|
If Wal-Mart were a country, its
revenues would make it on par with the GDP of the 25th largest economy in the
world by, surpassing 157 smaller countries. Here are 25 major American
corporations whose 2010 revenues surpass the 2010 Gross Domestic Product of
entire countries, often with a few billion to spare. Even some major
countries like
Yahoo is bigger than
Mongolia
Yahoo's Revenue: $6.32 billion
Yahoo would rank as the world's 138th biggest country.
Source: Fortune/CNN Money, IMF
Visa is bigger than Zimbabwe
Visa's Revenue: $8.07 billion
Source: Fortune/CNN Money, IMF
eBay is bigger than
eBay's Revenue: $9.16 billion
Ebay would rank as the world's 129th biggest country.
Source: Fortune/CNN Money, IMF
Nike is bigger than Paraguay
Nike's Revenue: $19.16 billion
Nike would rank as the world's 102nd biggest country.
Source: Fortune/CNN Money, IMF
Consolidated Edison is bigger than the
Democratic Republic of the Congo
ConEdison's Revenue: $13.33 billion
ConEdison would rank as the world's 112th biggest country.
Source: Fortune/CNN Money, IMF
McDonald's is bigger than Latvia
McDonald's Revenue: $24.07 billion
McDonald's would rank as the world's 92nd biggest country.
Source: Fortune/CNN Money, IMF
Amazon.com is bigger than Kenya
Amazon.com's
Revenue: $34.2 billion
Amazon would rank as the world's 86th biggest
country.
Source: Fortune/CNN Money, IMF
Morgan
Stanley is bigger than Uzbekistan
Morgan Stanley's
Revenue: $39.32 billion
Morgan Stanley would rank as the world's 82nd
biggest country.
Source: Fortune/CNN Money, IMF
Cisco
is bigger than Lebanon
Cisco's Revenue:
$40.04 billion
Cisco would rank as the world's 81st biggest country.
Source:
Fortune/CNN Money, IMF
Pepsi is bigger than Oman
Pepsi's Revenue: $57.83 billion
Pepsi would rank as the world's 69th biggest country.
Source: Fortune/CNN Money, IMF
Apple is bigger than Ecuador
Apple's Revenue:
$65.23 billion
Apple would rank as the world's 68th biggest country.
Source:
Fortune/CNN Money, IMF
Microsoft
is bigger than Croatia
Microsoft's Revenue:
$62.48 billion
Microsoft would rank as the world's 66th biggest economy.
Source: Fortune/CNN Money, IMF
Costco
is bigger than Sudan
Costco's Revenue:
$77.94 billion
Costco would rank as the world's 65th biggest country.
Source:
Fortune/CNN Money, IMF
Proctor
and Gamble is bigger than Libya
Proctor and Gamble's
Revenue: $79.69 billion
Proctor and Gamble would rank as the world's 64th
biggest country.
Source: Fortune/CNN Money, IMF
Wells
Fargo is bigger than Angola
Wells Fargo's
Revenue: $93.249 billion
Wells Fargo would rank as the world's 62nd
biggest economy.
Source: Fortune/CNN Money, IMF
Ford
is bigger than Morocco
Ford's Revenue:
$128.95 billion
Ford would rank as the world's 60th biggest country.
Source:
Fortune/CNN Money, IMF
Bank
of America is bigger than Vietnam
Bank of America's
Revenue: $134.19 billion
Bank of America would rank as the world's 59th
biggest country.
Source: Fortune/CNN Money, IMF
General
Motors is bigger than Bangladesh
GM's Revenue:
$135.59 billion
GM would rank as the world's 58th biggest country.
Source:
Fortune/CNN Money, IMF
Berkshire
Hathaway is bigger than Hungary
Berkshire Hathaway's
Revenue: $136.19 billion
Berkshire Hathaway would rank as the world's
57th biggest economy.
Source: Fortune/CNN Money, IMF
General
Electric is bigger than New Zealand
GE's Revenue:
$151.63 billion
GE would rank as the world's 52nd biggest country.
Source:
Fortune/CNN Money, IMF
Fannie
Mae is bigger than Peru
Fannie mae's Revenue:
$153.83 billion
Fannie Mae would rank as the world's 51st biggest country.
Source: Fortune/CNN Money, IMF
Conoco
Phillips is bigger than Pakistan
Conoco Phillip's
Revenue: $184.97 billion
Conoco Phillips would rank as the world's 48th
biggest country.
Source: Fortune/CNN Money, IMF
Chevron
is bigger than the Czech Republic
Chevron's Revenue:
$196.34 billion
Chevron would rank as the world's 46th biggest country.
Source: Fortune/CNN Money, IMF
Exxon
Mobil is bigger than Thailand
Exxon Mobil's
Revenue: $354.67 billion
Exxon Mobil would rank as the world's 30th
biggest country.
Source: Fortune/CNN Money, IMF
Walmart
is bigger than Norway
Walmart's Revenue:
$421.89 billion
Source: Fortune/CNN Money,
IMF
|
Tuesday, May 29, 2012
MIGHTY AMERICAN CORPORATE WORLD
Friday, March 30, 2012
SBI Investment Strategy
Few of your schemes are doing exceptionally well, so how do you discover stocks among the hundreds available in the market? What is the star performing stock selection process from the universe of stocks in the market?
As a house we have two separate philosophies, one for large caps and the other for mid caps. The large-cap philosophy is based on a one year perspective but the mid-cap viewpoint is longer, say for around three years. We define large-cap stocks as the top 100 companies in terms of market capitalisation and look at four essential variables. The first one is positive fundamental change (sales, margins and profitability); then we look at market expectations since there is no point in buying when the news has already been factored in. The third variable is valuations and the last but not the least is momentum. This is in addition to our regular due diligence on the business. We also take into account the recommendations of our research teams as they too have their own models of identifying a stock. Based on these parameters, we rank the stocks and decide where to be actively over-weight or under-weight.
For mid-caps we adopt different parameters on account of liquidity constraints and a longer time perspective. We consider five factors for mid-caps. The first factor is a ‘right to win’ or a core competency which can be defined objectively, for example in terms of market share, gross margins, technological edge or a brand franchise. We find a lot consumer companies with some high brand franchise such as Hindustan Unilever. Second is the return on capital and its consistency over a time period. Then we look at the growth expectation as you don’t want to end up with single digit returns in a growing market like India. Our fourth factor takes into account the management capabilities and their integrity which is followed by valuations.
