Random Thoughts

Theme 2012 – Carefully rebuild; Hopefully Not the End of time

2012-02-01T01:31:00.000+05:30

The Mayan’s predicted the end of the world in 2012. Assuming they are wrong, I chose to have a theme for this year. Here is, hoping that they aren't correct.

To begin, lets be honest. We ain't out of trouble on the economic front. Countries on the verge collapsing across Europe, sweeping revolutions in the Middle East, slowing growth in Asia and sweet corruption in India. Not trying to sound gloomy, but yes, these are largely the facts.

It is very easy to get stuck in a downward spiral. Negativity breeds inaction and results in poor performance and complacency. Might be a great idea to look afresh, breathe optimistically and work harder towards new goals. Positivity is like the proverbial lotus. Lets put the past few years behind, and look at this year with renewed vigour. Various catastrophic events, both, man made and nature’s fury, have pegged us back. It’s time to shake it off and resume careful rebuilding.

Why do I sound optimistic?

It is God’s greatest blessing that he made human beings resilient. Unbounded optimism maybe foolish, overly pessimistic can be catastrophic, but to be cautiously optimistic makes infinite sense. A large portion of humans fall in this category. Some aware but most largely unaware of this state of being. I do not wish to debate the benefits of each mental state, but if I were to simply add the sum of all of mankind’s mental state. It would probably lean towards the optimistic side. Having this faith, and given last year’s over pessimism there is a need for restoring the balance.

Let’s take those steps towards being positive in rebuilding what was lost in the last few years.

The I Revolution

2011-12-30T11:48:00.000+05:30

If you were born before 1970 then this write up might seem blasphemous to you, but read on anyway. I say 1970, but I might be off by a few years. But the general idea of thinking about yourself before others not being considered selfish emerged only in the early 90’s. No, this is not one of those essays which will ‘intellectually’ conclude that this is the result of ‘imported western culture’ due to the opening of our economy.

In the Indian context, the identity of an individual is an emerging concept. Identity has always been based on a collective concept under religion, caste, creed and family name. The protective umbrella provided comfort and respect which quelled the need to express individuality. As families disintegrated due to space constraints in our cities, the protective umbrella cover has withdrawn. To a large extent, it forced people to discover their individuality. As a result, this has opened a whole new emphasis on focusing on yourself. The collective needs of a group are no longer unequivocally greater than an individual.

It has been a gradual shift, but it is systemic and real. In India it is developing into a revolution which will eventually engulf the country. As a result of this emerging revolution there is some stress in the old and new ideologies. One of the points of contention is the ‘giving of respect’. The idea of respect being earned and not a right because of the tag he wears creates friction in both parties. I will refrain from taking sides.

It seems sensible to understand what ‘you’ want. After all it is ‘your’ life. It is not greed or selfishness; it is a simple emphasis on self. And there seems nothing wrong if you are not hurting others in achieving it.

PS – Sorry I abused the inverted quotes and used some awesome cliches!

Leap, in good faith

2011-11-29T21:51:00.000+05:30

You stare into the abyss of the unknown. The darkness creates trepidation in the mind. It is not just the unknown your worried about, but the consequences of the impact of a hard landing. Everyone fears the unknown; there is nothing wrong with that. But to freeze into inaction, is not the path a warrior of destiny must adopt.

The longer you look more frightening it gets. You look for clues, for guidance but none is at hand. To forge forward is your way of life, but against a gaping black hole your way of life takes a back seat. The reality is quite different from your philosophy. Still that gnawing urge to continue pushes you to the edge. Your mind is numb, you at the end of your wits. Nowhere to run, nowhere to hide, it is time to face reality. The equation is simple, turn around and walk back or move forward.

Here is what you do, you listen to the heart. Your heart will guide you through this turmoil. It is not biased by data; it is not corrupt with prejudice. The heart is pure. It is simply guiding your instincts. You hesitate, shut your eyes and leap.

If the intent is good, the outcome will be good.

Keep the faith.

I - Alone.

2011-10-09T13:38:00.000+05:30

Standing alone, I ponder.
Is it real or just my minds creation?

I wonder, amazed, at the gnawing questions.
At the thousand little doubts, at a million unknowns.

Should you just ignore them,
Or seek answers to the unending queries.
Or just let them lie in vacuum for eternity.

Somethings are best left untouched.
Happiness has an uncanny way of finding its way into your life.

A Modern Greek Tragedy

2011-06-28T16:30:00.000+05:30

The world is fretting over the potential default by the Greek government on the debt it has issued. Various scenarios are being envisaged and implications being discussed by Central Banks, Governments, economists and analysts alike. A similar scenario was witnessed just last year. At the time, members of the European Union stepped in to ‘bailout’ (word of the year nominee) to the errant nation.

Greece piled up the debt to fund its infrastructure investment when they hosted the Olympics in 2004. Time has now come to repay these debts and the coffers are empty. The sustainability of the infrastructure has been questionable right from the beginning. Huge stadiums with no utilization plans post the event, swimming pools rotting, velodrome covered with dust and a hockey arena which hasn’t been used since (no one plays hockey in Greece apparently!!). This is just about stadiums and sporting facilities. Greece upgraded its airport (old one lies unused now), updated its metro systems, built a tram network and improved its road. The infrastructure created is a positive but the huge operating costs are unsustainable.

It is not just the Olympics that have single handedly caused the spiral of the nation. There are various other factors that have contributed to this situation. The major factors are government policy on pension, taxation systems, government employee salary structures and corruption amongst others.

It’s no longer the issue of interest or principal not being paid to lenders. Huge amounts of derivatives and insurance (hedging) products are issued based on this debt. So it is possible that entities insuring Greece does not default will face billions in claims which could potentially render them insolvent.

Bailing out Greece will not cost too much financially (in the region of $100bn, a drop in the ocean) but raises the further complications of how many such nations will wander the path of default knowing they will be bailed. When Lehmann went bust, the world discovered that they had hardly imagined the consequences.

If Greece goes bust, we may just revisit the experience of the last few years. A déjà vu of sorts with a hint of Greek Tragedy!!

Demographic Divide(n)d

2011-05-06T10:30:00.001+05:30

1.2 billion people and growing, more than half under the age of 25. That’s present day India for you.

“Wow” scream economists and financial analysts, “that is such a huge opportunity”. It most definitely is a huge opportunity but a lot of things need to fall in place for it to become tangibly beneficial. The opportunity will translate into a reality when this huge chunk of people get an education, enter the workforce (either jobs or as entrepreneurs) and earn an income. After all, the market will get bigger only when more people have money. That’s the whole concept of Demographic Dividend.

Here’s my issue, there are too many if’s to be addressed and honestly some of them look insurmountable.
Getting over a 150 million into school, another 40 million to college and completing higher education. The challenge to fight illiteracy has never been so significant.Our system is not strong enough to support such volumes. Yes, there are some great organizations (Pratham, Teach India etc) doing some excellent work to encourage education and they have broken traditional models to achieve great success. But the fact remains vast areas of India are not as accessible.Education is half the battle, creating employable talent is a whole different ball game.

Lets talk about infrastructure, roads teeming with cars, trains overflowing with people, lack of housing, inefficient supply chain etc and the worst part is the total apathy towards the situation. It is a wonder how we have sustained our high GDP growth. The India story is definitely one which will be told as one achieved despite a million 'inspite off's'.

I would love to talk about politics and the impact politicians can have on demographic dividend. But I risk sounding more cynical than this post has already become. So I am just going to say "No comments" on that topic. The less I say, the more it will be heard I guess.

We as a nation surprise and that is probably our greatest asset. Overcoming obstacles and shocking the ordinary, that's India. Just hope the Dividend pays off..

World Champions

2011-04-07T23:50:00.000+05:30

Truly exhilarating.

Happy for Sachin!!

Glacier

2011-03-13T19:58:00.000+05:30

Standing on the glacier, I wait to slide. The expanse of white is numbing. My spirit is awakened by the jaw clenching cold. Nobody is around, no warmth, no fear. Just the vapor from your breath rising towards heaven. It is here that you find yourself. Frozen inside you know the depths that really matter. It never seems enough. You strive for more, push harder and fight longer. the journey continues but your still standing there.

Suddenly, with a leap of faith you take a step. And that makes all the difference. You slide on the glacier, cold and hard but exhilarating. Watch out, your mind says but then the adrenaline takes over. You dodge the obstacles, a few knocks are fine. Your efforts are not in vain. The slide gets you on track.

The rapid nature of the event leaves you gasping, the air is rare in any case. The chill hits your lungs but the joy is evident and the pain is forgotten. You look up at the summit, think to yourself, this was worth it.

Theme 2011 - Reach for the Sky

2011-01-01T16:44:00.000+05:30

The air smells a bit better, the fog has subsided a bit. One can see a bit further in the horizon now. 2011 provides an opportunity to be a more ambitious which is truly welcome.

As I look around the world, the West still seems to be finding its way out of the hole it fell into. There are no guarantees of everyone getting out too. Moving to the East, things are reaching a point where you might feel nothing ever happened. Well there is still some caution in the air, and justifiably so. That caution has prompted me to keep the goal at the sky and not the stars.

I see the foundations in place, the base seems strong. Its now time to build while keeping one eye on the future. And if there is no catastrophe, there is no reason why the sky should be the limit.

Conform Or..

