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Who is Manjul Khattar ?

If you have heard this name and know a few things about him, please do not read this piece of mine any further. Because, you probably know more about what I am saying here more than me.
Accidentally, I hit upon an article online about an app called ‘Famous birthdays.’ The success of this app, made me even download this app on my phone and play with it. For a trivia junkie like me, it is very interesting. But , what it throws up is also shocking.

The app which started of as a database of celebrity birthdays, it is now a wikipedia of celebrities that the Gen Z follows keenly. Mostly in US. It has a lot of information which appeals to them and also is fast and engaging. Gen Z can vote their popular celebrities by clicking ‘Boost’. This gives the app, the info to rank the celebs on various parameters dynamically.
If this was only about the Gen Z stars, I would have reconciled that you don’t expect a Virat Kohli in a listing of footballers. But, here my world is intersecting with the world of teenagers , that it throws up shocking data.

Let me give you a sample. Today is August 4. The birthdays of Barack Obama and Kishore Kumar from my world. As per this app, Obama is the most famous US President. Yet, he is not the most famous person born on August 4. He is #2. #1 is a TV star called Cole Sprouse. I have’nt heard this name ever.

Kishore Kumar is not even in Top 25, among August 4th born. Kishore who always prided himself as Khandwa born and for my generation Kishore was synonymous with Khandwa. But even in the Khandwa born, Kishore is # 2. Who is #1.

# 1 Khandwa born is Shaan, the singer. I guess even Shaan would be ambarrassed that he is more famous than Kishore Kumar, after all Shaan has sung cover versions of Kishore songs.
If I asked you, which is the most popular celebrity with the name Vidya. Most of you would guess Vidya Balan. She is # 2 Vidya. # 1 Vidya is Vidya Iyer, a 21 year old You Tube star popular for singing as Vidya Vox in Shankar Tucker’s group.
Let me shock you a little more.

Who is the #1 celebrity with an Indian name ? Lilly Singh, also known as Superwoman. Among celebrities born in India, it is a somewhat familiar name Priyanka Chopra. If you were wondering where is Narendra Modi, who is known to have a great social media profile, he is at a rather unimpressive # 14 Indian. Can you believe it when I say , the strongman Khali precedes Modi at # 13.
So who is # 1 Most popular celeb in Famous Birthdays. It is a 19 year old teenager named Jacob Sartorius. He is an Instagram star with 8 million followers. He has a couple of original songs and many lip sync videos of popular songs. Interestingly, his birthday is on October 2. For those of us, who associate October 2 with Gandhiji, please do not feel disheartened. Mahatma Gandhi figues at # 8 among those born on October 2. Jacob is followed closely by a girl, all of 14 years, Annie Leblanc. Both these are ahead of well known pop stars like Justin Bieber, Taylor Swift, Beyonce etc.

Now let me answer the original question who is Manjul Khattar ? Manjul Khattar is India’s # 1 web-star. He gained popularity on Tik Tok. His web success has made him mainstream now. His recently launched single ” Yaara”‘s music video, where he plays a young school boy was released on 22nd July in YouTube. . In a little over 10 days, it has crossed 20 million views.!!!  Please see the link to the video here. The singer is Mamta Sharma, who sang songs like Munni Badnaam, Fevicol Se etc in Hindi movies.

If you want to know, what makes Manjul Khattar such a star, please ask your children, nephews, nieces , I can’t explain. I
dont understand this generation.

It is not a generation gap. It is a generation valley.

The Start-up community feels bereaved

The entire startup world feels bereaved with Siddhartha’s death. His manner of dying, makes it even more depressing. Startups at every stage face so many challenges and entrepreneurs are plagued by self doubts that they need a lot of psychological support to take them through their travails.The startup ecosystem is not just about money and markets. It is models, mentors and morale too.

When a very Indian role model like VGS admits ‘failure’ and succumbs like this , the collective morale of an entire community goes down.

In a country where risk taking and entrepreneurship are discouraged at every stage, this story becomes another hurdle for the entrepreneur to cross. Several ideas for startups across India will die with the death of Siddhartha. Not blaming him at all. We don’t know what he went through.

For all those doing startups. As they say ” This too will pass.”

CCD is a great Indian story. Thanks for creating it.

RIP Siddhartha.🙏

The “Rahul Bose” class of products

The furore created by Rahul Bose’s tweet about the bill of Rs 442 for two bananas charged by a 5 star hotel in Chandigarh refuses to die. It has created so many memes and even advertisements taking a dig at the hotel. These advertisements are obviously catering to the value conscious middle class customer.

In India, we have a segment of customers who have thanks to their fast rise in their profession or corporate sector travel the world , live in 5 stars, lead a lifestyle comparable to the wealthy. Yet, they are very conscious of the value that these products or services provide. When they see outlandish prices for everyday products like in this case a humble ‘banana’ being priced over Rs 200, they cannot take it.

This segment of customers appreciate comfort and quality, yet will not pay through their nose, particularly, when they are spending from their own pocket.

There are many products and services that I am calling ‘Rahul Bose” class of products, that fits this bill.

A few examples :

In Railways, among the first seats to get booked in long distance trains are AC – 3 Tier. The person who normally travels in AC I class or AC 2 Tier on company account will settle for AC 3 Tier while travelling on personal account. The traveller gets the comfort of AC and is willing to squeeze in the lesser space that AC 3 Tier provides.

The Low Cost Carriers ( LCC) IndiGo and SpiceJet have made a successful business serving this value conscious customers. Have you seen the reaction of the “Rahul Boses” when the airline charges extra for luggage and insists on giving the aisle or window seat only for an additional charge. When travelling on company account, they may pay, but while on personal account they don’t mind the middle seat. 

While travelling within the city, most of these successful executives have a good company car at their disposal. They often do not know or care what bills are being paid by their employer or client for this service. But this ‘Rahul Bose’ , when he is travelling on his own or on vacation , he is suddenly shocked when he sees the rates charged by the ‘travels’. He suddenly sees the virtue of an Uber or Ola. He does not mind waiting a few minutes or the car not being at his command.

There is a huge potential in India for ” Premium” Economy ( an oxymoron one may say ). products and services. Air Vistara has a “Premium” Economy class that is in between the Economy Class and Business Class

Most important , thing here is getting the pricing right for the value conscious customer.

Mind it. Rahul Bose is not poor but he does not want to feel cheated.

 

Public Sector Banks (PSB) – How they touched our lives

If you are someone belonging to my generation, it is highly unlikely that one or the other PSB has not touched your life.

On 19th July 1969, the Govt of India nationalised 14 banks and they became PSBs. They were chosen from across India, so wherever you grew up one or the other PSB would have been round the corner.

My first experience of entering a bank was a PSB. My father had his salary account in UCO Bank ( it was called United Commercial Bank then ). Withdrawing one’s own money from the account was an eventful day back then. .Employers would give half day off for drawing salary.Beginning of the month, the queues were long

My own first account opened during my college days was with SBI. SBI, was not part of the 14 banks because it had been nationalised earlier. But for all practical purposes in terms of products and services it was a PSB.

At my first workplace in Ranchi, my salary account was with Union Bank of India. Quiet and efficient bank . My transactions were also minimal , so I hardly have any good or bad memories of their service.

My second job was with TCS. Being a Tata company, it mandated all their employees to have an account with Central Bank of India. CBI was owned by the Parsis and the Tatas used to patronise them. I was pleasantly surprised to read that at the time of nationalisation Central Bank was the biggest in terms of deposits, number of branches and profits. Govt paid Rs 1750 crore to nationalise it , the highest among all.

I got my first credit card from CBI.

My experience with CBI mostly at their Calcutta branch was not very pleasant. In the 1990s, strikes to oppose computerisation were at their peak. Long delays and general apathy was the norm.

That was the time when new generation private sector banks were coming up. They offered better technology and service compared to the PSBs albeit at a higher minimum balance, I moved to private banks for bulk of my banking requirements then. Have been mostly with them, ever since.

I still have some legacy accounts with PSBs. Some for sentimental reasons, like a joint account with mother in Canara Bank. One or two accounts have become dormant and even dead because I hardly use them.

I have also met some very nice people in the staff everywhere. They were often constrained by the processes, which bound them. Unlike, a private sector guy who approaches you only when he has something to sell or a target to meet, the PSB officer usually has no hidden agenda. I have never felt cheated by them.

Yet, I have little business with them.. Once I moved to use a private sector bank, I am with them. I rarely visit any bank branch and I dont even know the face of the relationship manager mapped to me.

All I can say on the 50th year of nationalisation is thanks for all the service you gave. I wish you all the best and some day when you change, do call me, I am open to a relationship with you, once again.

No colour left in Tiranga

Some of the people who read my posts may recall the satirical post I had written after the elections. One of the characters in Nukkad, Guru had joined a news channel just before the elections, He was fearing that he may be laid off soon.

