A = P(1+r)^n

Get him out early! He has to attend medical school!!

2011-06-24T01:04:00.008+07:00

Age is tie-breaker on MBBS list

what is is age is going to get real confusing. does it begin when the sperm fertilises the egg or the baby is delivered !!!

2010-10-14T22:32:00.001+07:00

For Health and Wealth : - GO RETRO

2010-10-06T22:53:00.000+07:00

My bet is on S Ramadorai to head Tata Sons

2010-03-14T14:57:00.001+07:00

Mc Donalds and subway will become cheaper than local restaurants

2010-03-06T21:50:00.000+07:00

Bihar freed from resource curse, hence the economic surge?!

2010-02-24T02:13:00.000+07:00

Happiness occurs when a good stock is held for 10 years, and bliss after 20.

2010-02-18T01:46:00.001+07:00

Toyota under a full body scanner. A normal person will have atleast three defects!

2010-02-17T17:13:00.000+07:00

Gunit Chadha, Deutsche Bank India, will create a Maruti!

2010-02-17T01:58:00.001+07:00

Bollywood recently discovered that the world likes good dysfunctional people

2010-02-13T02:38:00.001+07:00

Warren Buffet may leave Berkshire mainstream

2010-02-12T18:05:00.002+07:00

Where Toyota goes today, will Japan go tomorrow ?

2010-02-11T02:29:00.002+07:00

real estate is the opiate of the masses

then and now!

2007-10-03T13:39:00.000+07:00

Wipro's m-cap run continues

THE never-ending bull run in the stock price of Wipro has inflated the value of the company to stratospheric levels.

At the end of trading on February 9 (2000) , the market capitalisation of Wipro was around Rs. 1,15,000 crores. Seven trading sessions later, it has now catapulted past the Rs. 2,00,000-crore mark. Since February 9, Wipro has been locked in at the upper end of the circuit filter on all trading days. At the closing price of Rs. 8,928.65 on the National Stock Exchange on Friday, Wipro's market capitalisation stood at Rs. 2,04,953 crores. It crossed Rs. 1,00,000 crores only on February 2.

The stock now trades at 755 times the annualised per share earnings of the nine months ended December 1999. Significantly, the Wipro stock is also trading at close to 100 times its annualised revenues per share for the nine months ended December 1999.

the full news story here

Wipro has grown many times over in the last seven and a half years... its market cap is now rs 80000 crore, not even half its peak in feb 2000.

India - clean up ur backyard

2007-09-28T19:46:00.000+07:00

Video shows Japanese journalist 'being shot deliberately'
Warning: video contains graphic content Here

sanitation is not india's strength . now, it myanmar has got dirtier and the world is compelled to look. George W Bush has said that every civilised nation "has a responsibility" to stand up for the people of Burma . here. Sadly, i think, India, like in the past, will say a few worlds a look the other way. this attitude runs deep in all of us. It is OK as long a guy beats in wife inside his house. similarly what burma does with in its borders is an "internal issue".

sadly, poor sanitation spreads disease too the living room too.

and the world and especially india must never forget Elie Wiesel's words.

Sometimes we must interfere. When human lives are endangered, when human dignity is in jeopardy, national borders and sensitivities become irrelevant. Wherever men and women are persecuted because of their race, religion, or political views, that place must--at that moment-- become the center of the universe.

stealing goes around, hopefully good too!

2007-09-18T18:24:00.000+07:00

Vangal seeks his share in Cambridge Solutions
8 Sep, 2007, 0930 hrs IST,R Sriram, TNN

MUMBAI: A battle has erupted between serial entrepreneur Ramesh Vangal and his former promoter colleagues in Scandent Solutions over a delay in the fulfilment of certain conditions in their agreement.

People close to the situation said Mr Vangal is angry that he has not been given his share in Cambridge Solutions — the Indian subsidiary of Scandent — as promised. here

why ICICI ventures shouldnt buy into Scandent

Friday, October 21, 2005

decent people dont buy stolen goods. decent people dont buy stolen goods even if its paper wrapped to mask it identity. here

A lot of gas in the Indian economy!

2007-07-17T01:02:00.000+07:00

i dont mean the fluff in the economy but the real gas! there is gas everywhere - from the east coast , the KG basin and the cauvery basin to the coal bed methane in west bengal and soon other nothern states like jhartkhand, bihar...and oil and gas in rajasthan and gujarat..

the quantities and plans spoken of are too huge for me to pretend to comprehend.. pipelines from east to west, along the east costs and lot of another places.

there will city gas, a/c will run on cng and so will the car , bike and even trucks...some reports say 30% of the country's petrol and diesel use could be replaced by cheap and clean gas and i think this is conservative.

i have no doubt whatsoever that the gas which will surely begin to flow by next year end will lower the costs in the economy and put a lot of money in peoples hand to spend on other things.

there is very little clarity how the cng game will play out... maybe the few readers of this blog can help fill in...

wisest words on competition from a teenager

2007-06-02T16:14:00.000+07:00

i have read a bit of management theory on competition but never come across such words of wisdom - like those from a student who in spite of his family difficulties came third in madurai district in a school exam.

"I was one among the top five in the class and there was stiff competition among us, as who would emerge on top. Besides, our teachers supported all of us. Ultimately, this magic of one trying to better the other helped me to do well."
here

i wonder if any management guru can ever put it better.

Rajathan and India - is the growth clock be ing set back

2007-06-02T02:23:00.001+07:00

About a fortnight ago, I was gushing about the prospects of Rajasthan to an old friend of mine– the rapid economic development taking place and how it will pull millions out of poverty .

The R in BIMARU will be dropped soon , an acronym coined by taking the first letter of four very backward northern Indian states: Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh. “Social studies text books in schools have to be rewritten and Rajasthan will be ranked along Indian best economically performing states,” I prophesized.

“There is Infosys and Honda in Jaipur and all you are concerned about is the hues and strength of Rajasthan marble,” I told my friend who has his finger in real estate and construction. And the Delhi – Jaipur highway looks like one of the best roads in the country with hotels and entertainment centers on either side.

“We must go and see it,” said my ever willing to travel friend but luckily he could not draw his couch potato friend away from comfort zone to the battlefield as the recent turn of events show. Here.

Perhaps, the events in Rajasthan show that rapid economic development of India cant be taken for granted. There are many dangers to our growth from within. The clock has been turned back for Rajasthan by a few years and the same fate may fall on India unless we pay heed and act to sooth our frayed social nerves.

India - the big bully of the region

2007-06-01T13:41:00.000+07:00

We are the big power in this region. Let us make it very clear. We strongly believe that whatever requirements the Sri Lankan government has, they should come to us. And we will give them what we think is necessary. We do not favour their going to China or Pakistan or any other country."
- National Security Adviser M.K. Narayanan
here

India, i believe, often bullies its neighbors into submission using its economic and military might but when other powers want India to tread a certain path - often good - there is a cry - "we wont be bullied"

India is old civilization buy a young country. as its power grows and spreads , it should learn to use it responsibly and with much restraint.

Srilanka , is a sovereign country, and has every right to defend itself with whatever weapons are needed and sourced from where it feels is the best market - just like india, which too buys weapons from almost everywhere.

what India has done in Srilanka and continues to do is unbecoming of the great nation which i hope it is transforming itself to.

indian railway - 20% improvement in 50 years

2007-02-14T16:44:00.000+07:00

February 13, 1957: Madras-Delhi deluxe train. here

it covered the distance in 41 hours and the fastest train currently takes 33 hours and others much more . the story from the "pages of The Hindu" repeatedly says the "the train steamed". so i think it was a stream engine . either one says indian railways did a gr8 thing then or in my view - things have not improved much over 50 years. the train had "one airconditioned restaurant with modern equipment" and "three airconditioned third class coaches" also.
sadly , the ticket cost is not provided.

Only if we truly understand the past can we have a real feel for the present.
this requires we collect info on our past and present - even if it is in a random manner. more on that later.

but for now it may make sense to be thrifty in our praise for laloo yadav and his team of of railway gangmen!