A combination of these five factors helps us make a buy decision based on the relative intensity of each factor. Fortunately, for mid caps we are not benchmark oriented which is unlikely in the case of large caps and hence can afford to ignore what we do not like.
After going through all the process, how do you choose a stock that is best suited for a fund and avoid the bad one?
Well, for example, we run a mid-cap fund called Magnum Global where the fund needs to satisfy three factors such as competency, consistently high returns on capital and fairly high growth expectation. So we consider a stock if it meets this criteria and follow this strategy for more than 75 per cent of our equity funds. This approach narrows down our universe of stocks to around 150 odd scrips. We then make the selection decision based on management assessment and relative valuations.
Due to this philosophy, this fund is typically high on ‘quality’ and stocks may come expensive relative to the index or the peer set. We have seen this philosophy work well in secular markets but not during sharp swift rallies. So, last month, we got hammered badly against the benchmark.
The Emerging Business Fund, on the other hand, could happily buy junk if the valuation comfort is high. In other words, we might compromise on companies that have no core competency or where returns on capital are low just because valuations are attractive. Take McDowell Holdings, for instance, which is trading at an 88 per cent discount to the value of its underlying which ironically, is also a holding company trading at a huge discount. Not to say it is low risk but one needs to weigh the probability of a one-zero event.
Can you tell us about some stock calls that have gone right or wrong while managing the fund?
Page Industries is definitely one stock that contributed substantially to excess returns last year across a number of funds. Manappuram General Finance has done well for us and so have Hawkins as well as Goodyear among the mid cap bets. Likewise, Redington India is something we bought for its ‘right to win’ (market share and business model), consistently high returns on capital, valuations and most important out of all, its management, and it paid off handsomely as it has almost doubled in a bear market.
Buying Bajaj Holdings, we thought, was a no brainer as we liked the underlying, Bajaj Auto and there was a 65 per cent margin of safety. We got a meaningful lot at Rs 400-odd, I think, at a time when the management itself was doing a preferential at Rs 450 and made decent returns on them.
Clearly, we’ve gone terribly wrong on a few others. Dhanlaxmi Bank for example, where we betted on the new management coming in and picking up low lying fruits similarly we got it wrong with Centurion Bank. We had bought a meaningful quantity in the Emerging Business Fund but lost more than one-third of it before we exited and the stock crashed even further. We had bought that stock for around Rs 180 levels and exited later when it came down to Rs 120-125 and booked some losses there.
McDowell Holding is another example which we still hold. The stock is at half the price we bought it for. I had thought it was a doubler then; now, obviously, I think it’s a four-bagger (smiles). It is down because of the problems with Kingfisher. Did we see it then? Yes. But, we thought and still do that the stock sufficiently factors in the concerns based on the reasonable event probabilities.
Essentially, we run an investment thesis on the stocks we hold which we revisit every once in a while and then revise our view when the thesis changes. In Dhanlaxmi Bank, we had an investment thesis which changed when the bank got into a vicious cycle rather than a virtuous one. When we saw that, we exited irrespective of the cost price. I think, in the investment business, one need to swallow a lot of self discipline and as a house, I think, we have been alert on cutting our losses on the wrong decisions and made more right decisions.
Mid-cap stocks come with a set of risks, how do you manage the overall portfolio balance?
There is risk in mid-cap stocks because it comes with high beta and it is apparent that when markets are negative mid-cap stocks fall more. While managing a mid-cap fund, we are obviously benchmarking it to other mid-cap funds and the mid-cap index, so in that context there is no relative risk. On an absolute basis, risk effectively emerges out of volatility. I personally think, volatility is a boon and presents an excellent opportunity to buy businesses you like at your price. In the Emerging Business Fund, for example, we don’t bother about volatility for a significant part of the portfolio but we do communicate to our investors that this is a high-risk, high-return fund. But, having said that, in all the other funds we run clear internal mandates that controls risk and limit the fund manager’s flexibility to the given mandate. Say for instance, Magnum Equity which is a pure large-cap fund that can invest only in the large-cap space of top 100 companies wherein we also run a minimum benchmark coverage and active sector and stock limits. SBI Bluechip can buy mid caps only to the extent of 20 per cent and similarly we have limits for every fund that cover not only market cap risks but also benchmark risks along with volatility risks.
But, in a way you are right, mid-cap companies are more prone to basic business risk because they are small. But, like I said, we try to focus on leaders within that smaller space like a Page Industries or a Redington or even a Divi’s Laboratories.
Given this kind of scenario how do you sustain your conviction on the stocks or the sector you hold?
One should have done enough work on the company before getting into the stock so that the market momentum does not change your conviction. In a stock if one has a high conviction, you should be happy if it comes off because you can accumulate more stocks. That’s especially true for a large fund house like ours where you have more money chasing fewer ideas. Simply speaking, a stock falling shouldn’t affect the conviction as all the stocks are not going to perform during all periods. But again as I said, our five pillars in selecting a stock are very important. Even in mid-cap stocks we are looking for some core competency, we are not buying a small company in a space that is dominated by larger player. One has to, I guess; wait for its time to come.
But some times do you try to avoid some stocks and what are the reasons behind it?
We don’t have any specific reasons for avoiding stocks, but typically we stay away from stocks which have larger concerns on management side. As a house, we don’t have a particular philosophy for not investing in a company because finally we are looking at the risk-adjusted returns. But it could be that some times we might not buy a sector due to fundamental reasons. So, today we don’t own much in Construction as we feel that the balance sheets are still quite stressed.
Personally, real estate has been a no-no for me since long time. I didn’t participate even in the DLF Initial Public Offering (IPO). I have bought only two real estate stocks, one is Phoenix mills and other is Godrej Properties. So it does not mean we don’t get into real estate stocks.
Who has been your investment mentor?
I have read many investments books, but I really like Philips Fisher’s ‘Common stocks with Uncommon profits’ which was introduced to me by Raamdeo Agrawal of Motilal Oswal. And mostly, people from real life whom I have worked with have added tremendous value knowingly or unknowingly.
So many investors across the globe also look at investment strategies of famous investors like Warren Buffet. Have you any time looked at investment strategies and replicated it while buying a stock?