Something similar has happened at Tiranga TV. Today Barkha Dutt in a series of tweets has brought out how 200 employees of Tiranga TV have been laid off by the channel without giving them any severance pay..

Tiranga TV is owned by Kapil Sibal and his wife. They had roped in Barkha Dutt and Karan Thapar to anchor the prime time slots. It started beaming from Janurary 26, 2019. Besides these stars, it had attracted a large team of news journalists and other technical staff

After Congress lost the elections, perhaps, the owners of Tiranga TV would not have found any reason to continue operating the channel.

Barkha Dutt has said that the channel management’s treatment of staff is ‘hideous’. Kapil Sibal and his wife have refused to meet any of the staff. They even flew off to London making Barkha to remark that Kapil Sibal has done a ‘Mallya’.

What is happening at Tiranga TV is unjust and sad. But my guess is this is not an isolated case. Many ‘Gurus’ must be losing jobs and no news or social media covers it.

India just has too many TV channels. As of March 2019, there were 902 channels out of which news channels were more than 400. In English, there are 15 channels, this does not include foreign channels.

Most news channels are unprofitable and are set up for considerations other than business. They are set up by politicians or political parties. In telugu, there are 18 news channels and almost every channel is linked to one or the other political party. . This is well known and surely the journalists know it. The journalists see the politicians from up -close. They must be seeing the politicians making tall promises to the voters, with no intentions of keeping them. What makes them believe that they would be any different as employers.Kapil Sibal is not only a politician, he is a top lawyer too. He will not even fear the law.

Indian TV news industry is totally broken and Tiranga closure is just an example.

Brainstorming content for the Start Up TV Channel

The Union Finance Minister Nirmala Sitharaman announced in the Union Budget that the government will start an exclusive TV channel for Start Ups. This will be under the Doordarshan umbrella. So it will be on the lines of DD Kisan , an exclusive TV channel for farmers launched in 2015.

Government had also launched 32 DTH channels to broadcast lessons on various subjects for undergraduate and post graduate students through SWAYAM PRABHA. This was launched in 2017. Each Swayam Prabha channel beams 4 hours of fresh content everyday. This content is repeated 6 times everyday.

Let us look at this exclusive TV channel for Start Ups. What kind of programming may make this TV channel popular. Let us not worry too much about its viability as it is funded by the government.

This TV channel is just one of the pieces under the Start Up India programme of the government that aims to promote entrepreneurship and kickstart economic activity. This will create a virtuous cycle.

Who is the audience for this TV Channel ?

Existing entrepreneurs in different stages of setting up or running new businesses. The TV channel also should address potential entrepreneurs and this can be anyone with a certain psychographic profile.

What would this audience expect ?

Entrepreneurs have lots of problems. Money, market, technology, people to name a few. A TV channel cannot solve it. But surely can give information and also inspiration about how others are solving it or have already solved it.

This has to be packaged and delivered in an engaging way . Otherwise, it will be impossible to hold the viewers’ attention.

What is already available ?

Many business news channels have case study like stories of successful entrepreneurs and startups. CNBC TV 18 has Young Turks.

There are numerous YouTube channels and web-sites focussed on start-ups. Most have a huge technology start-ups bias and almost all the content is available in English only.

TED talks and their Indian versions .

Here are the questions to be addressed

What should be the kind of programming that will make this TV channel popular ? Suggest some programme formats

How many hours of fresh programming everyday is feasible ?

What should be the language of this channel ?

I look forward to your comments

Kohli vs Williamson – 2008 World Cup Semi Finals Redux !

I woke up this morning to read the news that India would be playing New Zealand in the semis and not England as was initially predicted. South Africa created an upset by defeating the table topper Australia.
The pessimists started posting messages, that India had never defeated the Kiwis in World Cup. Then this really heartwarming and positive tweet came up. India had defeated New Zealand in 2008 Under 19 World Cup in the Semis.

Coincidentally, India was led by Virat Kohli and New Zealand by Kane Williamson then also.

I would like to draw your attention to the fact that on the Corruption Perception Index by Transparency International , New Zealand always comes in the Top 3. In the 2018 list , New Zealand’s rank was No 2 . In the same list, India is a lowly 78th rank. So one would expect New Zealand to be an ideal meritocracy whereas India corrupt and chaotic.

If after 11 years, the captain of the Under 19 team of India and New Zealand are Captains of their respective country teams what does it tell us about our Indian cricket system

1. India’s Under 19 system worked well to identify Virat Kohli early and appoint him Captain

2. Indian cricket system is far more meritocratic and corruption free than rest of other Indian systems. ( Because of which we are 78th) Despite, all the selection controversies we keep
hearing by and large in cricket talent gets recognised in India
.
3. New Zealand is a country with a population of 45 lakhs, less than Hyderabad’s. So managing a system in India is far more complex than NZ’s. If merit prevails in cricket, despite the size of India and also a rather corrupt overall society compared to New Zealand, it is commendable.

Grudgingly, I say kudos to BCCI.

 

Some strange parallels between the lives and careers of Guru Dutt and Sanjeev Kumar

Today, 9th July is the birth anniversary of two well respected film personalities of yesteryears, Guru Dutt and Sanjeev Kumar. There were quite a few similarities and even a connection ( for that you have to read till the end between the two birthday personalities.

Let me start with the parallels.

To start with, both came from families unconnected to films. They belonged to states not usually the home for Bollywood actors. Guru Dutt from Karnataka and Sanjeev from Gujarat.

Both got recognition not by their real names but given names. Guru Dutt was born Vasanth Kumar Shivshankar Padukone. Harihar Jethalal Jariwala became Sanjeev Kumar.

Both Guru Dutt and Sanjeev Kumar worked in the commercial film industry of Mumbai, yet they were not seen as typical chocolate box heroes. Both were never in the race for becoming box office superstars. Yet, they were successful. Guru Dutt more as a Producer – Director and Sanjeev Kumar as an actor.

Both Guru Dutt and Sanjeev Kumar had a rather unfulfilled and sad love lives. Guru Dutt married the singer Geeta Dutt but that marriage did not work after a few years. They lived separately later and Geeta Dutt died at the age of 41, due to excessive drinking. Guru Dutt was obsessively in love with Waheeda Rehman,but she did not reciprocate. Sanjeev Kumar had proposed to Hema Malini just after Seeta aur Geeta, but she preferred the other hero in the film Dharmendra to be her life partner. Sanjeev Kumar was later paired with Sulakshana Pandit but that also did not lead to marriage.

Given their miserable personal lives, both Guru Dutt and Sanjeev Kumar were alcoholics. .

Their ends also came at a rather young age. Guru Dutt at 39 and Sanjeev at 47. It is not known whether Guru Dutt’s death was an accident or a suicide. His family insists that it was a combination of alcohol and sleeping pills that became lethal. Sanjeev Kumar had a congenital heart disease. He was aware that none of the male members in his family had lived beyond their 50th birthday. So his death came early but not unexpected.

Guru Dutt and Sanjeev Kumar came from a different generation, separated by 13 years. So they never worked together. Yet, look at this coincidence. K Asif , the legendary director of Mughal-e-Azam, had signed Guru Dutt for Love and God. Guru Dutt died before completing his work. K Asif signed up Sanjeev Kumar to play the role supposed to be played by Guru Dutt. Then K Asif died. The film remained incomplete for a long time and then released by K Asif’s wife in 1986 after Sanjeev Kumar’s death. The film flopped badly.

Several decades after the deaths of Guru Dutt and Sanjeev Kumar, they are still remembered with respect for their work. The similarities and coincidences make us wonder if there is some truth in Linda Goodman’s Sun Signs and astrology.

 

 Indians’ love-hate-love affair with ghee

Ghee has been an essential part of Indian life for ages. Ghee is not just a cooking medium. It is a seasoning. It is a sacred fuel for the havans. It lights the temple lamps. A lot of ayurvedic medicines have to be taken only with ghee. Ghee is a lotion. So ghee commanded respect and status, that perhaps nothing else in the kitchen shelves got.  On this, in varying degrees, whole India agreed.

Sometime in the 1930s, the Europeans sensed an opportunity to market a substitute for ghee. They imported saturated vegetable fat from Holland. It got an Indian name Vanaspati. Lever Brothers even launched a separate company called Hindustan Vanaspati Mfg Co in 1931. Levers got the rights to produce Dada vanaspati in India. In order to put their identity in the brand, they included an L in the middle, so DALDA was born.

Dalda was marketed as a cheaper alternative to ghee, largely only for the ghee’s use as a cooking medium. Marketing , of Dalda was not easy. As Sagar Boke of Bunge India says
“The challenge for Dalda in the initial years was to drive home the point that it tasted just like desi ghee, had deep-frying properties like it, but unlike ghee, it wouldn’t feel heavy either on the pocket or the palate.”

