The country is set to capture 1% of global trade soon, while merchandise exports have grown an average of 24% a year over the past four years, according to Economy Watch. Goldman Sachs predicts India will rise to be the third largest economy in the world by the year 2035.

But India is a country where progress meets poverty, and new ideas meet with old traditions.

By all measurable standards, India has a long way to go before its economy matures.

Two-thirds of Indian workers are employed in some aspect of agriculture. And almost 30% of Indians live below the country’s poverty line.

When one of my co-workers returned from a trip to India last year, he described in detail the country’s changing landscape. It’s a place where brand new highrise buildings abut a dirt road and a field of farm workers and cows, he said. It literally is a land where high-tech meets low-tech.

This is the kind of parody I found when researching the impact of the Internet on India. Only in a place like India could a centuries-old tradition like arranged marriage meet the Web in such a way to create a national phenomenon…

I’ll be the first to admit that my ignorance on the subject of Indian marriage got the best of me when I first began my research. At first, I figured that these matrimonial sites were dating services like we see here in the United States, such as Match.com. I assumed the “matrimonial” part was merely a translation issue or just their way of describing dating. I was only partly correct…

Culturally, it is perfectly acceptable in India to announce to the world that your son or daughter is ready for marriage. In fact, fathers, mothers and siblings who are trying to find a match for their family member created many of the profiles on these sites.

After searching through many of the testimonials on the sites, it became clear to me that most of the married couples became engaged after a very brief courtship period. Many were married within months of first meeting each other.

As it turns out, these matrimonial sites fit in nicely with Indian culture. Sites like BharatMatrimony.com prominently display astrological information on members’ profiles. These horoscopes are taken into account when finding a life partner to determine compatibility.

I came across a telling passage online that helped me better understand how marriage is viewed in India: “A marriage in India is considered a marriage of families rather than the marriage of individuals.”

I mentioned last week that Yahoo! and Canaan Partners invested $8.65 million in BharatMatrimony.com, one of India’s largest matrimonial websites. Execs at BharatMatrimony told ZeeNews.com that they expect to register 2.5 million users in 2006-07, as compared to 1.5 million that were registered in 2005-06.

And these marriage websites are no passing fad. Statistics show that the reason 15% of Indians are online is for matrimonial searches. And if you think people aren’t really using services like this, think again.

Since BharatMatrimony.com went online in 1997, it claims to have facilitated more than 700,000 marriages all over the world. As of now, the site has a staggering nine million members.

Another matrimonial site, Shaadi.com, claims it receives more than 50 testimonials a day from happy couples. This site now posts more than 3.6 million photos of singles, and more than 710,000 success stories have been reported to the company.

I’ll continue my series on India next week.

Best,
Gunner
January 15, 2007

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Investing in India was originally featured in the Penny Sleuth.

Every month, these people spend an average of 32 hours online, logging on to an average of 64 unique websites, according to the Nielsen NetRatings.

I think it’s safe to say that the online market in the U.S. is mature, if not completely saturated. But what about some of the more emerging, faster-growing economies of the world?

Take Asia, for instance. With more than 3.6 billion people, the continent is home to approximately 54% of the world’s population. But only about 10% of them are online, according to Internet World Stats. Just to give you an idea on how small a number that actually is, about 25% of the rest of the world is online.

However, Asia’s online population is growing by leaps and bounds. The number of Chinese online increased by about one-third during 2006 to 132 million people. Overall, China’s online population has increased 486% since 2000.

But that’s nothing compared to India.

India’s online growth rate is staggering. The country’s Internet population has grown 700% since 2000. And there’s still plenty of room for it to expand. Let’s look at the numbers…

More than 1.1 billion people live in India. But only 40 million are online — only 3.5% of the total population. In mature Asian Internet markets, such as Hong Kong, Japan and South Korea, there is a saturation rate of about 68%. Even if India reaches only 50% saturation over the next several years, this will mean more than 500 million new Internet customers.

Compare this to the 210 million Internet users in the U.S., and you can see the gigantic potential.