TCS - the forgotten hero

2007-01-31T18:51:00.000+07:00

all lights are on ratan tata and his team for having pulled off the takeover of Corus steel, which will catapult tata steel into the global top 5 in terms of size. i know nothing about the steel industry - whether the tatas have overpaid to buy Corus , which was a penny stock a few years ago or its is truly a show of tata's mettle and benefits will be visible to all in a few years.

but what i do know is that the real heroes of this deal are far away from the spotlight and overseeing an army of programmers , which has created the wealth for mr tata to buy corus and consolidate his holding across group companies. yes, the boring programmers and the sober management of TCS to me are to the true heroes who have enabled tata's bold overseas moves.
from tata tea buys to the corus one, the debt component guaranteed by tata sons , which is primarily the holding company for TCS, has made these takeovers possible. that is, the cash flows from TCS, are being used to fund and guarantee the takeovers. in the Corus case, they even sold some TCS stock worth $2 billlion , i think.

now the issue i have with this is why sell parts of a great software company or keep it in bondage for many years to buy into steel companies or coloured or colourless water. TCS will have a market value equal to Infosys at least if listed on the Nasdaq - thats $33 billion or thrice what tatas have paid Corus. and TCS surely has a great future while larger mergers are always shrouded in uncertainties.

It is not just what you buy that counts but what you sell to enable the buy.
and in this case, the tatas , i think, have sold stupid and in the best possible scenario bought smart.
and maybe its time they acknowledge the real heroes.

global quality healthcare = global costs

2007-01-29T19:41:00.000+07:00

But indian affordability needs critical illness insurance for global quality treatment

the indian middle is aspires for global quality in almost all aspects of daily living - from cars to overseas holidays.
but a crucial aspect in this whole scheme of thing is health care - whose costs have largely been affordable to the middle class for minor illnesses.
but in the area of critical illness, the aspiration to get global quality treatment comes at a global costs as most equipment and medicine are pricey even by western standards -such as the latest treatment for types of cancer , which can cost a few thousand dollars a month.
and family member often have to make the choice whether to provide t such treatment or not.
this is tough decision and emotionally a tearing one.
there is an interesting insurance policy from tata insurance which meets this need and it i think it is a very good idea for especially the young to take one. more details here

five ways to ride the india wave!

2007-01-18T15:02:00.000+07:00

First, Name change :
Change the company name to include India. like to **** (India) Ltd from just the boring *** Ltd. If you are creative enough put India right in front of the name like India Intel (bangalore) Ltd ! this will lead to a 25% increase in m cap and never mind the results!

Second, Indian CEO:
hire an indian CEO. that will show how serious the company is about india. and in some ways only an indian truly knows how to do business in india - like the Vadafone chief who heads straight to delhi to buy something owned by a guy sitting in hong kong!

Third, Small Large India office
set up a small office in india with large plans and a large piece of land. like say a 1000 sf well furnished headquaters headed by a son of a indian minister surrounded by 1000 acres of greenery. you can be assured morgan stanley and goldman sacs will buy a part of your firm for rs 600 crore. hey, didnt they buy DSQ and pentamedia too!

Fourth , India food
make sure to serve only indian cuisine at those boring day long investor conferences. it will surely spice things up and let everyone know you are really hot on india!!

Last, List in India
then move for the kill. list your indian operations by following cairn's example. they added India to their name - Cairn India ltd . got an indian CEO with merchant banking experience .... and made some money in the process! sadly, if you cant find anything to sell to indian investors, try listing your indian head's mumbai residence in Indiaproperty.com, it may take care of a quarters profit requirements!

begin tagging children

2007-01-07T23:00:00.000+07:00

tagging children is the only solution to protect children from such acts like the incidents in Noida,
and its need can be felt more than ever. concerned citizens and corporates are wondering what can be done. this best thing, is to bring out an low cost embedded tagging solution which can be easily tracked across vast regions.
those who wish away such devices, please note the Noida crime was cracked only because an adult victim was carrying a tagging device ( a mobile phone) , which took more than half an year to track down. surely, lower cost more effective devices can be easily brought to the market.
i wrote about this many months ago. here. and hope will never have to write about it again in such sad circumstances.

Indians buy homes and foreigners HDFC

2006-12-22T02:00:00.000+07:00

almost everyone i know- and who is earning enough to afford one - is buying a house or a plot.
and foreigners are lapping up companies like HDFC and Infosys.
foreign ownership in top indian corporates especially professional managed ones has crossed the 75% mark in many cases.

i am a firm believer in free markets (here) , but i think it will be far wiser for indians to fund their growth spurt themselves rather than to leave it to overseas capital, especially when domestic capital is available.

what this current situation does is make us providers of labour to overseas investors for years to come. take singapore for example, with a population of 4 million it will hold 20% of ICICI bank, which along with it associates could employ a 200,000 people sometime in the future! so, it wouldnt be wrong to say 40,000 people in ICICI Bank will work for the Singapore government rather than India.

and if we want to buy back this capital from the foreigners, we have have to pay a heavy price in the future- or takes the help of the likes of George Fernandes!

it may make sense for the govt to facilitate affordable housing and soften the home price appreciation so, indians will use the surplus cash, effort, time and skills - not in evaluating real estate buys - but starting or funding companies, which will truly enable them to partake in their growth.

A perfect Deepavali gift - A light bulb that can save the world!

2006-10-10T17:25:00.000+07:00

what could be a better gift for the festival of lights than a CFL light bulb which saves the world as it lights up your home and lightens your electricity bills. replacing a 40 Watt buld used for five hours a day with a 11 W CFL one will save 4.5 units of electricity a month - about rs 20 - when no generators are used ! . the payback period will be about 6 months- better than any other investment i know of except Youtube !. and the bulb will last atleast 8 times longer. it will also produce less heat so will warm up homes far less. for more details on the savings please read - How Many Lightbulbs Does it Take to Change the World? One. And You're Looking At It. here.

end gathering speed for Sahara?

2006-07-25T01:14:00.000+07:00

the sale of the airline business by Sahara to Jet has got stuck and now they are selling plots in amby valley in smaller sizes and for a big discount -works out more than 50% !!- if the market sources the reporter has spoken to are to be believed. here.
it will be interesting to see how much longer they can hold and if the TBTF - too big to fail principle will be applied to them.

India bulls getting closer to India bullshit!

2006-07-24T12:17:00.000+07:00

Indiabulls, touted to be one of the larger broking houses in the country with interests in real estate as well, is said to have gone on a firing spree of late - here - in DNA . as senxex races to saner levels, companies whose business models is based on raising money from the capital markets face the axe. previous posts on Indiabulls from Feb 2005 here.

Tagging children

2006-06-26T01:36:00.000+07:00

perhaps, this is the most important post i will ever put out. last week, i saw a cute litte boy wailing in a crowded bus station. the boy obiviously had got seperated from his parents who were to board a bus to a far away place. i asked him if his parents had a mobile and he said "no". i was in a hurry and luckily someone responsible was at hand to help. (ofcourse , i wonder if i would have helped even if i had all the time in the world!)

the incident set me thinking. why cant parents but a tag on children every time they are taken out - atleast on a long trip. cant the young and the old be tagged whenever there is a need.
taking the arguement further, as and when technology based tags like RFID become affordable - why cant they be insetered under our skins so we are tagged till and after a certain age -.

may be , privacy groups may have an issue about it.

They should see the fear on a lost childs face.

beyond infy, tcs nos :A divine prediction !

2006-04-19T01:45:00.000+07:00

Oracle predicts India's rise on software horizon!
London: Silicon Valley is in danger of losing its crown as home of the technology start-up as India is on course to become the new hotbed of innovation, according to the Chairman of Oracle, Mr Jeff Henley. here.

executive greed - a view from the real top!

2006-03-17T01:59:00.000+07:00

salaries are skyrocketing in india and ofcourse the rest of the world. many Indians are now getting pay packets which compare to those in developed countries. but how of it is justified, i wonder. Peter Drucker used to say that the chief executive's pay should not exceed 12 times the lowest paid employee of the company. how much of the current executive compensation is justified given the inequalities in our country. - how many housemaids or manual workers can we employ with the salaries many indians make - ??

i found words from this news article very thought provoking.
"I have to say, if there is any change that has disgusted me in the past few years, then it is not in the least the self-dealing, the enormously high salaries, that they say are caused by globalization, but I say is caused by greed; excess that is unsustainable in a society that they want to live in. It is nothing but excess when some young men, that are just out of school, and even barely so, try to claim, in one year, that they need to serve themselves the lifetime salary of a diligent couple, ISK 200 - 250 million. We all need to slow down a little to preserve that which is most valuable to us, the stability, and we need to protect the equality which has characterized Icelandic society through the ages." - The Minister of Agriculture, Gudni Ágústsson, Iceland

Indiabulls - No questions. Only loans

2006-02-09T21:11:00.000+07:00

this ad gives me the creeps. it says no questions only loans. take your cheque on the same day. loans available for everyone , from any Company (public/private) or any government.