Suddenly the exalted status of ghee was under attack. New words started entering the common Indian’s lexicon. Cholesterol, HDL and LDL, saturated fats, unsaturated fats , PUFA etc some scientific and a lot just marketing mumbo-jumbo carefully created by the marketers, media and medical fraternity either playing ball or simply keeping quiet. Ghee was seen as unhealthy, at least as a cooking medium.

Dalda enjoyed a dream run for three decades. Dalda became a generic name for vanaspati.

Dalda

Some of the very reasons that vansapati marketers used to move consumers away from ghee , became the reasons on which vanaspati lost out to the refined oil marketers. Vanaspati almost became a taboo, and a byword for unhealthy eating. So much so, that Hindustan Unilever decided to sell Dalda to Bunge India in 2003.

Vanaspati’s loss was not ghee’s gain, immediately. It took a while for the long nurtured misconceptions and biases against ghee to go.

Ghee’s comeback can be traced to the influence of the Babas and Swamis. As Indians turned towards yoga, ayurveda and watching the TV channels like Sanskar and Aastha, ghee came back. Ghee also got differentiated as Buffalo Ghee and Cow’s Ghee.

The new found love for cow’s ghee in the last 10 years., is the real turnaround story in the fortunes of ghee. Though cow’s ghee even now accounts only for 10 % of the total ghee sales, it is growing at 3 times the market rate.

Cow’s ghee is that holy cow which has all the virtues of ghee but none of its faults.

Cow’s ghee has become such a selling point that Hindustan Unilever that several decades ago had bad mouthed ghee in order to sell their Dalda vanaspati today markets its bathing soaps and lotions under their Ayush range of personal products as having Cow’s Ghee.

AYUSH_MOISTURISING_COW_S_GHEE_SOAP_100_GM_large

Will the cow’s ghee fad last ?

RD Burman : A Case Study in Psychoprofessional Gravitation:

Today is RD Burman’s birth anniversary. As one of the huge fans of RD, I have been listening to his songs for last several days on my Carvaan. Some of my music friends would know how much I adore him. I have nothing to add on his music.

As a fan, I write this piece to make sense of the pain he went through in the last few years of his life.

It is fairly well known that he died a rather unhappy man at a fairly young age,i.e, before he turned 55. The last 7-8 years of his career were very painful for him. Ijaazat in 1987 was his last big hit. Many of his later films did not do well ( except his swansong 1942 , A Love Story ) . He himself was a pale shadow of his former self.

Many commentators blame the industry for not giving RD his due. People blamed producers like Nasir Hussain for whom he gave so many hits from Teesri Manzil onwards. Nasir Hussain shifted to Anand Milind for QSQT. Ramesh Sippy and Subash Ghai went to Laxmikant Pyarelal after signing RD Burman.

After reading this fabulous article ” Your Professional Decline is Coming ( Much) Sooner than you think “ by Arthur C Brooks, (Link given below) , I realised that RD Burman himself needs to take a lot of the blame for his misery of the last 7-8 years of his life. It is unfair to blame the industry. People even blame some of his associates , including his wife Asha Bhosle for his misery of later years.

Let me explain. As per the article

Principle of Psychoprofessional Gravitation:

The idea that the agony of professional oblivion is directly related to the height of professional prestige previously achieved, and to one’s emotional attachment to that prestige. But if you reach professional heights and are deeply invested in being high up, you can suffer mightily when you inevitably fall.

RD Burman’s case is similar to that of Charles Darwin, as mentioned in the article. RD achieved extraordinary success at a pretty young age. He composed ” sar jo tera chakraye’ for Pyaasa as a teenager. He got break as an independent music director in Chote Nawab when he was barely 22. His big hit Teesri Manzil happened when he was 27 years. During the purple patch that he had collaborating with Kishore Kumar and Anand Bakshi for several Rajesh Khanna films in the 1970s, he was in his 30s. In that period , he was not only producing high quality music, he was prolific in his output too. Many years he had 10-12 releases.

In the 1980s, call it bad judgement or bad luck many films for which he gave fabulous music they bombed badly at the box office. Yeh Vaada Ra6ha and Bade Dil Wala , just to name a few. Bappi Lahiri and Laxmikant Pyarelal’s music and films became bigger hits. RD was seen as unlucky.

RD himself started losing his creativity. He started repeating himself. He was expecting that he would get the same success. Success further eluded him.The reality is that he had reached his level of psychoprofessional gravitation.

RD could have well accepted this as a professional decline and tried to reinvent himself or accepted it as a natural process of burn-out . But , psychologically, he was just a child. He did not have the maturity or any guidance to look at his career and life in a different light. The only thing he knew was to create music. It did not help that he had no real family. He was the only child of his parents. Though married to Asha, she used to live with her children separately. He did not have any children of his own. He used to eat, breathe, sleep with his musicians. But,they also deserted him slowly when he stopped getting work.

If only RD had developed the maturity and come to terms with his professional decline he would have lived a lot longer and would have died a happier man. Someone who continues to give us so much joy 25 years after his death, deserved a lot more happiness. As a fanboy that lament will remain.

Is there a wealth effect when gold prices rise ?

The gold prices are touching new highs in the bullion market. It is touching Rs 35,000 per 10 grams. In the last one month alone the prices of gold has risen by 9 %. In the last one year it has gone up by 13 %.

As per World Gold Council, a total of 190,000 tonnes of gold have been mined till date. Out of this Indians’ private holdings is considered to be the highest between 18,000 – 24,000 tonnes. American citizens’ holdings is a mere 4000 tonnes.

The value of Indian gold holding at current prices is about $ 1 trillion. Even if one does not go into the current GDP measuring controversy, India’s GDP is about $ 2.9 Trillion. The value of gold in Indian households is equivalent to a third of Indian GDP.

So in the last one year when gold prices have gone up by 13 %, the wealth of Indians has gone up due to gold price increase by about $ 115 Billion. That equals about 3.9 % of the GDP.

So for no real effort on the part of the Indians or the government, this wealth has got added to the Indian households overall. Obviously, this is only notional. Also, the distribution of gold is not uniform.

When asset prices rise, there is a tendency to spend more and save less because of the feel good factor that comes because the pressure to save becomes less. During the real estate boom of 2000s it was seen.

Because of this sudden increase in the value of their gold holdings, will households start consuming and spending more ?

Usually for the information about gold prices to trickle down to households and also households making an estimate of their wealth increase, it will take a fair amount of time. Also, due to volatility, for people to accept that the increase in the price is real requires the prices to stabilie at a higher level. Only then they will go out to spend,

In casual conversations with people ( among people like us (PLUs)) who bought a flat or a house, I see buyers often doing a valuation check. They will say proudly “I bought it for X , 10 years ago, now it is 2 X or 3X ” Obviously, they are not going to sell it, because they are living in it  So no money is going to enter their accounts. Just they feel good that they are wealthier and also they made the right decision.

I have never seen PLUs discussing about their gold holdings. Because gold mostly follows a one way route. Gold comes in but rarely goes out. At most it gets transformed from one jewellery to another or it is gifted , mostly within the family. So gold is rarely valued in money terms.

When gold prices rise, Indians should feel happy. But my guess is they are going to grumble that the jewellery that they wanted to buy has become unaffordable.

What do you think ? They would go out and spend more, grumble or just get on with their daily life as usual.

Financial Support to grown up children

We and our children belong to two different generations. As per the table given below, my peer group are either Gen X or Boomers. Our children are either Millennials or Gen Z. The Mint Story, whose link is given below talks about how some Millennial children , continue to take financial support from their parents upsetting their retirement plans.

Generations in 2019

Gen Z 7-22
Millennials 23-38
Gen X 39-54
Boomers 55-78
Silent 79-91

Source : Pew Group

In my interactions with my peer group as well as other people in my Personal Finance related training programmes I have seen this is as a pretty common problem.

This article suggests that a lot of the responsibility is on parenting. Giving financial responsibility to children as well as communicating to them to live within their means is parents’ job. Also, by supporting children well into their 20s and 30s parents are upsetting their own retirement kitty. Valid points. There is nothing wrong with this advice.

I would like to point out that the external environment has contributed a lot to this situation in india. The entry level salaries in many jobs haven’t risen for the last many years in India.BPO salaries are Rs 15K per month and software engineers salaries are Rs 25K per month for last five years, atleast. Even after joining, the hikes of 15-25 % per annum, like in the 2000s, is all gone. Many private companies, who do not have a concept of Dearness Allowances, barely hike salaries to match the inflation. Obviously, there are exceptions but the average millennial in an average job is not in a pretty position.

If income has not been high and rising fast enough, the expenditures have been high and climbing because of lifestyle issues. Here, I would put a lot of blame to the parents, my peer group. I will give a few examples here.

1. When children start attending classes or tuitions when they are 10-11 years , parents’ to reduce their own anxiety give a mobile phone.
2. To save time and have more time for studies, children are given bikes and scooters or allowed to hire cabs and autos , instead of going by bus or other means.
3. When children are travelling alone, parents often can’t take the anxiety of rail journey, so they send them by flights.

