The diary: Somerset’s Asyraf Salman

Asyraf Salman 700

Sunday I pack my suitcase and catch an afternoon flight to Mumbai, India for a conference. This event allows me to speak directly to a company’s management team in order to better understand their business. India has a deep market and very promising demographics. However, sentiments on the country have turned bearish due to weak economic growth and a twin deficit problem (aggravated by ineffective regulatory policies over the last few years). Regardless, as value investors, this is a good chance to hunt for long-term, deep value investments amidst all the negativity.

Monday/Tuesday Within two weeks, India was to announce its 2013 Budget to the world. The local newspaper ran articles and commentaries on whether the government would continue its path of populism even in the face of declining foreign direct investments  and the ballooning current account & fiscal deficits. At 09.00hrs (IST), the conference opened with a keynote speech by the Reserve Bank of India highlighting the bright prospects of the Indian banking sector; an industry driven by rapid urbanisation and low technological costs (1/10th of global norms). Interest rate cuts however will be limited to perhaps 100 – 150 basis points for the year owing to inflationary pressures embedded within the system. I  meet with a small-mid cap Kerala bank later in the day and these macro insights form the foundation of my questions.


Wednesday One of the last meetings I had for the conference was with a large cap Indian IT company – a competitor to one of our holdings in the portfolio. I want to know how they were coping with the industry downturn. Discretionary IT capex spending remains suppressed, but competition from Indian and Western peers continues to intensify. Despite these pressures, management identified growth opportunities of up to 10 per cent in the Infrastructure Management Services (IMS) and Business Process Outsourcing (BPO) segments, but remained cautious about being too optimistic for the year.

At 17.30 the conference was officially over but I opt to stay for the two-day infrastructure tour. While on a five hour domestic flight to Delhi, I had fruitful interactions with some newly acquainted analysts and fund managers from Japan, France, UK and the US, with discussions ranging from from politics to our personal hobbies.


Thursday/Friday We are given the rare opportunity to speak directly to several ministries during the tour, which helped deepen my understanding of the country’s regulatory landscape. India’s power sector, in particular, has problems virtually at each level of the value chain. Coal distribution is inefficient, power generation plants were built unprofitably, and electricity transmission keeps getting lost through leakages and theft. I begin to appreciate the complexities of delivering power to the individual household and how I have taken that for granted living in Singapore.

After a few other meetings with traders, consultants and even a magazine editor, the tour ends with a site visit to Delhi’s largest ‘township’ to date – set to be completed within two years. It was bigger than some of the sites which I had seen in Malaysia and Dubai before, but I remained sceptical as to whether there was enough demand to fill such a huge project.


Saturday/Sunday I take a 10pm flight the night before and reach home the next morning at 7am (Singapore time). I rest for a bit to recover from the slight time difference but before long I am responding to emails and sorting out my raw notes. On Sunday evening, I take a breather by going for a jog at a nearby reservoir park.