i know very little how the financial world works but once had the opportunity to interact with someone who knows a lot about the sector. he was developing a decision support system (a software), which would help companies assess the risk profile of the loan candidates. he was at pain to explain that the product produced far better results than the existing manual or semi automated systems in market. for example, one of the desicion rules he had implement was never to provide a loan to a govt employee, unless sanction by someone very high in the organisation. he logic was if a govt employee needs a loan , he has exhausted all low interest options and is usually neck deep in debt before he moves to the private sector - so, this segment should be ideally avoided. somwhow, it seemed very logical to me and perhaps Indiabulls could buy this software!

i think the reckless loans doled out to individuals will lead to a remake of the SME default scenario will played out post 1995 and sent many financial players deep into the red.

end of the road for sahara

2006-01-31T00:40:00.000+07:00

the sahara group is divesting its non core business like avaiation, entertainment , real estate inorder to retain its core business - a ponzi scheme. the consulting company madanated to do the stuff uses terms terms like restructing or divesting, while i would have preffered a plain term "sale". i wonder what is the reason for the sudden change in business strategy - may be something like not enough cash being raised to pay back existing depostors?

all ponzi schemes like to keep the appearence of a healthy business until they bust. i guess the same is with Sahara - sponsoring the indian cricket or offering jobs in the group to all those from sahar airlines who dont want to join jet -

i guess the end is near for the group and it hope it doesnt lead to social chaos in many north indian states.

when every human is a potential treat

2006-01-14T23:17:00.000+07:00

the finnish health service has mapped out a terrifing scenario for the bird flu - here - A third of the Finns could catch the virus and about 10,000 could die. hopefully, the scenario is purely a planning exercise and has no use in reality.

but what if such a scenario comes true - God forbid. then every human will become a possible source of infections and human have to minimise or avoid contact with each other. i dont know what kind of a society or economy this will lead to - but i am sure humans will be seggregated based only on one parameter - infected or not - as against caste , creed, religion, skin colour that presently happens.

Stock to watch -Kaashyap Radiant

2006-01-05T15:21:00.000+07:00

Kaashyap Radiant - Board Meeting on Jan 10, 2006.
this co. came out with a public issue in 2000 in think at par. then the stock touched rs 220. i personally know that the company has no operations. the stock used to trade at 10 paise six months ago. i think it is to rocket with the aid of some adroit manupulators. it is a stock to watch. it now trades at rs 2.50

a career choice

2006-01-01T13:18:00.000+07:00

"if he picks the trowel he can earn 160 rupees a day in a few years. it is a profession that wont let you down if you work hard. please advice him , sir," pleads the head mason.

the sixteen year lad , who always sports a sheepish smile and a spritely step, has his mind set on beginning a new journey in lfe - to become a clearner in a truck where he will earn rupees 60 a day on a regular basis, as against his present rupees 90 , when he finds work. he hopes to graduate to a driver in time and earn a few thousand rupees a month, perhaps double of what he will make as a mason.

the choice is far cry from the boys i know, who have to deal with supposedly critical choices at the same age - to join the science stream in high school or step into the commerce branch - a decision often debated by elders and techers to find out what is best in the interest of the child.

i am speechless and dont know what to say and the boy continues his grin.
i extend my hand and grasp his much callused young palm and wish him the very best as he traverses the risk ridden roads of our vast country.

as the sensex races ahead towoards the 10,000 , double my target for the year, i continue to spend time carrying our minor contruction work - interacting mostly with mason, carpenters and electricians.

a world where money has a different meaning - equated to livelyhood and not wealth.

synergies in M&As - landline and mobile disconnect

2005-12-27T22:37:00.000+07:00

india inc is on a mergers and acquisitions spree. overseas cos are being bought like a kid buying candy. great explanation about the synergies are being given and 1+ 1 = 4 !!
but i think the benefits of the mergers may be far less than being portrayed.

take the case of airtel, the merged the landline and mobile operations after the universal licensing regime came into place. but walk into to an airtel showroom, and they are likely to carry on only one activity - landline or mobile --- not both. - which is pretty annoying from a customer perspective

if bharati, one of most admired company in india cant pull of an internal merger from a customer perspective - i wonder what the other cos. buying overseas assets can do.

TVM Links

2005-12-21T19:31:00.000+07:00

i have just put up a new blog - www.tvmlinks.blogspot.com. this blog contains interesting reading that i have come across while browing. it is a copy of ramzlinks.blogspot.com, from whose author i have learnt much of what little i know about the net and the new economy. thankyou.

when all asset classes soar

2005-12-08T14:23:00.000+07:00

i guess it is something worth repeating and trying to understand further.
what is the significance of the prices of currency (dollar), equity, land, gold, metal, and even some agricultural commidities - rising or soaring - all at once. shouldnt there be a negative correlation between some of these asset classes. i cant undertand nor have i come across a meaniful explanation for such a movement. it will be interesting to see the long term outcome of such movement - whether any asset class with correct strongly or such a run will continue forever!

india better viewed thro western eyes

2005-12-07T01:38:00.000+07:00

westerners often have a better ability to understand india . perhaps it is because our sense s are numbed by the everyday occurances which we take for granted. i enjoyed reading this article in the NY times, some excerpts here:

Debt, once anathema for the middle class, is now an acceptable means to an end.

America, of course, went through a similar evolution: the making of a postwar consumerist economy; the introduction of credit cards and growing comfort with, and dependence on, debt; the rise of an advertising culture. India today offers the chance to watch it in real time, at a hyper, almost-out-of-control, pace.

ndian society has always been more about duty, or dharma, than drive, more about responsibility to others than the realization of individual desire.

"The value system is finishing now," he said. "We are gradually increasing everyone for himself." Luxuries are now necessities, he said, and children are focused more on earning for themselves than on caring for their parents. Indians have always been critical of what they see as American selfishness, the way children relegate parents to retirement homes so they can pursue their own lives. Now, suddenly, they are hearing such stories among themselves.

There are still only about eight million passenger vehicles on Indian roads, in a country of more than one billion people. By the late 1920's, in comparison, the United States had 23 million registered car owners.

India's growing material hunger has another downside: it is largely being sated by credit and debt.

With borrowing comes the danger of overstretching, and pricy cars purchased in Vishakhapatnam's Toyota showroom can always be taken back.

That is where the repo man comes in.

what is the meaning of asset price

2005-12-06T16:07:00.000+07:00

finding no attractive option to invest in any asset class - equities, bonds or real estate, i stumbled on a topic which i thought was very easy to understand -- "what does an asset price calculated in paper currency actually mean" - in absolute terms. i have no clue for the answer to this question

when a kilogram of rice sells for Rs 20 - it means crudely that Rs 20 meets the hunger requirement of a family of four for a day. when a share of a company trade at rs 100 it reflects the fundamental earning of the corporate - or atleast supposed to.
but what does a house selling for Rs 25 lakhs mean ? that it is equivalent to the five or ten year gross salary of the person buying it? while in absolute terms it will be difficult to evaluate the value of house , perhaps the relative method of valuing is also flawed, which may be one of the reasons for an asset price bubble in the sector.

if retail property in india peddles for a higher rate that prices in other cities like in europe , it a cause for concern. maybe people should sell their flats in mumbai and move to london - or maybe many would once they are permitted to do so by law.

why is gold soaring

2005-11-30T17:35:00.000+07:00

gold prices have crossed the $500 mark per once, for the fourth time in last hundred years, as this article says. gold is traditional hedge against uncertainity, but why should its price soar if mankind is on an uninterrupted path to prosperity as indian and global markets suggest. perhaps, investors of gold know something that others dont or its is purely a techical rally driven by flow of funds

why economists underplay ITs contribution

2005-11-28T00:35:00.000+07:00

i have often wondered why economists in india dont stress on the importance IT has played in economic growth and employement. so, i was pretty annoyed see an artcile stating that "IT contribution to employment not so good", which quotes Prof C. P. Chandrasekhar of the Centre for Economic Studies and Planning, Jawaharlal Nehru University.

the article states that: he said National Association of Software and Service Companies (Nasscom) estimates that employment rose from around 2,85,000 in 1999-2000 to just above one million in 2004-05, at a compound rate of about 28.5 per cent per annum.

However, these numbers are deceptive because of the low base from which employment in the IT sector has grown, and it constitutes only 0.21 per cent of the non-agricultural workforce in the country (NSS survey on employment and unemployment)

i hate to use such strong words, but i believe that anyone with a modicum of common sense will think otherwise.

the first thing is we have to agree that a million people are employed in the IT industry. it may not seem much in a country of 1000 million but then only 12 million people are employed by the handloom sector, one of the largest employers in the country after agriculture.

now, lets dig a bit further. each IT job, according to conservative estimates, creates one addition job through direct means. this includes the driver who ferries the staff to and forth and the cleaner at the office. so, IT is directly responsible for employing 2 million people.

now, let say IT has a direct effect on the lives on the 2 million families , considering each IT worker will influence his family. and let us take the average number in the family to be 5 - in india , there is usually an extended family - one own - wife and children and then parents, atleast.that makes it 10 million - or 1% of the population - thats pretty significant i would say.