Once they are used to these, even when they start earning they see this as an entitlement even if they cannot afford it . Also, going down in lifestyle is so very difficult if one is used to a higher level of comfort.

Some children, realise it is not proper to ask money from their parents, end up taking personal loans and credit card debts, only making matters worse. .With incomes not rising, these debts one day come to a head and they come to their parents to bail them out.

The parents’ love/ guilt then takes over and they start funding it by dipping into their savings. The problem is solved temporarily but the retirement can has been pushed down the road.

No easy solutions here. Your thoughts are welcome.

The Halwa Ceremony before the Budget 

Yesterday the Halwa ceremony was observed in North Block. This marks the beginning of the printing process of the Union Budget.
This tradition was started by the then Union Finance Minister T T Krishnamachari. Apparently, this ceremony was inspired by Mahabharata. Before Pandavas went incognito in the last year of their exile, halwa was given to them. As Finance Ministry officials go incognito when budget printing happens, halwa was chosen. Interesting !!!

Mobile beats TV in US

What was feared for a while, has happened in 2019. Americans are spending more time on phone than on TV. In future, TV is expected to decline further.

My guess is in India, after the cheap wireless data revolution started by Jio and matched by others, mobile time for most Indians would be higher than TV time. WhatsApp, TikTok, YouTube, music streaming,.cricket on Hotstar , there are enough apps to engage the average Indian. TV hardly has that draw.now.TRAI with its new tariff rules, created so much confusion that people are even thinking of discontinuing their DTH service.
Will DTH go the pager way ?

Gully Boy : A Fine Balance of Roots and Wings

This is a follow-up post to my post on Tambrams, but it can be read stand alone also.

“There are only two lasting bequests we can hope to give our children. One of these is roots; the other, wings.” — Hodding Carter, Where Main Street Meets the River (Rinehart)

The above quote has been quoted by several people including Dalai Lama as a guiding principle in parenting . One may disagree with it , as Annaji Garimella,does, saying humans are not trees , so why this fixation about roots.

Connection with roots means different things to different people. Does roots mean just your immediate family, or your village or town where you grew up, or it means the culture and values associated with the people when you were growing up ?
How can someone maintain the connection with the roots , when everything is changing ?

Is connecting with roots , an expression of gratitude towards the people and the place that gave you the strength to become what you eventually became ?

Is it just a reference point, for reflecting and seeing how far you have come from where you started. ?

Or Is it just an emotional space, a nostalgia about the time, space and people when things were simple and life less stressful as Gokul Das hinted at.

We do not choose our roots. We are born to it. Some of us are luckier than others but I guess nobody has it perfect. There are elements of roots which you want to retain and some which you want to change.

I could see beautiful depiction of the pulls from roots and wings in the movie ‘Gully Boy’. The hero played by Ranveer Singh is born in a poor family , living in the Dharavi slums of Mumbai. His family is dysfunctional with a cruel father. The hero’s friends are petty criminals. In the midst of all of that he has a dream to become a rap singer. His father insists that he stop dreaming and become a driver first and later a servant in his uncle’s firm. He takes risk, leaves the job and keeps working on his skill and eventually wins a Rap singer contest. He, becomes rich and famous.

Yet, after winning he goes around meeting all his folks and friends in the slums. He helps release his friend who is in jail. He takes care of the young children in slums. He even invites his father to his performance, despite the acrimony.

The movie shows while pursuing his dreams he overcomes many things that are limiting about his roots and yet when he achieves his dreams, he looks at his roots with gratitude and compassion.

Obviously, it is fiction and real life is different. But worth watching ( available on Amazon Prime ) and also thinking , with the ‘Roots and wings’ lens.

If you have watched Gully Boy, I would like to hear your comments.

  •  Posted by G.Mohan in Facebook on 2nd June 2019

Padhoge likhoge, banoge bekaar

“A generation ago it was inconceivable to get a job in the organised sectors without a graduation degree. Today the minimum education required to get a job in the organised sectors is much lower and is dropping.” -says Mahesh Vyas, CEO of Centre for Monitoring Indian Economy.

I would not have believed this if I had not seen it for myself. Recently, I was conducting a training session at an IT Services company, a big MNC, whose name I cannot disclose.

One young man of about 23-24 years was assigned as an escort to me for going through all the security processes for entry and exit. I struck some small conversation with him, just to kill some time and also to know what really goes inside this huge and imposing steel and glass building.

I asked him , how long he had been with the company. He very proudly said ’19 months’. ( I did not feel so much pride even after 19 years  ) I asked him if it was his first job, he said, ” No, ‘second’.

I asked him what was his role. He said ‘Quality Analyst’ . I assumed with such a fancy role , he must be an engineer. I asked him ‘ Which engineering college was he from ?’ . He said he was not an engineer. He had joined a general B.Sc course, put an application in Naukri.com because some of his friends had got jobs through it. He got a call from a BPO firm and he got the job . Given the odd working hours, he left his studies mid-way. He seemed to have no regrets.

I asked him, as a Quality Analyst his job must be very challenging. He said , it was initially , now it is ‘cool’. I then probed a little further to find what he really did at work . He said his job was to watch YouTube videos as they were getting submitted for uploading and see if they violate Google’s policies. If something is violating then he had to flag them and then his supervisor would take a decision on whether to allow the video or stop it from being uploaded. ‘

Though I did not ask what his salary was, he seemed quite happy with all the paraphernalia the job gave like the choice of beverages in the vending machines. He also mentioned that the company gave pick up and drop, whenever the shifts were late night or early morning.

I just wonder what is the future of such skills and jobs. India in general and Hyderabad in particular has become a big centre for such IT enabled services.

For these services, higher qualification is actually a disqualfication. It appears you are better of in India with lesser qualifications than more, as things stand now,

  • Posted by G,Mohan in Facebook on 2nd June, 2019

Tambrams- strong wings, weak roots ?

Home, Defence, Finance and External Affairs Ministers are considered core of the Union cabinet. Perhaps never in the history of post independent India, two Tamils have occupied two of the four most important portfolios in the Union cabinet.

We have them now.

Nirmala Sitharaman is the Finance Minister and S Jaishankar is the External Affairs Minister.

Yet, there would perhaps be no celebrations in Tamil Nadu. Because, they have not been elected from Tamil Nadu. I don’t think they can ever win a Lok Sabha election in Tamil Nadu. Tamilians will not identify with them and perhaps, they also would find it difficult to identify with an average Tamilian.

That is the tragedy of many a Tamil brahmins ( Tambrams).

Both Nirmala and Jaishankar are Tamil brahmins ( Tambrams) , whose roots can be traced to Tiruchirappalli or Trichy. Nirmala had a little longer stay in Tamil Nadu, having studied her BA in Trichy and then later studying at JNU, working in London and settling down in Hyderabad , having married a Telugu.

Jaishankar’s link to Trichy is further removed. His father the well known strategic analyst K Subramanium was born and brought up in Tamil Nadu. Subramanium worked in Delhi as a civil servant and so Jaishankar grew up in Delhi, went to Air Force school, St Stephens, JNU and then joined the IFS. He is married to a Japanese lady, Kyoko. His work took him all over the globe including Ambassador assignments in US & China. His bio says he can speak Russian, Tamil, Hindi, Mandarin, Japanese and Hungarian. Tamil is just one of the many languages he knows.

Nirmala and Jaishankar are to my mind fine examples of how lives of many a Tamil brahmin have shaped in post-independence India.

Most Tambrahms have taken the professional route to build a career. They have not restricted themselves in seeking opportunities in any part of the globe. They have also not been very rigid about marrying within their community. They have learnt local languages wherever they went to get on with their work, but hardly integrated with the local people. i cannot imagine Nirmala winning an election in Hyderabad or Jaishankar in Delhi.

In their eagerness to pursue their career and notch up achievements in their profession, they have spread their wings far, but along the way they have little or very tenuous connection with their roots. I would not be surprised if Nirmala and Jaishankar’s only Tamil connections are starting the day with filter coffee and ending every meal with curd rice.

  • Posted by G,Mohan in Facebook on 31st May , 2019

The unlikely similarity between BJP and Tata Group

The Elections are over and the results are out. Now is the time for government formation. This is the time to to speculate about the leaders likely to be part of Modi’s cabinet.
While thinking about it, it struck me , the uncanny similarity between BJP’s top leadership and the Tata Group.

Despite 100s of companies, of which nearly 30 are listed companies , Tata Consultancy Services (TCS) towers over all others and accounts for more than 3/4ths of the valuation of the group. Narendra Modi is like TCS. Just like TCS came from nowhere , to become the dominant and most valuable company in the group, Narendra Modi started as a humble karyakarta , became CM and now towers over not just the party but the country.

A distant second to TCS but that is a darling of the stock investors is Titan . Amit Shah, the party president, is like Titan , young and dynamic.

