same and the liquidity aspect of the same. Investors will be better informed about these non equity based products. Green bonds will be under huge threat as the parameter for the investors in these bonds are expected to be socially strong in terms of credentials.  Another key area which will get exposed is inter -bank hedging which till now remained in closed doors. After MFID2 is implemented all these hedging details will need to be exposed.

Selling bonds will be difficult in the next year and this would affect currency and investors as many of them will flock for redemption out of panic.

The biggest pain will be for those investors who will not be able to withdraw from the small self-administered scheme in January unless their scheme has met Mifid II rules. Penison schemes will be under pressure if they don’t comply with MFID 2. Hence the problem is going to create simply panic before and during that time frame. The client has to wait until the trustees have applied to the London Stock Exchange (LSE) for the document and the scheme has been registered. The catch point is that in between if markets have fallen in the intervening period, the scheme could lose money if the trustee carries out the trade in a down market.

Buyers of the non equity products will have an open option to buy research or not which earlier used to be part of the product in gamut. Transparency is the key. US banks and its other financial arms that are holding these bonds as well as looking ahead to buy such products in future will face one of the toughest days coming ahead. It’s about unbundling the products and this will lead to quality research output as well as many shops will be shut down and many research segments to upgrade their works.

Data will be public and European bonds will be under huge pressure going ahead as closed doors transactions and other gimmicks comes to an end going ahead. From January 3 2018, one of the EU’s most ambitious, packages of financial reforms will be rolled out. Monopoly of the bond players and exchanges will come to an end through this new law.

The last 2 years European banks have been riding rough ride based on profitability issues and liquidity injection where some banks came up with bond issues to save the banks. Most of these bonds were invested by those who knew little about the Hybrid aspect of the bonds. From banks to institutional investors, exchanges, brokers, hedge funds and high-frequency traders all will come under the transparency guideline and hence many of the bonds will face hard times as institutions will have to report more information about most trades immediately, including price and volume.

Tuesday, October 3, 2017

Cost Accountants save them from becoming Auto Rickshaw Drivers.. Varanasi Weavers


In continuation to my previous article on APPLY STRATEGIC COST MANAGEMENT TO TAKE BENEFIT OF GST  http://www.ianalysis.co.in/2017/10/apply-strategic-cost-management-to-take.html I am happy to share an opportunity for the Cost Accountants and its chapters to come up and save the problems of an Indian tradition which is on the path of getting depleted.  In my previous article I accentuated on the B2B network and its huge opportunity for companies to come forward and reap the gains from this unorganised players who are about to leave various industries due to GST. Cost Accountants and cost chapters can play a huge role to save the industry and its players and workers from the sudden death of GST related gaps. From the problem mentioned throughout in the article one will get clear idea and ABC and efficient cost allocation is not at ll followed which has lead to this sudden death of an industry growing from 16th century.

Currently Indian textile industry is under immense threat due to GST related issues. India’s biggest market of sari weaving is Varanasi.  The sari business in the city that has a textile tradition which goes back to at least the 16th century. We all know the Varanasi Sari demand and its quality over the last several decades. GST related issues have ripped the business by 50% and most of the weavers are leaving the profession and heading for Auto Rickshaw drivers etc where they can earn better. Banarasi silk saris rates has fallen to less than half of the Rs 800-Rs 1,000 a week which one used to get  making in September last year. In Varanasi’s Jaitpura-Chhora colony of weavers have abandoned their craft. This segment of sari is an export denominated market where we all know the demand and the price at which they are sold.

