Research
We aim to integrate our products and investment processes with the rigorous standards and authenticity of academic research.
Our goal is to further research in financial markets and corporate finance, while also focusing on contemporary issues such as ESG investing, climate finance, and Fintech. It’s interesting to study “why firms fail” in India. If you want to explore or contribute to this research, please send us an email.
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Wealth Generation Skew
78% of firms deliver less than Gilt returns. 40% of firms give negative returns over a 20+ year period. 1% of firms create 50% of the total wealth. -
Return on Equity (ROE) Skew
The median ROE of 6,000 corporates in India stands at 8%. -
Banks in India: Loss Factors
Industrial lending leads to 15-25% Gross Non-Performing Assets (GNPA) during down cycles. - High GNPA levels relative to the Rest of the World (ROW), possibly due to poor underwriting or bad governance.
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Loss Given Default (LGD) in India
LGD remains high even after the Insolvency and Bankruptcy Code (IBC) implementation, with recovery rates around 15-20%. Potential reasons include mis-assessment of collaterals or pro-cyclical collaterals.
- Macro: Since most credit down cycles tend to be industry-wide, is there a way to build a lead indicator framework to assess the evolution of the credit cycle?
- Market: Do markets lead the credit cycle? Internals of stock markets, spreads – both term and credit, and volumes in credit markets.
- Micro: Are there firm or industry-related issues that can help practitioners identify balance sheet deterioration? Regulatory issues?
- Rating agency: The problem of incentive structure, static models, and the past track record
- Research teams: Expensive and myopic (wrt Macro and industry-wide understanding), bank credit standards are cyclical.
stakeholders
- Lenders: To help lenders with better credit underwriting and right price of the risk.
- Borrowers: Help firms act ahead of the point of no-return
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Regulators:
- SEBI: To design policies to deepen corporate bond markets
- RBI: Design counter-cyclical policies to avoid hysteresis and cyclical tightening of lending standards
- Fin-Min: Contract policies, corporate laws, taxation (based on risk instead of simple asset class classification)
Mosaic Asset Management is excited to announce a case study competition focused on the evolution and downfall of 25 firms that went bankrupt or nearly faced bankruptcy. This competition is open to first and second-year MBA students who will delve into the factors that led to these firms’ financial crises.
- Competition: Price wars and new technology disruptions
- Leverage: High debt levels
- Promoter Leverage: Financial exposure of company promoters
- Capital Market Leverage: Impact of share price fluctuations
- Business Cycle Downturn: Revenue slowdowns
- Regulatory Issues: Compliance and legal challenges
- Government Receivables: Delayed payments from government entities
- Governance: Corporate governance issues
- Financial Cycle: Rollover and asset-liability management issues
- Poor Underwriting as Financiers: Ineffective lending practices
- Poor Business and Strategy: Strategic missteps and operational failures
The top-performing teams will be rewarded handsomely
1st Place: INR 1,00,000
2nd Place: INR 50,000
3rd Place: INR 25,000
Additionally, winners will receive offers for summer internships and job opportunities at Mosaic Asset Management.
We encourage all participating students to take this opportunity to showcase their analytical and strategic skills while gaining valuable insights into corporate financial management. Are you a student of another management institute and want to conduct similar research at your campus – then please send us an email.
Jamnalal Bajaj Institute of Management Studies, Mumbai
Course: Financial Markets & Institutions
Ashwini teaches a “Financial Markets & Institutions” course to second-year MBA students. The course focuses on understanding return and risk, identifying their sources in both domestic and international financial markets and institutions. The objective is to equip future financial managers with strategies to maximize returns while managing risk, ultimately achieving the most favourable return–risk balance.
Topics covered include the roles and determinants of interest rates, fixed income securities markets, equity markets, foreign exchange markets, derivative markets, and risk management in financial institutions.
Maneesh delivered a speech on the Indian economy and potential trends of 2047. To predict our economic future of 2047 is a difficult task but a little bit of history of its own growth, scanning the obvious risks, and drawing parallels from other nations which were adjacent to its income and demographics, can get us a good idea of where ours or any other country’s economy will be.
Maneesh presented his investing framework- its structure, reason and how-to-act along with risks and opportunities in India. The aim was to discuss the nature of uncertainty in markets, explore methods of harvesting it in investing, and examine the risks and opportunities for India and the global markets. The key points heI covered were
- Markets are inherently uncertain. The dominant role of uncertainty in markets is often under-appreciated.
- Market uncertainty is the primary driver of returns. There are two main ways to harvest uncertainty: taking a systematic risk or timing the market.
- Understanding the nuances of returns from various assets is essential to size positions. Each asset class has an inherent uncertainty premium. But at most points – asset valuations deviate from it.
- Maneesh's market timing framework involves the policy & valuation quadrant. There are more methods out there in the world to do the same. But building one at the intersection of macro and micro – is somewhat a unique approach and potentially rewarding one.
- India’s markets have certain advantages and risks. It’s neither China nor Africa or Latin America.
We are currently running a project to predict whether certain sectors will perform better or worse compared to the benchmark index. This prediction is based on modelling global and local economic variables and analysing how they relate to each sector.
Maneesh cautions against both the continuous search for trends and the danger of becoming lethargic or losing vigilance after stacking up on risk.
Read the full paper on www.academia.edu
