Saturday, August 28, 2010

SME rankings make me smile

     Today going through the headlines of the frontpage article of a national daily,something made me smile.
It read "Ahmedabad No.1 among 100 cities for small & medium enterprise". It was not part of the once too often regional jingoism we come across. It was a well established fact published by none other than E&Y.

Here are the rankings:
1. Ahmedabad
2. Banglore
3. Mumbai
4. Hyderabad
5. Delhi
6. Chennai
7. Surat
8. Faridabad
9. Jaipur
10 Gurgaon

Well its not that I liked the article just because it praised Ahmedabad.
The city where I was brought up, did my schooling and completed my under grads.
It was because I was linked with almost all of the cities......and the one city left out...gave me a SIGN......

  As I said earlier, I did my schooling from Ahmedabad, my Alma mater was St.Xavier's High School.
I could see that people here were enterprising right from childhood, I guess it was in their blood.Kids as young as 10 would start their book club, not only foster their own learning, but also make a quick buck!I did my engineering from L.D. Engineering college, one of the oldest,world renown, government engineering college, a part of the Gujarat University.Now this university did not just have a prestigious Engineering college, but also had a multitude of technical graduation courses, the B.Scs & the ITIs among other courses.
You won't imagine college passouts, rather guys who have not even passed out of college setup their own small scale industires. Small plants manufacturing industrial goods, machinery, chemicals, Engineering equipments and God knows what not. I guess they start off young and their backgrounds give them a risk taking appetite. Not to mention the general honesty and work ethic of Gujaratis.

 When I mention Gujarati, I would mention another city from this state, Surat, which is ranked 7th. I happened to work in Hazira, Surat for 6 months. I worked as a the sole procurement personnel for Electrical for the setup of a new plant for ESSAR Steel. I bought stuff worth Rs. 10 Crores way back in 2003, not to mention numerous, revised & improved rate-contracts with existing vendors. Although many quick purchases were made from Surat city itself,because Surat was primarily a textile city & had textile entrepreneurs, most of the purchases were done from Mumbai,Maharashtra,from where we could claim ModVat/CenVat.

 Not only did Mumbai, which is ranked 3rd in the tally, have hundreds of manufacturers of industrial equipment, especially electrical, but also it provided me with 4% Excise instead of 6% GST.  I visited Mumbai often as well, to meet relatives; these visits gave me a first hand look at the enterprise of the Mumbaikar: hardworking, methodical & calculative.

Come 2004 and I decided to join the IT Bandwagon. Leaving behind greener pastures to try something new. I joined TCS in Gurgaon, which is ranked 10th in the SME rankings. Gurgaon is actually a part of Delhi-NCR. Thus Delhi(ranked 5th),Faridabad(ranked 8th) & Gurgaon can be looked at as one region. Each of these cities though have a different speciality though. While Faridabad is primarily a hub of small scale manufacturers of automobile spare-parts, leather and other manufactured goods, Gurgaon is known world over for it BPO/KPO & IT industry, not to mention the prior established Electronic and automobile plants, & Delhi being a big commercial hub, nothing in this world can beat the enthusiasm of a Sardar selling stuff!Although I worked in Gurgaon now for quite a while, I still fondly remember my summer vacation visits to folks back in Delhi.

I used to work for a strategic business unit, TCS-Financial Services, a product arm of the Company which was primarily into IT Services.Imagine 1/50 of the people (3000 of 1,50,000) generating a quarter of the revenue. Imagine that TCS-BaNCS became the no.1 Financial product in it domain within 3 years,this all happened after TCS's public listing in late 2004.Yes I was among the ones who had seen it through. The SBU is headed by N G Subramaniam, based in Banglore(which ranks 2nd in the SME list.) Now Bangaluru, is the IT capital of India. There are thousands of startups in Banglore, not to mention small,medium and large size companies.People from all over India, come here to kick start their careers in IT, as well as Companies from all over the Globe come here to take advantage of the large pool of talent and the IT infrastructure. This explains its high SME ranking.

 When we tend to work hard, we like to party harder. And thats where I will mention Jaipur(ranked 9th), a weekend getaway, at a 5 hr journey from Gurgaon.The Jaipur city palaces are a must watch! Jaipur, primarily dependent on tourism, has a lot many people who have developed various businesses around tourism.

 I can explain my connection to Chennai(ranked 6th) as well. My father was an aeronautical engineer from IIT Madras. This explains my roots to this city.

The only city in the ranking, with which I cannot explain my direct connection to, is Hyderabad.
As an ISB aspirant shall I take this as a SIGN ?
Afterall how could HE leave out Hyderabad......I hope Buddha will smile with me, for me!!

Friday, August 13, 2010


A lot depends on how you look at the SIGNS!!
A lot depends upon able to identify the short term changes from long term trends.
Since a past few months have have been getting to see these indications.