Arun Jaitley and Sushma Swaraj who were once leader of BJP in Rajya Sabha and Lok Sabha are like Tata Motors and Tata Steel. Their sickness does not give them the energy to lead from the front. Their salad days are over. Rajnath Singh, though a Home Minister and a past BJP President is like Tata Power, with power only in name.

All the rest of the leaders are like the rest of the Tata companies , who serve their own small customer base but do.not count for much.

Another similarity is that just like the listed Tata companies are controlled by Tata Sons Limited, an unlisted holding company, BJP also has a mother organisation i.e RSS . Just like the relationship between RSS and BJP is mysterious , the relationship between Tata Sons and the Tata companies is unknown. Everyone knows that most important decisions are taken at Tata Sons or RSS HQ and usually it cannot be opposed or violated.

Both BJP and the Tata Group suffer from a vacuum of talent. The No.1s are masking a lot of their inadequacies and gaps.
The challenge for BJP is to find its next Modi and for the Tata Group to find its next TCS.

Note : Please treat this metaphor as just a figment of an idle analyst’s imagination

  • Posted by G.Mohan on 24th May , 2019

Lull after the elections in Nukkad

Remember Nukkad the Doordarshan TV serial of the 1980s. It had a bunch of endearing but generally good-for-nothing characters living in a slum somewhere in Mumbai.

Now imagine these characters sensing the various opportunities for extra hands needed or making a quick buck during the Elections 2019 , get involved in various things .

Now that the campaign is over, they now return to Nukkad and exchange notes with each other sharing their exploits and experiences. Here is what they said to each other :

Chaurasia : Arey bhai log, aap log do mahine se gaayab ho. Apun to bas yahaan paanwa banate reh gaye. Batao kahan the..Hum bhi sunen kya kya kiya

Hari : Arey apun ko to Amit Shah ka security ka kaam mil gaya. Apun akka Hindustan helicopter mein ghoom liya.

Ghansu : Main to gaon chala gaya, kaka ne bulaya tha. Unka tent shamiana ka ek dhandha hai. Is chunav mein mein wahan bahut kaam tha

Khopdi : Tumko to pata hai apne ko kya chahiye. Jab apna Ganpat ne bola ki ek neta apne ilaake mein daaru baant raha hai. Apun wahan pahunch gaya aur unka daaru godown sambhala . Bas do mahine mein bahut daaru piya.

Guru : Apun ko bachpan se patrakar banne ka shaukh tha. Guptaji bole ek naya TV channel khul raha hai aur uske liye patrakar chahiye. Apun pahunch gaya , interview diya udhar aur apne ko kaam mil gaya.

Dukhiya : Apun ko beech beech mein poster chipkane ka kaam mila..kabhi painting kiya ..mohalle mein chit baanta ..bahut biryani khaya lekin Abhi tak kuch paisa nahin mila …

Chaurasia : To Sab bahut khush phir…Kuch party ho jaaye

Hari : Itna ghumaya Shah ne mera sar ghoom raha hai…khud bas Thepla aur Khakra khata hai aur bas wohi sabko khilata tha…Tandoori murg ke liye dil taras gaya bhai !

Ghansu : Haan kuch paisa kama liya…samajh gaya, 100 kursi bhej kar 200 kursi bolo aur 400 kursi ka bill kaise banate hain…Elections ki garmi mein kisi ko pata hi nahin chalta ..badhiya dhandha hai

Khopdi : Apun ke paas 3 mahine ka Angrezi maal hai… Apun tum sab ko aaj raat pilayega ..Hick !

Guru : Apun imaandari se sab se baat kiya , video mein interview liya …Baat mein pata chala khali kuch interview rakh liya , baki kaat diya aur dikhaya bhi nahin ..Mujhe maloom nahin tha ki ek neta ka benaami channel hai… abhi sunta hoon ki agar neta haar jayega to TV channel bandh… Motorcycle aur ye Samsung mobile mere paas hai , mein to dene wala nahin

Dukhiya : Is election mein to apna kuch hua hi nahin …Apna to ek hi sapna hai.., kuch gatbandhan sarkar ban jayein aur 6 mahine mein phir elections ho jaye , to apna beda paar ho…

Chaurasia : Challiye to isi baat pe sab log paanwa khaiye !

Note : This is just a piece of satire and not intended to discredit any political party or the election process in India

  • Posted by G.Mohan in Facebook on 19th May 2019

Live Sports dominates TV

As per a recent Financial Times article, in the US, In 2018, out of the 100 most watched broadcasts on US broadcast TV , more than 90 % of the most watched broadcasts were live sports events like NFL, baseball and basket ball events.

Compare this with 2011, when out of the 100 most watched broadcasts , roughly half were sports. Other was non-sports content including non-sports live events like Oscar awards.

From 50 % to 90 % is a huge change. In these seven years clearly media consumption habits have changed dramatically. People are spending lesser and lesser time watching network TV and spending more time on apps on smartphones. They get their video feed via Internet. Streaming services like Netflix and Amazon Prime give them the content and movies which they wish to watch at their convenience.

Even in India, live sports is big business. IPL 2019 was a roaring success for Star Sports. IPL Finals on Hotstar created a world record of 18.6 million concurrent users. It is not just IPL. There are so many cricket leagues these days. Each state or even a city like Mumbai has a cricket league. Besides cricket in India now we have Kabaddi, Football , Volleyball leagues. These are all mostly aimed for audience on TV.

It is interesting to note that in IPL 2019, 50 % of the audience on TV were women. Watching live sports being a male obsession also is a stereotype we have to discard

  • Posted by G.Mohan on 18th May , 2019

Are Professional managers any different from Owners ?

Today the news has come out that Mr Sanjiv Puri will take over as the Chairman and Managing Director of ITC . It is on expected lines because he was already the Managing Director of the Company, since 2018. YC Deveshwar was the Chairman until he passed away on May 11.

YC Deveshwar was the Chairman and Managing director for more than two decades, from 1996 to 2017. Deveshwar became synonymous with ITC.
After much talk for a long time about a successor for him, Mr Puri was announced as his successor. Several worthy professionals like Mr Kurush Grant who were tipped as successors to Deveshwar retired quietly.

In hindsight, it appears the choice of successor was also driven by the serious illness of Y C Deveshwar. ITC has not clearly mentioned the cause of Mr Deveshwar’s death. Some media like Business Today have reported that he was suffering from cancer. Unconfirmed reports say that he infact had been suffering from lung cancer. If this news had been released publicly this would have not gone down well for a market leader in cigarettes.

ITC is often cited as an example of a professionally managed company led by Indian professionals. Yet when I look at the example of YC Deveshwar and transition from Deveshwar to Puri I do not see much of a difference between a professionally managed company and an owner driven company.

Let us compare ITC with an owner driven group. the Aditya Birla Group. Aditya Birla was suffering from cancer. The news was kept under wraps, When he was taken to the US for treatment even at that time the exact illness was not disclosed. This was done perhaps to not create panic among the stock markets and other company observers.This is considered to be bad corporate governance because good corporate governance talks about transparency and public disclosure of information that is material to the shareholders of the company. If Aditya Birla group , being an owner driven group showed poor transparency , ITC as a professionally managed company did not disclose any differently.

One can argue that Deveshwar was only a Non-Executive Chairman. But was he really Non-Executive ? Would he have been non-executive , if he did not have serious illness. If he were really Non-Executive why was he paid such a handsome package ( his salary in 2017-18 was Rs One Crore per month plus perks and bonus) by the company ? Just like an owner wants to hang on to power as long as he can, Deveshwar hung on to the top job. As a professional, he did not follow normal rules of retirement that is applicable to other professionals in the company. Succession planning is only for others !!

If indeed Deveshwar was a Non-Executive Chairman, ITC would have selected a Non-Executive Chairman on his death. In fact, good corporate governance practice prescribes that Chairman and CEO positions should be separated. SEBI has even issued guidelines that all top 500 companies should separate the Chairman and CEO positions, as recommended by the Kotak panel on corporate governance.

Yet ITC has gone back and appointed Sanjiv Puri as CMD. It is more like Sanjiv Puri has grabbed the opportunity to get the top position and is unwilling to share the power with any Chairman even if he is Non-Executive. Sanjiv Puri is a IIT Kanpur and a Wharton MBA graduate, as good a professional one can get . Yet Sanjiv Puri’s actions are no different from a typical owner. Next I expect Puri to increase his salary from a measly Rs 12 lakhs per month to a level which Deveshwar was earning in a few years. My guess is Sanjiv Puri will like Deveshwar hang on to that position as long as he can. Obviously, that is what is he has seen his predecessor do. This is only a guess and I have no access to Mr Puri.

Maybe professionals behave like owners only in old companies like ITC and L&T. But they are not good examples. If you have come across good examples of professionally managed companies from India ( No PSU, No MNC) please do let me know, it will help me change my opinion.

P.S : This is not a commentary on YC Deveshwar’s leadership and legacy.

