Thursday, April 27, 2006

Random Snippets-I

  • The biggest realization for me from the first few weeks on campus has been that one needs to maintain a strong focus. I have 428 friends around, innumerable student clubs, numerous other activities and a few classes and group activities in between, but alas we have just a year on hand (525600 minutes to be precise).This place offers endless opportunities for every interest and inclination. One needs to be very careful in selecting what all he wants to be involved into. There is a real risk of spreading oneself too thin , one needs to make sure he makes the best use of the available resources and the time…. And that’s what management is all about … isn’t it.

  • Its amazing to see the sociology at work on campus. Most people have already organized themselves into their own groups , some prefer to move alone all the time while some are found in pairs whenever you see them.

  • First term begins on Monday and there is lots of material to be read for the first class (around 100 pages for marketing class, 100 odd for economics et all. .). We all are pretty enthusiastic right now and almost everyone has completed the reading. Some people have even completed the following chapters. Would be interesting to see how many can continue the same enthusiasm. I am told the year at ISB is all about maintaining the momentum. Sounds simple but its not gonna be easy.

Monday, April 24, 2006

Random Snippets ....

  • The pre terms began today. This week long modules are designed to acwuint us of the basic concepts to be applied during the core terms. Out of the three courses on offer (Quant, Stats and Accounting) I have opted for only the quant course. Didn’t go there expecting much apart from getting a feel of attending classes after almost four years. And I must confess that the professor kept a good job of keeping us all wide awake for atleast 90 of the 120 minutes lecture. Prof. Shankar (who is teaching us this course) is a faculty at IIM-B. He made the class lot more interesting by providing a historical perspective to math. I aim to refresh my math concepts during the course and also be able to appreciate the application of math to business problems a lot better.

  • Every day I bump into a large number of people, we greet each other out of sheer courtesy although on many of the occasions we do not know each others name. I have discovered this that its almost impossible to remember 400 names so soon. My rule for this.
    1. Don’t take offence if people forget you r name.
    2. Don’t expect yourself to remember all the names, nothing wrong with asking people to say their names again.

  • Infrastructure at ISB is superb. The campus is a wifi zone. The internet speed is 100mbps which is cool. The LRC is the best I have seen anywhere, it has a huge collection on almost each and every issue, not to mentions a superb collection of DVDs.

Sunday, April 23, 2006

Business and Art ......

ISB has a tradition of inviting eminent speakers from a variety of areas to interact with the students. We hosted Girish Shahene on the campus yesterday. For the uninitiated like me Girish gave useful insights into the different forms of art. We also discussed at length about the huge upsurge in the market for art in India and the demand and valuation of works by Indian artists.

I had the opportunity of meeting with Girish over breakfast and being a CA I could not help but dwell over the commercial aspects and the thought of art as an investment medium. My key take aways :

1. Invest in art only after you begin to appreciate the beauty of the piece and the artists vision. Not all works ,even by the renowned artists, would fetch those astronomical valuations. Most of the people who benefited from investing into art didn’t really “Invest” at the first place. They acquired a piece for the sheer joy of seeing it every day . Another reason why art auctions sells expensive is that collectors are often quite reluctant to let go of their priced possessions. So the demand far outstrips the supply.

2. There is no ready market for art (and there cannot be). Unlike stocks and shares art cannot be bought and sold anytime in the market. So you could be stuck with a piece of canvas for years without finding a buyer.

3. Art Funds : An art fund doesn’t really sound that exciting a concept. Since unlike stocks the value of stock doesn’t correspond to an underlying like profits, EPS etc.. An art fund would be under compulsion to buy and sell regularly to show consistent performance and ROI for the investors, and this might not actually be a good idea.

So the bottomline is enjoy art…. Appreciate it …. A demeterialised form of art doesn’t seem such a great thought.

Friday, April 21, 2006

First week at ISB...

Its nearly a week now since we came here. The first week was dedicated entirely to the induction. Alumni from the previous batch turned out in large numbers to interact with us and organised a large number of sessions around various club activities, their experiance during placements and life at ISB in general. In fact one factor I was a bit apprehansive before joining ISB was that unlike a two year program we would not have a seniour batch to help and guide and you might end up reinventing the wheel each time in such a situation. But the alums have done a good job at helping us benefit from their experiances.