GST related issues are placing brakes on then growth of this industry. Most of the weavers and players cannot figure out when to generate bills, how much GST will be applicable and whom to charge.GST regulations require these enterprises to file three returns per month along with all documents on sales, purchases and tax levied and paid which turns out to be a massive problem for these traders and weavers who have little knowledge of the organised mode of business. This segment is highly unorganised and creates immense opportunity for the companies who are larger in this industry to employ or rather develop business relationship with these dying weavers to grow their business. A win-win proposition for both. Access of larger markets and sudden evaporation of middlemen within the industry have left these weavers under no business opportunity.
In my previous article I depicted the picture of creating direct contact with the unorganised players to create new markets and opportunities by educating and developing technological dependent opportunities to remove the traditional barriers. Cost Accountants across India can find huge practicing opportunity at lesser fee but with huge long term loyalty of clients by educating and working together with the weavers.
 The cost accountants can bridge these gaps through their existing business partners or through their clients who can get in direct touch with these weavers or unorganised players to create new opportunities. Around  90%  of the business is in the unorganised sector employing large numbers of weavers who are uneducated and unable to handle the technicalities of GST. Hence  cost accountants and the chapters can come up and get huge batch of client tale who might not be able to pay huge fee but a moderate fee and technical support can make huge opportunity to explore.

Till July, they did not charge any tax at all from customers, choosing to absorb the cost themselves. Efficient costing methods like ABC and target costing can help these weavers to make substantial profit without even increasing the price.  I find this one of the best example and opportunity for the cost Accountancy profession to support not only Varanasi weavers but other weavers placed in different location.

Efficient cost management will help the industry to offer healthy credit facility without making jaw dropping business outlook for the long term. Efficient cost management and working capital management will lead to compilation of GST related invoicing deadlines and also growth of the industry.  Suppliers of raw material such as fibres and zari  (gold or silver thread)  have  stopped giving weavers material on credit and started insisting on immediate payment. They simply don’t have money in their pockets. This is gray area since cost accounting tools are being avoided and hence due to no knowledge of the subject working capital shortage has turned into a anaconda swallowing up such a huge Rs 5000cr  market.

Most of the weavers and players cannot figure out when to generate bills, how much GST will be applicable and whom to charge. They are unable to figure out how much GST to charge for a sari in which they have used both polyester and cotton – a popular combination for cheaper power loom saris. 

Its an huge opportunity for the practicing community of cost accountants and their clients to create a new market opportunity for these weavers who are shifting into become Auto Rickshaw drivers.Its an opportunity for the profession to convert an unorganised market into organised players with efficient capital and cost managmenet.

APPLY STRATEGIC COST MANAGEMENT TO TAKE BENEFIT OF GST



GST has started playing its tune and the benefits of the music in healing the economic gaps will be witnessed after a year almost. Among these I find that there is an immense opportunity for the industry to take opportunity of expanding their business and developing new frontiers particularly into B2B segment which earlier used to work as only commission agents between the agency networks. Strategic cost management application will help to increase market share and revenue from a ready available market through the blessing of GST. This article depicts the road map for creating unorganized players into organized segment and making companies to win new market of new B2B players in those areas.   It’s a first mover’s advantage and always remembers the unorganized will be completely eliminated but certain fraction will be out. Unorganized players are currently in search of some avenue to save from GST affects and this is the right time to strike chord for growth of business.  The rest will be required to nurture to tap the potential of new market frontiers for sale of products. Remember these unorganized players cannot afford to sit at home for the sake for GST hence come ahead to create new B2B frontiers.  
Indian companies needs to think and apply strategic cost management tools to create new markets and frontiers from the current GST issues.

Developing new markets and reducing Branch fixed compliance cost under GST is the key success road map. This segment can be capitalized to convert into a main stream B2B network. This segment is about to evaporate as GST as increased the compliance cost and they are the ones who are under the unorganized segment of the market. This B2B of unorganized segment can be converted into organized provided the company applies the strategic cost management to grow the business network. They are less cost consuming and looking for some extra income apart from their mainstream business/profession line.

B2B expansion under this category will be faster as one is getting a ready distributor with zero cost of acquisition and converting the same into the main stream business line. B2B is one of the most efficient ways of increasing revenue without incurring any fixed cost to sale your products. B2B market expansion will be easier under the current circumstances as one will get ready well trained and well ready market. A company need its product development team to educate about the products and sales team needs to train these new B2B players about where and how to pitch. Hence less cost of acquisition, less gestation period for revenue generation and the best time for an opportunity as the GST have been implemented. Most of the companies will lose sight or will be compelled for entertaining any more non GST complaint middlemen who used to be ruling any product market.

