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Sunday, November 29, 2009

THE CONSUMPTION Bubble

Are we witnessing a genuine re-rating of consumer stocks or is it a case of irrational exuberance? ET Intelligence Grouptries to dig deeper into ever rising stock prices of FMCG and pharma stocks

KI R AN K SOMVAN SH I & KR I SH NA K ANT ET INTELLIGENCE GROU P 


 The credit crisis, slow economic growth, hiring freeze in India Inc. and salary decrements; the economic recipe is enough to intimidate the best of consumer goods makers. But scan through the stock prices of the consumer goods companies and an entirely different picture emerges. Not only FMCG and pharma stocks are flying on bourses but many of them are also out-performing the benchmark indices. In last one year, most frontline stocks including Dabur, Nestle India, Marico, Godrej Consumer Products (GCPL), Cipla and smaller players like Emami, Procter & Gamble Hygiene & Healthcare (PGHH), Henkel India and Pidilite have seen their stocks outperforming the Sensex. This is quite surprising as being a defensive sector you will expect these stocks to under perform the market during a bull-run. 
    So what is happening here? Are we witnessing a genuine re-rating of the stocks in the sector or is it a case of irrational exuberance? First, let's check the facts and figures. In last 12 months, the Sensex is up by 86% and many 

mid-sized FMCG companies have more than doubled in value. In contrast, the sector bellwether Hindustan Unilever appreciated by just 21% and the tobacco-to-food major ITC has 
moved up 59% during the same period. 
    But more than the rise in stock price, what strikes most is the run-in the sector's price to earning multiple (P/E). The stocks, comprising the ET FMCG index, are trading at nearly 28 times of their trailing twelve months (TTM) net profit. In comparison, the 30-stock Sensex is trading at 21 times of its TTM earnings. Historically, FMCG companies always tend to have a higher P/E multiple than the broader market indices. This is because, former have more stable earnings than the other manufacturing companies. At first look, the FMCG Index doesn't look too expensive. In last seven years, the index has, on an average, traded at around 20% premium to Sensex. So the current premium of around 30% doesn't look stretched. But the average hides more than it reveals. 
    The relatively modest premium is entirely due to Hindustan Unilever, which has been a gross un
der performer and has appreciated by just 21% in last one year. If one excludes the industry's two heavy weights – ITC and Hindustan Unilever – the valuation picture changes dramatically. Most of the other companies in the sector are now trading at high P/E multiple compared to earlier. This is shown in the chart below. Take Nestle for instance. The dairy to ready-to-eat food maker is currently trading at nearly 37 times its trailing earnings, which is at least 20% premium to its historical average. The valuations look even more stretched in case of Dabur India, Marico and Godrej Consumer. 
    In most of the above cases, the runup in the stock price has been preceded by a better than expected financial performance by these companies in last three quarters. They have logged robust growth in their revenues and profit. These companies managed to gain market share on account of consumers shifting from high priced products to value-formoney products provided by them. Savings on raw materials and cost containment in other modes of expenditure helped the companies to further boost their bottomlines. 
    But to sustain the current level of 
valuation, these companies need to do even better in the forthcoming quarters. Take for instance Dabur India. To sustain its current P/E multiple of 35, the company will need to grow its net profit by at least 30% year-on-year for next few quarters. This, in turn, will need higher than 6% GDP growth expected during FY10. Consumption lagging GDP growth 
WHAT'S more, the consumer's wallet or their purchasing power needs to expand at a much faster pace. But latter is not happening as is evident from the second adjoining chart.In the last ten years, the growth in private final consumption expenditure (PFCE) — the money spent by households on items of personal consumption including consumer durables — has lagged behind the economic growth in the country. During the 11-years ending FY09, India's GDP at current prices expanded at compounded annual growth rate (CAGR) of 12.2%, in comparison PFCE grew at a CAGR of 10.43%. The slowest growth was recorded by expenses on food, beverages 
and tobacco (FBT), which expanded at the rate of just 7.8% per annum. As of now, there are no signs of any reversal in the trend. Incidentally FBT is the largest item in of PFCE and account for nearly 42% of consumer basket. This doesn't augur well for the volume growth in the industry and without a volume growth it will be impossible to meet market's expectation. 
    In the immediate past, the earning growth was driven by lower raw materials cost, but consumer price inflation (for urban white collar workers) is now touching 15%. This creeping inflation is set to erase the cost benefits enjoyed by companies. Besides the inflation, rising food prices will eat into the purchasing power of consumers and force them to either cut their expenses or downgrade to cheaper products. All this is bad news for FMCG makers and their shareholders. 
    krishna.kant@timesgroup.com 