ITs contribution doesnt end here. in my view one of the greatest benefits of IT to the "common man" is the construction activity it generates. each IT worker occupies 120 square feet of office space. that makes it 120 million square feet and at an extremely conservative rs 1500 per sqare feet that makes it 180,000 million rupees and if a fouth of it goes in labour costs, it amounts to rs 45,000 million in labour , enough to provide lifetime employment to - i dont know how many workers. (i often think the market should begin to view IT cos as real estate plays!)

and then, almost all IT workers in know buy a house, atleast a small apartment through a friendly bank loan. i wonder how much employment that creates.

a lot of IT workers have been exposed to the US culture - so, they splurge on everything from cars to candy. i think that sweetens up the economy quite a bit.

and takes places where IT activity is concentrated like Karnataka. i estimate about 75 % of the incremental GDP growth comes from the sector and allied ones.

this is plain logic which could only escape a blinkered economist. perhaps, they should look beyond the NSS survey and take a trip around blore - or sit in the desk and calculate the direct and indirect employment generated by the sector and its multiplier effect!

indian taking on more debt than americans

2005-11-27T01:17:00.000+07:00

i am pretty scared about the level of debt some of my friends are taking. i cannot understand it.
it has become so easy now to take on debt as illustrated in my earlier posts a b.

it was interesting to see a morgan stanley report echo similar views.

India has been living on debt more than any other non-Japan Asian country or even the US, says the report, which is culled from the newsreport available here.

finally, some numbers on Sahara

2005-11-24T01:36:00.000+07:00

The sahara group is making money and has a rs 1000 crore dispute with the tax dept that would put ITC to shame. anyways, this is the first time that i have come across the group numbers available here. i wont bother looking at them lest they compete with my well cooked dinner!

how the press is managed

2005-11-20T12:58:00.000+07:00

i am no expert on this subject and i certainly should not be putting out this post.
but i was appaled to see this story about the Sahara boss in the times of india.
to me, it shows how low some in the media can stoop. the entire story has the line - all is fine with daddy and he is a great guy.

how about using the opportunity to ask some tought questions. why dad doesnt appear in public. how much public deposits has dad taken. how is the RBI scrutiny of his business going. can they provide the annual reports of dad's companies. what is the source of dad money. why doesnt dad ever hold a press conference. do they get a great inflow of principal every month than interest paid out. - a true test of a ponzi scheme. perhaps "dad" should answer these questions.

when pesticide is found is soft drinks, there is a sunitha narian taking up the issue. when food is adulerated there are thousands of food inspectors to check. same applies to the hundreds of things we consume on a daily basis.

but when the most potent commodity in today's world - information - borders on trash- there is hardly any check. just an anonymous ,unread ,blogger writes a stupid post.

importance of information flow.

2005-11-18T22:27:00.001+07:00

i had written about the importance of information flow here espically in the context of bird flu.
i thought the excerpts from this news report may be of interest.

"The last thing that any nation can afford to do, not only in its own interests but in the interests of the fellow members of the world community, is to hide or cover up in any way." In London, the leading medical journal The Lancet called on governments to communicate honestly and openly with the public. Governments "must admit to uncertainty, act transparently, issue guidance on disease protection and make sure information is disseminated to the public as quickly as possible" to avoid panic even before a pandemic emerges, it said in an editorial.

===

U.N. official Robert Hepworth said in a Reuters interview in Nairobi that the world body wanted to pull together data from a range of sources on the routes and flight times of migratory birds, which carry the flu virus and infect domestic flocks.

===

the pen drive is mightier than the sword!

2005-11-17T18:48:00.000+07:00

available here

Peter drucker emerges from the morning sun - leads to a "changed society"

2005-11-15T22:04:00.000+07:00

i have a feeling that peter drucker always wanted to walk quietly into the evening sun. he lived in small town US and was associated with a lesser ranked university.
Though a prolific writer , he gave few interviews and was featured in the press far less than he deserved or could have easily got. (being a former journalist he knew how the system worked and could have had reporters eating off his hands).

i guess the press in the last few days had put out almost all that one needs to know about him -
from his birth to an intellectual family in vienna, living thro WWII , synthesizing the field of management from social sciences and engineering disciplines, to pathbreaking concepts like management by objectives.

i have a few thoughts about him which has been missed by the mainstream orbit writers.

1. influence of danish philosopher Soren Kierkegaard
drucker learnt danish in a very short time - some say 2 weeks - to read kierkegaard's writing in original. he was very much influenced by the K's concept of the influence of religion on society and varies principles he espoused. this, i believe laid the foundation for drucker's beliefs in life.

2. learning from catholic church.
the catholic church had then an overpowering influence on businesses and the state. i believe that views on drucker's on social responsibility of business are derived from the church.

3. Forget predicting the future - take a look at what happening today.
this is the key lesson i learnt from his works. he was so focussed on trying to understand the present rather than make grandiose statements about the future. if he say things about the future it was based on events happening today.

4. A great philosopher- leads to a "changed society"
drucker has changed how companies work to put it mildly. and many of us lucky enough to use
the net probably work for a company or are associated with one in some way. he has changed the way we work and it effects will be felt longer than we can think of.

5. his death will spark an interest in his work.
drucker was in many was not a part of the mainstream management bandwagon. he was truly a bystander. his work based on logic rather than on models or empirical evidence was not used by mainstream academia , as much it should have been. his death , i believe, will lead to a greater use of his work.

6. three year system
drucker studied a topic for three years . Japanese art to india history. his gave him a breadth of knowledge few possess. incidentally, he rated Indian Civil service, under the british the best middle management in the world. the top management was involved in the world wars and the lower management was not very good, yet the ICS, he says, did a gr8 job.

7. never predict the stock market!
drucker, as it now well known, predict a gr8 bull run just before the 1929 crash. my sensex target of 5000 looks just a ridiculous now. lets see a year later.

china and information flow - need for a global regulator

2005-11-04T19:32:00.000+07:00

i have always known that information flow from china is suspect and had always believed that it needs free up the flow for the sake of the international community.
take a look at this, a outbreak of bird flu takes place on Oct 26 and it gets reported on nov 4.
pretty unbeliveable.

just think about the consequences of withholding of information, which is needed for the whole of humanity. we need to have a global body, an arm of the UN, to regulate the flow of information. to see all need info. is available for making better decisions for the sake of humanity. countries guilty of withholding sensitive info - in the sense of human wellbeing - should be punished severely.

A typical bull market - throwing caution to the winds

2005-11-03T01:14:00.000+07:00

i have been doing some reading about the bird flu and the probability of the H5N1 virus mutating. pretty scary stuff. the threat does seem real from what little i know about the subject.
i wonder what hedges one can put in place against a doomsday scenario which hopefully will never play out. i wonder if gold is a good hedge now. if there is a collapse of the modern financial system who will have the money or the commoditity needed to buy gold and why would they want to buy it.
agriculture is a great hedge but i wonder how many can practice it. in germany, after world war II the farmers where the richest people around and used to try and bribe other people with milk!

anyways, coming back to the bird flu and the market and in my view the meaningless bull market.

look the stock prices of venkateshwara hatcheries (venkys) and SKM Egg feeds, the leaders in the poultry business in india. venky's lost 0.6% during wednesdays trading to close at Rs 140 double its 52-week low. SKM egg feeds closed up a 1% at rs 20.50, well above its 52-week lows of rs 13.

i wonder if it is irrational to expect these stocks to hit new lows everyday given the current environment.

on bird flu:
http://www.cdc.gov/flu/avian/gen-info/facts.htm

IT industry and politicians

2005-10-27T02:11:00.000+07:00

Deve Gouda is talking rubbish about narayana murthy of infosys. the communists in kolkatta want to have a say about workers rights in the IT industry.

they may seem like isolated incidents but i firmly believe that are not.

