India will continue to be a magnet for investments

BofA-ML COUNTRY CHIEF SPEAKS ON REGULATIONS, INDIA INC'S RACE FOR GLOBAL ASSETS     KEVAN Watts, who heads the combined operations of Bank of America-Merrill Lynch in the country, says India is a very attractive investment destination from a global perspective. In an interview with ET NOW's senior editor Andy Mukherjee, Mr Watts discusses India's prudent regulatory approach to capital flows and the need for growth with greater income equality. Mr Watts is confident that Indian companies will once again get into the race for buying overseas assets. Excerpts:  You're very bullish on capital flows into India. Why?  There are three reasons. The fundamentals are so positive for India — the demographics, the rate of growth that the economy has been able to sustain over the past decade. Secondly, Indians are sometimes their biggest critics. They are always ready to say what isn't working. But a lot of things are working a lot better.  Such as?  If I look just at my own experience, the Worli sea bridge gets me to airport much faster; it gets me to Bandra-Kurla a lot faster. Sitting at the airport in Mumbai at 4.00 am, waiting for that early morning flight, is a much better experience now than it was five years ago. Thirdly, what's happening in the rest of the world is also very important. And that's probably another reason why I'm in India. The rest of the world, particularly the West, is facing quite a challenging adjustment. We had economies very dependent on consumption, on borrowings. We have to sort out those balance sheets. By comparison, in the global marketplace, India is looking very attractive. India will continue to be a magnet for investments, bearing in mind that you don't want to go overboard in attracting foreign capital. The economy's ability to absorb those funds is a factor.  We don't want too many bubbles.  In fact, you don't want any bubbles; but you can't achieve that. That's too optimistic. But you do need to look at not only attracting foreign capital, but how that capital is put to use. Is it put to use to build the real economy, or is it put to use purely speculatively? You can never entirely separate the two ends of the spectrum.  You talked of a difficult adjustment period for the West. Do you believe the centre of economic activity is gradually shifting eastward to Asia?  No question. There will be inflexion points in that process. The financial crisis that we've lived through — the crisis that my own company Merrill Lynch became a casualty of (I'm not sure being owned by Bank of America is a bad thing, frankly) — is very material to the shift of economic and financial influence. Technology plays an important role in this shift. One of the things that I'm interested in personally is how this wealth that's created by this process gets shared across Asian societies. We really need to work hard to create economic structures that improve people's livelihoods in villages. That's where, I think, technology has an important contribution to make. For example, by bringing local firms like Bharti and ICICI Bank together, you can see the possibility of offering a different kind of service in rural India without building a lot of hard infrastructure.  I can't almost believe my ears. A career investment banker is talking about financial inclusion. That's something new. The world is changing around us, it seems.  I suppose all professions are caricatured. Although financial services and investment banking produce bad outcomes, they produce a lot of good outcomes as well. There has been a lot of focus on the negative aspects of my profession in the past 18 months for understandable reasons,  but I certainly would not believe it justifiable to regard all  investment bankers as participating in the worst excesses.  What are your clients telling you? Have the bruises of the credit crunch healed?  They're healing. Companies are regaining a sense of confidence in the financial system. We're further along than that in India. India has not quite been affected to the same extent as Western economies. Overall, Indian companies are definitely optimistic and looking to the future. Many companies we deal with that are focused on the infrastructure needs in India have very ambitious plans to build very physical things, and a lot of capital has gone into those companies. Their real focus is on execution now — getting it done. We had a period of Indian companies buying companies and assets abroad at the end of the last cycle. That will come back. Whenever you have cataclysmic changes in market levels, M&A activity declines: Buyers and sellers need to get confident again about the price. That takes time.

INDIA GROWTH :MF industry assets touch Rs 7.5L crore

Mumbai/Chennai: The mutual fund (MF) industry has shown a 42% growth in average assets under management (AUM) in the last one year, while in August it grew by about 8% to its highest ever AUM level of Rs 7.5 lakh crore. While industry players admitted that most of the growth came from strong inflows in debt, liquid and money market schemes, 12 of the 35 fund houses saw their AUM grow by over 50% since September 2008—more than the industry average—data released by Association of Mutual Funds in India (AMFI) showed.      One of the discernible traits among a host of fund houses that showed strong growth was either a complete change in management, coming on board of a new partner or some major changes at the top over the last two years.      Among the top 10 fund houses by percentage growth over the last one year, IDFC MF and Religare MF saw complete change of management, Baroda Pioneer MF saw a new partner—Pioneer—coming on board, while Taurus MF, DBS Chola MF and Birla Sun Life MF saw new teams at the top. The exceptions were Kotak MF, HDFC MF and UTI MF—all of which showed over 65% growth based on their own inherent strengths.      Speaking to TOI, Naval Bir Kumar, MD, IDFC MF said the fund house tried to analyse how the growth came and found three main factors that helped it grow since a change of management in June 2008. "The IDFC brand name generated trust among investors. Secondly, the strong focus on our limited number of schemes and their consistent performance even during trying times a few months ago helped us retain our investors,'' Kumar said. "IDFC MF's strong asset quality, including its FMPs, also helped it grow,'' Kumar added. For Birla Sun Life MF, the 67% growth in average AUM since September 2008 came after a new management led by Ajay Srinivasan took over at the helm of affairs for all of Aditya Birla group's financial services business about two years ago.      Religare MF on the other hand took over the assets of Lotus MF in November 2008 when it was facing huge assetliability mismatch and redemption pressure in its FMPs.