RBI to seek Dubai World exposure details from banks

The Reserve Bank of India (RBI) on Friday said it would ask banks to furnish details of their direct and indirect exposure to Dubai World, the beleaguered Dubai government-owned holding company which asked for more time to repay its debt.

While RBI played down the issue, it emerged that Bank of Baroda (BoB) had an exposure of around $200 million (Rs 928 crore at Friday's rates) to Dubai World, a senior bank executive said. "The amount is due for repayment only after 2011. It is paying interest and there are no overdues. So, we have absolutely no immediate concern," a senior bank executive said.

The bank's total exposure in the United Arab Emirates (UAE) was estimated at around Rs 10,000 crore, of which, the share of Dubai was around Rs 4,000 crore, the executive said.

Though the public sector player had an exposure of around Rs 600 crore to real estate companies in the UAE, the executive added that the lender was not exposed to Nakheel, Dubai World's real estate arm, which has borne the brunt of an almost 50 per cent drop in real estate prices.

Investors reacted negatively to news of BoB's exposure to Dubai World. The bank's scrip fell 4.64 per cent on the Bombay Stock Exchange (BSE) to close the day at Rs 521.40.

Axis Bank, ICICI Bank and Indian Overseas Bank (IOB), among others, have exposure to companies operating in Dubai and the UAE.

While IOB said its exposure was to the tune of $15-16 million (around Rs 70 crore), a senior executive at Axis Bank said the lender had an exposure of less than $10 million (around Rs 46 crore) to the Dubai arm of an Indian real estate developer, "but no significant exposure otherwise".

When contacted, a spokesperson for ICICI Bank said, "ICICI Bank has no material non-India linked exposure to Dubai companies."

A senior Bank of India executive said the public sector player neither had branches in West Asia, nor and any direct exposure to real estate companies in the region. It had two Indian clients with interests in real estate and construction in Dubai. The total exposure to these companies, whose names he refused to disclose, was pegged at $21 million (around Rs 100 crore). "These are performing assets and we do not expect much problem in repayments," he added.

"We will ask banks to furnish the details regarding their exposure in Dubai World," RBI Deputy Governor Shyamala Gopinath told reporters in Ahmedabad.

RBI Governor D Subbarao said, "We should not react instantly. We must first study the development and measure the strength of the problem," when asked about the impact of the developments in Dubai on India.

Bank of Baroda says UAE loan book exposure 7-8 pct

MUMBAI (Reuters) - State-run Bank of Baroda has exposure of 7-8 percent of its loan book in the United Arab Emirates, a top official told Reuters on Friday.

The lender's total UAE exposure stands at around 100 billion rupees out of a total loan book size of 1.5 trillion rupees, Chairman M.D. Mallya said over the telephone.

At 12.02 p.m. shares in the bank was down 5.44 percent at 517 rupees, the bank index down 3.97 percent, and the broader Mumbai market lost 3.09 percent.

Dubai's debt problems revived concerns about the health of the global financial system and exposure of Indian lenders to the Middle East.

"Our exposure includes both corporate and retail accounts and not only the real estate portfolio," Mallya said.

The funds had been disbursed in all the Emirate constituents like Abu Dhabi, Bahrain, Oman and not only in Dubai, Mallya said.

"We see no slippages in the accounts so far. These are good performing assets," he said, adding he is not contemplating any action on its exposure in the Middle East.