The IT industry has become big enough to attract the attention of politicians. the want to have a stake in it in some form of the other. i believe that the coming months are going to see more action on this front.

ps: the amount of publicity given to deve gowdas remarks was stupid, to say the least.
i was pretty suprised by how low the editorial levels at new indian express could stoop when all they had was a story on what deve gowda had said in the sunday edition's front page. this makes the editorial standards of papers which put off pictures of scantily clad women on the cover much higher.

why ICICI ventures shouldnt buy into Scandent

2005-10-21T03:09:00.000+07:00

decent people dont buy stolen goods. decent people dont buy stolen goods even if its paper wrapped to mask it identity.

but what does this have to do with Scandent and icici ventures.
well, Scandent has a sordid past to put it mildly. the company was formed by buying sticky assets from the promoters of companies like DSQ Software and SSI Ltd, at the expense of minority shareholders. The transaction between dsq and the company is supposed to be under investigation.

so, why is icici ventures buying this company? may be, it is available cheap and yield good profits.
but then how different are the people at ICICI ventures from the mason building my house who wants to buy some stolen sand at less than half the price? may be, only the pocket being filled is larger.

i know that the following line could be considered irresponsible and in bad taste.
but i have an awful feeling that the folks who put through this deal at ICICI ventures may not be squeaky clean.

some links on ramesh vangal and dsq

http://www.suchetadalal.com/articles/display/479/625.article

http://www.suchetadalal.com/articles/display/80/701.article

importance of serendipity

2005-10-20T03:12:00.000+07:00

the markets are heading south but not southward enough to engage my complete attention. so, my tryst with home building continues. building materials is a facinating subject with plently of listed companies. it is difficult to appreciate pidilites product range or snowcem's brand equity without speaking to those involved in the industry.

and there are so many differnt materials available - from pvc windows to cpvc prices that can carry hot water. to latest clamps that can easily hold a ton of weight.

there is ablsolutely no requirement for metal anywhere in the plumbing process - quite revolutionary if u can see old GI pipes running all over your old bathroom.

anyways, was reading about vinyl flooring can came across this interesting webpage. it highlights how much we owe to serendipitous discoveries. more than we can ever imagine. perhaps, we are all just errors in a DNA duplication process!

importance of spelling!

2005-10-12T18:40:00.000+07:00

"nobody can see more than two quarters ahead"

2005-10-11T22:46:00.000+07:00

nobody can see more than two quaters ahead, said Kumar Mahadeva, chairman of Cognizant
technology solutions, referring to unpredictable nature of the IT industry. this was about three years ago. today, things seem very different.
i have never seen TCS offcials so bullish about the prospects of the industry or in such good humour. infy folks were extremely positive and narayana murthy thinks it is the best time to walk into the evening sun and its azure rays. the industry is at its peak and seems everready to scale greater hieghts.
but i hope the time does not come too soon when one has to remind everyone about Mr Mahadeva's words.

consumption and investment led booms and price distortions

2005-10-04T14:39:00.000+07:00

Citibank: : see, the rate of interest is 7.5 % and you can easily invest it elsewhere at 8%.

(from my previous post based on a conversation with Citi)

This i belive is the crux of the current boom in equities and real estate. it is driven by investments hoping to get a higher rate of return than the costs. and these are often leveraged.

the issue with investment led booms is that largely amounts of capital - theoratically infinite can flow in seeking a rent higher than the cost.

to explain further, think of a middle class individual. if he believes that his investnments can fetch a high rate of return, he can leverage and deploy large amounts of capital. and when he invests is such a manner he causes price distortion because his need is not backed "true demand" but percieved returns. such investments is now being practiced by all class of investors and the price distortions can be very severe. also, when such investment led boom come to an end the pain levels can be very extremely high.

consumption led booms such as one in the US is a far better option in my view. a person can consume only a finite amount - a house , car, another car, fancy clothing and food on the credit card. but the incentive to practice this is no so widespread or large in financial terms. this also causes less distortions in asset prices.

to me the US-led consumption boom looks less riskier than India and China led investment boom.

tailpiece: if i act on Citis generous offer to loan 4.5 lakhs to my mom and leverage further on it, i can easily raise rs 12-15 lakhs with it!

how much does this paperboy earn??

2005-09-29T02:59:00.000+07:00

take a guess

i am pretty surprised by the answer. if anyone comes across this boy, it will be great to reconfirm the amount which is in this story here.

ps: i this boy takes his enterprise public , i will surely want to invest.

Dr Prahalad and top of the pyramid!

2005-09-18T11:51:00.000+07:00

we indians have the great ability to poke holes at the works of successful people. this is no such attempt but something i genuinely feel . dr prahalad is certainly a great management guru and peter drucker says his work is seminal.

i had purchased the book "fortune at the bottom of the pyramid" a long time ago but never got down to actually reading it. i have been reading rave reviews about it everywhere and seen it feature regularly among the CEOs reading picks in many business magazines.

i picked up the book and leafed through the pages and saw the innocuous pencil mark of the pricing - Rs 500. it really hit me hard. why would somebody who preaches the merits of the bottom of the pyramid price his book at rs 500. wouldnt it be better if he had priced it at rs 20 for a pdf version on the web. couldnt it be priced so low that it can be found with every management student and those associated with the profession in india and abroad. wouldnt this be a larger market? i only have such questions and i think it will be difficult for me to get convincing answers even if i ever read the book.

Citi never sleeps but forgets that i do!

2005-09-18T01:23:00.000+07:00

I got another call from Citibank for my mom, while i was having my siesta in the afternoon, and it proved enlightening as usual. it goes something like this.

citibank: can i speak to ***, we are calling from citibank to offer a value added service.
me: you can explain it to me, i am her son
C: can u give me the DOB and address
Me : ***
C: we are offering a draft facililty for rs 4.5 lakh.
Me: I dont want a loan
C: why do you want it. the rate is only.....
Me: Honestly, my mother does not have the capacity to repay the loan. she has no source of income.
C: then why cant you take the draft in your name.
Me: (pretty stunned to reply. It is the first time i have come across a bank offering a loan to someone who admits that they dont have the money to repay!)
C: see, the rate of interest is 7.5 % and you can easily invest it elsewhere at 8%

my thoughts on the converstation later.

dinesh dalmia - a profile

2005-09-16T02:06:00.000+07:00

i can across this link while googling for information on dinesh dalmia. it is funny , to say the least.
also, it is a pointer to that fact what we write today can look so stupid tomorrow. this blog certainly included.

the interpol red alert for DD is available here, so if u see him pl. call the police!

dinesh dalmia wanted by interpol

2005-09-06T16:00:00.000+07:00

dinesh dalmia is wanted by the interpol and i read about it here. it was news to me but i realised that i had not been reading the papers carefully for a long time or may be enough has not been written about it.

about five years ago, dinesh dalmia's companies were at the peak. DSQ software shares were at the peak trading at rs 2300 and the m-cap should have been atleast 10,000 crore. DSQ biotech also announced grandoise plans. mr dalmia had a shady past especially with respect to dsq biotech, and everybody who knew something, knew it.

DSQ software was a though company to evaluate. the promoter was a crook but the company had some solid operations and very good middle management team and some managerial talent was brough in the top.

so, mr dalmia was able to market his company well. journalist wrote pages about it. foriegn investors flocked to it.

while the rise of mr dalmia had been penned in great detail, his fall has gone rather unrecorded, except for some writing of ms sucheta dalal and a few other stray articles.
after regulators started clamping down on his listed outfits, he began to focus on some of his unlisted companies in the BPO space, again with big plans.

this is an old story and perhaps badly retold. but the reason for putting it out is that we forget such events in bull markets like these or think they wont happen again.

sadly, markets dont change much and crooks are always out to make money and those operating now, i fear, could make mr dalmia look small. it is impossible to protect the lay investor against himself.

tailpiece: mr dalmi was holding an agm in chennai a couple of years back while the economic offences wing in calcutta had a warrant out for him. hope the interpol has better luck!

sensex at 5000 in a year!!

2005-08-31T10:37:00.000+07:00

steve forbes has predicted here oil will plunges to $35 a barrel in a year. a SEBI member says here sensex will hit 16,000 in the same time frame. perhaps, it is time for me to stick my neck out.

i believe that the sensex will fall to 5000 within a year. markets are very overheated and commodity profits form a large parts of the earnings, which is not sustainable. the period of rapid global growth couldl be impacted by some events, as past probability suggests.

see this space a year later!

a call from citibank or a loan bubble !!

2005-08-25T19:15:00.000+07:00

A lady calls from Citibank, Chennai, waking me up from my afternoon siesta!

