Readers, please do a favor for yourself, rewind your memories to recall the Maggi noodles controversy. The case was, the lead was found excessive of the permissible limits set by the FSSAI. Although no hazardous effects were observed to the consumer of the product, obviously it was a contravention of the food safety standards in India. Company associates grasped the severity of good & bad management and deployed the disaster management team for the rescue and relief. Asset management decided to destroy the stock. Sooner than later the Maggi went off themselves across the length and breadth of India.
The company was stuck with estimated 30,000 tons of the produce valuing approximately 425 – 450 crores. What to do with this giant stock. Made arrangements to transport the stock to a cement manufacturing location to use the furnace of the cement maker to fire and extinguish the stock. It was a tough decision in tough times. But for business ethics and to save the prestigious brand the management took the painful decision. Maggie is the flagship brand of Nestle India Ltd.
Recent media reports suggest that some mutual funds are facing problems in the redemption of the schemes particularly the FMPs. HDFC Asset Management Co. is also facing redemption problems in some of its FMPs on the backdrop of Zee group Companies default of the debt instrument of Zee where the HDFC Asset Management bought the debt papers under the troubled FMPs. The unitholders are a precious asset for any asset management company and to preserve these assets.
The HDFC Asset management company also took a tough decision. The AMC bought the non-performing debt instruments from the beleaguered FMP to provide respite and relief to its unitholders and Rs. 500 crores liquidity to the FMP. Although some so-called analysts and expert raised eyebrows on this decision of AMC. Which makes it different from other asset management companies
While conducting fundamental analysis of any company management is of utmost importance but least bothered. It is very difficult to analyze management. No rating agency in the world rates management and it solely depends upon the wisdom of the analyst to rate management. The above stated two case studies can help the readers to have a better understanding of management.
Tough decisions can be taken in tough times but taking the right decision in tough times is tough.
So, by reading this you can now start analyzing asset management decision in good times and bad times.