Dubai's debt problems come at a time when Indian bank loan growth was crimped to 9.8 percent, from average 30 percent growth levels a year ago following global economic downturn.

(Reporting by Tamajit Pain; Editing by Harish Nambiar)

(For more news on Reuters Money visit www.reutersmoney.in)

Downtrend Triggered

HE Dubai World effect sent the market hurtling down at the end of what had been a steady week until Wednesday. The Sensitive Index finished 2.29% or 389.84 points lower, and the Nifty ended 2.19% down. The CNX Midcap Index lost 1.75%. Hero Honda was the biggest winner among index stocks with a 5.7% gain. The other index stocks to go up included ACC, Hindustan Unilever, Grasim and Sun Pharmaceutical with gains between 3.3% and 1.5%. Jaiprakash Associates was the biggest loser among index stocks with a 7.9% loss. The other index stocks to go down included DLF, Reliance Infrastructure, ICICI Bank and Infosys with losses falling between 6.4% and 4.1%. 

    Thinksoft Global Services was the biggest winner among the more heavily traded non-index stocks with a 14.0% gain. The other non-index stocks to go up included Hindustan Zinc, BPCL, GMDC, Jet Airways, GAIL India, Orchid Chemicals and Bajaj Auto with gains falling 12.7% and 5.1%. 
    Satyam Computers was the biggest loser among the more heavily traded non-index stocks with a 13.4% loss. The other non-index stocks to go down included Mercator Lines, Indiabulls Real Estate, India Infoline, IRB Infrastructure Developers, Aban Offshore, Jaiprakash Hydro and Orbit Corporation with losses falling between 10.6% and 9.3%. 

INTERMEDIATE TREND: The three indices breached their intermediate downtrend trigger levels on Friday, suggesting that the intermediate uptrend, which started on November 3, has ended somewhat abruptly. The trigger levels, which were breached were 16,600 for the Sensitive Index, 4,900 for the Nifty, and 6,350 for the CNX Midcap Index. The indices did recover from their lows as the day progressed and even closed above these levels, so there is a small chance that the downtrend signal was a knee-jerk reaction to the Dubai crisis. However, the Sensitive Index will have to climb back above last week's high of 17,300 to make that happen. Most global indices are also in intermediate downtrends, which increases the odds in favour of a global downtrend, and one here as well. 
LONG-TERM TREND: The market's long-term (major) trend is still being treated as up. However, it is under threat as the intermediate uptrend failed to make a new bull market high. A close below 15,300 would signal a bear market. The Nifty's equivalent is 4,500, and that for the CNX Midcap Index is 6,300 (figures rounded down to the nearest 100). These figures correspond to the November 3 lows, where the uptrend had started. Nearly 10% of the more heavily traded stocks are in major downtrends, and the index had done a retracement of 77% during the last intermediate downtrend. These factors suggest that the bull market is in some danger now. The majority of global indices are still in major (long-term) uptrends. 

TRADING & INVESTING STRATEGIES: It would be safer to not increase exposure to equity as the bull market is threatened. However, there is still no reason to reduce exposure, as a bear market has not been confirmed. Consider switching out from stocks, which fall to 4-5-month lows or worse. 
GLOBAL PERSPECTIVE: Most global indices are also in intermediate downtrends, and a global downtrend can be said to be on. The possibility of a false signal exists here, too, but a few markets - including Shanghai, Tokyo and a couple of European indices, had entered downtrends even before the Dubai situation. Tokyo's Nikkei has gone below its last intermediate bottom and may be in a bear phase already. A fall below 9,000 could mean a bear phase for the Dow. 
    The Sensitive Index gained 86.7% in the twelve months that ended on Thursday, up one position to 4th place among 35 well-known global indices considered for the study. Argentina continues to head the list with a 121.9% gain. Indonesia, Russia, the Sensitive Index and Brazil follow. The Dow Jones Industrial Average has gained 19.9% and the NASDAQ Composite has gained 42.0% over the same period. (These rankings do not take exchange rate effects
into consideration) (The author is an independent technical analyst)

Dubai workers sacked while on Eid vacation

Meerut: When Sajid took leave to come home for Eid last week, he had thought he would spend some quiet days with his wife and two children before returning to his job in Dubai. But the festival holiday has quickly turned into a nightmare for Sajid. He and dozens of other workers from Meerut who were employed in various tile production units in Dubai were informed through SMSes that they were being sacked. 