Citibank: can i speak to mrs ****
Me: Sorry she is not available, what it regarding?
CB: can i know who is speaking
Me: this is her son
CB: Your mother card ends with no: **** ( i can't think of any reason why i should know), and she has been paying her bills regularly. so, we are offering her a draft scheme, and we can make out a draft in any third party's name for upto Rs 4.5 lakhs. There is no need for any paperwork. this is not a loan.
Me: Can you give the draft in her name?
CB: Sure, the interest rate is only 7.5% per year
Me: What is the longest tenure you can offer and what will the monthly installments be for a 4 lakhs.
CB: It is 48 months and the EMI is Rs 10,932
Me: Great. will call u if i need it. ( i later figured the interest works out to 14% and i didnt find out what is the processing charge and prepayment penalty)

It is usual call that many of us get these days. the only problem i had with it was my mom was a retired person with a small income and could no way pay back such an amount. This got me wide awake and set me wondering. what if people accepted such offers and what if a lot of them did. (my father would have certainly accepted the offer had he picked up the phone and honestly i was tempted!) what happens if there is a minor economic shock. what will happen to these people and the asset quality of the banks. it seems to me we very clearly have a loan bubble.

I am reminded of the end -1990 days, when banks, NBFCs were lending like no tomorrow to small companies. when the bubble burst it was very painful. Kotak Mahindra, now a favourite private sector bank, was quoting at rs 15 during 1999 (rs 3 adjusted for the bonus issues and now trades at over rs 200, thats 66 times!!). of course i wasnt smart enough to buy then.

But i am hoping Uday kotak is a smarter man these days. he said in a TV interview that he has learnt a lot from from the past mistakes and they wont happen again. i wonder if he is really that smart and so are the other in the finacial services space. i feel otherwise.

China: is it a treat or an opportunity?

2005-08-23T17:19:00.000+07:00

it has become a rather stale question now, but i did find this discussion interesting

does ms dalal read my blog??!!

2005-08-22T12:20:00.000+07:00

i was just wondering if ms sucheta dalal reads my blog or my mind or the reverse. just kidding, ofcourse!!.

but it would be interesting to read her article here which appeared on monday, aug 22, 2005

sensex = 16,000; dow = 36,000

2005-08-21T17:57:00.000+07:00

a recent comment by a SEBI wholetime member that sensex will touch 16,000 in the currently fiscal is astonishing to say the least. i wonder if the reporter got the story wrong.
if not, it is the most optimistic projection for the sensex that i have come across but i wonder why a person in such a reposible post should make such comments.
the statement reminds me of the 36,000 target for the Dow set a few years ago, which now seems absurd.
I personally am more comfortable with CLSA's estimate of 6000 for the sensex, eventhough i believe it is a meaningless exercise to predict a stock index.

A man peeing and a wall for reference!

2005-08-19T11:21:00.000+07:00

i am buiding a small house on the outskirts of a meium sized town and it has been an enlightening experience, to say the least - and i plan to put up details of it in another site. Initially, i was least interested in participating in the construction, as all i wanted was 4 walls and a washroom, and i had better things to do - "like follow prices!", but later circumstances forced me to get fully involved and i think i have learnt quite a bit.
The house, 800 sq.ft, is situated on 2000 sq. ft of land and there are another 300 vacant plots in 12-acre compund.
Yesterday, a group of 11 men, who form the lowest part of the construction chain, came to lay the the roof (centering).
On guy moved to side of the house and started peeing on the wall. (he didnt know i could see him). I was too stunned to say anything for a minute, as the brown bricks of my newly built house slowly turned blood red!
I just kept quiet and pretended i didnt see anything but the incident really set me thinking.
why would a guy want to pee on the wall, when he has 12-acres of open space and atleast 500 trees, which makes it rather woody.
Obviously, the guy is used to peeing in street corners and other such places and he is propably conditioned to pee on a wall, which provides a frame of reference. further, it could it even be that the sight of free wall triggers the sense to pee !, but i will stick to former. so, the guy needs a frame of reference to pee.
I was just thinking, how different are sophisticated investors from the guy peeing on the wall. Afterall, in DNA terms we would 99.99% same. Maybe , we are not different from him in other ways too.
All of needs our false walls to lean on, to make decisions. We prefer the promximity of the building to the unknown woods. We are inherently loathe to venture far whether it is to invest or to pee!

PC's folly

2005-08-17T03:37:00.000+07:00

the markets are showing extraordinary strength and i have never seen such strong broadbased action. i must admit that i have been caught on the wrong foot. I am not short but my cash levels are extremely high.

ofcourse, it is far less painful to point out other mistakes than examine your own and thats what i plan to do!

I was all praise for P chidambaran, the finance minister and his team here while he set up the national investment fund but lately i have to dislike the way he treats share issuance by public sector units. Sure, back tracking on strategic stake sales in PSU is the right path but many PSU could have been coaxed to issued fresh shares to the public during this bull run.
By spending his energy on confrontation with the left, PC has lost an opportunity to let PSU raise money from the market and the disinvestment battle could have been fought another day.

again, the is the strongest bull market in recent memory but with the least amount of primary paper flowing in, which is certainly not healthy.

anil and political risk

2005-07-20T00:40:00.000+07:00

Anil Ambani has raised the amount his firm ADA enterprises will invest in Reliance Capital from Rs 1000 crore and Rs 1500 crore, a whopping Rs 500 crore. was the increase brought about by a whim? for somebody who potrays himself as a professional manager.

The amount is large by any stretch of imagination and leaves one wondering how it happened.
The only possibility i can imagine is that some politicians wanted to be a part of the deal and anil was forced to take funds from them, afterall he had sought their help during the settlement and there can no points guessing the group of politicians.

now, if sahara and they get in trouble, there can be blood on Anil's hands.

also, the equity structure of ADA, i am sure, will make Reliance holding pattern look elegant.

PS: I am still unable to google the Reliance Capital website. It is still shown as a part of Reliance Industries website here!

safety on demat a/cs in question again

2005-07-16T15:06:00.000+07:00

on feb 25, 2005, i had written:
"There is no great barrier to stop the stockbrokers who hold investor’s shares to transfer them to their own account. Many of broker-depository participants have closed down and some random cases of investor fraud have come to light especially in Kolkotta."
the full post is available here.

Now, the Business Standard reports that a fraud has come to light at Karvy, Kolkotta.
The manager of a branch transferred some shares from client a/cs to himself. there were warning signs earlier and now it has made it to the mainstream media.

"Incidentally, there were reports in a section of media that Karvy Stock Broking has allegedly siphoned off shares from the clients account for their own gain. It was also alleged that Karvy has not transferred the shares purchased by some clients to their respective depository accounts."

The complete article is available here.

If it can happen at Karvy, one of the better run broking houses, it is pretty nightmarish what can happen elsewhere. The demat system is structurally flawed i cant think what can be done to rectify it.

I believe the greatest risk to the Indian equity market does not come fronm global events like the London bombings but from the systemic risk in the demat procedures and entities like Sahara.

Sahara, Peerless under RBI lens

2005-07-14T00:39:00.000+07:00

"Sahara and Peerless have already conveyed to the RBI that they have complied with all regulatory directions, but the central bank doesn�t believe in what they say, said a industry source." - July 13, Business Standard. The complete article is available here.

i am suprised that the RBI believed what Sahara said till date. i guess it is too little too late.

my tryst with fish farming

2005-07-08T23:58:00.000+07:00

the market are showing remarkale strength. the japanese feel india is cheap. they are used to the nikkei at 30,000 levels so i guess 7000 looks like a value pick.
anyways, i continued to stay away from dalal street and look for other sources of income.
i decided to take a look at fish farming after a friend had difficulty in purchasing some. and ofcourse, i have always been impressed on druckers ideas on fish farming, how it is the next big wave. and i like New Marine Harvest.

i ventured to a dam near my place after seeing a photograph of the district collector at the fish farm, describing how the govt. would supply lakhs of fingerlings to prospective cultivators and how it provide employment to many.

i reached the dam at around 3 in the afternoon. a compound with the board inspector of fisheries was locked. the person who takes care of it leaves at 2 for lunch and only returns at 5.

luckily, there was another dam about 20 kms away. i went there and met an unhelpful guy, who had no interest in helping anyone set up a fish farm. he talked something about the types of fishes. i wonder how he could have been of use to anybody.

anyways, i have always believed that most goverment schemes are mere photo opps. and nothing serious comes off them. sadly, my stand has been vindicated.

my first experience with agri - cereal prices to soar!

2005-07-04T17:10:00.000+07:00

The markets can remain irrational longer than i can solvent - to repeat an anon. quote repeated by ashu dutt, an anchor for NDTV Profit.

so, i thought i would be better off tilling some farmland - slightly below two acres- which my father owns. and what i saw pretty much stunned me and goaded me to write an elegy on indian agri if things go the same way.

The land is located in a supposedly very fertile area near a small city.

