The Hindu Business Line : Riding a high tide

In Kerala, a growing number of shippies or merchant navy professionals are entering equity. This high-earning group, often the target of fly-by-night operators, finds equity not only profitable but safer too!

As equity indices defy gravity and scale new peaks every week, in Kerala a sizable group of merchant navy professionals are entering equity. But quite a few of them, having burnt their fingers dabbling in equity on their own, are now taking the PMS (Portfolio Management Scheme) route; particularly those who were cheated by unscrupulous operators selling them dubious business ideas.

Jayaraj Senan and wife Preeta

This class of professionals has always had a good chunk of disposable income, and is considered easy game by fly-by-night operators. As Kochi-based Captain Jayaraj Senan, Master Mariner, Tanker Pacific, puts it, "We shippies are the biggest suckers and tend to believe the first polished, courteous looking guy who talks sweetly to us. As soon as I come home on leave, the first set of people who come home do so for money and my family has never seen them before!"

Mr P.K. Chacko

Take the case of P.K. Chacko, a mariner for over 20 years. He believes in diversifying his investment and has put money in equity, real estate and bank deposits. Ten years ago he lost Rs 17,000 while trying to help his friend unload some shares. "The broker suggested why don't you buy them, these are good companies. I did, and very soon the share certificates had become worthless pieces of paper. After this bad experience I gave up equity."

But this loss was nothing compared to the experience he had with one of his tenants. "I buy shops which I rent out and have been cheated so many times. One day one of my tenants said, `my container has come from Dubai and I'm short of Rs. 2.5 lakh, so can you help me?'"

Unfortunately for Chacko, his FD had just matured and the money was in his account. But before he could give the cheque one of his land deals materialised and "so I took a loan of Rs 2.5 lakh from my bank and gave it to my tenant saying you have to repay it with interest. Now eight months have passed, he has paid no interest, no capital and no rent too. He is not vacating my shop either and all I'm left with are two cheques that have bounced. Now I have to go through legal hassles and who has the time for all that?"

Six months ago a colleague introduced him to a PMS in Kochi. "He was a heavy trader in equity and had been doing that for over 10 years. I gave him Rs 2 lakh and he made some money for me. Then he introduced me to the Equity Intelligence PMS in Kochi and I put in Rs 5 lakh (the minimum stipulated by SEBI for a PMS). It has done wonders for me, giving me a return of 60 per cent in less than 6 months," says the beaming man.

Senan, a shippie since 1972, has reason to don a brighter smile. He also has invested with this PMS since November 2003, gradually putting in more money in his wife Preeta's name. "And it has given me over cent per cent return," he says.

But is he aware that such returns are not sustainable?

"Of course, I would be happy with a 20 per cent return," he says.

Senan keeps a hawk's eye on his portfolio, which he can access on e-mail even while sailing. So does Preeta keep track too?

"Oh no, she is only interested in the returns," is his response.

Chacko is unhappy about his investment of Rs 1 lakh with a well-known securities firm six months ago. "They are really cheating me, giving me contract orders at prices which are higher than the high of the stock for that particular day. The market has done so well and their return has been a paltry 6 per cent. All of them seem to think that we shippies are dumb."

Mr Nandakumar Menon

Nandakumar Menon, who has been working with the Shipping Corporation of India for 25 years, has also zeroed in on equity through the PMS route. In 1993 he lost about Rs 10,000 buying shares in IPOs. "They were altu-faltu companies and I don't even remember their names."

But luckily, he quit immediately after losing this sum. But in 2004 he once again faced the dilemma of where to invest his money. "I was not interested in real estate and the interest on bank deposits does not even cover inflation. But in November 2004 I joined this PMS with Rs 5 lakh and then put in more money; my capital has doubled in less than 10 months. What more can one ask for? They're approved by SEBI, so I feel comfortable and they give me pucca audited statements, that take care of my taxes."

Is he aware which shares are in his portfolio?

"Oh yes, I get weekly statements and know my portfolio has about 20 shares. And since they are the experts and not I, I just respect their judgement."

Now that he's doubled his money, has he felt like withdrawing at least some amount?

"No, let it grow. I'm happy with the performance."

Menon has referred his friends to this service and says that several more mariners are interested in equity as an investment option. "A lot of them are interested; they have money, and don't know what to do with it. Often what happens is that they get talked into all sorts of businesses and lose their money."

"Oh yes," adds Chacko with a grimace. "The worst part is that my wife taunts me: `You have money for cheats but you don't have money for me' and that is the biggest punishment!"

Says Porinju Veliyath, CEO and Chief Portfolio Manager of Equity Intelligence, "Hundreds of crores of rupees have been lost by Kerala NRIs investing in fly-by-night industries, goat farms, teakwood plantations, etc. They have funds but no investment avenues; most of them are scared of equity, but have now begun to understand that equity is not necessarily gambling but can be a serious and systematic investment plan."

Mr Jo Joseph

Jo Joseph, a merchant navy officer working for a Hong Kong-based shipping company, agrees. "I've also joined the PMS; I was totally new to shares. So I required somebody to monitor my investment for me. A close family friend introduced me to them and said it is a safe place, and transparent too, and you can track your portfolio on e-mail."

In six months he has got a 60 per cent return and "I'm just watching before I put more money. Of course I'd be happy with at least 20 per cent annual return."

Veliyath adds that apart from doctors and NRIs, their PMS is attracting auditors. "Of late we've found auditors becoming our clients. Normally, they are very conservative in their investment decisions but I believe they decided to join after auditing the accounts of their clients who are our members. We also have about 25 to 30 clients from the Mutual Fund industry. Because of large portfolios, they are not able to capitalise from some very good growth stories.

Pictures by the author

Response may be sent to rasheeda@thehindu.co.in

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