Improved Profitability Due to Increased Operating Efficiencies

CRISIL has conducted a study on the operating performance of about 5000 Indian companies in nine key manufacturing industries. The study indicates that these companies have been able to improve their profitability because of increased operating efficiencies.

So while the Net Sales grew between 2001-02 and 2005-06 by 15.13%, the operating profits rose by a higher 22.39% despite rising prices.

During the period under consideration (2001-02 to 2005-06) there has been a substantial increase in prices of critical input materials like crude oil, natural gas, steel and base metals resulting in an increase in prices of derivatives products, which are raw materials (RMs) for all major manufacturing companies.

The companies studied have not only been able to offset the impact of rising RM prices on their operating margins, they have actually expanded the operating margins by increases in end product prices and operating efficiency.

However, going forward, the ability to increase end product prices may be limited. Hence, to expand margins companies will have to rely largely on operating efficiency.

CRISIL believes that this commentary will be of interest to you. They will be glad to receive your views and comments on this commentary at CRISILratings@crisil.com. And me too!

Improved efficiency also means a lean, fit and competetive organisation. That is why we are increasingly showing our presence in the International market.

Being Covered is Not Sexy or Cool But Smart

Hey, I'm not into fashion designing. But could not resist a tantalising title to talk about Insurance!! If you haven't started a family, an Insurance cover is the least of your priorities. But even though it's not that cool to be insured, it sure is smart when there are people who depend on you.

Life insurance is a potent tool that not only offers the ability to plan for unforseen events that can affect the family's financial situation adversely, but is also looked up to as an important tax saving cum investment tool.

One needs to do a certain amount of spade work before purchasing a policy, to ensure the best possible coverage at the right price. Here are some helpful tips to get you started:

Explore As premiums vary widely from company to company and cover to cover, it’s important to look around. One can try internet sites to get instant quotes.

Plot your value The key to purchasing the right amount of life insurance is to have just enough coverage to meet your needs. If you have more life insurance than you need, you'll be paying unnecessarily for higher premiums. On the other hand, it's important not to have too little coverage, resulting in you being underinsured.

Health matters the most Healthy people get better rates on life insurance. Higher premiums are quoted for anything that poses a risk for longer life expectancy (smoking, on regular medication, etc). Sooner the better As premium rise with increasing age, the younger you are when you purchase life insurance, the lower premiums you will be required to pay.

Review your cover periodically Any life change indicates the need for an overall review of the financial plans. Make sure you have enough cover for all important events of life.

Focus on annual installments You may not realize it, but you may be paying more for your life insurance if you pay your premium in monthly installments. Many insurance companies charge extra fees if you make monthly premium payments instead of paying the annual premium.

Never conceal facts Though, age and negative health related conditions attract higher premium, don’t think about lying on the insurance application. If your insurance company gets the knowledge of concealed facts they can terminate the cover.

Mutual Funds v/s Direct Stocks Investing

Investing in the equity market directly is exciting and sexy. You are in the thick of things and are able to take responsibility for yourself. Though the volatility and the information overload makes it a daunting task.

How about investing through Mutual finds? Doesn't it have its own loading and administrative charges and the fund managers making merry on your hard earned money? And can't we see the best performing mutual funds and follow their portfolio?

Here are some points to ponder:

• We should allocate our time to investment decisions in proportion to our income generation goals.
• Convenience and hassle free investing should be a major factor.
• Fund managers are into it full time. If we able to identify fund managers who have consistently performed over last 3-5 years, nothing like it.
• The fund manager also has the muscle power of crores of Rupees and is able to take entry and exit decisions impartially.
• MFs continuosly churn their portfolio. When MFs buy and sell stocks, they don't have to pay capital gains as you do when you churn.
• We are likely to panic over market crashes. MFs can take advantage of a crash!
• With Systematic Investment plans (SIP), you can start investing with as low as Rs 500 per month.

There is another financial product called ETF: Exchange Traded Funds. They are the least expensive and manage themselves on their own.

Take your call.

Freedom & Responsibility of Working on your idea

Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. So what keeps the dreamy eyed entrepreneurs going. Or what makes an entrepreneur?

• The entrepreneur has to have an enthusiastic vision, the driving force of an enterprise.
• The entrepreneur's vision is usually supported by a specific business plan. I think when the overall blueprint to realize the vision is clear, the details may be incomplete, flexible, and evolving.
• With persistence and determination, the entrepreneur develops strategies to change the vision into reality.
• The entrepreneur takes the initial responsibility to cause a vision to become a success.
  Entrepreneurs take prudent risks. They assess costs, market/customer needs and persuade others to join and help.
• An entrepreneur is usually a positive thinker and a decision maker.

The idea of becoming an Entrepreneur is a sexy one. But taking the road less travelled is tough. You have the freedom to work with your ideas and have your own work time and space. But the freedom can work out to a demanding schedule of 18-20 hours a day!!

Guess you have the freedom to work in a Tshirt and your joggers too. But working while in a Tshirt/ Joggers is revolting to me!!

Chindia: The fight between Dragon and Tiger

The debate about comparisons between China and India is an interesting one. While both have similar huge human capital, China is way ahead in terms of infrastucture.

Economists don't see India overtaking China in terms of GDP even in 2050. But here's a different take on the issue. Read on......

What is the national animal of the two countries? Well, China has the Dragon and India has its Tigers.

Dragons are so many times more powerful than Tigers, you'll say.

But where are they? So while we still have some Tigers left, there are no Dragons surviving in China. Survival of the fittest!!

So the Tigers win! Atleast some of them are still alive!!