I took a turn off the road. the bike could proceed no further. i began to walk on the fields towards my land. i saw a abandoned well, a motor room and some power line poles. the land is dry with some weeds and paddy shoots griwing on it. i walk further on the bunds and reach my land. next to it, is a patch of yellow brinjal plants, left to ripe on the fields for some reason.

Some conclusion from my first visit:

1. subsidised/free power to farmers is an issue that needs to looked at closely. the city dewellers and free market economists, who want farmers to pay the actual ecomonic costs, shold realise that it could make farming unviable for many. the well, with water at 20 feet, was abonded by a person who couldn't pay the electricity bills, and hence stopped cultivation. the local government till recently had a policy of free power, which it has now reversed.

2. agriculuture, in the current form in which it is practised, does not seem to a profitable activity.
one person told me it is better to find some work in the city rather than pick up dung.

3. There is a tremendous pressure on farm land from encroaching cities. houses have sprung up a close as one kn away and somebody is selling plots 500 meters away from my plot.

4. i expect, that in India like in China, cereal prices could shoot up by 50% in the near term say 5 years, as quality agricultural lands becomes sparse and labour far more expensive. This can only be mitigated if agri. productivity is significantly raised.

Link to Wall Street Journal Video

2005-06-27T00:21:00.000+07:00

The Wall Street Journal video link is available here. Currently, it is free a provides useful comment of imporatant daily events

Steel prices keep falling in China since April

2005-06-23T18:55:00.000+07:00

I came across the interesting article on steel prices in China. Looks like there is a bloodbath out there and the view are contrary to comments made by Tata Steel
available here.

UPDATED: 17:16, June 23, 2005
Steel prices keep falling in China since April

China Iron & Steel Association found in its survey recently that prices of steel products had kept sagging since April this year in China. Some products are priced about 1,000 yuan lower per ton on average than in the first quarter. Some have plunged by 20 percent. This means Chinese steel products are much cheaper than those on the foreign markets.

The Association asked steel makers to pay more attention to the adjustment of their lines than on scale and output, so as to prevent sharp fluctuation of steel prices.

At present, prices of long products, reinforced steel and steel rods in particular, have even plummeted below the average production costs of the whole sector.

By People's Daily Online
http://english.people.com.cn//200506/23/eng20050623_191967.html

why cheer the Reliance settlement??

2005-06-23T12:17:00.000+07:00

I am perplexed by the way everyone from the finance minister to the lay investor on the street is cheering the Reliance settlement. Nobody has stopped to ask at what cost is it to the non-promoter shareholders.

The board of Reliance seems to exist just to execute the promoters thoughts, which is indeed very sad when you realise that Reliance is India largest private sector company.

There are tremendous synergies between Reliance and Reliance Energy. Public Sector petroleum players desperately want get to the energy sector and Reliance wants to give up that area!

In the short term, the market is cheering the settlement - In the long term things could be different.

Meanwhile, i am reminded of an old friends question.

Who would you prefer to employ. An honest person with a medium level of effeciency or an dishonest but highly effiecient person, who even after skimming something off, will still give you a better output.

The market, without doubt, seems to prefer the second. But i think a better option is to search for the honest and highly effecient person!

To expect more from the media though is futile!

2005-06-16T13:38:00.000+07:00

"To expect more from the media though is futile. No one would cross a major advertiser, not even if it affects the lives of hundreds of thousands. We had to wait for the Ambanis to spill the beans on the Ambanis. Maybe the Roys will one day be as obliging."

This article in the Telegraph raises many relevant issues on which i dont want to comment further but i believe it is a must read

metal prices - a 25% fall

2005-06-13T21:50:00.000+07:00

this table from Indiainfoline,
shows have steel price have reacted from March. I expect another 20% decline.

Metals melt as prices, demand fall 6/13/2005 6:14:50 PM IST - Indiainfoline

"it’s amazing how fortunes change in the stock market. Last year and early this year, metal shares were the toast of the town as international prices shot through the roof even as demand, both local as well as overseas, remained robust. However, things have turned sour for them since the middle of March and many of them have lost quite a lot of shin. Among the major losers have been Tata Steel, SAIL, NALCO, Jindal Steel, Essar Steel, etc have lost significantly in the last three months.

Index	15-Mar-05	13-Jun-05	% Change
Metal	6977	5279	-24.3
Index	6752	6833	1.2

Atmosphere in a small broker's back office

2005-06-13T20:30:00.000+07:00

A friend of mine described to me a scene at a small brokers back office in a mid sized city.
"There were two computers and about ten people stood behind each of them to complete their chores. The room was small, and the air conditioning had become ineffecitive. The stench of sweat was overpowering and i could just stand there to complete the formalities - I ran out".

I wonder what stage of the bull market it is!

A balanced copy on Sahara

2005-06-12T20:00:00.000+07:00

The FT copy available here does a great job in explaining the happening at the Sahara group and the "Systemic risk" it poses.

Sahara India TV footage

2005-06-10T19:55:00.000+07:00

I haven't seen the TV clip of the Sahara chief birthday bash. Some news stories about it quote him as "disease free" - a tag more often used for animals. May be he can try to convience people about his physical health with such stage managed events, but it is the health of business that everyone should be worried about.

I remember reading a long time ago that the Reserve Bank of India
had classified the Sahara group, as an entitity capable of causing minor disruption in the financial system. They are into mutiual funds and have got a life insurance biz. license too.

Some Random Thoughts

2005-06-10T12:06:00.000+07:00

Put up a new blog where i plan to pen some thoughts.

An outlandish prediction - on Sahara

2005-06-08T13:02:00.000+07:00

Almost every major bull market in India has ended due to a scam. I wonder why this run should be any different.

Will Sahara pull the market down this time? surely, something is wrong with the Sahara group which has millions in public deposits. Nobody knows anything about the group - how it raised funds, who are the people behind it. They spend money like water and expand in ways that legitimate money can never does.

The group chairman, who loves the media attention, has not been seen i public for 3 months.
( I havent read the cover story in a news magazine about it). He is expected to appear in public on June 10. The company says he is only suffering from mild blood pressure but i guess he needs more than a Hepril.

Now, let me paint a doomsday scenario. Major industrial groups could have exposure to the company. Reliance is clearly a suspect. banks may have funded it. If the public dont get their money back, there will riots in north india cities - atleast lucknow. Politicians may be forced to take some populist decions - like get a bank to bail out these deposits.

Afterall, the group claims 1 in 17 Indians have a deposit in the group - surely a major vote bank - atleast in the northern states.

This will have a cascading effect on the financial system and there is no need to guess where the market will go.

I fervently hope what i write does not happen. we will know shortly.

The sensex prediction - not so right.

2005-06-08T12:44:00.000+07:00

"This, i believe, means that the market will take a final heave before a significant fall." - Feb 23, 2005.

the market was aroung 6600 feb end. it did move up to 6800 and then fall to 6000 levels and now has risen to 6800. but i was referring to a far deeper correction. a loss of 20% from 6600 levels. i still believe that the market will shave off 20% from curren levels of 6800 - how soon will it happen, is the unpredictable factor.

bang on target on steel prices

2005-06-08T12:30:00.000+07:00

"I wonder what this will do to commodity prices like steel, coal, which are at alltime highs. Some rapid cooling off of prices should be in the offing and these stocks should follow suit." - March 5, 2005 post.

Indeed, steel has had a rapid cooling off and i dont follow coal prices. Steel baron Lashmi Mittal has lost 35% of his wealth. I wanted to see the decline in steel prices and how the BSE metal index has moved during the period, but then though will give it a pass. It would be fair to assume that steel prices have declined by 10-15% and the index 20%

Taking Stock

2005-06-08T12:21:00.000+07:00

It has been nearly 4 months since my last post. In the market the abilility to "do nothing" is a virtue and i guess it got transferred to my blog! I have made some predictions on the metal prices and the market levels it is time to see how i have fared.

China and commodity boom - some cooling off ahead

2005-03-05T10:26:00.000+07:00

The picture of people rushing to buy an apartment, as if they were buying a lottery ticket, seemed quite disturbing. It certainly has also the signs of a real estate bubble and it is fair to ssume that it will burst in the near future - say a maximum of a year or two. But perhaps even earlier.
I wonder what this will do to commodity prices like steel, coal, which are at alltime highs. Some rapid cooling off of prices should be in the offing and these stocks should follow suit.
Throughout history, China has been a little understood country. Alexander the Great, who ventured into India, said "Don't awaken the sleeping tiger" but didnt go there. Pehaps, our understanding of China is no better now.