2010-12-02T22:09:00.000+05:30

In the initial stages of our lives all we want to do is fit in. As we grow older all we want to do is be different. It’s a strange dichotomy for the same lifetime. That’s allowed of course, you can change your perspective towards life. The reason behind the transition is what fascinates me.

Let’s journey back to school. A bespectacled lady in the classroom tells you what good behavior is and that you are constantly being watched. The same saga is repeated during the impressionable years. Now different people react to this discourse in a number of ways. Some follow the path, some do the exact opposite, some differ but stay aligned when being watched and some accidentally disobey. This phase has a telling impact on the personality, sometimes lifelong. Toe the line or face the back of the hand. Now that’s hardly a fair choice.

Cut to the next phase, college. Ah the smell of freedom coupled with the rashness of youth. Brilliant!! A potent recipe for disaster or and a big or at that, foundations of a grand success. So which way does one go? Follow the path of conformity or break free. To be honest that’s not a real dilemma; in a country of over a billion even the rebels are fairly mainstream purely on the basis of absolute numbers.

Statistics apart, as you grow up, there is a compelling need to distinguish yourself from others. This is sometimes driven by questions like, ‘what sets you apart from others?’, or ‘how are you different from the next guy?’, or ‘what difference will you make?’ Standard questions asked in various settings and perfectly relevant too.

Now this gets me wondering, apart from the true rebels (don’t ask me to define a true rebel), are the others who are ‘being different’ actually different. They are in a sense conforming to the need to be different as expected due to external forces. So the next time you are asked to display you difference, you may want to ponder on what you as an individual really want.

New Age Stories

2010-11-07T12:15:00.000+05:30

I truly enjoy good stories, both to narrate and read. Something to stimulate the gray cells is always welcome.

But these days the word ‘story’ is being used rather loosely. Every advertising hoarding, news paper article etc has the word story mentioned. We have the ‘India growth story’, ‘Infrastructure Story’, ‘Power story’. I can go on and list many more.

It makes me wonder if these are stories at all. Writing something which follows the straight line of rationality is not what I would term as a ‘story’. In the new age we are sold these stories. Rationality simplified, created on a spreadsheet and sold over the counter, bit cold too.

A story (fiction or real) must have some elements of irrationality, some unexpected elements. It must bring some zing into the reader's mind. It would be great if the words can create a strong visual appeal.

I think 'story' would be India's word of the year 2010, but I hope its not in 2011.

'Common' 'wealth' "Games"

2010-09-26T19:45:00.002+05:30

Really...
Angry, hurt, disappointed...

Nothing more to say..

Premier League Preview

2010-08-14T12:28:00.001+05:30

The start of another season of the BPL beckons. After the excitement of the World Cup, it will be fun to get back to the bustle of club football. It harder to pick a winner this season as the gap between the top teams seems to be closing. Especially when clubs spend $100m in the transfer market.

Liverpool under new manager Roy Hodgson will be a far more stable now. Having managed to keep Gerrard and Torres is a big boost to their chances.

Tottenham Hotspurs will look to build on their last seasons performance. I think how far they progress in the Champions League will be inversely proportional to how well they do in the Premier League.

Manchester City have almost purchased a new team. Significant additions include David Silva, Yaya Toure, Mario Balotelli, Jerome Boateng and rumuors of more on the way. They seem to be a team with a mission and I reckon they have a great chance of finishing in the top four.

Arsenal have under achieved for a long time now. Five years without a trophy is unacceptable for a team of this repute. In my view they may slide further this season, and a finish in the top four looks challenging.

Chelsea and Manchester United, the perennial toppers are my favourites this time too. Chelsea have not made any significant addition to their squads but look formidable. Manchester United have added a couple of young strikers to their team, adding some solidity to the attack.

I am going to go with Manchester United winning this season.

An ode to EBITDA

2010-06-06T12:43:00.000+05:30

Life was beautiful, naïve and innocent.

Profit simply meant Sales less cost,

So simple, so elegant, uncomplicated;

Then along the way came EBITDA,

Life suddenly changed,

Light shone on the ignorant mind,

Then the winds of realization rocked my world,

Life would no longer remain the same.

Profit was no longer a simple concept,

Real value began to emerge, and

With it came WACC, ROCE and ROE.

Thus illuminating the darkness permanently.

Stock Market - Respect

2010-05-10T22:50:00.001+05:30

A lot has been said and written about the anomalies of the stock market, its irrational exuberance driven by sentiment and liquidity. The inefficiencies are always highlighted and talked and written about, especially during a bear market when things are collapsing. The fact remains, that a market consists of various participants. While the speculators do create noise, the sane minds respect earnings.

Last week, the Supreme court declared its verdict on the Reliance gas controversy. It ruled in favour of Reliance Industry being able to sell the gas at government prescribed rate.
The stock market reacted in an expected manner. Reliance Industry soared, RNRL and Reliance Power tanked. What is amazing is that the market capitalization lost and gained was almost equal.

This is the beauty of the stock market. It computed the value derived by one company and value lost to the other set of companies in a matter of hours. This is no coincidence, its the sheer power of rationality of the markets.
Its instances like these which makes you say, Respect...

Kasab Verdict

2010-05-08T12:21:00.000+05:30

It took over 17 months for the trial to conclude. The decision seemed inevitable right at the outset, but the judge deliberated and heard arguments from both parties before passing his judgment.
"To be hanged till death"

Its a landmark judgment, not because of the complexity involved but the impact it has on the common man. For the unfortunate victims relatives, it is a step forward towards closure. It alleviates the grief of these folks and God alone knows that they deserve better.

The judgment also sends a message to terrorists; there is no honour in what they are doing and what they are trying to achieve. The end result, as it rightfully should be, is death without any dignity.

It also makes me feel proud to be an Indian. Nobody would have grudged us if we had shot Kasab on the fateful night or immediately thereafter. We were mature enough to allow are judicial system to play its part and reach a legal conclusion.

My prayers are with all those that suffered.

How sport helps an Economy

2010-04-04T20:07:00.000+05:30

Sport is viewed in many dimensions across the world. It provides great entertainment to the public, career opportunities to the players, coaches and others associated (broadcasters, journalists etc). But we seldom look at it from an economy perspective. I believe that a huge sporting extravaganza is an economic kicker. You suddenly have an event which creates new avenue of enterprise at various levels.

Lets try and break it down, using the IPL as an example.

Direct Impact

Players - Earning significant salaries, which will eventually trickle into the economy
Broadcasters - Huge advertising revenue due to popularity of sport
Team Owners - Revenue generation through broadcasting rights, gate receipts and merchandise
Stadium / Venues - Match hosting fee
Government - Through tax receipts (In the context of IPL, this may not be entirely accurate

These stakeholders are direct beneficiaries of hosting a huge sporting event. Obviously the trickle down effect from each of these parties is significant. At an individual level, there wont be a significant impact to the above mentioned stakeholder (except for maybe the players) as most of them are fairly well off in their current life scenario.
The life altering impact is on a different set of people, mentioned below.

Associated Impact

Food Vendors - In and around the stadium there are large number of food / refreshment vendors who suddenly have an additional target audience ready to consume.
Merchandiser - The small guys manufacturing and selling jerseys, banners , placards, whistles, hats, accessories etc..
Event Management Firms - Organizing and managing such events is a professionals job
Tourism - Loyal fans travel along with teams they support

I may have missed out a few, but the point I am trying to make must be clear by now. It provides opportunity to a bunch of small guys to grow their business, expand their horizons and strive for more. These events also facilitate fans to consume more than they otherwise would have.
When the IPL shifted to South Africa last year, it generated over 1billion rand for the economy. That is the kind of impact sport makes.

Sport : Life

2010-03-31T23:40:00.001+05:30

Year 1999:
Bayern Munich - 1
Machester United - 2
(Manchester United score in the last few seconds of the game; Bayern Munich lead for most of the game)

Year 2010:
Bayern Munich - 2

Machester United - 1
(Bayern Munich score in the last few seconds of the game; Manchester United lead for most of the game)

Sport is such a great leveler....... Don't get me started on life now....

Economy Overview

2010-03-09T23:06:00.000+05:30

World Economy

The world is recovering from the shocks of the most severe recession in recent history. It was the first time since world war two that the global economy has substantially contracted when compared to previous years. The acute phase of the financial crisis has passed and a global economic recovery is underway. However, the recovery remains fragile and is expected to slow in the second half of 2010 as the growth impact of fiscal and monetary measures wane and the current inventory cycle runs its course. Economists believe that the baseline scenario for global growth would be 2.7 percent in 2010 and 3.2 percent in 2011. The world can be classified into slow growth economies like U.S.A, U.K and the rest of Europe who are grappling with huge fiscal deficits and significant debt, and faster growing Asian countries which have remained well insulated from the turmoil.

The world economy is trudging towards recovery but faces significant risks which can hamper growth. The reduced impact of the fiscal stimulus, sovereign defaults or banking failures could plunge the world economy back into recession.

Indian Economy

The Indian economy witnessed an average GDP growth of over 9% from 2005-08. The global financial crisis contributed to the deceleration in annual GDP growth to 6.1% in 2009. India escaped the brunt of the global financial crisis because of cautious banking policies and a relatively low dependence on exports for growth. Domestic demand driven by purchases of consumer durables and automobiles has emerged as a key driver of the economy. During the slowdown imports and exports were severely impacted. The economy is back on track, with industrial output improving every month. The government expects GDP growth to be over 8% in 2010 and above 9% from 2011 onwards.