Yes of course. Frankly, nothing we do is original. Ours is a glorified copy-and-paste industry (smiles). There is definitely a lot to learn and whatever I say here would seem clichéd. But, yes, as much as possible you try to read up and copy-paste effectively. The most we learn, however, is from our interaction with company managements who unfortunately tend to get less credit than money managers for the performance of their own companies. Having said that, a typical ‘Buffet’ philosophy does not work naturally for a mutual fund since the focus is on relative returns and the consistency of that relative performance given that investors are getting in all the time.
So what kind of strategy do you follow in investments as volatility is part of the equity markets?
It is like running on a treadmill and we need to keep evaluating the portfolio all the time. We did well in a lot of funds last year as we had a defensive approach. Towards the end of last year we moved incrementally into higher beta, but unfortunately it wasn’t good enough. So, a few funds that were doing well last year have lagged the benchmark (year-to-date) while some others are doing much better. Apart from that we have active churn in the portfolio, there are many stocks which we buy and hold again where our thesis are bang on. When we think our price targets are achieved or the thesis is getting shaky we churn, eventually we rank our preferences all the times and buy what looks best. Fortunately or unfortunately, one thing I have learnt in this profession is not to respect one’s views too much.
As a house we have two separate philosophies, one for large caps and the other for mid caps. The large-cap philosophy is based on a one year perspective but the mid-cap viewpoint is longer, say for around three years. We define large-cap stocks as the top 100 companies in terms of market capitalisation and look at four essential variables. The first one is positive fundamental change (sales, margins and profitability); then we look at market expectations since there is no point in buying when the news has already been factored in. The third variable is valuations and the last but not the least is momentum. This is in addition to our regular due diligence on the business. We also take into account the recommendations of our research teams as they too have their own models of identifying a stock. Based on these parameters, we rank the stocks and decide where to be actively over-weight or under-weight.
For mid-caps we adopt different parameters on account of liquidity constraints and a longer time perspective. We consider five factors for mid-caps. The first factor is a ‘right to win’ or a core competency which can be defined objectively, for example in terms of market share, gross margins, technological edge or a brand franchise. We find a lot consumer companies with some high brand franchise such as Hindustan Unilever. Second is the return on capital and its consistency over a time period. Then we look at the growth expectation as you don’t want to end up with single digit returns in a growing market like India. Our fourth factor takes into account the management capabilities and their integrity which is followed by valuations.
A combination of these five factors helps us make a buy decision based on the relative intensity of each factor. Fortunately, for mid caps we are not benchmark oriented which is unlikely in the case of large caps and hence can afford to ignore what we do not like.
After going through all the process, how do you choose a stock that is best suited for a fund and avoid the bad one?
Well, for example, we run a mid-cap fund called Magnum Global where the fund needs to satisfy three factors such as competency, consistently high returns on capital and fairly high growth expectation. So we consider a stock if it meets this criteria and follow this strategy for more than 75 per cent of our equity funds. This approach narrows down our universe of stocks to around 150 odd scrips. We then make the selection decision based on management assessment and relative valuations.
Due to this philosophy, this fund is typically high on ‘quality’ and stocks may come expensive relative to the index or the peer set. We have seen this philosophy work well in secular markets but not during sharp swift rallies. So, last month, we got hammered badly against the benchmark.
The Emerging Business Fund, on the other hand, could happily buy junk if the valuation comfort is high. In other words, we might compromise on companies that have no core competency or where returns on capital are low just because valuations are attractive. Take McDowell Holdings, for instance, which is trading at an 88 per cent discount to the value of its underlying which ironically, is also a holding company trading at a huge discount. Not to say it is low risk but one needs to weigh the probability of a one-zero event.
Can you tell us about some stock calls that have gone right or wrong while managing the fund?
Page Industries is definitely one stock that contributed substantially to excess returns last year across a number of funds. Manappuram General Finance has done well for us and so have Hawkins as well as Goodyear among the mid cap bets. Likewise, Redington India is something we bought for its ‘right to win’ (market share and business model), consistently high returns on capital, valuations and most important out of all, its management, and it paid off handsomely as it has almost doubled in a bear market.
Buying Bajaj Holdings, we thought, was a no brainer as we liked the underlying, Bajaj Auto and there was a 65 per cent margin of safety. We got a meaningful lot at Rs 400-odd, I think, at a time when the management itself was doing a preferential at Rs 450 and made decent returns on them.
Clearly, we’ve gone terribly wrong on a few others. Dhanlaxmi Bank for example, where we betted on the new management coming in and picking up low lying fruits similarly we got it wrong with Centurion Bank. We had bought a meaningful quantity in the Emerging Business Fund but lost more than one-third of it before we exited and the stock crashed even further. We had bought that stock for around Rs 180 levels and exited later when it came down to Rs 120-125 and booked some losses there.
McDowell Holding is another example which we still hold. The stock is at half the price we bought it for. I had thought it was a doubler then; now, obviously, I think it’s a four-bagger (smiles). It is down because of the problems with Kingfisher. Did we see it then? Yes. But, we thought and still do that the stock sufficiently factors in the concerns based on the reasonable event probabilities.
Essentially, we run an investment thesis on the stocks we hold which we revisit every once in a while and then revise our view when the thesis changes. In Dhanlaxmi Bank, we had an investment thesis which changed when the bank got into a vicious cycle rather than a virtuous one. When we saw that, we exited irrespective of the cost price. I think, in the investment business, one need to swallow a lot of self discipline and as a house, I think, we have been alert on cutting our losses on the wrong decisions and made more right decisions.
Mid-cap stocks come with a set of risks, how do you manage the overall portfolio balance?
There is risk in mid-cap stocks because it comes with high beta and it is apparent that when markets are negative mid-cap stocks fall more. While managing a mid-cap fund, we are obviously benchmarking it to other mid-cap funds and the mid-cap index, so in that context there is no relative risk. On an absolute basis, risk effectively emerges out of volatility. I personally think, volatility is a boon and presents an excellent opportunity to buy businesses you like at your price. In the Emerging Business Fund, for example, we don’t bother about volatility for a significant part of the portfolio but we do communicate to our investors that this is a high-risk, high-return fund. But, having said that, in all the other funds we run clear internal mandates that controls risk and limit the fund manager’s flexibility to the given mandate. Say for instance, Magnum Equity which is a pure large-cap fund that can invest only in the large-cap space of top 100 companies wherein we also run a minimum benchmark coverage and active sector and stock limits. SBI Bluechip can buy mid caps only to the extent of 20 per cent and similarly we have limits for every fund that cover not only market cap risks but also benchmark risks along with volatility risks.