Observing some patterns:
I read a couple of articles in newspapers and news-websties,

-> India lowers growth targets of 11th Five Year Plan (2007-12) in march 2010 from 9% to 8%

->The European Union crisis in May 2010

->Chinese stocks falling since June 2010

-> Yuan Slides Most in Seven Weeks August 2010

->The US unemployment rates remain high at 9.5 percent , now for more than a year - August 2010

->India’s industrial output grew by a lower-than-expected 7.1 per cent in Q2 2010. - August 2010

-> "the pace of economic recovery is likely to be more modest in the near term than had been anticipated" - Fed warning - this August
The US Fed  holds on at near-zero intrest rates, and is left with little options.

Simply to put it the indications of CEOs resigning is also not good.

GM CEO - Ed Whitacre , steps down on cusp of IPO filing.

Ranbaxy Q2 net dips 48%, CEO Atul Sobti to step down

I have not put HP's CEO ( Mark Hurd )resignation or call for BP's CEO(Tony Hayward) resignation,
in picture as these are short term,little or no impact items on the larger picture of the world economy

When I connect the pieces of the jigsaw puzzle, I believe

Was the June 2010 G-20 summit in Toronto a way that richer countries huddles together to make a consensus as to when, in which quarter to declare a recession? Remember that interest rates to keep the economy liquid were revised soon after the vist. I believe the Finance Minister and the Prime Minister knew that more liquidity would mean more washing away of money from the government coffers.

Q3 is going downwards and Q4 we'll see a global recession!

Now unlike seeing this like a premonition lets see it in a technical way.

Yesterday 12 Aug 2010, All global markets closed in Red.
However Indian markets opened and closed at the same or nearly the same level
Infact of the two major indexes, one rose a bit and one fell a bit.
SENSEX 18073.90 +3.71‎ (0.02%‎) 
NIFTY    5416.45    -4.15 (-0.07%)

This is a Doji Signal (Candle stick formation)

An unprecedented number of companies in India with capital posting huge profits to jack up the costs, after which a slump will be seen.
With sensex at 18073 with its way higher than it should be.

Remember the indications of a worldwide recession were coming from August 2007,
where as the sensex closed at its highest in Jan 2008 at 21078 ?

The poor investor is going to lose trillions of Dollars,Pounds,Euros,Rupees.

In fact I don't understand the concept of  P/E ratios greater than 12.5

Should not the price of a share not be equal to the potential dividend it can earn?
See for me the formula is fairly simple, the average growth is around 8% then

Price or share(take it as 100) /earning per share (as per organic growth 8%) = 12.5

Growth is no magic and a higher P/E means that the price is bloated,they are selling you a dream....
The more widely shares are held, the higher is the risk to the individual who hold the share when the bubble bursts and the price of share normalized.

What I could have done??
well....I have gradually switched from equity stocks to Gold and Gold related stocks.
Carefully watch how I spend every penny in my pocket.

But the big ticket things pending in my life
should I plan to delay ? or let it take its own course??
I guess...I will go ahead with the former, no matter what, the latter can wait for later!!
After-all even our Finance minster P. Chidambaram is an MBA from Harvard Business School.

Thursday, August 5, 2010

To Moon and Back!

Just pains as I sit back and listen one controversy after another about the CommonWealth Games to be held this October in India's capital New Delhi. The latest blemish,
A Helium baloon costing Rs. 40 Cr. another Rs. 10 Cr. to transport and inspect it.
I am still wondering is this the same India that launched the moon mission for just about Rs. 386 Cr. ?
A Creative Country which Could Cut Costs could be so Corrupt as well...

And as it pains, I sit back and listen to 'Savage Garden'
(a name so ironic)  To Moon and Back....
I feel we had reached the pinnacle and now back in the dumps!
A song so apt for the occasion.

She's taking her time making up the reasons
To justify all the hurt inside
Guess she knows from the smiles and the look in their eyes
Everyone's got a theory about the bitter one
They're saying
Mama never loved her much
And daddy never keeps in touch
That's why she shies away from human affection
But somewhere in a private place
She packs her bags for outer space
And now she's waiting for the right kind of pilot
To come (and she'll say to him)
She's saying

I would fly you to the moon and back
If you'll be if you'll be my baby
Got a ticket for a world where
we belong
So would you be my baby

She can't remember a time
When she felt needed
If love was red then she was colour-blind
All her friends they've been tried for treason
And crimes that were never defined
She's saying
Love is like a barren place
And reaching out for human faith is
Is like a journey I just don't have a map for
So baby gonna take a dive and push the shift to overdrive
Send a signal that she's hanging all her hopes on the stars
(What a pleasant dream) just saying