The risks that India faces are more external in nature. The risk of the global economy experiencing a downturn, sovereign default or failure of banks threaten India’s impressive growth rate. The fiscal deficit for 2009 was at 6.9% of GDP is a cause of concern for the economy. The Finance Minister has pledged to bring the deficit down to 5.5% of GDP in 2010 and further to 4.8% in 2011. Improvement in this situation will allow better credit access to corporate as government borrowing will reduce.
The situation remains linked to how the world progresses but the clouds are less dark now.

Theme 2010 - Consolidate

2010-01-02T13:12:00.003+05:30

The ship has just made it out of a dangerous storm. The port is visible but yet at a distance. The key question is should we make a dash for the port or spend some time and repair the holes in the ship before proceeding.

This past year has helped separate the truly resilient individuals, businesses and countries. Some of it is fortuitous and some of it is due to foresight. The point is, we stand at the threshold of a new world order being created. It needs to be built with careful preparation. Adequate time needs to be spent in the repairing and then moving towards growing.

My theme of the year is careful rebuilding.

Mutual Funds; hmmmmm

2009-12-29T21:58:00.000+05:30

We work really hard to earn money, and then invest it with hopes of better returns. People who do not actively track stock markets prefer to invest in mutual funds. These are considered safer than equity.

The key to succeed in the stock market is to buy low and sell high. Easier said than done.
More than 70% of mutual funds do not out perform their benchmark indices. Fund managers are highly educated, intelligent and trained people. Yet most do not need beat the index. The above graph is an indication of how badly the fund managers timed the market in 2009. They had the highest cash holding in their portfolio when the market was at the lowest point.

This leads to me ponder if its worth my while to bother investing in mutual funds when I can easily invest in an Index ETF (exchange traded fund).

Not Healed

2009-11-26T09:22:00.000+05:30

The wounds are still not covered, the tears have not yet dried. One year to the aftermath of the Mumbai attacks, the people are still hurting. I will refrain on harping the rhetoric (the media is doing that with great fervour). The fact is, that it still hurts.

As the months passed by, the degree of conversation related to the attacks quietened down. Why did we stop talking? I am not referring to questioning the system, accusing the politicians, shouting for accountability on T.V channels and blaming security lapses. Why did we stop talking about our individual pain? (This question is for me too, I waited a full year to write this and don't know what stopped me).
You cannot heal until you talk.

A recent newspaper report mentioned that Mumbai bounced back faster from its trauma as compared to New York and London. It just made me wonder, what choice did we have? There was limited options of venting our anger. Apart from the protest march, most of the anger and pain was internalized and made us more cynical.

I dont have any solutions, but talking might help.

I Want

2009-11-12T21:39:00.000+05:30

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Where the market goes..

2009-10-30T12:05:00.000+05:30

Liquidity, you crazy crazy drug that fueled the mother of rallies since March, when does thou disappear?

Since Mar09 most benchmark indices have doubled across all geographies. The main reasons attributed to this sudden rally has been liquidity. Central banks in their quest to encourage growth have made money cheaper and more accessible. Some of this has paid of and signs of growth are visible. The dilemma that Central banks now face, is how to structure the withdrawal of this liquidity without hampering growth.

In my mind, the market just realized that you cant fall of the floor. Sometime in march the market felt we were at rock bottom and going lower wasn't an option. But the impact of this realization has been rather startling, a one way rise to current levels.

Now the next question that comes up, is if this rally is sustainable. The global growth story is still hazy, the U.S. and Europe continue to grapple with issues they haven't fully understood. This leads me to believe that maybe being patient with your cash would be a good option.
The critical issue is whether the market will sustain without liquidity and higher interest rates.
Only the central banks know when they will reduce the morphine dose..

A Little Bridge

2009-10-16T22:37:00.000+05:30

Each year a fresh batch of business graduates step into the corporate world. New ideas, high zeal and a sense of purpose not witnessed since Jawaharlal Nehru's 'tryst with destiny' speech. The fundamental quality of over confidence rides high over any sense of rationality.

The situation changes drastically once work begins. All the illusions of acquiring companies, rolling out businesses and expanding capacities are shattered into pieces. Realization sets in, that to do all these activities one needs to spend time on the ground. The planes of reality are significantly different and challenging. The discomfort in the grind consumes a few, who move to cooler climes like migratory birds.

This a big dilemma, as you cannot stop people from dreaming, at the same time work on the ground level is important. So the best solution is to connect these two little islands of reality and idealism. And here is when the little bridge of phased induction makes life comfortable.

Attaining Happiness

2009-09-18T20:27:00.000+05:30

There lived a young boy named Gopi in a small quaint village in central India. He was an inquisitive young teenager with a philosophical bent of mind. He was passionate about things around him. He kept probing into matters far deeper than people his age normally do.

Close to his village was a great monastery. The monk who resided there, was highly revered. People came from distant lands to seek his advice and blessings. Gopi often visited the monastery, sitting there and meditating. The monk observed Gopi but they never exchanged more than a smile.

One day Gopi approached the monk and asked him, "How can I always be happy?"
The monk reflected on the question and responded, "What makes you happy?"
Gopi replied, "Chasing my pet hen in the garden" , to which the monk said, "pursue it".

Gopi thought the response was fairly mundane, but did not want to question the monks wisdom. After all, this monk had followers across the country. He did as the monk said, and he had to admit; there was a strange sense of joy. Over time the joy subsided. After six months he visited the monk again.

Gopi asked the monk, "How can I always be happy?"
The monk again replied, "What makes you happy?"
Gopi replied, "Tilling my farm land", to which the monk said, "pursue it".
Gopi had hoped the response would change on this occasion. Again he controlled his urge of questioning the monks response. As time went by, Gopi was intensely focused on his farm land and crops. He did feel a divine satisfaction when he was on the farm. The same level of joy was absent once he got home. His pets did provide him with moments of joy. He felt he needed something else, he was a bit distracted lately. He decided to visit the monk again. He resolved that he will question the monk further this time.

He gathered courage from his past visits and asked the monk, "How can I always be happy?"
The monk again replied, "What makes you happy?"
Gopi replied, "Marriage to the baker's beautiful daughter", to which the monk said, "pursue her".
Gopi hesitated for a second, then said, "Every time I came to you with my question, you respond by saying pursue the matter. How are these related to my happiness?"

The monk smiled and said,"Every time I asked you your source of happiness, you told me a part of your dream, hence I asked you to pursue them. As you accomplished each target, your mind moved towards a new one. Happiness is a moving target of achieving your dreams. As time goes by, your goals and objectives change, you need to pursue them with vigour."

Gopi silently stared in awe. It was now clear to him why so many people approached the monk The monk did not give him the answer in the first visit, he helped him discover it before explaining it to him.
Gopi married the bakers daughter............

In Reality - There is no Versus

2009-09-14T01:16:00.000+05:30

This century is proclaimed to belong to the Asian nations of China and India. It will be remembered in history as the arrival of these two giants on the world stage. Facts and data on various parameters involving these countries have been dissected and analyzed by all and sundry. Each 'expert' has painted a new portrait and given a new dimension to the economic successes of the two nations.Constant comparisons, vivid analogies, dramatic graphs and diagrams, have all romanticized the great 'China vs India' focus.

I will try and replicate some views to highlight some observations I made while reading economist views and media reports about these nations.

Reports in China

China's economy grew by x% to reach of a figure of $y billion
China constructing a bridge to connect mainland to Hongkong

Reports in India

India's economy grew by a% to reach a figure of $b billion, but China's economy grew by x% to reach of a figure of $y billion, what does this mean?
Bandra worli sealink completed, but China constructing a bigger bridge.

These are not isolated comparisons. If you Google 'India vs China', you will find mostly Indian or American websites discussing the two countries in tandem. Read the interview of Chinese economists (click here) and then you will realize that China is not concerned about India. There is not a single mention of India in the entire article. Its we who are obsessed with them with our constant comparisons. Our media has created the drama, our economist are constantly comparing, our kids are writing essay and preparing for group discussions on this topic.

China is working on a export driven economy and India is building a strong domestic driven economy. It makes more sense to focus on our own path and channel energy towards our own goals. Probably the reason for their success lies in the fact that they are not paying attention to us. Maybe the two 'engines' of global growth need to discover their own destinies.

"My bat talks to me"

2009-09-05T20:15:00.008+05:30

In a recent interview Sachin Tendulkar was asked on what parameters does he evaluate his sports gears before selecting them. He mentioned the usual ones about his gloves, pads and bats. Then went on to say that, 'The bat speaks to him", thus he knows which one to select. It might sound ridiculous when you first read it, talking to to an inanimate object. Then you read the statement again; this guy is truly genius.

Champions in the past have often talked about the connectedness with various aspects of their profession. In all aspects of life, the dedicated champion has an additional element apart from skill, focus and luck. This zen like state of mind is when you and your art become one. You talk to and listen from your heart. You are in complete control of every movement and action. Your mind, body and spirit is totally immersed into the space of calm achievement.

One can aspire to achieve this state. Till then, keep trying is the mantra.