  • Posted by G.Mohan on 14th May, 2019

Greed has no gender bias

Around 2015-16, Indian business took a lot of pride on the fact that the corner office in many large banks and financial services organisations were occupied by women. SBI was led by Arundhati Bhattacharya, ICICI had Chanda Kochhar, Axis Bank had Shikha Sharma, Usha Ananthasubramanian in PNB, CRISIL had Roopa Kudva , NSE had Chitra Ramakrishna and a few more at one level lower and smaller organisations.

Now almost all of them have left their positions and mostly replaced by men.

I am sure all of the women got there on the basis of their competence and leadership skills. They would have competed with men and proved themselves over a long period to get the top job. As women it would have been tougher because of the obvious biases in largely male dominated boards of directors and other difficulties of managing family and work.

One comment I have often heard in favour of women is that they are clean and they are not part of typical cliques of men that operate at the top of many organisations. As many women, rarely take part in after office gossip and spending time together at clubs or watering holes, it is assumed they are not part of these boys networks. Also, many successful women have equally successful husbands, so there is no real need for extra money earned through dubious means.

Many of these women leaders usually have a no-nonsense approach outwardly that it would appear that no one would have the courage to make offers that bend the rules or those that are outright illegal.

The above is slowly coming out to be just a perception and not reality. Women are as vulnerable as men to enticements of different kinds, particularly quick big money. Some of them, just like men are part of networks that does dubious deals. If one goes into the murky details of the scams where Chanda Kochhar , Usha Ananthasubramanian and now Chitra Ramakrishna are involved, the above becomes clear.

Integrity and character are as rare in women as they are in men. Just because we did not see many women in top jobs, we did not have adequate examples, so we carried a wrong perception.

I am not saying that women are more corrupt than men. All I am saying is do not mix up gender with character. The same minefield of corporates and rat race that make many a men compromise their values, forces women to do so also. The same greed that makes men to put a hand in the till tempts women also.

We the public and media made every woman at the top a role model. They better live upto that else, it is very unfair to all the young girls and boys who look upto them.

  • Posted by G.Mohan in Facebook on 2nd May 2019 

A Brief History of Indian Time

One grouse I have about our history textbooks is that it has too much information about rulers, dates, wars and very little historical information about important aspects of everyday life.

Time for instance. We in India from my generation and later, assume that Indian standard Time ( IST) was a given and it was always so. Often while dealing with Americans we find it odd that they do not have a US standard time. We think their six time zones ( 4 in the mainland ) coupled with complications of Daylight savings time are unnecessary complexities or ‘nakhras’.

It is not. Back to basics. The earth is divided into 360 degrees of longitude. In one hour the earth travels 15 degrees, India with its 29 degrees breadth in longitude, ought to be having atleast two time zones. The sunrise in the western most tip of India would be two hours after the Eastern most tip.

India did have multiple times in British India. Bombay Time, Calcutta Time, Madras Time , Port Blair Time and Indian Standard Time. Interestingly, way back in 1802 , an observatory was set in Madras and the Madras time was the first one established by John Goldingham , the official astronomer of East India Company. In 1884, after an International Conference in Washington DC, India was divided into 2 time zones, Bombay Time and Calcutta Time. Calcutta Time was One hour and 3 minutes ahead of Bombay Time.

Before the British came there was no need for an Indian Time. British by establishing Posts and Railways connected the various parts of India and hence they had to come up with an agreeable standard, else there would have been chaos.

Indian Standard Time was established on 1st January , 1906 . This was 5 hours 30 mins ahead of Greenwich Mean Time. Geographically, it passed through 82.5 deg E in Mirzapur , UP.

Even after establishing IST, India continued to have multiple time zones. Bombay Time continued till 1955. Bombay Time was 39 minutes behind IST. Railways used to follow the time tables as per Madras Time, as it was in between the Calcutta Time and the Bombay Time. . So , Madras Time was also known as the Railway Time of India.

After independence , the government decided to adopt Indian Standard Time as the official time. All India Radio was used extensively to broadcast to the public so that the people could set their clocks and watches. If we the people, made IST as Indian stretchable time, please do not blame the government for that 

  • Posted by G.Mohan in Facebook on 30th April, 2019 

Will Bollywood be able to avenge the Avengers ?

Avengers: Endgame has got the best opening for any film this year in India. In the first two days it has crossed the important Rs 100 crore mark, even before the weekend is over. Only Bahubali 2 had a bigger opening.

Avengers : Endgame, has been released in 2800 screens across India in 4 languages namely Hindi, Tamil , Telugu and English. The number of screens is lower than Bahubali’s 6500 and Rajinikanth’s 2.0 8000 screens release. Avengers is earning more money by having shows even beyond midnight in some cities and also pricing the tickets high,beyond Rs 1000 in some multiplexes.

Avengers has a marketing budget of 200 mn $, ( approx Rs 1400 crore) the highest ever for a Hollywood film. They would have earmarked a good sum for India also. It is this promotion that has created so much expectations about the film and not just limited to the Avengers fans. The release of the film has been timed well to catch the school children just after their school exams.

Bollywood producers were surely aware of this , so no big film was released during this week. Normally Bollywood producers are undeterred by Hollywood releases but Avengers seems to have been different.

Now the typical commercial film producers of Bollywood are in a tight spot. They cannot take creative risk by producing typical Indian stories that the small producers are able to take. They cannot produce spectatcular films using big budgets because they are too small when it comes to budgets in comparison to the Hollywood studios,. The marketing budget of one film like Avengers is higher than 3 years turnover of most Indian production houses.

If they occasionally try to take creative risk by producing an Indian story mounted on a big budget by their own standards they have a ‘Kalank” on their hands 😀

Disclaimer : I have not seen the film and the above is not a recommendation to see the film.

  • Posted by G.Mohan in Facebook on 28th April 2019 

Why Indian companies are so tied to their promoters ?

Narayana Murthy says Infosys is his middle child, because it came into being in between the birth of his daughter and son.

He mentions this obviously to bring out the emotional attachment he has with Infosys, much like a parent with a child.

Not just a parent, an Indian parent. An Indian parent is in control of his child’s life, at least he/she wishes to, a lot longer than a western parent. Children are also comfortable depending on their parents a lot longer than a western child does.

Is that the reason why the western concept of promoters leaving the management control to a board is still not getting firmly established in the Indian corporate sector.?

Perhaps. Just like an Indian parent and his child’s bond is longer and deeper than a western one, the bond between founder and his company may be deeper, leading to such situations as seen in Infy and Tatas.

Promoters like Indian parents are unable to let go and the company just like Indian children are comfortable depending on their promoters. They accept them with all their faults.

Even where promoters are no longer alive or have no second generation to take management position Indian cos are looking at leaders who are more like father figures. Cases in point, AM Naik in L&T and Yogi Deveshwar in ITC.

Western concepts like fixed tenures for Chairman, retirement age are treated by most companies as just rituals. Asking a promoter Chairman when he would retire is as sacrilegious as asking a parent when he/she would die.

With rising life expectancy, even retirement ages get shifted higher and higher. When it reaches unreasonable levels say 75, then there is a brilliant idea increasingly adopted by many , Chairman Emeritus.

It is often said that the role of a parent is to give the child , roots and wings. Indian parents often fail in giving wings to their children. Similarly, if the Indian companies want to be tied to the coat tails of their promoters, it is hard to expect them to develop wings and be global in size or make some world beating breakthroughs. They would be limited by the vision and capabilities of the promoter.

Why the brouhaha about a 50 basis points rate cut ?

In the last couple of days, a message has gone viral on Whatsapp where Santa and Banta have a conversation on the concepts of interest rates, inflation, repo, reverse repo rates. Well explained. If you have not read it already, you can read it here. When I first got it, I thought it will have some twist or humour in it, but it was pretty plain. Khushwant Singh, the creator of Santa and Banta, wherever he is up there, would not be amused.

These days, so much hullabaloo is being made out of monetary policy announcements. I know, RBI has been formulating monetary policies ever since they have existed. Monetary policies never used to get the top media coverage like the Union budget. In the past, twice a year RBI used to announce their policies quietly, which were tracked by the bankers and to a limited extent by the financial press. Even if they have become more important in a market-driven economy, do they really require everyone to be bothered so much. Regular newspapers and news channels of all kinds build hype about what RBI Governor would do in the next RBI policy announcement. These events have become bi-monthly, thereby making them more frequent. Two weeks of media content, one week before and one week after, is created every two months by this rather boring economic event. Speculations begin about whether there would be a rate cut or a hike or no change ? If a cut or a hike is expected, the extent of cut is speculated. How many “basis points” would be the cut or a hike ?

I first heard “basis points” in my second year MBA elective course Global Financial Services. Our Professor while teaching us Interest rate swaps, told us in the western world where interest rates are low and also they deal with billions of dollars, a smaller unit called “basis points” is used instead of the more common percentage. It is a unit limited to the treasury rooms and derivative traders of Wall Street and other financial hubs.

