Maneesh Dangi
Co-CIO, Birla Sunlife Mutual Fund
Credit underwriting, as in equity, is bottom up. It's important to understand the larger macro trend, but to a large extent, the alpha that I as a fund manager need to extract from the credit market is bottom up.
In India, there are two winds blowing.
One, the local conditions have actually improved sequentially over the last seven or eight quarters. I run a medium-term plan which is about near $1 billion, and if I were to look at any metric, be it margins or coverage ratios or leverage ratios, in aggregate terms they've improved.
Second, in the last 6-7 months a meltdown in the commodity market, because of an investment slowdown across the globe, has led to deterioration in credit conditions of many commodity companies. Somewhere between October and December 2014, we decided to stay away from these commodity players, which were in vogue at that point in time.
So from a macro standpoint, the local businesses in the finished goods or intermediates, have seen margins improving. Therefore, the credit conditions for a lot of them are improving. As long as you stay away from bad assets, for the lack of a better word, I guess, your funds would do well.
The same cannot be said for someone who invested thousands of crores in a company which actually is in the resource acquisition business, mining business, steel business or aluminum business. So it's more nuanced. It's not macro.