Crisis Rollover

2009-08-29T12:12:00.015+05:30

On the last Thursday of every month, the analyst appears on the television discussing the rollover in the derivatives market. Rollover is a term used to describe the closing of a derivative position for one month and opening it for the next month. Its rather strange that we have been rolling over one crisis after another, without much to cheer, for the last 18 months. Here is a quick recap of events.

April 2007 - World wakes up to the concept of subprime mortgages and its implications.
June 2007 - S&P downgrades over a 100 bonds.
Aug 2007 - Large banks halt redemption's for a few fund offers.
September 2007 - Central banks increase liquidity by reducing interest rates.
October 2007 - U.S. Treasury announces the HOPE NOW initiative, an alliance of investors, mortgage market participants.
December 2007 - U.S announces the Troubled Asset Relief Programme
January 2008 - Stock markets across the world start collapsing.
March 2008 - Bear Stearns is acquired by JP Morgan Chase in a distress sale
September 2008 - Lehmann Brothers collapses.
October 2008 - There is total freeze in the credit markets.
November 2008 - The U.S. Treasury purchases a total of $125 billion in preferred stocks in nine U.S. banks.
December 2008 - The U.S. Treasury authorizes loans of up to $13.4 billion for General Motors and $4.0 billion for Chrysler to bail them out.
March 2009 - Stock markets bottom out and reach the point of despair.
April 2009 - Swine flu scare grips the world.
June 2009 - India receives deficient rainfall and the threat of drought looms large.

Its been a tumultuous few months for everyone. In this typhoon the small fry have been really badly hit. It seems to me, and I say this without data, that the tide is turning. The news cycle will move towards positive and so will the rollover.

Two Brothers - One Nation on its knees

2009-08-08T11:39:00.020+05:30

This is a fascinating tale of two brothers. They grew up together with their parents in perfect harmony. Life seemed perfect and abound in happiness. But you know these things hardly last forever. The entire neighborhood looked at them with pride and sometimes a little envy.

Their father bought them a new GI Joe action figure. This was no simple action figure, it was a unique GI Joe collectors special. One of its kind figure. The brothers loved it, they played with it together all the time. Slowly a mild discontent starting brewing between the brothers. The GI Joe being the focal point of existence. Each tried to stake a claim over it. The situation deteriorated by the day, the parents intervened to no avail. The matter got so serious that the people in the neighborhood would discuss it with great detail. Slowly the battle ground became clear. You had to be supporting one of the two brothers, there was no middle ground. There were ugly exchanges between the two brothers and their associates. The local media for lack of other stories covered this one with great excitement. True to its style, the media added new twists to the saga. Somehow the local politicians also got involved. Things snowballed out of control. The amount of interest generated reached hysterical proportions.

Some sort of resolution had to be reached. The parents could not side with one and hence tried remaining neutral. After much thought and debate they confiscated the GI Joe. One wrap on the knuckles set things right. It was now clear to the brothers that unless they resolved their differences the GI Joe would be lost forever.
Conflict resolution was difficult. The politicians thought that the issue will distract the nation from more meaningful problems, so they wanted the battle to continue. They became party to the 'resolution meetings'.
Just like when god send the devil to count the political parties in the country and the devil never returned, these 'resolution meetings' continued without progress.

The episode had far reaching consequences. GI Joe never manufactured another toy in the country. A generation of children grew up without GI Joe's to play with.
And the saga continues...........

P.S - I apologize for my lack of subtlety.

English Premier League - Overview and Predictions

2009-07-24T11:13:00.018+05:30

The biggest football league will kick off next month. Like millions of fans, I am waiting with baited breath for the action to unfold. There has not been significant action on the transfer market in England, Real Madrid have hogged all the spotlight. Lets evaluate the chances of three contenders for the title.

Liverpool
There have been no significant additions to the Liverpool team. Glen Johnson at right back is the only signing so far. The team lacks match winners and is largely dependent on the two kingpins, Stevie G and Torres. If the opposition stifle them, Liverpool finds it difficult to score. Young players like Babel, El-Zhar, Ngog etc have flattered to deceive last season.

Chelsea
The biggest change this season has been the arrival of coach Carlo Ancelotti. The team remains well balanced and the only reason they fell behind last year was due to the unsettling approach of their former coach. Chelsea are strong defensively and play attacking football. The key strength lies in their midfield. For Chelsea to win this year, they need to make sure that there are no off field distractions. They do need to introduce some young talent to ensure that the veterans do not burn out.

Manchester United
The champions for the last three years are going to find it difficult this season. Departures of Ronaldo and Tevez will deplete the attacking resources. The challenge will be to find the goals this season. The manager has made a baffling choice by signing Owen. In the past he may have pulled some master strokes but I am not sure if this horse will payout. The core defense remains the same and the philosophy of 'If the opposition cannot score, you cannot lose' will be the driving force.

Verdict
The other teams will face an uphill task catching up with the big boys. Arsenal, City and Villa seem to have interesting projects developing.
As things stand, I think Chelsea will win the title this season. It will be difficult for United and Liverpool to remain consistent this season. But football is a game where strange things happen.

Silver Joy

2009-07-05T17:10:00.004+05:30

The sky looks down from its perch,
it seems wise and gray.
The earth below observes carefully,
not knowing which emotion is more appropriate, eagerness or fear.
From the distance it hard to comprehend,
will it face the wrath or gentle caressing.

The sky, with its belly bursting,
oscillates between parenthood and headmaster.
With a raised brow it unleashes its fury.
The initial rage is hard to accept,
the pain, the sting, with little pellets attacking.

Soon the anger subsides,
gentle drops kiss earth again.
The love, the affection is overwhelming.
The silver drops of joy encompassing.

Givers

2009-06-19T17:14:00.011+05:30

A long long time ago, in a place not to far but still far away, there lived a gentlemen named Mr A. Mr A was the proud owner of a vast piece of barren land. He reared his flock of sheep on this land. The sun shone harshly upon his land, but the moon brought some relief when it rose. There was not enough water to cultivate the land, hence it was predominantly barren apart from a few sparse shrubs. Mr A was content, life was peaceful.

Due to changing economic cycles, Mr A lost money in his other ventures and needed to sell his sheep and land. He easily sold his sheep to a wandering shepherd for a fair price. His barren land however, proved more difficult to sell. He struggled and searched for a suitable buyer, but none offered a fair price for the land. Eventually Mr A met Mr B, an honest and respected gentlemen. Mr B offered a good price for the land and a deal was struck.

Mr. B wanted to use this land to cultivate crops on this land. He realized before buying the land that there was not sufficient water available. He knelt down in prayers and asked the Lord for help. After completing his prayers, he asked his workers to dig at that spot. Hoping for water, his workers find an old chest buried in the ground. Mr B discovers that this chest contains gold.

He immediately goes to Mr. A and says, "I found this chest of gold on your land, and I have come to return it". Mr A is stunned, he never owned a chest of gold. He mulled over the situation for a few seconds, he needed the money, but the gold was not his. Mr A replies in a stoic voice, "The gold does not belong to me, you bought the land and you found it, its yours." Undeterred Mr. B replies," I bought the land, not whats beneath it, please accept the gold." Mr A exclaims, "You bought the land and everything that came with it".
Neither one was willing to keep the gold.

I do not know how the story ends, but I think the message is already evident.

Valuing Ronaldo

2009-06-15T17:05:00.013+05:30

The deal has finally been completed. Ronaldo's dream of playing for Real Madrid will finally come true, albeit at a great cost. Real Madrid did not flinch to shell out £80m. The press went crazy, experts gave their two bits, fact sheets were reprinted and the whole circus played out. Obviously Ronaldo made a few wiseacre, 'Im the best' comments to add to the hysteria.

I have often wondered how these clubs assign a value to a player. It is obvious that some players perform better than others, but how much are they really worth. Basic finance has taught me, that the value of an asset is equal to the amount of cash it can generate in the future discounted to its present value.

Lets list the cash flows Ronaldo will generate for Real Madrid.

1. T-shirt sales: At the moment he is arguably the most popular player on the planet (almost in the league of Beckham).
2. T.V. rights: Clubs in Spain negotiate T.V. rights individually. Ronaldo's popularity will give Real more bargaining power.
3. Endorsements: Ronaldo will definitely attract big brands to Madrid.
4. Stadium Receipts: The best players attract larger viewers to the game.
5. Buzz: This is not exactly tangible. But Ronaldo has a habit of shocking. check this (stupid but catches media attention)

I was wondering if you could use some multiples to arrive at a value. Here are some i could think of:

1. Player Value / T-shirts sold
2. Player Value / Goals scored
3. Player Value / Assists
4. Player Value / (Wins/Games started)

I still think its more art than science. Not really sure if the managers actually care about valuations but the finance guys at the clubs surely would.

Destiny ==> Rome

2009-05-26T16:49:00.006+05:30

Less than a day before the biggest football night of the year kicks off. The Champions League final will be played in Rome. Two of the best teams competing for, well history actually. Manchester United take on Barcelona in a final between equals, there is truly no favourite.

Its the biggest match in football players life (except maybe a world cup final). The pressure, anxiety, nerves and demons need to be fought. The 'stars' will be expected to dazzle, but its going to be the 'workmen' who deliver.

As is usual in sport, its going to be the 'Reds' against the 'Blues' ( why do all sporting contests have these two colours)

And there are no prizes for guessing my loyalty!!
Victory be ours, its destined..