    "It was early morning when I received a text message from my office, Al-Hamid, telling me that I need not bother returning to Dubai. My contract has been discontinued and my work permit stands terminated. It said my dues would be sent through post and my belongings would be duly returned,'' said Sajid. 
    The workers say at least 64 of them, 
all working in meltdownhit Dubai, have received pink slips through text messages. Most of them worked in tile-making units of various construction companies. 
    "We used to work beyond scheduled hours. We have not even taken our salaries for the past four months as we wanted to save money to get our families to the UAE. Our dreams are shattered today,'' said a weeping Noor Mohammad. 

    The workers say the text messages—received by workers in several other UP towns, including Bulandshahr—were all the more shocking as they came after several Indian ministers, including the finance minister, claimed that the financial meltdown in Dubai would not affect Indian workers much. 
It's a tense Eid for Indians in Dubai 
Meerut: Scores of workers from Meerut working in tile units in Dubai who have been laid off are sore with the Indian government. 
    "The ministers have been only talking about those from south India working in Dubai. A good 30% of the young workforce in our localities has gone to the Middle-East in the past two years. Many of my friends are still stuck in Dubai. We do not know whether they will even be paid. Our government must intervene and bring them back,'' said Asif, one of the workers who's been asked via SMS not to return to work. 
    These are tense times even for those who have not got the sack. "I still have my job. My office has not sent any SMS. But I'm worried as I have not been able to contact them. I am thinking of forgetting about going back to Dubai and instead going to Delhi to find a job,'' said Javed, a resident of Zaidi Colony. 
    According to official estimates, in 2008, India got $43.5 billion as remittances from 
those working in the UAE. A total of 3.4 lakh new workers got jobs in that country in 2008. 
    Sources in the Meerut administration said that they were closely watching the situation. "We are aware of the people who work in Dubai. We are sympathetic to their problems. We will be talking to the relevant central government departments once we know about the extent of the crisis,'' said a senior Meerut zone officer. 
    However, these words were of little comfort for Javed, a sacked worker from Meerut. "I want my salary. I wish the government will ensure that we get paid for the countless hours we toiled in Dubai," he said.