From driver's tips to site response time

2005-03-05T01:31:00.000+07:00

Getting a stock tip from a chauffer or a shoe sign boy is a sure sign of market overvaluation, goes the market analogy. But can there be an offbeat measure, which suits the internet age. May be, one should look at site response times of extremely popular financial sites. I have noticed that the Bombay Stock Exchange site has got a lot slower lately. It doesnt open, at times, during the day.
i wonder what this fortells

A frenzied rush for real estate in China

2005-03-04T12:28:00.000+07:00

"Crowds of eager buyer wait outside the sales center at Gold Bund Garden, a downtown apartment project that's still under construction. Some waited for more than 12 hours to register for a chance to buy a flat."
March 3, 2005, Shanghai Daily

The last time i saw a picture like this was investor queuing up to buy Morgan Stanley Growth Fund units in the early 90's. China and its cowboy like capitalism seems to be an effecient provider of asset bubbles. I wonder if India will follow China in a stratospheric rise in asset price. I guess there can be good supply, and tweaking with "floor space index" norms, which specifies how much construction can take place in a land space, and this will cool things here.
But i would love to see some real estate investment trust mop up money from the public and i think it would be a good idea to park some funds there.

From quoteron to quote tickers

2005-03-02T14:07:00.000+07:00

Peter Lynch, an investment guru, ran Fidelity's magellan Fund for 13 years (1977-90), providing a return of 2700%. One of the things that struck me while reading his book, Beating the street, a few years ago, was his reference to the constant stock prices bombarding investors through television and tickers. When Lynch, was managing the Magellan fund, and in a world yet to experience information overload, he had to use a Quoteron, a machine with a blank screen, where you had to punch in the symbol to get the stock price.
Today, it is impossible to watch any business channel with seeing the stock price movement and in disdain i switched off the television on budget day, as commentators try and make sense for every gyration - when perhaps no explanation is the best explanation.
May be, we are getting caught in an information warp and forgetting the age old maxim,
a watched stock seldom appreciates.

Indians & a facination for intellectual exercises

2005-03-01T15:00:00.000+07:00

Can someone change the fortunes of a billion Indians with a stroke of a pen? Can the FM think of some great innovation that can catapult millions out of the spiral of poverty? That is the kind of expectation that is built into an Indian budget.

What misses the radar of most economists and many others is that productivity is the key and in many ways it is more a managerial issue than an economic one.

At best, economists can try and create an external environment that’s fosters productivity.

I guess, the fact that this budget has become less exciting is a pointer of a move towards this direction.

Although, it may sound blasphemous, I haven’t yet read the Finance Bill, despite the blog’s name and in future- many more won’t!

Driver's query regarding MF's and overvaluation

2005-02-27T16:42:00.000+07:00

A driver asked me if investing in mutual funds was a great way to make money, given that interest rates for government saving schemes were on the decline, after reading an article about them in
Ananda Vikatan.
I wonder if this is a classic pointer to the overvaluation of the markets or whether we should look out for a query of a chauffer in NY or London asking about the Indian markets, as it is the FII which are driving up valuations!

some investor conference presentations

2005-02-27T13:31:00.000+07:00

some investor conference presenations are available here at Kotak Securities insitutional investor site. It does not require a log in, as of now but i couldn't find them on the company's retail site. Perhaps, they are aimed at giving institutions an edge! The presentations include a trend line extention presentation of Roopa Purushothaman, Associate economist, Goldman Sachs.

is your demat A/C safe?

2005-02-25T17:01:00.000+07:00

The depository system in India, where investors can hold shares and other securities in electronic form, has been touted as great success. Sure, in number terms, that is the case, as there are 6 million accounts in one of the depositories (NSDL) today, and the system was launched only around 2000.
But have enough safeguards been put to ensure that the system cannot be manipulated? Unfortunately, that has not been the case. The path to high demeratialisation has been short circuited by involving stock brokers in the system. There is no great barrier to stop the stockbrokers who hold investor’s shares to transfer them to their own account. Many of broker-depository participants have closed down and some random cases of investor fraud have come to light especially in Kolkotta.
Imagine a situation, where a broker faces default. He could then dip into his investor accounts and make good his losses. He could supply the investor with fake statements, which is the easiest thing to do and provide some forged delivery instruction slips (similar to check leaves) to the depository. If the victim is an old person or financially illiterate he may never notice the fraud.
By allowing a broker, who has a tremendous conflict of interest in holding securities, to become a player in the system, the security of the entire stock market has been compromised.

Extremely bullish and bearish market will put the system at risk and it will be the time brokers will have the greatest temptation to dip into the brokers account, if they are on the verge of default due to wrong bets.

PS: The delivery instruction slips of even top depository participants have no security features on them. They could be easily duplicated by the local printer or a high quality photocopier!

Harshad Mehta's dream come true!

2005-02-23T21:10:00.000+07:00

Harshad Mehta, the biggest bull ever in the India stock markets, had a vision of unemplyment being reduced drastically due to the employment opportunity offered by the Indian capital markets. He even made a presentation to the then RBI governor S Venkitaramanan to that effect and it is said that he was politely shown the door.
But now stock broking firm Indiabulls is helping make Harshad Mehta's unrealised dream a reality. "We are looking to hire about 1,500 management trainees (this year), all for sales and marketing. Last year, we had hired about 570 of them, of which 483 still work with us,"
says Gagan Banga, national sales and marketing head at Indiabulls in Business Standard.
Other broking firms are following suit. I think it is a whopping number by any stretch of imagination. Perhaps, broking firms can surpass IT in employment figures.
I can only hope that there is no correlation between the longevity of the greatest Indian bull and Indiabulls!

last leg of market rally?

2005-02-23T13:43:00.000+07:00

In the final phase of the market rally, in the Indian markets the non banking finance company (NBFC) stocks rise, as market players buy into them as they struggle to justify valuations elsewhere. Goldman Sacs has bought into Reliance Capital, Cholamandalam finance is on the rise, First Leasing has spurted and a bevy of venture capitalists and investors have lined up to invest in the Shriram group.
This, i believe, means that the market will take a final heave before a significant fall.
ps: i do believe NBFC s, which is essentially a terminology for finance firms which donot accept demand deposits, have some great business and offer tremendous value. HDFC and Goldman Sacs are NBFCs! But for the Indian market to value them decently they have to attached a "bank" in their surname as Kotak mahindra did or see some further financial reform.

Headless IDBI headed for a merger

2005-02-18T12:19:00.000+07:00

It is very interesting to find IDBI, which is headed for a merger with IDBI Bank, to be without a chairman and managing director during the period! I have always believed that the merger was like a sick old man sleeping with a virgin girl to get rid of his disease. It is an age old remedy which continues to be doled out, and the result is never different - Both end up dead.
In human anatomy, a badly wounded person say with bullet wounds, is often compared to a ballon with many pin pricks. The ballon can be kept inflated for very long period of time provided adequate air is carefully pumped in. Similarly, a human being bleeding from many gun shots can be kept alive for extended time by pumping in large quantities of blood. (When Indira Gandhi was shot, the doctors , it is said, did debate whether to keep her alive in a brain dead state for 10-20-30 years till a cure is found!).
In the world of finance too, an institution which is bleeding can be kepy alive by pumping in money and providing it young, strong institutions to partner in bed, oops sorry to merge. then survival can be ensured, atleast for long periods of time. That seems to be strategy at IDBI.

free market curber is new SEBI chief

2005-02-18T12:03:00.000+07:00

Mr M Damodaran has been appointed the new SEBI chief. The new post he has wrangled is a tribute to his adroitness in navigationing the corridors of power rather than his financial or managerial ability. He, ofcourse, does have the luck of being at the right place . The turnaround of UTI was more than aided by the booming market, while his brief stint at IDBI was a pointer to his excellent ability to get his way in the finance ministry.
But really bothers me is that he is non believer in the free market system. Why else would he choose to merge IDBI Bank, which was in the private sector, with the goverment owned and decayed IDBI. In the US, market regulators have had a strong capital market backgroud with most of them from the stock brocking freternity. In India, i was hoping somebody who understands the system like RH Patil could be given the top job. I guess the Indian financial system has a really long way to go.

Chinese stock markets closed for a week!

2005-02-16T00:13:00.000+07:00

The Chinese version of capitalism can be perplexing at times, to say the least. The Shanghai and Shenzhen Stock Exchanges, the most prominent symbols of a free market system, will open on Wed, Feb 16, after a week long holiday for the annual spring festival! I wonder how investors feel about the lack of liquidity during the period. Perhaps, they take consoliation from Warren Buffet, who says he does not care if the markets are closed for five years!