July 2012

It was a result season. We saw a mixed bag result by Indian corporates. This was the first full quarter result after Excise Duty and Service Tax rate hike. We saw impact of both on operating margins of the companies. Few of the companies reported negative growth in profit. 90% of the companies owned by us were able to deliver positive growth in revenue and profit. Some of the companies reported compression in margin. Companies are working hard to adjust to fall in growth rate by product innovation and tight cost control. In our view this financial year will be the last year of the bear market where profit will be under tremendous pressure. Most of the companies will be able to show better result next year on this low base.

Monsoon was below normal which may add to inflationary pressure. RBI has maintained status quo on interest rate in anticipation of uptick in inflation.

We have delivered positive alpha in India Dedicated & Wonder Companies for the month of July. India Equity marginally underperformed benchmark by 0.50%. We are committed to focus on high quality companies and to deliver return to investor with minimum volatility.