Abu Dhabi refuses to nurse all of Dubai’s debt wounds

NO PROMISE OF SAFETY NET

To selectively assist cash-strapped companies affiliated with government

Stanley Carvalho ABU DHABI 


ABU DHABI, capital of the United Arab Emirates and one of the world's top oil exporters, will "pick and choose" how to assist its debtladen neighbour Dubai, a senior Abu Dhabi official said on Saturday. 
    "We will look at Dubai's commitments and approach them on a case-by-case basis. It does not mean that Abu Dhabi will underwrite all of their debts," the official in the government of the emirate of Abu Dhabi said. A policy of selectively assisting cash-strapped companies affiliated with the government of Dubai, instead of providing blanket assistance, challenges assumptions made by many investors who assumed that wealthy Abu Dhabi provided a complete safety net for its racier neighbour. 
    Dubai's crisis exploded on Wednesday when the emirate, known for flashy lifestyles and the world's tallest building, said it would delay payment on debt issued by one of its 
flagship firms, angering investors and sending global markets sharply lower. "Some of Dubai's entities are commercial, semi-government ones. Abu Dhabi will pick and choose when and where to assist," said the official, who declined to be identified because he is not authorised to speak to the media. Abu Dhabi, which pumps 90% of the oil that make the United Arab Emirates the world's third-largest oil exporter, has already provided $15 billion in indirect support for Dubai through the UAE central bank and two private Abu Dhabi banks. Central bank watching closely 
HOW much more support the emirate provides for its cash-strapped neighbour, however, will depend on how Dubai clarifies its stand on unresolved issues. 
"Until things become clearer, it is very difficult to make any further investment decision on the bonds. Many things have to be clarified by Dubai," the official said. 
    Meanwhile, the UAE central bank said it was closely watching events stemming from the Dubai debt crisis to ensure no harm results for the national economy, a spokesman for the central bank said on Saturday. 
    "The central bank is monitoring devel
opments very carefully to ensure that there is no negative impact on the UAE economy," the spokesman said on phone. 
    Constitutionally, each emirate in the UAE is a separate legal entity within the loose federation, and each controls its own natural and financial resources. 
    The federal government has no guaranteed access to those resources nor is it obliged to underwrite the liabilities of any emirate. 
    International markets were rocked when Dubai said on Wednesday it was instigating a major restructuring at one of its biggest holding companies, Dubai World. 
    As part of the restructuring pro
gramme, investors have been advised of a 'standstill' in repayment of flagship real estate developer Nakheel's $3.5 billion Islamic bond, or sukuk, due for maturity on December 14. 
    Dubai World had $59 billion of liabilities as of August, making up the majority of Dubai's total debt of $80 billion. International banks' exposure related to Dubai World could reach $12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters LPC. 
    A statement from the Dubai government is expected on Monday, when the markets reopen following an extended break for Eid, a religious holiday observed across the Gulf region.

TALL CLAIMS BUT SHORT SUPPLY


Each Penny COUNTS

Even the smartest of people normally have spending holes which drain their money without them even noticing it. Sanjeev Sinha tells you how to plug those leaks & watch your savings grow


DO YOU really need that swanky mobile phone or the latest LCD TV which has just been unveiled in the market or have they caught your attention just because your neighbour got them the other day? It is possible that some of you might be able to turn a blind eye to such things. But have you also ensured that you are paying all your bills on time or are not carrying a creditcard balance? 
    The fact is even the smartest of people normally have budget leaks — whether it's careless spending or tiny indulgences that add up over time. And while they keep bothering where their money actually goes, these spending holes drain their hard-earned money without them even noticing it. Here we take a look at some common ways people overspend and waste money and how to plug their spending holes: 
BEING IGNORANT OF ONE'S SPENDING 
Ignorance is bliss? Think again! "Many chronic spendaholics live in denial about how much they spend. If you realise how much you spend on various items, this alone may be sufficient to reduce your spending," says Atul Surana, certified financial planner and MD of Mangalore-based Cata- lyst Financial Plan
ning. For example, on a night out it is easy to spend much more than you think, especially if you pay for drinks and food on credit cards. Often the problem is relatively cheap items that we buy often: coffee, takeaways, gift for friends etc. Solution? Go through your bank accounts, credit card statements and you will surely find all the reasons for more disciplined spending. 
BUYING ON IMPULSE 
Do you often purchase something and then get it home to find you aren't excited about it any longer? It happens with most of us. Therefore, if you are in the habit of spending on impulse, make an effort to have a moment of reflection before buying anything. "If you see something you would like to buy, try waiting a day or two before actually committing yourself to buying. If you really want it, you will come back. This also gives you the chance to find other things that may be better," says Surana. 
CARRYING CREDIT CARD BALANCE 
Debt has today become a way of our life with the phenomenon of consumer finance schemes and credit cards becoming a big driver of this devil. True, "using credit cards in 
    emergencies is understandable. The prob
lem, however, starts when people start using their plastic money even for recurring expenses like getting the gas filled in the car, buying groceries and clothes, among others," says Lovaii Navlakhi, MD and chief financial planner, International Money Matters. Paying interest as a result of failure to pay off credit card bills makes the price of the charged items a great deal more expensive, sometimes taking decades to clear the dues. 
AVOID PAYING BILLS ON TIME 
If you are one of those who avoids paying bills — such as mortgage, phone, credit card and utility bills — on time, you are wasting lots of money without realising it. For instance, if you have four credit cards and you are not clearing the minimum dues on time, you would be paying at least Rs 2,400 in late charges alone. However, if the same amount is invested every month in a scheme that earns, say, 10% annually, it can actually fetch you Rs 32 lakh in 25 years. And we have not yet factored in the savings resulting from the timely payment of other bills! 
SPENDING BY HABIT 
"Quite often a lot of our spending is a daily habit, which could be unnecessary too," says Surana. For example, if you buy a takeaway coffee everyday for your office staff/visitors, why not invest in a coffee machine? And just because you spend Rs 200 a day on lunch, doesn't mean this habit has to continue forever. Try taking your own lunch. Re-evaluate all your habitual spending patterns and decide whether that is necessary. 
HAVING UNUSED MEMBERSHIPS 
You might be a member of that elite club, but do you also have enough time and resources to go there and enjoy your life as some spendthrifts do? Or are you getting your money's worth out of that costly gym membership? If not, then why to join such clubs or become a gym member at all? 
PAYING FOR UNNECESSARY SERVICES/CHARGES 
You may sometimes need a car helpline service, but why to go for the extended warranty on car or washing machine when that is hardly worth the price? Do you also really need all those extra features for your cell phone or six bank accounts and a dozen credit cards when a few may be sufficient? 
NOT HAVING CLEAR NEEDS IN MIND 
People tend to overspend when they don't have a clear objective of what they need to buy. Thus, they often end up buying things just because they 'look nice' and not because they are actually needed. Therefore, avoid going into the city centre without a clear objective. 
LIVING BEYOND ONE'S MEANS 
With the lure of easily-available loans to buy that first car or easily-available credit cards, anyone would be tempted to indulge even without being able to afford the expense. "But just because you own a credit card, it does not mean you should indulge in whatever you fancy at the moment. The suggestion is not that one should never splurge on anything ever — just that you should implement a higher level of self control," says Navlakhi. 