But, in a way you are right, mid-cap companies are more prone to basic business risk because they are small. But, like I said, we try to focus on leaders within that smaller space like a Page Industries or a Redington or even a Divi’s Laboratories.
Given this kind of scenario how do you sustain your conviction on the stocks or the sector you hold?
One should have done enough work on the company before getting into the stock so that the market momentum does not change your conviction. In a stock if one has a high conviction, you should be happy if it comes off because you can accumulate more stocks. That’s especially true for a large fund house like ours where you have more money chasing fewer ideas. Simply speaking, a stock falling shouldn’t affect the conviction as all the stocks are not going to perform during all periods. But again as I said, our five pillars in selecting a stock are very important. Even in mid-cap stocks we are looking for some core competency, we are not buying a small company in a space that is dominated by larger player. One has to, I guess; wait for its time to come.
But some times do you try to avoid some stocks and what are the reasons behind it?
We don’t have any specific reasons for avoiding stocks, but typically we stay away from stocks which have larger concerns on management side. As a house, we don’t have a particular philosophy for not investing in a company because finally we are looking at the risk-adjusted returns. But it could be that some times we might not buy a sector due to fundamental reasons. So, today we don’t own much in Construction as we feel that the balance sheets are still quite stressed.
Personally, real estate has been a no-no for me since long time. I didn’t participate even in the DLF Initial Public Offering (IPO). I have bought only two real estate stocks, one is Phoenix mills and other is Godrej Properties. So it does not mean we don’t get into real estate stocks.
Who has been your investment mentor?
I have read many investments books, but I really like Philips Fisher’s ‘Common stocks with Uncommon profits’ which was introduced to me by Raamdeo Agrawal of Motilal Oswal. And mostly, people from real life whom I have worked with have added tremendous value knowingly or unknowingly.
So many investors across the globe also look at investment strategies of famous investors like Warren Buffet. Have you any time looked at investment strategies and replicated it while buying a stock?
Yes of course. Frankly, nothing we do is original. Ours is a glorified copy-and-paste industry (smiles). There is definitely a lot to learn and whatever I say here would seem clichéd. But, yes, as much as possible you try to read up and copy-paste effectively. The most we learn, however, is from our interaction with company managements who unfortunately tend to get less credit than money managers for the performance of their own companies. Having said that, a typical ‘Buffet’ philosophy does not work naturally for a mutual fund since the focus is on relative returns and the consistency of that relative performance given that investors are getting in all the time.
So what kind of strategy do you follow in investments as volatility is part of the equity markets?
It is like running on a treadmill and we need to keep evaluating the portfolio all the time. We did well in a lot of funds last year as we had a defensive approach. Towards the end of last year we moved incrementally into higher beta, but unfortunately it wasn’t good enough. So, a few funds that were doing well last year have lagged the benchmark (year-to-date) while some others are doing much better. Apart from that we have active churn in the portfolio, there are many stocks which we buy and hold again where our thesis are bang on. When we think our price targets are achieved or the thesis is getting shaky we churn, eventually we rank our preferences all the times and buy what looks best. Fortunately or unfortunately, one thing I have learnt in this profession is not to respect one’s views too much.
Thursday, March 29, 2012
Small Cities Big Business
In the last five years or so, the demand fundamentals in India have seen a distinct shift towards tier-II and tier-III cities where consumers have the same aspirations as their counterparts in large metros. Consider this: Chandigarh has the highest number of cars per person, Lucknow has the second highest proportion of graduates after Kolkata and Ludhiana ranks extremely high in terms of consumerism.
India’s younger and English-speaking middle class population, which mostly resides in tier-II cities such as Chandigarh, Lucknow, Ludhiana, Baddi, Surat, Pune, Nashik Coimbatore, Visakhapatnam as well as Kochi are driving demand like never before. Tier-II and tier-III cities have become attractive destinations for several businesses, be it retail, real estate, financial services or IT. Economic growth has trickled down from metros to smaller cities thanks to investments by information technology (IT) and IT-Enabled Services (ITeS) industries, improvement in infrastructure as well as increasing urbanization.
Information Technology, in particular, has contributed a lot to the growth of tier-II and tier-III cities. Take the case of Bhubaneswar in Orissa, which has become a hot property destination after three IT companies – Tata Consultancy Services, Infosys and Wipro set up their campuses there. In Kerala, cities such as Thrissur, Trivandrum, Calicut and Kochi have seen a lot of activity in property markets in recent times because of the growing presence of IT companies in the cities and also because of the demand for real estate from non-residential Indians (NRIs). Other smaller cities such as Baddi in Himachal Pradesh and Pantnagar and Rudrapur in Uttaranchal have attracted a lot of residential developers thanks to the respective governments’ proactive policies.
Rudrapur, for instance, has seen prices appreciating by more than 80% in the past three years, which is higher than the price appreciation in India’s hottest property market, Mumbai. It is not just Rudrapur. There are many tier-II and tier-III cities like Coimbatore, Visakhapatnam and Kochi in the south and Pune, Nasik and Nagpur in the West, which are showing steady price appreciation. Real estate developers are developing a fancy for tier-II and tier-III cities because returns in such cities are stable and much better than metros over the long-term. There is not much speculative buying in smaller cities as has been the case in larger markets such as Mumbai and Delhi. Lack of speculative buying helps in keeping price and demand stable, which really works for developers exposed to volatile price and demand movements
in large cities.
A key demand driver for real estate development across cities is the retail sector. Experts believe that the demand for real estate development in tier-II and tier-III cities will expand exponentially after the government allows Foreign Direct Investment (FDI) in the retail sector. Foreign retailers such as Wal-mart and Metro are already operating in the cash-and-carry segment in smaller cities such as Raipur and Ludhiana. With FDI in retail, it is likely that foreign retailers will open stores in smaller cities. This is because unlike metros, tier-II cities have lower real estate costs attached to retail operations. Retailers would also be motivated by consumer demographics of tier-II cities, which are seeing an increase in income generating young population.
Once foreign retail chains open shop in smaller cities, infrastructure in tier-II and tier-III cities will improve because the retail chains will require warehousing, cold storage and logistics facilities. This will have a multiplier effect because as infrastructure improves, more national retailers will move towards tier-II cities. This will, in turn, stimulate the demand for commercial and residential real estate in these cities. It is not just retail and real estate sector, even automobile companies say that the demand for cars in smaller cities, especially luxury cars, has been rising in the last few years. Spending on luxury cars such as Bentley, Lamborghini, Aston Martin, Ferrari, Maserati and Bugatti has grown manifold.