Clear Mandate!!

2009-05-17T17:01:00.018+05:30

Election 2009 will be remembered for a lot of things, but nobody had predicted the sweeping results. The Congress triumph, the BJP despair, the Left sent right out(pun unappologetically intended), Mayawati has more time to build statues (not in Delhi), Lalu can take a train to Bihar(on the side middle berth), Mulayam and Amar Singh can use the time to update their facebook profile (in English, they have 5 years to learn it). Who would have thought all this was possible. Let me state right at the outset that I have no brilliant insights you wouldn't have read, but I am so excited and that I am compelled to write this post. Thus a summary of events brought out by this election.

The most powerful statement made by voters this time is that extremism will not be tolerated. Extremism of any form, religious, ideological or caste based. Mr. Muthalik, beating women at pubs will get you pink chaddi's but not votes. The fact remains that India is secular not because the minority are secular, but the majority are secular.

My caste my vote; no longer true. People have matured (I hope my inference is correct) and are voting for development and visible economic benefits. Recent assembly polls and the last two national elections seem to reflect this.

Cut the negativity. The Congress party focused on the work that did in the last five years (I'm not getting into whether they actually did anything). While the BJP were harping on the 'Weak PM' line, the outcome indicates Dr Manmohan knocked them out with just one punch.

Humility. Its an under-rated virtue, but it is most appreciated. A host of politicians made arrogant statements, took cheap shots at opponents, trash talked. The endearing humility of the PM stood out and endeared the voters. The message was clear; 'My works speaks for me'.

The clear mandate to the UPA provides them with the opportunity to implement reforms they could not earlier bring about. The pressure is back on the Congress to deliver and validate the voters confidence. This election outcome leaves our country on the threshold to a lot of possibilities, let us achieve all of them.

Colour Obsession

2009-05-14T11:55:00.004+05:30

As a nation we are obsessed with fair skin. No this post is not another rant about our hypocritical view on skin tone. I am also not going to debate on the ethical stand point of fairness cream advertisements as well. This is more like a journey through our collective past, which I think shaped our mindset.

If we look back at our history and ponder over the last five hundred years and examine our rulers. First we had the Mughals of Persian-Afghan descent. Then for over a century we were ruled by the British. This era had a significant impact on our psyche. As the skin tone of our masters became fairer, our fear of the colour increased. We are victims of our past. I don't blame anyone, after all the British did dominate our existence rather brutally. And when they left our shores the fear, shock, awe,respect turned to love for fair skin. I wonder if our attitude would have totally opposite if we were ruled by a darker skinned race?

As we complete almost 61 years of independence, we are breaking the shackles. We are more confident in all aspects of life, acquiring businesses, leading innovation and driving growth (No this is not part of the India Shining campaign). The fear has reduced but it has not been replaced with equality in our minds.

You can't really blame the advertising guys behind the fairness cream ads, they are just taking advantage of a dominant prejudice (though the underlying concept still rankles me).
P.S - There is no anger directed at anybody.

Poll Commentary

2009-05-01T17:23:00.002+05:30

The great dance of the Indian democracy is drawing to its climax. The general elections are always exciting and full of drama. This time was no different, the incessant mud slinging, changing partners and meaningless cacophony littered among some important issues. The election process ends mid may.

I voted; but where was the rest of Mumbai? It is appalling that only 44% of the electorate exercised their vote. This is not very different from the last time, but the environment has changed dramatically. Mumbai was hit badly and one expected a stronger reaction from the citizens. A lot of anger was vent during the rally at Gateway post the terrorist attack, but heck the attitude has not changed. It makes me wonder that if this does not change us, then what will?

We face adversary with our chin up, but we missed an opportunity to be the change. No matter what the reason for not voting, the black dot on the finger is far more important.

Transcending Horizons

2009-04-24T11:50:00.003+05:30

I took another small step venturing further out into the world. The graduation ceremony was a culmination of our efforts over the two years. At the end there is a small sense of achievement, a little pride and renewed ambition to face the next challenge.

As I move ahead its time to ponder on the experience. Reflect on the learning and the mistakes. The voyage has been excellent, just hope the shore is also fruitful.
Ahead i move on a wing with a prayer..

New Epidemic

2009-04-08T10:55:00.005+05:30

There is a new virus infecting journalists across the globe. Its called the 'shoe-thro'. What seemed to be an isolated incident in Iraq is now proving to be a tipping point. Flinging shoes is the new method of registering your protest and being heard. Our very own defence minister got a shoe flung at him. Though it was a symbolic and the journalist did not intend to hit him, it has serious implications.

The first time this happened I was amused. This time I am a bit concerned. Is this the beginning of a new unhealthy trend. The 'watchdogs' of society are turning into wild dogs. The journalist already has a mighty weapon, the pen, now he wants the shoe as well. In the future I wont be surprised if they are requested to remove their shoes before entering a press conference!!

Exported IPL

2009-03-24T21:22:00.007+05:30

Wohoo!! The IPL is going to happen this year!!!
Like the rest of the country, I was deeply concerned at the thought of the IPL being shelved this year. After all the IPL is the single biggest eye ball magnet after Ekta Kapoor came up with 'Kyunki..' It has become a part of my April calendar.

This year the IPL will take place in South Africa. Personally I think its a great opportunity for the tournament to become truly global. Its a forced option, but it can take this league to the next level. The tournament has cemented a bond with the people of India and now it is going to do the same globally.

One may argue that for a resident of Durban it will not be exciting to watch, say, a 'Mumbai Indian' versus 'Kolkata Knight Riders'. I can think of four reasons why someone would pay to watch it.
1 - Its cricket, and South Africans are crazy about the game.
2 - Its got all the top international stars littered in different teams.
3 - A whole host of film stars lend some glamour to the event.
4 - Indians are present in every country. In South Africa there are 1.1 million to assure packed stadiums.

In my view the IPL is too big an event to ignore. It is a Rs 1000cr money spinner. Sharing this pie with another nation, albeit forcefully, is better than foregoing in altogether. An unintended consequence of this would be strengthened cricketing relations between the two nations.
This adversity definitely provides a profitable opportunity.

Political Opportunism

2009-03-16T10:15:00.017+05:30

Nothing feels like the joy success, even if it belongs to someone else. Indian politics is all about blatant opportunism and riding on others success. Take the recent example of the Congress using the new national anthem 'Jai Ho' as its campaign song. This post is not a rant on our politicians, its more about how they sense our pulse.

Every Indian was brimming with pride when Rahman picked up his two Oscar. There was a sense of national achievement, albeit half of the people did not know what an Oscar was. The movie struck a chord with the people. The Congress party swiftly connected the dots to capitalize on the popularity. The Congress party on its platform of hope for the aam admi linked itself with the story in the movie of a common man who makes it big. There is a emotional connect in the song and the theme of the Congress party.

On most occasions such political gimmicks have failed miserably, remember the glorious 'India Shining' campaign. The reason for these failures can be attributed to the lack of connection with the average person. Its great that the GDP grows at 9% but how does it translate to his life. If you can make that connection and help the common man relate to your story then your campaign is likely to be successful.

In my humble view, the Congress has pulled a master stroke with the 'Jai Ho' campaign. Time will tell if it translates into votes.
The link to one of the videos - http://www.youtube.com/watch?v=jUZblPEdEd8&feature=related

Heir Apparent

2009-03-12T17:28:00.009+05:30

I write this post after watching Manchester United beat Inter Milan by two goals last night. The self proclaimed 'special one' was no match for Alex Ferguson's men and tactics.

There has been a lot of talk about who will replace Alex Ferguson when he announces his retirement. I for one am convinced that it will be Jose Mourinho. If you look at the intrinsic quality of the two coaches there are some similarities. Both men deflect the pressure of their teams and take it on to themselves. Both are master tacticians and realize that a football match is not won by the players skill alone. They have a sense of humour but of a different nature. Sir Alex has the amiable British banter, while Jose is more cynical and subtle.

One striking similarity is their attention for detail. In his press conference Jose said he knows everyone at United. He mentioned that spoke to the 'grassman' (groundsman) before the game. It is a reflection on the amount of preparation he puts into each game.

They both have different approaches to the game, but each is a uniquely successful man. I look forward to seeing Mourinho at Old Trafford in the years to come.

New Breakfast Trends

2009-02-28T13:56:00.007+05:30

Eating out has really caught on in India in the last decade. Visits to restaurants for lunches and dinners are fairly common and occur on a weekly basis. We have imbibed a lot from the west and the most recent addition is 'breakfast at the cafe'.

A typical day for any Indian would begin with a cup of chai and Times of India accompanying his breakfast. Now the breakfast varies depending on which part of the country he is from. Parathas in the north, idlis in the south and poha in the west are the conventional choices (of course there are plenty of options and egg remains the universal choice). The reason I am talking about this, is because there is a new trend of having breakfast at the cafe. McDonalds has launched a new breakfast menu across few cities. Costa coffee and Barista already have the breakfast option.

What this means is that there is a significant number of people willing to have their breakfast outside home every morning. We have moved from traditional fare to cereals and now breakfast on the go. I would attribute this change to the effect of western sitcoms. Its not a question good or bad, these guys have identified a growing trend and are capitalizing on it. It makes the food industry more interesting now.