    SURESHOT WAYS OF BLOWING MONEY 

Buying things you DON'T NEED BUYING BRAND name instead of generic) Not going for the BEST DEAL 
Not availing of discounts/ CASH BACK OFFERS NOT BUDGETING your expenses Not giving yourself strict income LIMITS


Saturday, November 28, 2009

DUBAI DOLDRUMS CAUGHT IN DESERTED STORM

DREAMS TURN TO DUST: BUT IMPACT ON REST OF WORLD TO BE LIMITED 

The sands continue to shift below Dubai's feet, sending ripples across world markets, but investors are keeping their faith in sturdier economies like India

TEAM ET 


 WORLD markets were on their way to regaining their recentlyacquired composure as fears that the knock-on effect of the financial crisis in Dubai would lead to a double-dip global recession abated. 
    In India, policymakers did not appear too concerned about the impact of Dubai's troubles on the economy and the benchmark Sensex of the Bombay Stock Exchange pared early losses to close 1.2% lower. 
    Emerging markets, which have been outperforming over the past few months, bore the brunt of the sell-off, but major European stock indices rose on Friday. The Morgan Stanley 
Emerging Markets Index fell by 2.7% and the rupee, the Russian ruble and the South Korean won slid while the S&P 500 in the US recovered from opening 2.1% lower to trade 1.72% down at 12 am IST. 
    The sell-off in stocks, commodities and currencies was triggered after Dubai World, a government investment company with $59 billion in liabilities, sought on Wednesday to delay repayment of much of its debt even as Russia set final terms for settling the last of the Soviet Union's trade debt obligations after its 1998 default. 
    The sell-off may be a much-needed correction after asset prices rallied substantially this year as central banks and governments opened the money supply tap to pull the world out of the worst recession since the 1930s. 
    "We're bound to see a rise in risk aversion," said Arnab Das of Roubini
Global Economics, whose founder Nouriel Roubini predicts a double-dip recession where the economy, after recovering from the depths, contracts again as economic stimulus effects fade away. 
    "The Dubai situation signifies that although the major central banks around the world have stabilised the financial system, they can't make all the excesses simply disappear. We still have to work out those balance-sheet stresses. The recovery is proceeding, but significant challenges still lie ahead." 
    Mark Mobius, executive chairman of Templeton Asset Management, told Bloomberg News that the Dubai crisis may be the trigger to allow for the market to take a rest and pull back. "If Dubai has to default, that could start a wave of defaults in other areas," he added. 

