HDFC's interest in low interest rates

Mumbai home sales dropped to a 2-year low last quarter, according to real estate analyst Liases Foras, and logged 14% lower than the previous quarter, even while unsold units reached 105 mn. square feet.

In India's largest market, Delhi and surrounding areas, sales soared in contrast, by a whopping 32%; nevertheless, unsold units soared to 194 mn. square feet, roughly 2 years worth of sales at the current elevated levels.

This dynamic could turn explosive if the Reserve Bank of India (RBI) decides to actually pay people money to lend money to banks, rather than pay banks to borrow money from the RBI - which is what is happening today, when the RBI repo rate is considerably below inflation. The volume of economists - including the IMF - pressing the RBI to get tough on inflation is ratcheting up, even while the Chairman of HDFC, our largest housing lender, says that 25 bps (0.25%) is hike enough. Of course he would - who would like to see the cost of his major (only) raw material go up!.

This view, in an interview printed in the Mint this morning, is a lot better than another pious statement he made a couple of days ago, that the RBI is never behind the curve. That sounds a bit like his fellow Mumbaikars believing that Ganesh statues were drinking milk a few years ago. Actually worse, because in that case, it did appear that the milk was disappearing into the stone of statues. In this case, it would be pretty obvious to anyone who bought their own milk and vegetables that inflation is way ahead of the RBI's gentle incline. I guess Deepak Parekh doesn't.

Buy his own milk and fruit, I mean.

Dhoni holds down Gillette run-rate

I know, I know, Team Gillette doesn't play cricket. They try to sell blades. Their competition is not so much other blade brands as not shaving. Unfortunately, everytime the TV cameras zoom in on Dhoni or Sehwag, they show a grizzly, unshaven face. It's almost as though it's not manly to go about with a clean-shaven face. When the stars of the other Indian galaxy pose at their premieres, they're unshaven too - Abishek Bacchhan and Hrithik Roshan. The only prince of our political world, Rahul Gandhi, is most often seen with a two-day stubble.


Gillette has tried to fight 'Not Shaving' with a campaign saying women prefer men who shave regularly. Its a hard slog when their competition is the pantheon of young Indian gods. In the last quarter, Gillette spent Rs. 73 cr. on advertising, a staggering 28% of revenue for the quarter. In my book, anything over a 10% spend on advertising is already aggressive. I have nothing against aggressive, especially when the parent company has deep pockets, and a virtual monopoly in many markets. The cautionary sign, though, is that sales growth is not electric - at 20%, it does stand apart from growth at Nestle, for example. And yet, the Price-Earnings multiple for Gillette now stands at over 60. Much too pricey, by my reckoning.