Indians still shy away from investing in mutual funds

Perceived high risk and lack of awareness on how mutual funds work are the two major reasons preventing investors from going in for these instruments 

Despite being available in the market for over two decades, less than 10% of Indian households have invested in mutual funds, according to a report.

The report on mutual fund investments released by research firm Boston Analytics, suggests that investors are holding back from putting their money in mutual funds due to their perceived high risk and a lack of information on how mutual funds work, reports PTI.

The report is based on a survey of approximately 10,000 respondents in 15 Indian cities and towns as of March 2010.

Among respondents with a high savings rate, close to 40% of those who live in metros and Tier-I cities said that such investments were “very risky”, whereas 33% of those in Tier-II cities said that they did not know “how and where to invest” in such assets.

On the other hand, among those who invested, close to nine out of ten respondents did so because they felt these assets to be more professionally managed than other asset classes.

Non-investors cite “risk” as one of the primary reasons they do not invest in mutual funds. Those who do invest cite the fact that they are “professionally managed” and “more diverse” most often as the reasons why they invest in mutual funds versus other investments.

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Emami introduces balms in low-unit packs

The pain-relief segment is now taking the low-unit pack route, after the success of this strategy in shampoo and hair-oil marketing

Velvet Shampoo was the trend-setter in the sachet market many years back when it introduced shampoo sachets at Re1 to penetrate the rural market. This gave an edge to the company and better market penetration due to the low price point.
 
Other fast-moving consumer goods (FMCG) players like Hindustan Unilever Limited, Godrej Consumer Products and Dabur India Ltd have also tried this route for their different products, at different price points. Now the pain-relief segment is also trying to penetrate the rural segment with this time-tested strategy.

Emami Group is launching low-unit packs (LUPs) of Zandu Balm at Rs2. The pack will weigh 1.2 grams and it will be used to penetrate the rural market. “We feel that any consumer suffering from headache, cold or backache will be able to get relief from the LUPs instead of looking for a Rs-20 packet. This will not only add to the convenience of the consumers, but will also generate rapid sales of the product,” said Mohan Goenka, director, Emami Group.

The LUP market forms 35% of the total Indian FMCG market. “The market size for LUPs is different for different categories. For example, in shampoos, close to 80% of sales come from sachets. The LUP market for balms is around Rs100 crore; it is currently contributing about 20%-25% of the total sales of balms. Looking at this trend, we are confident that the LUP market for balms is certainly bound to grow and hence the decision to launch LUPs for Zandu Balm,” said Harsh V Agarwal, director, Emami Group.

The company is trying to push the product deeper into rural areas through its mobile trading scheme (selling products door-to-door through vans or bicycles) and the ‘small village shop scheme’ (where products are sold from shops based in rural houses).   

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Peak-hour deficit touches 13.3%, says Central Electricity Authority

According to the CEA website, peak-hour deficit has increased from 11.9% in 2008-09 to 13.3% in 2009-10. Experts believe that pent-up demand may be higher than the projected 11%, further worsening the situation

The power ministry plans 100% electricity supply all over India by 2012. However, statistics from the Central Electricity Authority (CEA) show an increase in the demand-supply gap during peak hours from 11.9% in 2008-09 to 13.3% in 2009-10.

The total energy deficit has come down from 11.1% in 2008-09 to 10.1% in 2009-10. However, power experts believe it is the peak-hour deficit that is the main concern and which needs to be monitored.

“I would be concerned about the peak deficits. We will have to plan capacities to match the peak deficits. There is a lot of electrification that needs to be done, there is a lot of pent-up demand,” said Kuljit Singh, energy expert and partner, (transaction advisories services), Ernst & Young, India.

Mr Singh also pointed out that the peak-hour deficit might be much higher than the projection by the government body. “The real peak demand may be much higher than the projected peak demand. There may be a lot of peak demand that is not coming on-stream because there is no capacity. The 11% projected deficit is also not in synch with the experiences of larger cities that are going through load-shedding for hours together,” stated Mr Singh.

If the official figures released by CEA are anything to go by, the western region and the north-eastern region have recorded a significant improvement in the demand-supply scenario. The power deficit in the north-eastern region has improved from 14% in 2008-09 to 11.1% in 2009-10. Similarly, in the western region, the power deficit has improved from 16% to 13.7% in the same period.

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