September 2013

We witnessed a major reversal in currency in September. The INR appreciated by 10% after falling to a life­time low of 68.84 and with this the focus came back to domestic companies which were reeling under the sudden and quick depreciation of the INR. All the three strategies benefited from this currency reversal.

Most of the companies owned by us generate very high return on capital.Apart from Tata Motors and banks all other companies we own do not have debt on their books.With recent hike in rates by RBI the cost of borrowing has gone up. This will reduce competitive pressure for businesses owned by us due to their steady cash flow and zero debt. At the same time they will significantly benefit from any uptick in investment cycle.Our portfolio is geared for any pickup in growth.

Its been a fantastic journey for us and our investors in this sideways and punishing market which we have witnessed in the last 3 years. We have been able to generate significant alpha even in such trying conditions.Our belief is that we can see an uptick in growth anytime and as such we are preparing ourselves for a change in economic cycle.