This is quite a change from times when spending on luxury items was frowned upon in smaller cities. Cars such as BMW, Mercedes, Jaguar and Audi top the list of luxury cars bought by the rich in cities such as Indore, Lucknow and Coimbatore. Realizing the demand potential from tier-II and tier-III cities, auto companies such as Mercedes and BMW are increasing their dealership in these cities. While Mercedes has expanded to Surat, Jaipur and Goa, BMW plans to take the brand to Aurangabad, Surat, Ludhiana, Goa, Nagpur, Kolhapur, Jalandhar, Raipur and Noida. Luxury car makers are also tweaking their products to suit the demands of buyers in smaller cities. Brands such as Aston Martin, Porsche, Maserati and Ferrari have introduced four-door cars because buyers in tier-II cities prefer four-door luxury sedans compared to two-door sports cars.
Bike manufacturers are also targeting the rich in non-metros such as Guwahati, Jaipur, Bhubaneswar, Lucknow, Kochi, Bellary and Indore. For instance, Harley-Davidson plans to open dealership centres in Kolkata, Jaipur and Kochi. A study by ratings agency, Crisil makes it clear that rising income levels and a greater propensity to consume in India’s tier-II cities has created an attractive opportunity for retail finance players. The study covered markets including Bhopal, Coimbatore, Indore, Jaipur, Kanpur, Kozhikode, Lucknow, Ludhiana, Madurai, Mysore, Nagpur, Nashik, Rajkot, Thiruvananthapuram, and Visakhapatnam. These markets account for about 15% of the demand for retail loans in India, as per the report by Crisil. Crisil research believes that growth prospects in most of these markets are very strong. The report estimates that car loan disbursements in 10 of the 15 markets covered will clock a 20% compounded annual growth rate (CAGR) over the next two years compared to a CAGR of around 13% in larger cities.
Gold loans are expected to grow at a much faster pace (more than 50% annually) in five non-southern cities covered in the study. Strong growth prospects, less competition, high yields and profitability compared with larger cities make tier-II markets an extremely attractive proposition for financiers, as per industry experts at Crisil research. Reserve Bank of India’s mandate that one-fourth of new branches must be opened in rural and semi-urban unbanked regions indicates that the demand for retail loans will also come from consumers from smaller cities. “These cities would be the main drivers of retail loans in India,” the Crisil report said. Crisil says that despite the difference in volumes, higher profit margins can make smaller towns as attractive as metro cities. Banks, however, would have to be careful about the asset quality, which could be a concern for choosing the right cities. Yields in smaller cities, in products such as home and two-wheeler loans is higher while for asset quality again, in 8 out of 15 cities, bad loans were comparable to all-India standards. Crisil says that this means that if chosen carefully, the fear of more loans turning bad in smaller markets could be successfully combated. Credit card companies have been a step ahead of banks in offering their services in smaller cities, where there is a surge in borrowing for the purpose of consumption. Going by the success stories of several businesses in tier-II and tier-III cities, it is quite possible that in the coming years, we may see more and more companies targeting the burgeoning demand potential in smaller cities.
India’s younger and English-speaking middle class population, which mostly resides in tier-II cities such as Chandigarh, Lucknow, Ludhiana, Baddi, Surat, Pune, Nashik Coimbatore, Visakhapatnam as well as Kochi are driving demand like never before. Tier-II and tier-III cities have become attractive destinations for several businesses, be it retail, real estate, financial services or IT. Economic growth has trickled down from metros to smaller cities thanks to investments by information technology (IT) and IT-Enabled Services (ITeS) industries, improvement in infrastructure as well as increasing urbanization.
Information Technology, in particular, has contributed a lot to the growth of tier-II and tier-III cities. Take the case of Bhubaneswar in Orissa, which has become a hot property destination after three IT companies – Tata Consultancy Services, Infosys and Wipro set up their campuses there. In Kerala, cities such as Thrissur, Trivandrum, Calicut and Kochi have seen a lot of activity in property markets in recent times because of the growing presence of IT companies in the cities and also because of the demand for real estate from non-residential Indians (NRIs). Other smaller cities such as Baddi in Himachal Pradesh and Pantnagar and Rudrapur in Uttaranchal have attracted a lot of residential developers thanks to the respective governments’ proactive policies.
Rudrapur, for instance, has seen prices appreciating by more than 80% in the past three years, which is higher than the price appreciation in India’s hottest property market, Mumbai. It is not just Rudrapur. There are many tier-II and tier-III cities like Coimbatore, Visakhapatnam and Kochi in the south and Pune, Nasik and Nagpur in the West, which are showing steady price appreciation. Real estate developers are developing a fancy for tier-II and tier-III cities because returns in such cities are stable and much better than metros over the long-term. There is not much speculative buying in smaller cities as has been the case in larger markets such as Mumbai and Delhi. Lack of speculative buying helps in keeping price and demand stable, which really works for developers exposed to volatile price and demand movements
in large cities.
A key demand driver for real estate development across cities is the retail sector. Experts believe that the demand for real estate development in tier-II and tier-III cities will expand exponentially after the government allows Foreign Direct Investment (FDI) in the retail sector. Foreign retailers such as Wal-mart and Metro are already operating in the cash-and-carry segment in smaller cities such as Raipur and Ludhiana. With FDI in retail, it is likely that foreign retailers will open stores in smaller cities. This is because unlike metros, tier-II cities have lower real estate costs attached to retail operations. Retailers would also be motivated by consumer demographics of tier-II cities, which are seeing an increase in income generating young population.
Once foreign retail chains open shop in smaller cities, infrastructure in tier-II and tier-III cities will improve because the retail chains will require warehousing, cold storage and logistics facilities. This will have a multiplier effect because as infrastructure improves, more national retailers will move towards tier-II cities. This will, in turn, stimulate the demand for commercial and residential real estate in these cities. It is not just retail and real estate sector, even automobile companies say that the demand for cars in smaller cities, especially luxury cars, has been rising in the last few years. Spending on luxury cars such as Bentley, Lamborghini, Aston Martin, Ferrari, Maserati and Bugatti has grown manifold.