Now its Gold

2009-02-19T10:25:00.001+05:30

Gold the ethereal shiny metal has been in the spotlight of late. We Indians have a fairly complex equation with gold. In the Western world it is viewed just as any other asset.In India it has a lot of symbolic value, parents gift their daughters on their wedding day. Gold remains the most popular gift on Diwali. In essence, gold is not traded frequently and mostly owned in physical form.

There has been a shift in recent years. Securitazion of gold has made it more accessible and to some extent reduced its elusiveness. Gold exchange traded funds (ETF's) allows you to own gold without physically owning it. Gold is now a financial asset which is traded on an exchange along with its derivative products like futures etc..

The real estate bubble burst and the equity markets collapsed in 2008. Oil witnessed a three fold increase in price but has now collapsed to reality. During this entire period gold has been quietly rising. Now when you compare returns across asset classes gold has outperformed. Now a lot of money is chasing gold, the quintessential safe haven.

I am no expert, but I can identify euphoria. The gold rush seems to be reaching the crescendo of madness, what with all the small players wanting a piece of the action. I see the headline of newspaper in the future reading, "Now its gold.....

The graph above is very interesting. The price from 1978-80 went from $200 to $820. The nature of the current incline seems to be following a similar trajectory.

Beach

2009-02-05T12:27:00.000+05:30

I walk on the sand, with no one around me,
only my footprints follow me.

I wonder where my destination is,
as I watch the sun come out of its cover.
Illuminating this dark world.

The beach is empty, the waves are my only companions.

I venture into the water, not too deep though.
A wave hits me and I am back on the sand.
The journey is easier here, no challenges, no hardships.

The beach is filled with people now, the sun fully out.
I look behind me and realize that my footprints have disappeared.

Few people head for the water, the rest throng the sands.
I wake up to the fact;
the water is where I should venture.

Anatomy of a Trade

2009-01-22T16:08:00.000+05:30

Warren Buffet recently stated that, you only know who was swimming naked when the tide goes out. But some people just enjoy the nudity. I guess it must be fun for some to remain uncovered (pun intended). I for one, prefer to keep my trunks on..

The movement on the ticker entices a trade. The risk capacity dictates the size. The ego maneuvers the time duration. The stop loss is forgotten in the book.
The beta attracts, it titillates and it destroys. The joy in the volatility subsides when the margin calls you. The ride is over, the wallet is empty. Its time to move towards sanity.

Always on the edge

2009-01-16T17:04:00.000+05:30

It is very common to see Indian's gesticulating angrily. Whether its in the queue to purchase a ticket, or in public transport or on the road. If you speak with any foreigner about their experience with Indian people they will surely use adjectives like, 'calm, hospitable, accepting, pleasant, adjusting' etc. Almost no one will say Indian's are angry people. Genetically we are not angry people, but we still display a lot of anger even in mundane activities.

Let's take a step back and evaluate the anger. Let us suppose that you are standing in line to purchase a rail ticket; there are a lot of other people as well. One smart Alec tries jumping the queue. If he is spotted, people vent their fury in dramatic fashion. The anger displayed is irrationally greater than the nature of the offense. The reason for this is traveling by train is stressful due to the crowds. If a man has to think about something as basic as his commute, he definitely is a stressed being. Over population is taking its toll.

Let's take another step back. We better not be living in the illusion that Indian sperms are more potent, and that is the reason for our population growth. But if society treats procreation as a form of recreation, then we are in trouble. Social studies have indicated lack of education as a significant reason. Illiteracy has been identified as the root to many issues. Thus it needs to be tackled in a huge way.

This is probably too simplistic an explanation of why we are always on the edge.

'Shut'yam

2009-01-08T11:49:00.000+05:30

The investor community and markets been caught napping. The facts on Satyam have been documented and are available. Enough has been spoken on the lack of corporate governance and level of fraud. I am going to focus on what I perceive as the way forward and possible outcomes.

Scenario 1: Company Liquidates
The current situation for Satyam is extremely delicate. If we examine the last quarter numbers (as stated in Raju's letter), the revenues stand at Rs 2112cr and operating margins at just Rs 61cr. This effectively means Satyam is losing money at the net level. For a company with no cash (cash balances stated are not present) it may not be able to meet its financial commitments and fixed expenses. If these unfortunate events materialize, and no other means of financing are available to salvage the business, the company may be forced to down its shutters.
Probability: Low

Scenario 2: Satyam gets Acquired
You may wonder why anyone would want to board a sinking ship. The pragmatic answer is, only if he can repair the holes. Satyam has large holes in its accounts. Rs 5000cr of non existing cash, shrinking margins (3%) and potential client churn.
In an industry which has operating margins around 30%, Satyam's 3% looks abysmal. It reflects poor pricing and ineffective cost structures.
If a potential acquirer were to value Satyam. He would be looking at skilled employees and large number of clients. It would be fair to assume most clients would already be looking for alternatives. If Satyam manages to salvage 50-60% of its clients it would be an achievement. For a mid size I.T companies with significant cash balance, Satyam may prove to be an attractive proposition. This will be viable if the acquirer can manage to reduce operating costs and retain clients.
Probability: High

Scenario 3: Replacement of Management
Though an interim CEO has been appointed, there is a chance that other stakeholders (government, shareholders or regulators) may force a change in the management. The new management will have to inspire confidence amongst its employees and clients. Getting the business back to shape will be a long drawn process with lots of tough decisions.
Probability: Moderate

Theme for 2009 - Survive

2009-01-04T02:25:00.000+05:30

Keep your head above the water.. Breathe.. Gasp.. Oxygen.. Hang on to anything that floats.. Oxygen.. Breath.. Breathe..

The theme for this year, cannot be any clearer. And it would be fair to say, that it is applicable for all spheres of human existence. We don't know when the haze will clear, not sure how deep it is either. What we do know is that its real and its going to be around for a while.

As the fog makes its presence felt, businesses feel the pinch. Probably defaults may rise. Litigation may raise its ugly head. Skeletons will fall out. (Watch out as Satyam unfolds)

At the individual level, expect your biscuit packet and your pay packet to be smaller. Drink less, eat less, spend less is the new mantra. (Helps you loose weight in the process)

Since life moves along a circular path, things will be bright again. The sun will rise brighter, the coffee will smell stronger and the food will taste better. Till then, stay afloat!!

Understanding Jihad

2008-12-31T17:51:00.000+05:30

I have debated on writing on this topic for a while, now I feel it’s a pertinent issue to tackle. I have to confess I don’t have all the answers but this is an honest attempt at trying to break down the concept of Jihad.

The word Jihad does not mean holy war. The idea of being sent to heaven by killing people in the name of religion is highly misplaced. There is no place for violence and killing of innocent people. The term Jihad was used in the context of ‘a struggle within oneself’. It means fighting your vices and walking the righteous path. It is very easy to distort the context, and ingrain into impressionable minds that the struggle means violence.

The popular concept of Jihad being a holy war was highlighted by the media. This of course was because the idea was ingrained into misguided youth. There is nothing glorious about the attacks that they carry. They may get swayed by the romanticism of the idea, but it is their naivety which is capitalized on, by the smart masterminds behind this terror.

Somewhere over the years terror got mixed with religion, it is now time to separate them.

The Flying Shoe

2008-12-17T17:21:00.000+05:30

Its been a bad fortnight for politicians. Some have lost their jobs, some been fooled by crank callers and one had a shoe flung at him. Well its not everyday that a shoe is hurled at the President of the U.S.A. It was a surreal experience. To his credit, Dubya managed to dodge the shoes with comfort. A video of the incident can be viewed at http://in.youtube.com/watch?v=mjdXwLQrRJ8

Surprisingly the incident has not created a furore as one would expect. The middle east is hailing the journalist as a hero and the rest of the world is quite cheerful about the incident. It is sad the president has become such a joke. His actions are debatable, but the position he occupies commands respect which has been diminished. The incident itself is quite random, and thinking about it cracks me up. It is an indication of the anger of the people of the region. But what was the journalist thinking??

Dubya's rein as president has been a blessing for comedians, since he provides them with enough material. But majority of the people would be glad at his exit. Internet companies love to cash in on such freaky events. I think this game is quite a laugh. Try it. http://www.kroma.no/2008/bushgame/
http://www.sockandawe.com/

The Hoax Call

2008-12-08T12:03:00.000+05:30

A head of state received a telephone call from the external minister of a neighboring country threatening him of war. How best would you describe this scenario??

Amusing, is the first word that comes to mind. Amusing because some impersonator could manage to call the president with such ease, and then had the audacity to realistically threaten. At the moment I'm seeing the funny side of the story, but i realize the grave consequences.

It was an inane event. And to think that the president took the call so seriously that he ordered troops to move into advanced position only highlights his state of mind. It maybe a tactical move to divert attention but it comes at the high price of displaying naivety.

The whole incident reiterates the volatility of the situation, but you have to see the lighter side as well..

There is hope!!

2008-12-03T22:40:00.000+05:30

I went to the Gateway of India today, to attend the peace march. To be very honest, i was surprised by the number of people present. The attendance made me realise, that the time has come for a new uprising. The energy was electrifying.