    European banks with exposure to the Middle East were badly hit, with HSBC Holdings falling 7.6% and Standard Chartered Bank crashing 7.5% on fears they may 
be holding a substantial portion of the debt owed by Dubai. 
    British banks have the most loans outstanding to the United Arab Emirates in Europe, constituting $49.5 billion of a total of $87.3 billion extended by the continent's lenders to the Gulf country as of June 2009, Royal Bank of Scotland Group said in a research report on Friday, citing Bank for International Settlements. 
    The S&P GSCI index of 24 commodities fell as much as 4.2%, spot gold lost as much as 4.2% from its record highs of Thursday. 
RBI cautions against knee-jerk reactions 
    BUT policymakers and Indian companies, which have operations in the Emirate, believe the impact may not be much even as British football stars David Beckham, Michael Owen and Hollywood couple Brad Pitt-Angelina Jolie stare at losses from investing in Dubai's Palm Jumeirah, the best-marketed property in the world in recent years. 
    The potential loss numbers pale in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates US and European lenders will have made between 2007 and 2010 as a result of the global credit crisis. 
    Reserve Bank of India governor D Subbarao cautioned against knee-jerk reactions while finance secretary Ashok Chawla was sanguine about the effect of the Dubai crisis on remittances from expat workers. "On Dubai alone, I want to say, that we should not react to instant news like this," Mr Subbarao remarked. "One lesson of the crisis is that we must study 
the developments and I think we must measure the extent of the problem there and how it might impact India." 
    Mr Chawla said remittances from expats didn't suffer during the period when the global economic crisis was on and it is "somewhat unlikely" that it will now. 

    India has one of the largest populations working in the Middle East, especially Dubai. India's exports to the UAE rose 53% last fiscal to $23.92 billion, but much of it was transit trade. Construction companies L&T, Punj Lloyd, engineering company Voltas, Bank of Baroda, ICICI Bank and a host of Indian companies with businesses in the Emirates recovered from the lows of the day after dispelling fears that their business is not intricately linked to Dubai World. 
    "There is no material non-India link exposure to Dubai corporates," said ICICI Bank. "We do not have any exposure to Dubai," said Punj Lloyd. But Indian companies where the Dubai government, or its associates have invested may face some uncertainties, said analysts. 
    Istithmar, the investment of the government of Dubai has a stake in low-cost carrier SpiceJet and DP World, which may get ring-fenced from the crisis, handles nearly 40% of the container traffic in India through various port, including the Jawaharlal Nehru Port Trust and in Chennai. 
    "Not aware of change in Dubai's Istith
mar investment strategy," said SpiceJet. 
    Some believe that the crisis may be blown out of proportion since the numbers are insignificant compared with the recent global credit crisis. 
    "Simply the market is over-reacting to a corporate entity that is attempting to restructure its liabilities," said Adrian Mowat, MD & chief Asian and Emerging Market Equity Strategist at JPMorgan based in Hong Kong. "The combination of limited information on the debt moratorium and thin trading volumes due to the Thanksgiving holiday amplified the correction. This is not the start of a wave of defaults." 
    Also, the wealthy neighbourhood emirate Abu Dhabi may step in to save Dubai as it had done in the past. 
    "At the end of the day, people like us were aware that they were overspending, we were aware that the debts were huge, but we always felt that at the end of the day, Abu Dhabi will come to the rescue and things would be OK, even though the debt levels are so high," said Mr Mobius.