This is quite a change from times when spending on luxury items was frowned upon in smaller cities. Cars such as BMW, Mercedes, Jaguar and Audi top the list of luxury cars bought by the rich in cities such as Indore, Lucknow and Coimbatore. Realizing the demand potential from tier-II and tier-III cities, auto companies such as Mercedes and BMW are increasing their dealership in these cities. While Mercedes has expanded to Surat, Jaipur and Goa, BMW plans to take the brand to Aurangabad, Surat, Ludhiana, Goa, Nagpur, Kolhapur, Jalandhar, Raipur and Noida. Luxury car makers are also tweaking their products to suit the demands of buyers in smaller cities. Brands such as Aston Martin, Porsche, Maserati and Ferrari have introduced four-door cars because buyers in tier-II cities prefer four-door luxury sedans compared to two-door sports cars.
Bike manufacturers are also targeting the rich in non-metros such as Guwahati, Jaipur, Bhubaneswar, Lucknow, Kochi, Bellary and Indore. For instance, Harley-Davidson plans to open dealership centres in Kolkata, Jaipur and Kochi. A study by ratings agency, Crisil makes it clear that rising income levels and a greater propensity to consume in India’s tier-II cities has created an attractive opportunity for retail finance players. The study covered markets including Bhopal, Coimbatore, Indore, Jaipur, Kanpur, Kozhikode, Lucknow, Ludhiana, Madurai, Mysore, Nagpur, Nashik, Rajkot, Thiruvananthapuram, and Visakhapatnam. These markets account for about 15% of the demand for retail loans in India, as per the report by Crisil. Crisil research believes that growth prospects in most of these markets are very strong. The report estimates that car loan disbursements in 10 of the 15 markets covered will clock a 20% compounded annual growth rate (CAGR) over the next two years compared to a CAGR of around 13% in larger cities.
Gold loans are expected to grow at a much faster pace (more than 50% annually) in five non-southern cities covered in the study. Strong growth prospects, less competition, high yields and profitability compared with larger cities make tier-II markets an extremely attractive proposition for financiers, as per industry experts at Crisil research. Reserve Bank of India’s mandate that one-fourth of new branches must be opened in rural and semi-urban unbanked regions indicates that the demand for retail loans will also come from consumers from smaller cities. “These cities would be the main drivers of retail loans in India,” the Crisil report said. Crisil says that despite the difference in volumes, higher profit margins can make smaller towns as attractive as metro cities. Banks, however, would have to be careful about the asset quality, which could be a concern for choosing the right cities. Yields in smaller cities, in products such as home and two-wheeler loans is higher while for asset quality again, in 8 out of 15 cities, bad loans were comparable to all-India standards. Crisil says that this means that if chosen carefully, the fear of more loans turning bad in smaller markets could be successfully combated. Credit card companies have been a step ahead of banks in offering their services in smaller cities, where there is a surge in borrowing for the purpose of consumption. Going by the success stories of several businesses in tier-II and tier-III cities, it is quite possible that in the coming years, we may see more and more companies targeting the burgeoning demand potential in smaller cities.
DVRs
A large number of people, especially retail investors, are unfamiliar with the term DVRs. Despite the fact that it has been in existence since nearly a decade now, DVRs offer more potential in terms of returns. In fact, since they are lesser known, DVRs of some of the companies are undervalued. Unlike their perception of being a complicated product, DVRs are simple to understand as well as invest.
IMPORTANCE OF DVRS
Every ordinary equity share and its owner have equal rights in a company. If a company wants to take a decision or take over another company, it will have to seek the approval of its owners or its shareholders, who in turn, will express their decision by exercising their voting rights. If companies do not get the requisite votes from their shareholders, then it cannot pass any resolution or take decisions on matters that require the approval of the shareholders. There are practical issues too. If you ask company managements what they prefer, they would say they much rather have institutional investors as shareholders of the company, but would also prefer them not interfering in the day to day running of the company. Many companies are known to have found it difficult to convince institutional shareholders or large shareholders while seeking their votes for particular decisions. Many a times institutional investors block certain resolutions and companies are forced to rollback resolutions in the event of opposition or the inability to obtain enough votes. There are circumstances when companies want to raise funds by issuing additional shares, but they fear they would lose control as issuance of additional shares could result in the dilution of voting rights. For instance, promoters of a company have a 51% stake. And following the issuance of additional shares, the same could fall to 40%. In such a situation, the company might fear losing control and also face difficulties in seeking approval. Moreover, a higher stake dilution could create the threat of a hostile takeover of the company. All these situations, particularly for family-run businesses, could have devastating effects on companies.
SOLUTION IN ITSELF
A DVR share, as the name suggests, has solutions to all these problems or the issues that companies and investors face. These shares carry differential voting rights. This means the shares will remain the same in all respects compared to the ordinary listed equity shares, but will carry differential voting rights. In this case, say a investor who holds 100 DVR shares, might be having voting rights equivalent of 10 or one-tenth of every DVR, whereas an ordinary equity shareholder who holds 100 shares could have voting rights equivalent to 100. Through the DVR route, the company may raise funds without diluting rights because they could carry lower voting rights. This might solve the company’s problem. But what about the problems of investors? Why would they have lesser voting rights even if they really do not exercise them? It is true in the Indian context that not many, especially retail investors, exercise their voting rights.
ADVANTAGE: DISCOUNTED PRICE WITH HIGHER DIVIDEND
Why should one shareholder (DVR) be deprived and the other be given more privilege (in terms of voting rights)? In view of these valid arguments, the need to compensate DVR holders with lower voting rights arises. This is why companies offer DVR shares at a lower price compared to their counterparts - ordinary equity shares. But what will the investor do if the markets closed for the next five years? Do not worry.
DVR holders are compensated with higher dividends. This means that if ordinary shareholders are issued 10% dividend, the DVR holders get an additional dividend of 15% or 5%. Let us now take actual examples to understand this better. In India, leading automobile company, Tata Motors, was the first to offer DVR shares. Its DVR shares have one voting right for every 10 DVR shares held by its owners.
So, in this case voting rights are almost one-tenth compared to voting rights enjoyed by ordinary equity shareholders. Therefore, if you buy Tata Motors DVR today, they will have lesser voting rights. However, for the lesser voting rights you are compensated by way of price. Today ordinary equity shares of Tata Motors are trading at around `279 per share (as on 9th March) whereas DVR shares are trading at around `155 per share (as on 9th March). This is almost a 45% discount compared to ordinary shares. That apart, Tata Motors pays a 5% additional dividend. So as the company is expected to declare per share dividend of `4 next year to its ordinary shareholders, the DVR holders will get 5% higher dividend, which will total to `4.2 per share.