My worry is that this tremendous energy may not be channeled in a direction. This may lead to hatred and further division in our society. I do have faith in the youth of India (me included) to convert this into a positive revolution. The first step is to convey a strong message to the politicians that their method of working is unacceptable. The next step would be to state points of action which should be implemented at the earliest. A group of people have filed a PIL asking the Bombay high court to ensure implementation of various security reports given to the government in the past. The next step is to monitor the implementation of these reports over a period of time, making the government more accountable. Finally, we as citizens must be alert and assist our government and security agencies in every possible way.

I have to confess, walking at the Gateway gave me a strong sense of reassurance and would have to the thousands present there as well.

My City Will Bounce Back

2008-11-29T11:26:00.000+05:30

It has been more than two days since my city has been under siege. Its very foundation has been attacked by a group of terrorists. We are frightened but we will not be cowed down. Our heroes are protecting us and the message they send is, ‘You can’t be harmed on my watch’. Yet I tremble and shake for the places attacked are places I have spent my life. These are the places I frequently visit. These are the neighborhoods I grew up in.

This attack has dampened the soul of the city. People are panicking and running at any sound remotely similar to a gunshot. Today I witnessed an entire street shut down in a matter of minutes because someone started a rumour about hearing a gunshot. I heard someone say, ‘this is not Bombay anymore’.

I silently pray for my city to heal. It will take time and it will need more heroes. I urge people to stand up and fight back. We will not bow down to these terrorists. The time to be afraid has past; the time to be resilient has arrived.

I do not know these heroes personally, but I have grown up reading about them in the newspapers. It saddens me that they are no more, but I stand up and salute their bravery. I can safely say that the city salutes you; Hemant Karkare, Vijay Salaskar, Ashok Kamte, Prakash More, Sandeep Unnikrishnan, police constables, NSG commando’s, army jawans, IAF, Indian navy, Marcos team of the navy and all others involved working behind the scenes. We are proud of our protectors.

Enjoying Cynicism

2008-11-19T19:05:00.000+05:30

I am an optimist most times, but am truly appreciative of cynicism and dark humour.
Recent events on the global economic front and its trickle down effect on b-school students is a situation compelling to bring out cynicism amongst everyone.

I find doomsday predictors fascinating creatures, they first make sweeping statements and later bite their tongues on being proved wrong. Personally i feel it doesn't make sense being a doomsday predictor, cause if the world does end how will you gloat on your accurate predictions.

Coming to the recent wave of negativity and cynicism on campus. At some level it is justified, but rather not dwell on it for too long. It is the perfect opportunity to practice the art of dark jokes, but do not believe in the negative rhetoric.

Life goes on, the sun will rise again, the wind will blow and more importantly everyone will get good jobs..

Separating Skill from Luck

2008-11-12T23:39:00.000+05:30

All your life you have cherished the moments of success and rued missed opportunities. But the manner in which you react mentally to both situations will be drastically different. Before explaining myself I intend to make a dramatic declaration. A lot of people have made it through life riding their luck.

Let me explain before the knives come out. Key events in life determine the direction it is going to take. At such defining moments if destiny favours you, things appear sweet. Now the question you need to ponder on, is did you deserve the success because you are skillful or you just got plain lucky?

It is almost impossible to separate the contribution of skill and luck in your success. The key is to realize their existence and identify their role. In an ideal world success would come from 99% skill and 1% luck, but there is enough evidence to believe otherwise.

Economy jokes (Inspired by Leno)

2008-11-01T11:31:00.000+05:30

The economy is so bad - Mukesh Ambani is shopping at Big Bazaar searching for discounts..

The economy is so bad - Azim Premji is using CFL bulbs to cut his electricity bill..

The economy is so bad - Jewelers are selling vegetables as a side business..

The economy is so bad - Students are moving from Barista to cutting chai..

The economy is so bad - Mcdonalds serves only Vada pav now..

The economy is so bad - Kids from Malabar hill and JVPD are travelling by BEST bus..

The economy is so bad - Restaurants are checking if u are employed with an i-bank before allowing u to enter..

The economy is so bad - People actually want to study instead of work now..

The economy is so bad - I may be making jokes for a living!!

Equity Flutter

2008-10-27T13:27:00.000+05:30

The butterfly flaps its wings in a distant land. The screen on the monitor blinks. the roof falls off. An old man is stumbling in the wind. A young man is trying to fight the wind. Gravity makes its presence felt. Some crazy new stories are written. A few tears are shed. A baby crying. A home sold. Purchases delayed. Gold stops shining. The sun looks dimmer.
Its amazing how a small crack in the dam can bring the structure down.

Sit back and let Equity flutter.

Fired or not, Decide!!

2008-10-17T20:36:00.000+05:30

Tuesday: Jet Airways and Kingfisher Airlines enter into a ‘strategic alliance’.

Wednesday: Jet Airways announces it will lay off 1800 employees who were on probation.

Thursday: Naresh Goyal, chairman of Jet Airways, reverses the decision saying it’s a ‘conscience call’.

This was the sequence of events that panned out in the last few days. There are some very important aspects which I felt compelled to discuss.

Given the general economic slowdown and the specific problems that the aviation industry is facing, cost cutting measures are inevitable. Hence the management would have spent considerable amount of time to deliberate this decision. Given the recent alliance this step indicates a well thought out plan to save the airline from going bust. Now the sudden change in decision is a complete shocker.

Let’s consider Naresh Goyal’s statement that he felt guilty after sacking his employees purely on face value. A seasoned businessman like him would not confront logic with emotion. As a manager you would have to take tough decisions to solve problems. I understand the pain of firing employees but I am sure it would have been done after considering all other options. The company is at stake, creditors are waiting for their payments, revenues are dropping and thus you need to cut the flab. From a managerial perspective this event is a sham. You take a decision after due consideration of all factors (moral and conscience as well) and then let things play out. It would be interesting to observe Jet’s future now.

Another possibility could be political pressure. We had one minister go on air and claim he had a ‘chat’ with Mr. Goyal. Another extreme right wing politician was seen ‘listening’ to the fired staff’s woes. There was more than a hint of potential trouble. The dilemma remains, should politicians interfere in business????

Naresh Goyal made it clear that he was not party to the original decision. It was a rather naïve statement, come on, we are in India, the promoter (and chairman in this case) has to have a say in such a critical decision. Imagine how red faced the CEO will be when he read the statement.

Signs

2008-10-12T21:50:00.000+05:30

I am a great believer in signs, indicators, signals, pointers or whatever you want to call them. By signs I mean bits of data which help us infer or conclude something. These cryptic messages are linked to the event but do not have a direct bearing on the course of the event. The stock markets have been in turmoil for the last few weeks and I have been struggling to search for signs which would indicate some sort of a bottom to the market.
The first sign was a newspaper report about some investor who had bought stocks recently with money he had saved for his sister’s wedding but lost more than 70% of his capital. This loss means he has to postpone his sister’s wedding. It is truly sad story, but highly clichéd as well. Don’t want to criticize the media, as it is not the intent of this article, but they need some imagination. Over the last week I read three similar articles in different newspapers. This leads me to conclude that some sort of bottom is being formed. The greater fool theory states that the value of an asset appreciates till you can find someone else who will buy it at a price higher than yours. In January we ran out of buyers, hence the great run came to a halt. The more I read articles of this nature, the more convinced I will be about my conclusion.
The second sign is the irrationality displayed during this week when stock markets across the globe tumbled 15-20%. The great panic and unprecedented has to be equalized by an equal and opposite force, albeit for a shorter duration. This leads me to believe some sort of a bounce in the markets. Once the irrationality is out of the way we can hope for some stability.
While I continue searching for more signs, would hope you (reading this) look out for some as well, and if you do stumble upon any, inform me.

Kites

2008-10-05T14:24:00.000+05:30

The biggest test of life lies ahead, i ponder,
Hoping it will soon be over.

Some kites will take off, some go up and then come down and maybe a few wont take off at all.

They say the future lies in your own hands,
but all life is written by same hand.

As these thoughts fill my mind and I miss the point
Life itself is an unending test.

The last laugh of Fixed Income Securities

2008-09-29T20:27:00.000+05:30

Equity traders and investors have never had it better than the period between 2003 - 07. The benchmark indices of the Indian equity markets, Sensex and Nifty, gave an annual return of over 40%. It was almost unimaginable to invest in fixed income options and mentioning that you invest in these products was taboo.

Cut to 2008 and I can assure you investors in fixed income securities will be smiling smugly. And equity traders will say they did not 'listen' to sign of excesses, thus they blew up. Soon the stories of sold homes, cars and gold to repay leveraged positions will trickle it. The media will have a field day running these stories (I admit equating Dalal street to Mahalaxmi racecourse is fun).

Some introspection will reveal how much of the past success was luck. Obviously its hard to accept its luck and not skill and its even harder to segregate the impact of each element. But honestly i can say some degree of certainty this cycle will repeat again. The simple reason for this is the human tendency to get complacent when the going is good. Danger evokes caution, fear curbs the natural risk taking ability.

While i write this hoping equities will bounce back, i accept 2008-09 will be the years of fixed income securities. So let them enjoy this time and do not grudge their success, respect it, because it is built on caution, planning and patience.

Stumbling Giants

2008-09-22T12:13:00.000+05:30

Probably not the best time to be a finance student hoping to get a job. Two of the big five I-banks gone and few other companies hovering close to bankruptcy surely makes me shiver. But hey, wise people say the Indian economy is resilient (I have to believe that, need a job soon).