The way basis points are being used by Indian media today, it appears that if you do not know basis points, you do not what is going on around you. I suspect, when the curriculum is rewritten of middle school mathematics, “basis points”would be taught in the chapter on percentage.smile emoticon

Is this building financial literacy or is it pushing some one’s agenda ? I suspect the latter.

In the recent RBI policy announcement, Governor Rajan cut the Repo rates by 50 basis points. The industry leaders and stock markets were expecting a 25 bps cut. The media projected that Governor Rajan has given a windfall by doubling the rate cut from 25 bps to 50 bps. Instead of 0.25 %, he announced a cut by 0.50 %. The actual rate fell from 7.25 % to 6.75 %. If the headlines had been “Repo rate changed from 7.25 % to 6.75 %”, would the man on the street really bothered much. I doubt it. But when basis points are used, suddenly the cut appears huge.

The popular reason given by the government is interest rate cuts are very important because it will spur development by reducing the cost of money. Industry will borrow money to invest more and consumers will spend more by using more and cheaper credit. The biggest cheerleaders for this theory is the big business houses through the industry associations like CII, FICCI and ASSOCHAM.

In my humble opinion, the rate cut of 50 basis points, does not mean much to most of the big borrowers. The big borrowers know pretty much that interest rates written in the loan documents are not to be taken too seriously. If the big borrowers are unable to bear the high rates, bankers will come after them to do a Debt restructuring or a One Time Settlement. Despite, all the noise about the growing NPAs in the Indian banking system, as this Moneylife article says, most of the debt restructuring has happened in the Power and Steel sector where NPAs are the highest. If the banks are under pressure to do all the restructuring for the big borrowers, how do they remain profitable?

They can remain profitable, only by cutting their cost of money. The deposit rates will be brought down. All the brouhaha about a 50 basis points cut is basically a communication to the savers that get ready for lower rates on your deposits whether in Post Office or PPF or in bank fixed deposits. One of the cheapest source of funds for banks are CASA ( Current accounts Savings accounts) , the money lying in common man’s savings accounts. When the interest rates on Savings bank accounts, the announcement will not be in Basis Points. It will be a simple “ Banks reduce savings bank interest by ½ % from 4 % to 3.5 %”. The news will be in an inside page corner.

The government, the industry and the banks all are playing this communication game to make the savers lose some interest on their savings , while protecting their own interests totally.

  • Posted by G.Mohan 4th of October 2015

Why did Volkswagen managers allow the ”defeat” device ?

The VW scandal is now pretty well known. For the sake of further discussion and to find an answer to the above question, I am summarizing it based on my own understanding.

The Environment Protection Agency ( EPA) has found out that VW diesel vehicles with TDI engines have been passing the emission standards in USA using a ‘defeat’ device. This ‘defeat’ device automatically makes the engine work in the ‘test’ mode that makes the engine work in such a way that it passes the emission tests. While, during the routine run on the roads it works on the ‘normal’ mode that emits 40 times more Nitrogen Oxides (NOx) gases than permitted under EPA standards. Whereas, there have been no deaths due to these gases, studies have shown that NOx gases have harmful effects in the short term and in nearby areas leading to poor health. The Economist has quoted a study which estimates that 58,000 early deaths in US have been attributed to NOx. VW has admitted that there are 500,000 cars in USA which have the TDI engine. These devices are part of standard equipment since 2005. Some reports claim that globally there are 11 million vehicles fitted with such a device.

This is being seen as one of the biggest scandals ever to hit the automobile industry. The impact of this will not only be felt by VW, the company but automobile industry globally. Some analysts even fear that the future of diesel engines itself has come under a cloud.

The Chairman of Volkswagen group Martin Winterkorn has accepted moral responsibility for the above scandal. He has claimed that he was not aware of the existence of such a device.
If such a big price is being paid for this error, why is it that the managers allowed it to continue. I came across an old HBR article that first appeared in 1986, called “ Why “Good” Managers Make Bad Ethical Choices” by Saul W. Gellerman. According to the article there are four commonly held rationalizations that can lead to misconduct :
1. A belief that the activity is within reasonable ethical and legal limits
2. A belief that the activity is in the individual’s or the corporation’s best interests
3. A belief that the activity is “safe” because it will never be found out or publicized
4. A belief that because the activity helps the company the company will condone it and even protect the person who engages in it.

Let us now look at the VW scandal and see what rationalizations might have been at work among the managers at VW.

I doubt if the managers would not have known that passing the emission tests using ‘defeat’ software was seen as ethical or legal. Not just one or two managers, but a team of engineers and designers would have known that the company cars were clearing the tests by cheating and using clever means which were not ethical. They also knew that when the cars were going through the normal runs, they were emitting more NOx than that was permissible. They would have probably known that they were harmful, but may not have known the extent of the damage they were causing to the health of the community. It is quite possible that they would have rationalized that US standards for NOx were unnecessarily higher than the European standards deliberately to make diesel cars i.e European cars, less popular. It is likely, that other companies in the industry are also using such tactics. This could have also been used to rationalise their own actions.

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The managers of VW who approved these scandalous methods were allowing it to go through clearly out of their own self interest and organisation’s interest. VW had a stated goal of becoming the largest car maker in the world, defeating Toyota. This goal could not have been achieved if the US market was not conquered. So, it is quite likely that the senior managers who had volume targets, pressurized the designers and engineers to find solutions for meeting the US EPA’s emission standards. When it was not possible, through straightforward means, the ‘defeat’ device method was used to achieve the goals. Out of their own self interest, none of the managers would have blown the whistle.
Since this tactic was going on since 2005, I am reasonably certain that complacency would have set in, that this was ‘safe’ and would never be found out. Though there is some news appearing that Bosch, one of their suppliers, had sent some communication warning the company and requesting them to stop using the practice. The managers of VW continued to use it, reasonably certain that if this misconduct was not found out for so long, it would never be discovered.

Also, the managers at VW would have rationalized that they were approving this because it was in the interest of VW and not for any personal gain, for e.g, a bribe or abuse of company resources, they would be condoned by their bosses. VW is known as a highly centralized and hierarchical organization, where most decisions flow top-down from Wolfsburg, Germany. It is quite likely, that the top management would have given tacit protection to the managers who were directly involved in the use of the ‘defeat’ device.

So the managers were ‘good’ people. They had no intentions or motives to cause such a big damage to their company or to cause serious damage to the health of the society. They were just too myopic and self-centred. Many of them would now lose their jobs. If the US law takes a harsh view of the misconduct, some may even be imprisoned. They would probably repent for not standing up or not blowing the whistle at the appropriate time. Most would blame their bosses, for asking them to chase targets and numbers, which were impractical.

As the VW managers wait for the punishment, there will be across the corporate world, managers making their own small everyday compromises with ethics, rationalizing much the same way the VW managers would have done.

  • G.Mohan posted on October 1, 2015

What if there were no currency notes or coins ?

Chief Economist at Bank of England has proposed that UK should get rid of cash completely. Imagine, our own Raghuram Rajan decides to go for such a move. What are the possible problems and solutions we in India will have if there are no currency notes or coins…Here is a non-serious list

1. What will replace Hundis and cash boxes In temples and other places of worship ?

2. How will cricket or other sports captains carry out their toss if there are no coins ?

3. How will we give bakshish, tips, alms to a waiter or a beggar ?

4. We often felicitate our politicians and also grooms with garlands of currency notes. Would we replace that with a mala of credit cards ?

5. In baraat where wads of currency notes are used to distribute cash, would people keep their Bluetooth on to give and receive money

6. What will we throw in the holy rivers like Ganga or Cauvery when we cross them in train ?

7. We often use coins to open a hard to open container , what will we use instead of coins ?

More situations and replies to the above questions welcome.

  • G.Mohan – 20th September 2015

Dearth of good quality stocks in Indian equity market

Jayant Sinha, The Minister of State for Finance, wants Employees Provident Fund Organisation ( EPFO) to invest  more of its funds in equity markets. He says “We are saying the EPFO, which always had the ability to put up to 15 per cent of its assets in equity markets but never did, has to do at least five per cent. Hopefully, over a period, it will raise it to 15 per cent,” Two days ago, pension fund regulator, PFRDA, wants pension funds to invest upto 50 % in the stock market, as reported by Financial Express.

In a country where the ownership of equities by middle class is very small, this appears to be a logical move. As per a recent CLSA report, the Indian households only own 2.7 % of their wealth in the form of equity. Property ( 58 %), Bank deposits (15 %) and Gold (12%) make up top three asset classes. Historically, Indians have been averse to investing in equity. However, in recent times this trend seems to be reversing. Business Standard in an article dated 16th September says “The RBI’s latest Annual Report says that the financial savings of Indian households rose to about 7.5 per cent of national income in 2014-15 from 7.3 per cent in 2013-14. At the same time, real estate and gold are both believed to have declined as a percentage of household savings.”