In the first case, one is buying DVRs at 45% discount. Secondly, if today one invests in ordinary shares at `279, then the dividend earnings will be about 1.4%. And if the same money is invested in DVRs, then the dividend earnings next year will be almost 2.8% if we include the benefit of 5% higher divided for DVR holders.
HOW MUCH DISCOUNT ?
By now it must be clear as to why DVRs trade at a discount. However, the bigger question is at how much discount should DVRs trade at and how should we value them. The quantum of discount could depend on several factors. But in India, in general, the discount is observed to be much more compared to the discount in the global markets. Globally, the concept of DVRs is quite old and well understood by investors. Many global giants like Berkshire Hathaway, Google, News Corp, etc have issued DVR shares in the past. The global price pattern suggests that most of them typically trade at about 0-15% discount compared to ordinary shares. In India the discount is as high as 40% to 50%, which many believe is not justified.
PRICE: A REFLECTION OF LOW AWARENESS
Though this looks illogical, it is largely on account of the fact that despite having four listed DVRs at present, the awareness of the product is very low. This can be gauged from the fact that most DVRs have very low volumes or liquidity. Also, only institutional investors or large investors have invested in DVRs in India. The participation of retail investors is still very low. It is possible that in the long run as a result of increased awareness, participation could increase, leading to the discovery of the logical or reasonable price of DVRs. In such a situation, the current discount on DVRs could also narrow down to the global benchmark.
SHOULD YOU BUY DVRs
Given a chance what would you buy - ordinary shares of Tata Motors or its DVR, which are trading at 45% discount and offering a far higher dividend yield? If you are an investor who is not interested in voting rights, why not invest in DVRs, which for no major reason trades at much cheaper prices. The odds are in favour of DVRs as in the long run investors will not only gain on account of structural investment story but also on account of higher dividends. Imagine you have invested in the DVR of a company which is in the growth phase and is expected to increase its dividend payouts over the long term. In such a situation, the dividend income alone could be far more rewarding. Not to forget, if in the long run, the gap between DVR prices and ordinary shares gets narrower, then there will be an additional kicker to the overall returns, which could be very high if it happens at higher prices in the future. Hence, factors like DVR discount compared to ordinary shares, dividend yield, ratio of voting rights and size of the equity capital play a critical role while determining the price of DVRs. However, simply going by the discount on DVR shares may not work always as rules of investing in equity shares do not change for DVR shares. This is nothing but one more form of equity shares albeit with lesser voting rights. Investors need to carefully understand the prospects of the company, industry in which it is operating and the company management like we do before investing in equity shares of the company.
To conclude, DVRs could be a far better instrument for long-term investors who are not very enthusiastic about voting rights. However, in the short term, the only visible risk to these instruments is that they trade with very thin volumes, which is why they tend to fall higher in falling markets as investors tend to sell them at lower prices in a bid to exit them.
However, this particular risk will largely influence short-term investors; long-term investors can still leverage on them.
DETAILS OF LISTED DVRs
Tata Motors
Tata Motors issued DVRs in the year 2008 to fund its global acquisition. In that year, the company announced rights issue, which also comprised DVR shares offered at `295 a share compared to ordinary new shares offered at `330 a share. In the case of Tata Motors’ DVR, investors have voting rights of one-tenth with the privilege to get 5% additional dividend compared to ordinary shareholders of the company.
Pantaloon Retail
Pantaloon issued its DVRs in the year 2008 through the issuance of bonus shares to existing ordinary shareholders of the company. Its DVR has voting rights of one for every 10 DVRs held by its owner. However, its DVR investors enjoy 5% additional dividends compared to ordinary shareholders of the company. Currently, Pantaloon’s DVR at the current price of `102 (as on 13th March) is trading at 37% discount to its ordinary shares which are trading at `161 per share (as on 13th March).
Gujarat NRE Coke
The private sector coking coal supplier, Gujarat NRE issued DVRs in the year 2010. Its DVR carries a voting right of one for every 100 DVRs held by its investors. Its DVR at the current price of `15.3 per share is trading at a 40% discount. However, investors should be aware that the trading volumes in the case of Gujarat NRE’s DVR is very less. The average two-week trading volumes in the counter stood at just about 7,700 shares compared to 9.31 lakh shares in the case of ordinary shares.
Jain Irrigation DVR
Jain Irrigation, which is the leading player in micro irrigation system, issued DVR shares recently in November ’11 in the form of bonus to its existing shareholders. Its 10 DVRs carry voting rights equal to voting rights of one ordinary share. Relatively, in the case of DVRs’ of Jain Irrigation, the discount is larger as currently its DVR is trading at almost 50% discount at around `52 per share (as on 13th March) compared to `108 per share price (as on 13th March) in case of the ordinary shares of Jain Irrigation.
IMPORTANCE OF DVRS
Every ordinary equity share and its owner have equal rights in a company. If a company wants to take a decision or take over another company, it will have to seek the approval of its owners or its shareholders, who in turn, will express their decision by exercising their voting rights. If companies do not get the requisite votes from their shareholders, then it cannot pass any resolution or take decisions on matters that require the approval of the shareholders. There are practical issues too. If you ask company managements what they prefer, they would say they much rather have institutional investors as shareholders of the company, but would also prefer them not interfering in the day to day running of the company. Many companies are known to have found it difficult to convince institutional shareholders or large shareholders while seeking their votes for particular decisions. Many a times institutional investors block certain resolutions and companies are forced to rollback resolutions in the event of opposition or the inability to obtain enough votes. There are circumstances when companies want to raise funds by issuing additional shares, but they fear they would lose control as issuance of additional shares could result in the dilution of voting rights. For instance, promoters of a company have a 51% stake. And following the issuance of additional shares, the same could fall to 40%. In such a situation, the company might fear losing control and also face difficulties in seeking approval. Moreover, a higher stake dilution could create the threat of a hostile takeover of the company. All these situations, particularly for family-run businesses, could have devastating effects on companies.
SOLUTION IN ITSELF
A DVR share, as the name suggests, has solutions to all these problems or the issues that companies and investors face. These shares carry differential voting rights. This means the shares will remain the same in all respects compared to the ordinary listed equity shares, but will carry differential voting rights. In this case, say a investor who holds 100 DVR shares, might be having voting rights equivalent of 10 or one-tenth of every DVR, whereas an ordinary equity shareholder who holds 100 shares could have voting rights equivalent to 100. Through the DVR route, the company may raise funds without diluting rights because they could carry lower voting rights. This might solve the company’s problem. But what about the problems of investors? Why would they have lesser voting rights even if they really do not exercise them? It is true in the Indian context that not many, especially retail investors, exercise their voting rights.