The government is even helping things along by reducing barriers for telecom providers. Also, Internet access is surprisingly affordable. According to the Internet & Mobile Association of India, a monthly broadband subscription can cost as little as 199 rupees, or about $4.50.

On top of this, there are three other factors that are paramount to the success of online growth in India.

The first is cheaper computers. India’s IT and Telecom Ministry is heading an initiative to cut the cost of PCs, which would, in turn, help more of India’s emerging middle class find their way to the Web. According to Internet & Mobile Association of India (IAMAI), the initiative is set to make computers available for less than 10,000 rupees — or $226.

Next is the increase in website registrations under the “.in” domain. According to the IAMAI, these registrations surpass 150,000. This shows that more local content is being created. And more relevant content will attract more Internet users. This is also a bonus for savvy investors, who will have a whole new sea of foreign online businesses to research.

Our third success factor is a bit unusual, but it’s a trend that can’t be easily ignored. While a majority of Indians log on for e-mail, chat and job searches, matrimonial sites are rapidly increasing in popularity. Statistics show that 15% of Indians go online for matrimonial searches.

In fact, matrimonial sites are so popular that even some major players are placing bets on their success. According to the India news site ZeeNews.com, Yahoo! and Canaan Partners invested $8.65 million in BharatMatrimony.com, one of India’s largest dating websites. Execs at BharatMatrimony told ZeeNews that they expect to register 2.5 million users in 2006-07, as compared to 1.5 million that we registered in 2005-06.

So while the online trends in India are obvious, the best ways to properly invest in the country’s coming Internet age are hazy at best. I’ll sort out some of the strongest companies in the coming weeks.

Best,
Gunner
January 8, 2007

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Investing in India was originally featured in the Penny Sleuth.

Unfortunately, most won’t until it is too late. But I don’t want you won’t fall into that trap. Let me explain…

For the first time since the British pulled out of India in 1947, the world’s largest democratic nation opened its virgin $300 billion retail sector up to a foreign mega-retailer. Namely: Wal-Mart.

Yesterday, Wal-Mart announced it formed an alliance with Bharti Enterprises Ltd. (a leading Indian telecommunications company) to open hundreds of stores in India over the next several years. According to an article on investor.com, “Under the deal, Wal-Mart and Bharti Enterprises will set up a joint venture to manage procurement, inventories and logistics, while stores will be set up under a franchise agreement, said Sunil Bharti Mittal, the chief executive of the Indian company.”

This is a massive story – although it didn’t make the headline of any mainstream news source that I saw. (It was buried under about 10 stories that came out that day). This sole event will lead to billions and billions in profits for investors (especially small-cap).

You see, until yesterday, 97% of India’s retail sector was made up of Indian mom and pop storeowners like the ones in this picture:

For the last 49 years, the Wal-Marts, Targets and Sam’s Clubs of the world were not granted access to India’s blossoming consumer class. The country’s leftist leaders wanted to protect the millions of small-time shopkeepers that dominate the retail sector. After all, the politicians need votes come election time. And this has been the major item on the Communist ticket for years now.

Screw the Communists!

To be a true super power you cannot close yourself off competition – whether foreign or domestic. By doing so you sacrifice your own people’s long-term prosperity for short-term mediocrity. By allowing major retail outfits like Wal-Mart into India you encourage billions of dollars to be spent on access roads, parking lots, water purification, infrastructure development, banking development, insurance writing and real-estate development. And on top of that, you encourage billions in foreign direct investment — money India can use to improve its living standard.

As a guy who has been to India twice in the last three years (and seen the problems with my own eyes), believe me: India has a lot of room for improvement. If you doubt that, here is a picture of an Indian slum my buddies Karim, Greg and I took this past February:

Of course, there will be some negatives that follow Wal-Mart and other massive retail outfits into India. Thousands of mom and pop shop owners will go out of business – just like they have here in the United State when Wal-Mart set up shop. Politicians (who are on the hook come election time) will scream bloody murder – just like they do here in the United States. And thousands of folks without a job will tell Wal-Mart and its supporters that they are the devil incarnate – just like they do here in the United States.