Suddenly I am surrounded with 400 people most of whom I am meeting for the first time but a lot of them would turn out to be friends for life in the course of the next one year. All of us have been struggling to remember as many names as we could. cant remember how many times I have introduced myself almost every time we step out of the quad we encounter a new face.

Section competitions are on simultaneously our batch strength is larger as compared to the previous batches we have been organised into six sections unlike four in the previous batches. Our section is leading the charts and the final results would be announced tomorrow after the talant nite.

On a personal note I have resumed squash I was a struggle to begin with having picked up the racket again after almost two years. Need to get down seriously to thinking about my career options post ISB.One fact lot of alums stressed was to start working on the resume from day-1. I hope to start my effort on this front from today.

The preterms begin from monday so I would be back to the classroom after almost four years now. Not sure how easy it would be to sit through two hrs of lactures.

All in all its been an exciting week so far met a lot of now and interesting people and it was a joy listening and sharing experiances. Met some old contacts as well including a friend from school days and one who was studying togather during the CA final exams.

Lots more to follow since its all just started.......

Saturday, April 08, 2006

Unemployed and Loving it ....

30th March was my last day with CSC. ISB is still a week away and after years of taking pride in calling myslef a workoholic I have absolutely nothing to do. It wasnt easy to say good bye though, for someone like me who spent most of his time in the office the people around become so much a part of life, and it turned out to be an emotional and extended farewell. My team organised a dinner for me and we followed it up with lunch the next day. I was at CSC for less then two years but I have made many friends for life. Will always miss all of them.

I am with my parents for the remaining days before I join ISB. Stayed away from my computer for almost a week but am now slowly gearing up for ISB.

The LDP team has kicked off the 360 feedback program. Have approached peoplefrom my former workplace and some other friends to complete the questionaire.

Meanwhile the placement news from ISB is out and wasnt it a big bang event, all of a sudden it was headline news at all news channels and news papers the next morning. The publicity has been good for ISB and suddenly everyone seems to be pretty aware about ISB.

Arjun or Bhasmasur ??

Arjun Singhs recent move to increase reservation in India’s premier institutions of learning reminds me of the story of Bhasmasura , a devil who had the power to destroy anything he put his hands on. One day he put his hands on his own head and was destroyed himself. Our beloved minister for HRD is also leaving no stone unturned in putting the crown jewels of our education system onto a self destruct mode.

At a time when we should be concentrating on making the IIT/IIM s the best of the best globally our politicians are taking them many steps backwards. The quality of student intake is the key to any institutes success that’s precisely the reason why they put so much emphasis on the admission process to make sure that only the best get selected. Reservations would definitely compromise the merit in admissions as almost half the class would find their way into the institutions only because they were born into certain communities.

Moreover will the increased reservations actually help the needy ? The answer is a big NO. Consider this, most of the tribal and backward class children still do not have access to primary education. Of the few that do most of them do not study beyond high school and very few actually make it past the graduation level. In a society where a large section still cannot read and write how can reservations in higher education be helpful.

We have been following the policy of reservation for the past 59 years and still the backward sections are as underprivileged as ever before and the tribal are still not a part of the social mainstream. What better proof that the policy has failed miserably to achieve its ends.

The minister for HRD feels that students from the weaker sections do not have an equal opportunity compete with others. But that cannot be a reason to compromise merit in the education system.What is needed instead is to create a society which provides equal opportunities to all its sections. Our objective should be to improve the quality of education facilities at the school level and make sure every child has access to education. The government should make sure that poverty or lack of funds does not prevent a deserving student from getting admission to higher education. The criteria should be merit and economic background and not caste.

Someone needs to tell Mr. Singh that in a country where the primary education system still continues to suffer from extreme corruption, lack of facilities/infrastructure and absenteeism or lack of teachers. He has the huge task of making this system functional and productive. Please tackle the root cause of the problem. You now have access to huge funds from the education cess all of us pay on our taxes, please use them to equip all sections of the society to compete on equal grounds. The IIT/IIMs have succeeded despite the government and not because of it. Please spare them of your evil designs and petty political motives.