ADVANTAGE: DISCOUNTED PRICE WITH HIGHER DIVIDEND
Why should one shareholder (DVR) be deprived and the other be given more privilege (in terms of voting rights)? In view of these valid arguments, the need to compensate DVR holders with lower voting rights arises. This is why companies offer DVR shares at a lower price compared to their counterparts - ordinary equity shares. But what will the investor do if the markets closed for the next five years? Do not worry.
DVR holders are compensated with higher dividends. This means that if ordinary shareholders are issued 10% dividend, the DVR holders get an additional dividend of 15% or 5%. Let us now take actual examples to understand this better. In India, leading automobile company, Tata Motors, was the first to offer DVR shares. Its DVR shares have one voting right for every 10 DVR shares held by its owners.
So, in this case voting rights are almost one-tenth compared to voting rights enjoyed by ordinary equity shareholders. Therefore, if you buy Tata Motors DVR today, they will have lesser voting rights. However, for the lesser voting rights you are compensated by way of price. Today ordinary equity shares of Tata Motors are trading at around `279 per share (as on 9th March) whereas DVR shares are trading at around `155 per share (as on 9th March). This is almost a 45% discount compared to ordinary shares. That apart, Tata Motors pays a 5% additional dividend. So as the company is expected to declare per share dividend of `4 next year to its ordinary shareholders, the DVR holders will get 5% higher dividend, which will total to `4.2 per share.
In the first case, one is buying DVRs at 45% discount. Secondly, if today one invests in ordinary shares at `279, then the dividend earnings will be about 1.4%. And if the same money is invested in DVRs, then the dividend earnings next year will be almost 2.8% if we include the benefit of 5% higher divided for DVR holders.
HOW MUCH DISCOUNT ?
By now it must be clear as to why DVRs trade at a discount. However, the bigger question is at how much discount should DVRs trade at and how should we value them. The quantum of discount could depend on several factors. But in India, in general, the discount is observed to be much more compared to the discount in the global markets. Globally, the concept of DVRs is quite old and well understood by investors. Many global giants like Berkshire Hathaway, Google, News Corp, etc have issued DVR shares in the past. The global price pattern suggests that most of them typically trade at about 0-15% discount compared to ordinary shares. In India the discount is as high as 40% to 50%, which many believe is not justified.
PRICE: A REFLECTION OF LOW AWARENESS
Though this looks illogical, it is largely on account of the fact that despite having four listed DVRs at present, the awareness of the product is very low. This can be gauged from the fact that most DVRs have very low volumes or liquidity. Also, only institutional investors or large investors have invested in DVRs in India. The participation of retail investors is still very low. It is possible that in the long run as a result of increased awareness, participation could increase, leading to the discovery of the logical or reasonable price of DVRs. In such a situation, the current discount on DVRs could also narrow down to the global benchmark.
SHOULD YOU BUY DVRs
Given a chance what would you buy - ordinary shares of Tata Motors or its DVR, which are trading at 45% discount and offering a far higher dividend yield? If you are an investor who is not interested in voting rights, why not invest in DVRs, which for no major reason trades at much cheaper prices. The odds are in favour of DVRs as in the long run investors will not only gain on account of structural investment story but also on account of higher dividends. Imagine you have invested in the DVR of a company which is in the growth phase and is expected to increase its dividend payouts over the long term. In such a situation, the dividend income alone could be far more rewarding. Not to forget, if in the long run, the gap between DVR prices and ordinary shares gets narrower, then there will be an additional kicker to the overall returns, which could be very high if it happens at higher prices in the future. Hence, factors like DVR discount compared to ordinary shares, dividend yield, ratio of voting rights and size of the equity capital play a critical role while determining the price of DVRs. However, simply going by the discount on DVR shares may not work always as rules of investing in equity shares do not change for DVR shares. This is nothing but one more form of equity shares albeit with lesser voting rights. Investors need to carefully understand the prospects of the company, industry in which it is operating and the company management like we do before investing in equity shares of the company.
To conclude, DVRs could be a far better instrument for long-term investors who are not very enthusiastic about voting rights. However, in the short term, the only visible risk to these instruments is that they trade with very thin volumes, which is why they tend to fall higher in falling markets as investors tend to sell them at lower prices in a bid to exit them.
However, this particular risk will largely influence short-term investors; long-term investors can still leverage on them.
DETAILS OF LISTED DVRs
Tata Motors
Tata Motors issued DVRs in the year 2008 to fund its global acquisition. In that year, the company announced rights issue, which also comprised DVR shares offered at `295 a share compared to ordinary new shares offered at `330 a share. In the case of Tata Motors’ DVR, investors have voting rights of one-tenth with the privilege to get 5% additional dividend compared to ordinary shareholders of the company.
Pantaloon Retail
Pantaloon issued its DVRs in the year 2008 through the issuance of bonus shares to existing ordinary shareholders of the company. Its DVR has voting rights of one for every 10 DVRs held by its owner. However, its DVR investors enjoy 5% additional dividends compared to ordinary shareholders of the company. Currently, Pantaloon’s DVR at the current price of `102 (as on 13th March) is trading at 37% discount to its ordinary shares which are trading at `161 per share (as on 13th March).
Gujarat NRE Coke
The private sector coking coal supplier, Gujarat NRE issued DVRs in the year 2010. Its DVR carries a voting right of one for every 100 DVRs held by its investors. Its DVR at the current price of `15.3 per share is trading at a 40% discount. However, investors should be aware that the trading volumes in the case of Gujarat NRE’s DVR is very less. The average two-week trading volumes in the counter stood at just about 7,700 shares compared to 9.31 lakh shares in the case of ordinary shares.
Jain Irrigation DVR
Jain Irrigation, which is the leading player in micro irrigation system, issued DVR shares recently in November ’11 in the form of bonus to its existing shareholders. Its 10 DVRs carry voting rights equal to voting rights of one ordinary share. Relatively, in the case of DVRs’ of Jain Irrigation, the discount is larger as currently its DVR is trading at almost 50% discount at around `52 per share (as on 13th March) compared to `108 per share price (as on 13th March) in case of the ordinary shares of Jain Irrigation.
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