BOO-HOO. Get over it. All great economic nations are founded on a principle of competition – both domestic and from abroad. That’s how progress is made. That’s how improvements are encouraged. And that’s how ingenuity is promoted.

It’s also how investors make a lot of money.

The last time a major Asian country opened its retail sector to foreign direct investment was China. In 1992, it opened its then $75 billion cash cow to foreign investment for the first time ever. And what followed in China was a wildly lucrative series of events…

• The Hang Seng Stock Exchange rose as much as 314%
• The Shanghai Stock Exchange’s market value soared 44 times over
• And the Chinese retail market grew from $75 billion to $480 billion. That’s a 15.3% annual growth rate for 13 years.

Looking forward, there are going to be a lot of investment ideas that pop up in India. Many of them will be small-cap in nature. But it is going to take time to find the really good ones.

Right now, I am working with Kif Hancock – editor of The Bull Hunter — to find an Indian play that will directly benefit from India’s emerging retail sector. Kif is still in the due diligence stages right now. But as soon as he has something figured out, I’ll let you know.

For now, please know this…

India’s retail market is not headline news at this time. No one is talking about it. No one is thinking about how to make money when it opens up. But it will open up (it is just starting to now). And investors who follow this story early on could make a mint . As investor.com reported yesterday…

“India’s retail industry is estimated at about $300 billion, and is forecast to grow to $427 billion in 2010 and $637 billion in 2015, according to consultancy Technopak Advisors.”

If you are interested in getting some of the billions in profits, stay tuned to this space. We here at the Sleuth will fill you in – early on in the game.

Best regards,
James Boric
November 28, 2006

P.S.: The last time we reported on India our  winning plays quickly shot through projected profit targets and yielded a combined average gain of 70%.

P.P.S.: Let me know what you think about India opening up its retail sector. Do you care? Do you have an opinion about anything I said in this Sleuth? Give us your two-cents. If you have something good to say, I’ll publish it in an upcoming article.

Investing in India was originally featured in the Penny Sleuth.

But could we see 14K by year’s end? It could happen. Considering the strong corporate earnings, the strong overseas fund inflow, the positive news that India will spend $350 billion on infrastructure, and a confident Finance Minister Palaniappan Chidambaram who believes India could expand by 10% in “the near future and poverty afflicting millions be eradicated in the next 10-20 years,” according to FinancialExpress.com.

However, does the latest Sensex run through four psychological barriers that overvalue Indian stocks? Nope. The economy is running strong. Corporate earnings are good. And, considering the historical bull runs witnessed by the likes of American and Japanese markets, there’s no reason why the Sensex run couldn’t be sustained. Welcome to the Indian bull market…

According to TheInquirer.net, India is expected to see a 160% jump in Internet users, which should drive more traffic and revenue to Internet sites. And second, I believe Rediff and Sify are buyout candidates for Yahoo! or Google based on recent discussions.

Yahoo!, for one, just inked an $8.6 million deal with Bharat Matrimoney, an Internet personals site (the Indian online matrimonial market is worth an estimated $200 million), and is reportedly “hungry for more acquisitions and tie-ups,” according to BusinessWeek.com. Yahoo! is so hot for India that it’s already announced “plans to launch up to six new portals in regional languages, and acquire or enter into a partnership with an Indian company,” according to Business-Standard.com. In fact, a decision on a partnership and/or acquisition is expected over the next 6-10 months.

And, my Google assumption is based on an invitation on its Indian website for applications from people who can “identify and evaluate acquisition opportunities across existing and future market opportunities, drive management team decisions, lead deal execution, and help manage post-acquisition integration and performance evaluation in the South Asia region.” That tells me Google’s on the hunt, too.

REDF is a buy under $18. Visit: http://www.rediff.com
SIFY is a buy under $11. Visit: http://www.sifycorp.com

Good investing,
Ian
November 7, 2006

Investing in India was originally featured in the Penny Sleuth.