Like many others I prey that in the interst of mother India you fail miserably.

Thursday, April 06, 2006

10700 and still counting .....

The SENSEX continues its upward journey in the process proving all the detractors wrong once again. The market has posted a record gain of 74% in FY06 and some sectors indeed look a tad expensive at the moment. However the buoyant mood in the economy continues and corporate results continue to show robust growth in profits.

Is a correction overdue ?

Although the markets has continues to defy all thoughts of a correction still a correction now seems overdue. It’s a sign of a healthy market and a sudden spike would always be followed by a period of decline. The sensex completed the last 1600 run in record time thus it is likely to shed a few hundred points. However a correction would in no way indicate the onset of a bear market. India would continue to remain in the bull phase for some time to go. So a slight correction – yes ; end of the bull run – NO.

What Fuels the Growth –

The Indian economy is going through a period of rapid growth, economists say such a growth phase typically lasts between 15 to 20 yrs. India is only into the third year of the boom phase, so still some time to go. Sales and profit growth is robust, market demand is growing and incomes levels are on the rise, you don’t have to go far to witness these trends. A visit to the neighborhood market is enough to indicate the optimism. A look at the placement data for business schools and engineering collages indicates a huge upsurge in the demand for talent, starting salaries are also touching all time highs. So what does it mean for the markets, well more money in the hand of the consumers means more demand , higher sales and higher profits. So sector to watch out for – Lifestyle Products and Retail.

A look at the FII and domestic MF inflows indicates the continued confidence in the Indian economy.

INR bn.
FY04 FY05 FY06
FII 388 493 173
MF (9) 128 26

What to watch out for –

Logistics the next big thing.

Logistics sector is the backbone of any economy and the rising manufacturing and service sector along with robust export- import growth opens new opportunities for the sector. Rising port activity and freight and cargo demand indicates the rising growth in the logistics sector. The growth of information technology has opened newer opportunities for logistics companies to integrate themselves more firmly into the supply chain. ( If you have read “The World is Flat” and the chapter on UPS in the book you would be able to better appreciate the point I am making).

The Indian logistics industry is taking the shaped of an organized sector pretty swiftly with a few leading players developing a national foot print and expanding the service offerings.


As I said earlier a high disposable income and rising salary levels result directly into bigger spending on lifestyle products. Organised retail is just making its presence felt in the Indian market. The share of organized sector in the retail market is still a dismal 3%. So you can estimate for yourself how much growth can be seen in this segment in the years to come.

Capital Goods and Construction

After a few years of caution the manufacturing sector has been witnessing expansion of existing capacity and fresh investment in green field projects. The credit off take from banks and a host of IPOs have provided enough cash to fund the expansion projects. Its definitely good times ahead for the capital goods sector.
Infrastructure seems to be another big mover with the benefits of mega infrastructure projects like the golden quadrangular clearly visible and successful public private partnerships in the infrastructure sector this sector is bound to grow at a fast pace.

What are the risks ?

The two factors that could play spoilsport are hardening interest rates and rising prices of crude. An increase in credit offtake has resulted in banks increasing the landing rates for the personal loans segment (home loans, car loans, education loans et all).
Crude prices on the other hand have risen above $67 per barrel on the back of lower inventory and supply side constraints.
Both the above could put pressure on the so far stable inflation rates and prove serious dampeners to the market sentiment.

Is the market overprices ?

Well lets put it this way- The market is no longer cheap. Valuations are comparable to other developing markets and the huge valuation arbitrage is no more there. Prices for most of the stocks seem to have already factored in the FY07 and in some cases even FY08 expected earnings. So don’t expect another year of 75% growth. However the positive move in the markets still remains intact and the market would continue to be amongst the better avenues to invest.

The next big event ?

The financial year has ended and earning season is here. The coming weeks would see corporates announcing their financial performance for the year gone by. Results being above or below street expectations could lead to a rerating for quite a few sectors. It would also provide further evidence of the continuing growth story.

So in conclusion the optimism continues and its unlikely that the earning numbers would disappoint anyone. The markets seem to be strong and showing no signs of fatigue. However a correction cannot be ruled out.