Tremendous wealth is created when you can spot a value migration story and bet big on it. Few examples from the past that you will easily recognize
- Scooter to bike migration (Bajaj to Hero Motocorp)
- Single screen to multiplex (Shanti cinemas to PVR)
- Photographic film based camera to digital camera (Kodak to Canon/Smart phones)
- Landline to mobile migration (BSNL/MTNL to Airtel)
- Doordarshan to DishTV
- Manual work to Software automation & services (account books to Infosys/Wipro)
Value migration happens over a long period of time as masses of people slowly migrate from some product, service, or habit to a new product service or habit in phases. There is also a compounding effect in the migration as more adoption drives even greater adoption and it starts slowly but once it catches pace, it happens very fast. So you need to spot it and position on it while it is still in nascent stage.
Current value migration stories in India
- non-tax compliant society to tax compliant society (91 Lakh new taxpayers registered, double digit growth in annual tax revenue)
- cash to cashless/less cash society (paytm, UPI, digital banking)
- Power deficient to power surplus & rural electrification (coal block allocations, Uday/Ujala schemes, 24 hours power even in summers)
- Migration from savings based society to investment based economy (from gold, land, cash to increasing interest in equity markets)
- Migration from uninsured to insured society (healthcare, savings, old age, high value possessions, travel, etc)
- Migration from a cash in locker society to a fully banked society (increase in money velocity & leverage, Kotak 811)
- Migration from unorganized to organized sector to create huge global mammoths and consolidation through mega M&A deals (Cairn-Vedanta, Vodafone-Idea, HDFC-Max, SBI Associates merger)
- Migration from basic spending (roti, kapda, makan) to discretionary/luxury spending society (BMW, Harley Davidson)
- Migration to brand conscious society (Tailored clothing to Levis/Van Heusen/Jockey)
- Migration from poverty ridden to poverty free society(several govt schemes skill India, employment generation schemes, one nation one market, DBT)
- Migration from fossil fuels to renewable energy sources (solar/wind energy available cheaper than fossil fuel based energy sources)
- Tubelight/Filament bulbs to LED based lighting
- Migration from BS-III to BS-VI, electrical vehicles (Climate change, Paris agreement)
- Privatization & FDI in large sectors like defense, railways (Pipavav/Reliance defense, L&T)
- Low oil price commodity cycle (subsidy based pricing to market pricing)
- Developing commodity market (dabba trading to the most advanced commodity exchange MCX, GIFT city)
- One nation one tax - GST (inefficient tax based planning vs business efficiency based planning)
- One nation one identity - Aadhaar (Easy tracking, efficient authorization)
- Corruption friendly to corruption free society (demonetization, e-governance, etc)
- Traditional bank loan based funding to Private Equity, REIT, InvIt for infrastructure and real estate, startup financing
- small kaccha projects to huge infrastructure, housing, smart city push (Huge development in some states like Andhra Pradesh)
- Paper companies, non-transparent, low corporate governance companies to credit rated & internationally certified businesses especially in the SME segment (CARE, ICRA, CRISIL)
- Chor real estate companies to highly regulated professionally managed, consumer friendly companies (RERA)
- Import into India to Make in India (good progress in manufacturing sectors like textile, chemical, auto, electronics)
- Conservative, Risk averse business to strong visionary businesses like Reliance Jio, Patanjali
- Leadership position in low cost space research & exploration (ISRO)
- Job seeker, labor & hard work oriented professionals to startup inclined professionals & innovative smart younger generation
- Alcohol drinking is sin to drinking is a sign of luxury & class society
- Coalition govt to single party, consensus majority and power mandate central govt (Congress to BJP)
- Improved rating & ranking on several parameters like ease of doing business, investment destination, tourism destination (pending credit rating upgrade)
- Developing/Emerging economy to developed economy
Negative Value migration:
- High salary & employee cost in less efficient PSU companies make them more uncompetitive and less attractive for investment. However increasing middle class income will be drivers for consumption