ON A PRAYER: People loaded a vehicle as they take a slow journey home after attending prayers during the Eid al-Adha holiday in Dubai on Friday


Sunday, November 22, 2009

FAQs & FICTION

Thinking twice before opting for homeopathy to treat your ailment? Dr Rajesh Shah answers all your frequently springing doubts


Is homeopathy indigenous? How does it cure illnesses? 
Homeopathy has been around for about 215 years. Its origins are German. It was brought to India in 1810 when a few German physicians and missionaries came to Bengal. Its popularity got a fillip after Maharaja Ranjit Singh (the then ruler of Punjab), who had lost his voice due to paralysis of vocal cords; got cured using homeopathy. Today, India boasts of having the highest number of homeopathic organisations in the world. 
    Homeopathic remedies are nanomedicines administered in micro doses to stimulate the body's healing powers. These remedies contain potent energies, which treat the symptoms and cure the diseases at a deeper level. 
Is homeopathy a scientific theory? How does it differ from herbal medicine or Ayurveda? 
The major difference is that homeopathy does not use any material substance. It treats underlying causes of illness rather than addressing outward symptoms. Herbal medicine is based on the use of pure constituents from plants and the biological response varies directly to the dose or concentration of the remedy. Ayurveda, a more traditional (and older) treatment, uses various alternative forms of healing such as herbs and chemicals alongwith physical elements such as yoga and massage. Many believe homeopathy is quacks' theory but FYI, it's supported by WHO and practiced in over 100 countries. It is approved by the US, European FDA and the Indian DCGI. 
So does homeopathy cure it all? For what ailments would you NOT recommend homeopathy? 
Diseases can be divided into two categories to understand the scope of homeopathy: 
Chronic and recurring: Homeopathy is very effective in these cases and has had considerable success in their treatment (asthma, vitiligo, psoriasis, migraine, eczema and so on). 
Acute and critical: Homeopathy is less effective in cases requiring urgent attention. Also, the critical nature of conditions such as a heart attack, high fever, severe attack of asthma, severe infection would warrant allopathy. 
    Also, I do not prescribe homeopathy in cases such as malaria, typhoid, and TB as these diseases take long to be treated and usually, allopathy fares better. Homeopathy has its own set of limitations, as does allopathy. 
I want to take other medications while my homeopathic treatment is underway. 

Absolutely. Homeopathy, in some cases like diabetes, asthma, arthritis, ulcerative colitis, can be married to allopathy and help in successfully managing the ailments. It is a wrong notion that homeopathy cannot be used in conjunction with other therapies. 
In our unregulated homeopathy market, how do I trust homeopathic products from my local health food store? How do I even trust a doctor? 
The Government of India currently manages over 200 homeopathy medical colleges, but fails to regulate the thousands of homeopathic manufacturing units. Regarding the products, one needs to look out for properly labeled products. The chances of them being phony these days are low, if it is a reputed health food store. 
    A homeopath is just like any other doctor. His qualifications would be the same as those of an allopathic doctor. So, the way one chooses their allopathic doctor (referrals, word of mouth, qualifications, etc), is the same for the manner in which one would choose a homeopathic doctor. 
Allopathy would give me a quicker solution, right? 
That homeopathy takes long to cure an ailment is not completely true. Since the science is popular for treating chronic (long standing) diseases, they obviously take time to be cured. For a given nature of the disease, for instance asthma, homeopathy may take a yearand-half to give lasting results. However, this period is too small compared to many years of suffering if homeopathy is not opted for. 
For quick solutions, one must opt for homeopathy in the early stage of diseases such as allergies, asthma, eczema, urticaria, ankylosing spondylitis, migraines, etc. If you approach homeopathy as a last resort, it might take longer to take effect because your already weakened system. 
What precautions do I take and which side-effects do I consider while taking homeopathy?
Homeopathy has no side-effects, if professionally prescribed. Contrary to myths, it is extremely rare that a disease intensifies before getting cured. 
My relative tried homeopathy once, didn't see a cure and gave up on it. Would it fail on me too? 
No system of medicine works all the time. The success or failure of any medicine (including homeopathy) depends largely on the nature of the disease, body's response to medicine and the strength of medicine. 

(Dr Rajesh Shah is MD of Life Force, a Homeopathy portal & editor, Homeopathy Times) —CO-ORDINATED BY MALAY DESAI



 

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