My friend, Umesh Kudalkar is someone who I respect and admire. He is outstanding at investment analysis and has deep views on the subject. He is also an active member of the global CFA Institute. He has penned a letter to the PM, which I have pleasure in reproducing below.
Pensioners, Savers and Investors in our country don’t have sufficient number of investing options that beat inflation. With government pensions going away, the retirees are at the mercy of their children in old age because Bank Fixed Deposit rates don’t beat inflation. Moreover, the high quality stocks that are usually bought by mutual funds are being quoted at very high Price to Earnings Ratios. Their prospective returns may again not beat inflation.
Solution and Proposal
PM could extend his slogan by saying that ‘Make in India and List in India’…. India has the best capital market system in the world. The finance ministry (through SEBI and Stock Exchanges) should call the officials of the leading global companies that sell their products and services in India for a meeting and put forth a proposal for listing their stocks on National Stock Exchange in India if they wish to continue to sell their products and services in India.
For example, we have many multinationals that are listed in their home countries, New York Stock Exchange, London Stock Exchange as well as Indian National Stock Exchange e.g. Nestle, Bosch, Hindustan Unilever.
When we have such a precedent, why not make listing in India compulsory for these global high quality companies such as say Samsung? Even though, these companies would not need any money to be raised in India, the listing of global high quality companies (MNCs) should be made compulsory for the benefit of Indian Citizens.
In addition to the above, the government should also take steps to prevent formation of private subsidiaries in India by listed global multinational companies. This is because, if they list in India, they should not divert value out through private companies shortchanging the Indian minority shareholders.
The logic behind compulsory listing
All of these global companies derive part of their market capitalization value in their home countries because 130 crore Indian consumers consume their product and services. What do the Indian consumers get in return other than the product or service they buy by paying money to these companies? …. Absolutely nothing.
Benefits of the proposal
Pursuing this logic, if these global multinationals are made to list in India, then Indian Pensioners, Savers and Investors would be able to invest in these high quality businesses thereby probably beating inflation and live a dignified life in retirement.
Few Examples of Global Companies that are not listed in India:
Toyota, Coke, Pepsi, McDonalds, Google, Apple, Microsoft, MNC pharma companies … the list in endless