The same Business Standard article says ” There has been a very significant expansion of household assets invested with the mutual fund industry. Over 1.5 million new individual investment folios were created last year. Fresh mutual fund mobilisation in 2014-15 rose to over Rs 1 lakh crore, nearly double the Rs 53,000 crore of fresh mobilisation registered in 2013-14.As much as 84 per cent of the AUM in equity-oriented schemes is owned by individuals, who have parked 59 per cent of their overall mutual fund exposures in equity.”

The demand for equity stocks from the domestic investors is going up thanks to all of the above. In addition, India is seen as a safe haven among the emerging markets and BRIC countries by the foreign institutional investors. With the relaxed monetary policy of the US continuing, the money coming into the equity markets from foreign portfolio investors ( FPIs ) continues to go up. As per an NDTV Profit news ” Since the beginning of the year, FPIs have made a net investment of Rs 27,463 crore in the equities and Rs 38,732 crore in the debt markets.”

Based on the existing demand for the equities from both domestic and foreign investors, the stock prices are already high. Even after the recent correct corrections, the BSE Sensex is ruling at 26,000 and NSE Fifty at over 8,000 as on 18th September 2015. The current four quarter trailing Earnings per share (EPS)  for Nifty stocks is expected to be Rs 361. At 8000 Nifty, the P/E ratio works to 22 times. Based on fundamental analysis, this is in the over valued zone. The fair valued zone for the Indian markets experts consider it to be between 17x to 20x P/E.

With more money expected to enter the stock markets because of pension funds, Provident Fund and foreign funds, the future of the stock markets appears to be bright. But  before, we make any forecasts, let us look at the supply side also.

There are over 6000 companies listed in the two leading stock exchanges of India, namely NSE and BSE. The universe of good public limited companies is a small fraction of the above. Perhaps, about 100 companies. By good companies,  I mean companies that are profit making, dividend paying, have no or low debt and are showing growth in revenue and profit. Colloquially, these are referred to as blue-chips. Many of these companies are part of the indices NSE Nifty and or BSE Sensex.

The blue chip companies are pretty well known. These companies are already well owned by the domestic institutional investors like the Mutual Funds and the Foreign Portfolio investors. There is always a clamour from the FIIs to permit increase in  the percentage holding of FIIs in good companies. For example, Ministry of Finance is considering a proposal to allow 100 % foreign holding in private banks. This will allow FIIs to increase their holding in HDFC bank from the current limit of 74 % and in ICICI Bank from the current holding of 70 %.

The demand for blue chips has already pushed the prices of good companies to the over priced zone, as mentioned earlier. If Nifty is at 22x PE multiples right now, there are many individual companies which have PE multiples over 40, i.e grossly overvalued . Nestle India Ltd, an FMCG stock,  despite all the problems that arose out of the banning of Maggi noodles, is still priced at 49x. Yet, when fresh money enters the market, they go after the same blue chips raising the prices even further.

In India, in the last decade there are few new companies that have entered the blue chip league. To illustrate, let me take the information technology (IT) industry. Despite, all the technological changes and disruptions that happen in the IT industry worldwide, the number of good companies stocks in India have remained the same in the last decade. TCS, Infosys, Wipro, HCL Technologies and Tech Mahindra. Mindtree was the last IPO of some significance that happened in the IT industry. The E-Commerce and Internet companies that have come up in recent years like Flipkart, Snapdeal or OLA prefer to raise funds from venture capitals and private equity. They may go public when there is pressure from the investors to exit.

So it is clear that there has to be some significant improvements on the supply side required for stock market investing to become less risky and reasonable before all the big money from PF and pension funds is allowed in. The government of India is keen to divest its stake in public sector undertakings. This will increase supply. But PSU stocks have lost their sheen. Some of the PSU blue-chips of the past like ONGC, NTPC or BHEL do not command the high valuations reserved for the good companies. Obviously, their performance and governance leaves much to be desired and that is the reason market has punished them. The government of India under Modi was expected to address this issue, but till now no major PSU reforms have been implemented.

The Public Sector Banks who are in desperate need of capital, can issue fresh paper. But there would be little demand for the shares of public sector banks. Most PSBs are saddled with so much NPAs, that the market is wary of investing in them. The market does not believe that the profits shown by them in the books can be trusted. Hence, the gap in the valuations of private sector banks and public sector banks has only widened in recent years.

In the last couple of years, despite the secondary market doing well, the primary market remained dull. 2015 is expected to have a few big IPOs. Already in 2015 till date, 5 IPOs of over Rs 500 crores each have been successful, as reported by this site. There is a clear need for many more. But the lead managers, rating agencies and the regulator SEBI should be careful not to allow sub-standard companies to raise large quantities of money at absurd valuations.

Isnt it an irony that a developing country, where a lot of capital is needed for growth, there is such dearth of investment opportunities.

To conclude, I can say that there is a clear supply side problem. Unless, this corrects itself through government intervention and market forces, the markets will remain overvalued. Those holding stocks of blue-chips should hold it tight, as there is a clear shortage of those. Those investing in equity mutual funds may temper their expectations as there are not many easy pickings for the fund managers in the current markets.

  • G.Mohan 18th September 2015 

Impact of Ola on car market and beyond

In the last 15 days, I have had quite a few rides in Ola Cabs, in Hyderabad and in Chennai. If I chose the Mini option, it was usually a Tata Indica. Tata Indica, the old workhorse of Tata Motors seems to be having a revival of sorts of late. I see several new Tata Indicas on road, mostly with the OLA drivers.

Ola is already doing 750,000 rides daily and is expected to cross 1 million rides every day by this month end. Uber is expected to cross 1 million rides per day by March 2016.

Ola and Uber seem to be creating ripples in the car market. So much so, that Anand Mahindra has said recently “”The age of access being offered by taxi-hailing apps like Uber and Ola is the biggest potential threat to auto industry. Since these apps operators have made transportation a commodity, (auto) sales could be hit and volumes get impacted,”

It appears that the taxi market would become a significant market for the auto manufacturers. Ola which till now was only an aggregator, has announced that it will enter into car leasing. It will be investing Rs 5000 crore to help drivers acquire cars. Drivers will have to make a small down payment of Rs 25,000 for a car. At an average price of Rs 5 lakh per car, that would mean 1 lakh cars. That is small but not insignificant share of the annual car market of 26 lakh cars in India. Also, if it is the beginning of a new trend then this share will only grow in future.

Along with Tata Motors, Mahindra with its Verito, Toyota with its Innova and Etios are established already in this market. It will be interesting to see if the biggies Maruti Suzuki and Hyundai respond to this opportunity with a new offering of their own.

If Olas of the world really take a big share as it is being expected , what do you think would be the other impacts. Will there be a drop in the value of the cars in the used car market ? If drivers can actually earn Rs 20,000 to Rs 50,000 per month as these app companies claim, will the drivers become hard to get and therefore become pricey ?

At the moment, with all the VC money that these app companies have received, they surely seem to be pricing it aggressively. When these companies, have to start balancing the books, will their users use them the same way needs to be seen. Interesting times ahead.

  • G.Mohan 15th September 2015

Do Indians really save in gold ?

The govt of India has recently come out with a scheme for Gold monetisation as well as a Gold bonds scheme. This is aimed at dissuading Indian households to stop saving money in the form of gold. This set me thinking as to what is the extent of savings Indians hold in the form of gold.

World Gold council estimates that the total quantity of gold in India is about 22,000 tonnes. If the population is taken as 125 crores, the per capita gold holding is about 17.6 grams. If we treat gold as a family asset and say there are 5 members per family, the total gold in an average household is about 88 grams. Translating into jewellery terms it may mean a thin chain (50g), a pair of bangles (30g) and 2 pairs of ear drops (8g). No big deal.

We do hear stories of families pawning their jewelleries to start a business, repay a loan or conduct a wedding. How much this average household gold can yield ? At current value this gold will yield about Rs 2.33 lakh.

Do the Indians save more in the form of gold or in the form of deposits in banks ? The aggregate bank deposits amount Rs 89 lakh crores as per RBI. Using the same 5 member per household assumption, each household has a deposit of Rs 3.55 lakh. So clearly, Indians save more through bank deposits than in gold.

Though the newspapers make a lot of noise about fluctuations in stock markets, fluctuations in the price of gold, would have a much bigger impact in the mood of an Indian household. The recent drop in prices of gold would certainly have impacted the spending mood. A 5 % drop in the price of gold is equivalent to a drop in GDP of about 2 %. People would feel less wealthy and hence would consume less, perhaps.

The above estimates do not take into account the income inequality and differences in saving pattern between urban and rural households.

We often hear people talk about the hidden wealth of Indian households in the form of gold. We also hear about Indian society that is still quite primitive and saves in gold, rather than financial assets like bank deposits. The above numbers do not support this

  • G.Mohan 11th September 2015

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