My job prospects aside, let’s look at the larger picture now. People hopefully will not be crazy in the future and be cautious of new derivative products (ah who am I kidding, wait till the next bubble). Insurance companies will do what they are supposed to do, sell insurance and not dabble in complex derivative products. Banks will be cautious and watch whom they lend to. Governments will play an active role in clearing the mess. The global economy is probably in a recession it is just a matter of accepting it, but things will get better. All this is possible in Utopia, but the lessons here are hard hitting.

As I reflect on these points preparing myself for interviews in the future, the perfect line hits me. I will say to the recruiters, ‘Sir, I am a finance student, can I sell soaps at your company’.

Transfer Madness

2008-09-12T19:28:00.000+05:30

September 1st was the transfer deadline for the English Premier League. The last few hours witnessed a mad scramble. Robinho signed for Manchester city, yes you read it correctly, city.. Well Man city was bought over in a dramatic takeover. Berbatov joined United at the last moment. i can only imagine the excitement that would have descended over England. If you are reading this article and not sensing the madness in the whole transfer system you are not passionate about football. But thats not the objective of this article.

I write this wondering when we in India can enjoy this madness. Cricket is the only game which evokes raw passion in the country. We all support the cricket team, but there is no rivalry amongst us. The IPL is a step in that direction. Soon the country is being divided into its favourite teams. The first edition of IPL provided a glimpse of what can be expected. So now when we are discussing 'our' teams with friends, and that team is not India.

Now imagine in the next edition of IPL, the Bangalore team attempts to 'buy' Sachin. This is blashpemous, it is unimaginable. People will take to the streets in protest. If you can feel the pulse of what i am talking about then you will be in a position to relate this with football in England. Every year there is drama, excitement and entertainment.

I look forward to this madness hitting our country. It will herald a new era of public involvement and stir passions like never before.

States of Gas

2008-09-05T15:58:00.000+05:30

Gas is appreciated mainly by two sets of professional. First scientists in a chemistry lab and second by MBA students. The reason for affection is entirely different. During the course of this post I will compare and contrast the various forms of gas available in nature and in b-schools. For those unaware gas in b-school parlance signifies the meaningless ‘gyan’ rambled by occupants.

Nitrogen (N₂)

It is the most abundant form of gas available in nature. Like in nature it occupies 78% of b-school environment as well. Harmless on the surface but can develop into a deadly concoction when mixed with other elements.

Oxygen (O₂)

This is the basis of life. These individuals provide the substance in the course. Again rather unfortunately only 21% of are in this state. It is due to the existence of this form of gas that a b-school is a tolerable place.

Ammonia (NH₃)

This one stinks. And it really is one that you should run away from. The strange thing though is that when you mix ammonia with the some other ingredients it can produce excellent results.

Nitrous Oxide (N₂O)

This one makes me laugh, I mean literally. Not for no reason is it called laughing gas. These characters on campus make life easier.

It is amazing how things connect, who would have thoughts lessons in chemistry play out in management.

Why we don’t Short Sell

2008-09-01T14:12:00.004+05:30

We Indians are a strange lot. World over we are famous for our culture, food, big grand weddings and our emotions. It is strange how famous we are the world over for wearing our heart on our sleeve. There is nothing wrong or right about this characteristic but understanding the limitations it creates is very important.

Short selling is a derivative contract which involves selling a stock without actually holding it with the anticipation that the price will go down. The investor thus makes profit which is equal to difference in the selling price and buying price. People short stocks when they are pessimistic about the future. Now here lies the dilemma for Indians. Most Indians are optimistic and do not wish badly for others, especially for personal gains. So even if there are strong signs of a stock moving down most would let the opportunity pass. On the other hand, if there was an opportunity to go long (exact opposite of shorting) people would be more willing. This may be due to a feeling of guilt that you have driven down the price.

It is strange how emotions cloud our judgments. The philosophy of taking decisions based on data, leaving emotions aside is a skill we need to develop. Money gets people a bit emotional, but discipline is the key to making consistent profits.

In defense of Subtlety

2008-08-25T11:44:00.000+05:30

I stand amongst the last few people guarding the citadel of subtlety. With me are a few brave warriors who value, cherish and fight for subtlety. It is a tough battle, but if it was easy then it would not have been a battle. Some might feel that this article has no point, but if you feel that, then you validate the title of this blog.

Most people like clarity, even in our humour. They kill the jokes a hundred times over with explanations and elaboration. The not said often has more value, enjoy it and appreciate it. Imagination is a powerful tool to appreciate subtlety. A little guessing never hurt anyone. By no means do I recommend deliberate obfuscation, but a little cloud cover makes the atmosphere beautiful.

As an ardent admirer of the unspoken I request more support in my sojourn to promote greater subtlety.

Dreams

2008-08-18T14:38:00.000+05:30

“Dreams are not those you get while sleeping. Dreams are those that don’t let you sleep”. This is what Indian boxer Akhil Kumar said after he beat the world champion at the Beijing Olympics.

Probably even he does not know how powerful this statement is. If you dissect it carefully it talks about three aspects. First is the importance of dreaming, nothing new here. Second is the implicit burning desire to achieve your dream, again lot of people talk about it. The third and most critical message this statement sends is that don’t rest unless you have achieved your dream. Motivation without direction and direction without motivation is of little use. To be a success these two drivers have to walk together.

A not so wise man once commented, “To achieve something you need to dream and to dream you need to sleep”. This not so wise man happens to be me.

People often miss the second and third message of Akhil’s statement. There could be various reasons for this. A large number of people are scared of achieving the dream because all their life they live to achieve that dream but they are scared that after they get it, life will lose its meaning. It is like their secret source of power which drives them in life. To these people I say, dream more again and again.

To the people who don’t have a dream, find one.

Why i will be nice..

2008-08-13T18:09:00.000+05:30

This incident took place over a year back. It left a strong impression on me and hence i decided to share it.

Really weird thing when I was returning home from work.. I took a cab from Metro to my place and went thru marine drive.. the fare was 24 bucks.. so i gave the guy the money and he says "Saab dus rupaiya wapas le lo, aaj bahut dhanda kar liya (there was a bus strike in Mumbai that day)... Mein taxi Girgaum me park karne wala tha to waise bhi ussey direction mein ja raha tha, aaj ke liya itna paisa bahut hain"..
Coming from a poor man, I was stunned.. I obviously argued with him and said, this is his money.. So for about 5 min we were arguing in the middle of the road...But he refused.. And i saw the satisfaction of anhonest man in his eyes.... Can u imagine a Mumbai cabby taking less money.. Its a good turn that will pass on...

This incident has left a lasting impression on me.. Its made me realize that greed is not all pervasive.. Kindness, humility and honour are still alive.. It is upto me to display these characteristics in the future.. I truly hope more people proudly display these traits more often..

Quick Gun Feedback

2008-08-11T15:00:00.000+05:30

I was invited for a preview screening of a English remake of a Tamil movie.. The producers wanted to get feedback on the movie before its commercial launch.. So before the movie, i was part of a focus group which focussed on the promotional aspects of the movie.. After the movie 400 people were asked to fill a quantitative questionnaire.
Honestly the less said about the movie the better..

The purpose of this article is more to analyze the method and relevance of the feedback.

The objectives of a movie maybe many, it could be to entertain, provide a message, medium of artistic performance etc etc.. Hence a movie has to be targetted at a specific audience. It is upto the movie makers to decide how to translate the idea from his head to the screen.

the real question is about the usefulness of the feedback..

- Negative Feedback, i really doubt if the producer would be willing to change the product after its complete.
- Selection of respondents. wrong sampling can make the director change his mind on the movie. (if the sample consisted of more people like me, the movie would never be released)

It was a really random experience to be paid for a movie and fill out a questionnaire at the end of the show. It was a bit surreal. I realize now, that a film critic has to suffer a large number of stupid movies and then write about it.
Finance is a safer option!!

Written Script

2008-08-09T11:13:00.001+05:30

AIN; the legendary warrior of the woods,
Lay wounded in the muck by the river bank.
His body carried many a scar,
Warm blood trickled out of his open wounds.

Each painful breath blew away some dust.
The shooting pain made everything numb.
He lay there, smelling the sweet soft soil,
Thinking he is soon going to be a part of it.

With great pain he looked towards Heaven,
Gasping aloud, “Is this my script’?
Then there was lightning, thunder rumbled in the distance.
The wind whistled through the trees

Droplets from heaven gently caressed the warrior.
The storm grew harder, the river got restless.
The pain heightened his awareness, arousing some fear.
The darkness seemed all encompassing.

Then rays of light journeyed to Earth.
AIN – The Warrior, managed a wry smile.
He knew his Maker had answered.
Destiny demanded a new victory tomorrow.

Opening Thoughts

2008-08-08T18:44:00.000+05:30

So ive finally decided to write.. an impulse decision spurred by some arbid comments..
i used to write earlier but never shared my work. so in a sense im coming out of the closet. (pun unintended)

Im a bit volatile and irrational at times, so its not surprising that the blog makes its debut during the strategic management class.. so while i listen to some stupid presentation of a companies vision i decide to put down some of my own stupid thoughts.

so this space is gona be my area for making sarcastic comments, observations and theories..

till the next time.. cheers..

p.s. for any complaints about the blog layout contact aditya patil
Comments and critcism welcome,,