Where to find growth in the post QE era?

The market turmoil over the last few weeks has indicated that businesses are uncertain where they will see growth, now that the QE has ended in America and the interest rates are on the rise. The Chinese economy which had overheated, is now cooling off and the demand for oil, iron ore, copper and other commodities are dropping along with their prices. China is suffering from an over-capacity problem right now.

I think in this environment, the input costs for manufacturers would be very low since the price of oil is at an all time low and the price of copper and iron ore are also close to their all time lows. This should boost the margins for the manufacturers if their sales are constant. So all else being same, the manufacturers should be able to report better profits. 

But the demand side is weak as the consumer is not spending a lot of money. This is due to the fact that they are cautious in this uncertain environment. In this situation, lowering the prices could be a good solution to increase sales. Considering the low input prices, manufacturers of goods should be able to sell their goods at a much lower price now vis a vis one year ago. Price of oil has dropped from the $50-60 range in 2015 to $30 per barrel today.   Iron ore prices have dropped to a third of where they were one year ago.  Copper prices are down 8% year over year. 

There could be demand for commodities from building heavy infrastructure such as a rail road in Afghanistan or solar power farms in Sahara in Africa. India, which is facing a power deficit right now, is planning to build 5 new nuclear reactors in collaboration with the French. I think there are business opportunities and investing opportunities present today that could yield dividends going forward.

BITCOIN AND RELATED BUSINESSES

This presentation was prepared for the E-BUSINESS COURSE taught by Prof. Vijay Shrotriya. This presentation covers the regulated aspects of the bitcoin currency. There is a large shady marketplace for bitcoins that is unregulated and exists outside of USA and Australia. Regulating the dark market is difficult due to the decentralized nature of the bitcoin. However, proactive and corrective actions such as those taken in USA and Australia are necessary to check the growth of the dark markets which are unregulated. Turning a blind eye to these dark exchanges is not going to solve the problem of money laundering using the bitcoin which is often time used by drug dealers and terrorist networks.

ENTREPRENEURSHIP SUMMIT 2015

Today I made my way to the Entrepreneurship Summit 2015 organized by the Social Entrepreneurship and Consulting Cell at Symbiosis Institute of Business Management, Pune.

This is the annual event where SECC invites eminent entrepreneurs to chat with the students and inspire them. There are panel discussions, entrepreneur stories and SymbiHaat - the food festival organized by SIBM students.

The first speaker today was Mr. Paavan Nanda, who is the co-founder of ZOSTELS and ZO-ROOMS.  ZOSTELs are hostels for back-packers that offer affordable and comfortable hostel rooms. They are located on most visited backpacker routes such as Delhi-Jaipur-Jodhpur and Goa. They started off with the idea during their college days at IIM Calcutta and built the first ZOSTEL in Jaipur. They secured funding by participating in start-up competitions and ended up winning all the 14 competitions they participated in, which included the one at India-Wharton Business Summit. From hostels, they moved into budget hotels that are standardized in terms of the amenities and services they provide. ZO-ROOMS expanded rapidly and they operate primarily by converting existing not so well managed hotels into standardized format hotels. What I found inspiring about the talk is that they decided to build a business model around backpacking and signed up with MTV to help them create brand awareness for their hostels. 

The second speaker today was Mr. Milind Sharma, who is an alumnus of Symbiosis School of Economics. He is the co-founder of NuovoEx and PepperTap. Both these start ups operate in the hyper local business format providing logistics services in the business to customer link. NuovoEx provides reverse logistics for the goods the people return when they are bought online from stores such as Flipkart and Snapdeal. PepperTap provides home delivery of groceries from the local store to your home. Mr. Sharma started off with NuovoEx in Gurgaon, working off from a small store in a local market. NuovoEx saw rapid growth as the online retail space saw exponential growth over the last 5-6 years. PepperTap is a more recent venture and is currently operating in 14 hyper local market places across India. They sign up with retail stores and hyper markets and serve 4-5 km area around these stores. It is a promising business model as food retail through hyper markets has grown very rapidly with the development of stores such as MORE and Reliance Fresh. 

The Entrepreneurship Summit 2014 saw founders of Pinstorm (Mahesh Murthy), Goli Vada Pao (Venky Aiyer), Rolocule Games (Rohit Gupta), Doolally (Suketu Talekar), The Pint Room (Pradeep Gidwani) and CarIQ. These were inspiring talks and revealed first hand the life of an entrepreneur. Loved listening to them.