Current GST rates might make few products less attractive and some people out of employment. This is the key for B2B market development. Those companies who are planning to expand can come ahead and educate and train about GST and replace these people with product where margins of revenue will affect the cost of operating for these B2B players.

We all know that in FMCG industry building the distributor business is the key aspect for saving fixed cost of having a branch etc.   This key area can be utilized again under GST as many companies will find huge compliance cost aspect under GST from multiple branches hence developing the B2B network is the best way to reduce fixed compliance cost for the companies as well as increasing a business network and revenue for the company.

Technology can be used judiciously to replace and educate these new B2B networks to increase business and reduce own fixed cost. The one who used to work in unorganized market segment can be easily attracted towards organized provided the products changes where margins makes sustainability of the B2B network praise worthy.

Monday, October 2, 2017

FRANCE THE BREXIT SAVIOUR FOR EUROPEAN UNION


Brexit have been keen focus area for the global economy in order to get an idea about the opportunities and deaths of opportunities arising from the same. EU is totally under a mixed bag scenario where the latest election win by Merkel is also under intense pressure as her chair is having 4 different collation parties support. Among all these doldrums I find France is going to be the biggest growth contributor for the EU and particularly a strong supporter for Merkel in his policy frame works in the long term. France is going to be the biggest growth opportunity market for the EU after Brexit and its preparing itself for the same. President Emmanuel Macron’s reform policies are going to be huge contributor for the economic growth of France over the next decade. 39 years old President is having enough oxygen in his blood to pump up the France Economy and became a strong contributor to the EU on the large picture.

The president is pushing technological shifts and adoption at rapid space which will change the traditional industries of France in the long term. These changes will create new job opportunities and attraction for VC funds in his country.  Innovation have been given huge thrust followed with entrepreneurship so as to adopt technology and make massive restructuring in its economy followed with Tax cuts, converting wealth tax into property tax adoption of Artificial Intelligence in its business and services creating huge flow of opportunities for many countries to invest in France.   Reform measures have been going good till now and one of the biggest achievements have been the Labour reform measures in France which plays pivotal role for the industrial investments to grow in France. Machine learning, artificial intelligence (AI) and big data  are being highly applied and adopted in the industries in France. Service industry will get huge boost up as technology will smoothen the process and innovation cult will play the tunes of growth for France.

France auto industry is coming up in big way with innovate technological driven products in the coming years very soon. Young French graduates are increasingly trying their luck with startups. The step towards reducing the corporate tax rate from 33% to 25% over five years plays pivotal role to push up the climate of investments in his country. The President is committed to improve not only the GDP but also to become a close alia of Germany.  A huge focus has been deployed to improve the education and qualification of France so as to match the demand for the global economy.  The whole of EU and Germany will support France in all respect after Brexit since France is  a permanent member of the UN Security Council and a nuclear power, will be the EU’s only member with military muscle.

French venture capital funds have raised €2.7 billion (£2.4 billion) from investors so far this year, compared with €2.3 billion in the UK, the first time France has raised more venture capital money. In the area of education its being found that by the age of 15, 40% of French pupils from poorer backgrounds are “in difficulty”, a figure six percentage points above the OECD average. French schools, with their demanding academic content and testing, do well by the brightest children, but often fail those at the bottom.  This is the key place where they are working to make over the traditional education polices. This will uplift the quality of education and manpower in the long term.


The Recent trouble of NATO and Paris Climate issues keeps France as strong supporter for the EU to stand together. Brexit and Merkel’s current condition creates immense opportunity for thr new President to negotiate and get the best for his country. The way the economic growth factors are being looked upon by the President its well clear that in coming months we will witness some healthy growth numbers from France and many countries of EU involved in this growth journey.


Those looking for investment opportunities can look towards France and be rest assured that the adversities of EU will be beneficial for the France followed with a strong support from Merkel who in her last term have to play lot of music. Neither France nor EU will get second chance to turn around the whole of the economy from the collapse faced in this decade.

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