Helpless ..

26^th – 28^th Nov , Sitting at home, watching the live videos of destruction and misery of people who fell victim to the planned attacks , that strong feeling of disgust and utter helplessness which few of us had ever felt .

This is not a fact to ignore that some people actually came, killed for fun and we were just the mock spectators. It differs from the cowardly planned bomb attacks, this time they took the whole city for ransom for 60 hours, looked liked as if the freedom of 60 years evaporated in 60 hours.

After everything got over, the anger of the people came out; they showed their solidarity for the cause and wanted a swift action from the government machinery. They pledged to put all their energies together to fight against the evil.

The question remains -Are we civilians really helping out our authorities in putting an end to the terrorism. What can we people do other than candle light marches and shouting for justice? How can we make our effort count? Is it really possible? I think this case is much tougher and complex than any of the case studies we have discussed in class. Do anyone have any concrete answers to the problem. 

I believe that even the government is helpless to a certain extent. Diplomacy is not working out for us the way it works for other countries as most of the countries are looking safeguard their interests rather than seek justice for India. Starting a war in this crisis will not only weaken the country financially but it will also affect the foreign relations and image of our country. So what can the government do? 

Credit Rating Agencies ..

The origin of credit ratings agencies can be traced back to 1840 when agencies started rating merchant’s ability to repay their financial obligations. It was the gift of 1837 financial crisis which saw increased credit defaults and it led to the birth of credit rating agencies which can predict the interest and debt repaying abilities of the lenders. The functioning of these credit ratings have remained questionable ever since and this topic revisits itself after every financial crisis, sub-prime crisis is no exception.

The whole purpose of structural finance and financial engineering for sub prime loans was to improve the credit ratings of various financial instruments by credit enhancement and converting them into marketable securities. The underlying risk of the financial innovation and the difference between Prime AAA+ securities and sub-prime AAA+ was never contested before the whole system failed. 

The biggest issue with these agencies is their financial model where they actually get there revenues from the company they rate and not from the users of credit ratings, it causes two problems,

1. The credit rating company cannot be conservative in its approach as there is high competition in the ratings business and the company may lose out on lucrative deals if it starts giving conservative ratings. 

2. Most of the companies which undergoes rating process wants better credit ratings to reduce the cost of financing and no company wants to increase their cost of capital even after paying rating agencies.

If we actually compare the number of above investment grade to below investment grade ratings issued by different agencies, we will find that most of the ratings given are above investment grade. There is a need to change this financial model to make the whole structure more fundamentally strong.

The second crucial issue with rating agencies is their operating model, which relies totally on the auditor and the companies for all financial and non financial statements. It increases the risk of distorted ratings in case the auditor and the company are running a joint partnership firm which happened in case of Enron. 

I feel that the world has seen enough recessions and depressions, there is an urgent need of a single world regulator who can improve the functioning of various financial markets and limit the grey areas of finance. 

Tata’s love for Ferrari ..

Just one week back the whole auto industry breathed a sigh of relief when the federal government approved more than $17 billion dollars as bailout package for likes of Ford, Chrysler and General Motors. Due to expectation of unfavorable economic conditions people are actually delaying their plans to buy new car. The reduced sale of new cars is leading to increases inventories and losses for all major Auto and auto ancillaries companies in the world. 

Everyone knows that last one year has not been the best of the year for Tata Motors (TTM). The average four wheeler sales growth rates have also reduced from preceding year and has turned negative which has caused TTM to cut down the production and give paid holidays to its employees . TTM is suffering hugely due to losses suffered in Singur which is in excess of $100 million, the untimely buyout of JLR had caused huge cash outflows and they are paying huge interests to cover the deal. The rights issue launched to pay a part of the deal was also not fully subscribed and was financed by Tata Sons. The Tata-owned Jaguar and Land Rover continues to lobby the UK government for a £1bn tax-payer bailout when they are actually bailing out likes of Ferrari. 

When the companies are conserving cash which can save themselves from future trouble, it’s very tough to understand the Tata’s logic to sponsor Ferrari for Formula One car racing championship. The question now is about surviving next two years rather than expansion for new phase of growth.

There might be a long term vision or strategy behind such move but I as a person am unable to comprehend the logic of such spending when you need to set your house in order first.

Market Timing ..

All technical and short term investors usually try to achieve something called market timing. Most of the traders believes that they can buy at low levels and sell at higher level in short duration of time. Although the term might look very simple but it is one of the toughest task according to industry experts. 

Technical analysis is the study of demand supply which is analyzed by reading different chart pattern which can daily, 3 day, 7 day or 30 days moving averages. The logic behind this exercise is said to be decoding the fundamental nature of human behavior that react to market scenario in either Fear or Greed. Most of the time people behave like a herd and as per the technical analyst the chart pattern actually help them in predicting the future direction of the market.

I am never able to appreciate the art of charting. Infact I seriously doubt the technique of reading charts for predicting future market scenario is something which can be proved or done on a regular basis. 

If we check the history of stock markets, the research suggests that the past information cannot be used to predict the future trends in market as that information is already discounted in the share price. This theory is called Weak form of ‘Efficient Market Hypothesis ‘ and has been proved by several quantitative research experiments.

Few weeks back I was reading a book on market timing by a prominent author who was trying to explain in a very unconvincing manner that the market timing does exist and people can actually do it. It is actually this belief which is making the markets liquid, nearly 60% of the volumes on BSE and NSE is from day traders who want to make the most in a day. They have literally zero holding time in comparison to the Warren Buffet philosophy of holding the stocks forever.

All said and done but I am yet to meet a person who says that he makes money 3 times a week by day trading specially in such volatile markets.

Govind ki Chai ..

Getting good food is a big issue around NMIMS. Our canteen does not serve very good menu most of the days and most of the people have to go to likes of Cooper Hospital , Rasraaj or Dena Bank Canteen for lunch . I mostly go to dena Bank canteen where Madhav’s canteen food taste seems more palatable and the place is easily accessible as it is just opposite to our Campus in JVPD. 

When I today stopped for tea after lunch near Dena Bank, I met Govind , he has been selling tea there from past 18 years , he is a very silent middle aged person who generally don’t talk much with the customers . I just talked with him about how the business is going and what kind of issues he faces regularly in the business and I found that his replies were quite interesting.

He told me that getting a place to setup a tea stall is very tough in Mumbai as most of them are illegal and the other hawkers want to grab the space where they can do good business. He regularly has to fight with other people ‘ Bhai’s ‘ who want to get that place but since he is there for around 18 years now, the tussles have reduced. Surprisingly the tension due to internal fights for space among hawkers is much more than that of the threat from Bombay Municipal Corporation (BMC) for illegal encroachment of space.

The business risk of these kind of setups are completely different from regular legal business .It cannot be easily evaluated by doing sensitivity analysis in the excel sheets. For example as NM has closed the main entrance for students from last few months, his business has reduced by nearly 50% as students don’t want to travel too far for tea. Again if less people start preferring Dena Bank canteen food, his business will again be impacted. These are some of the risks which are completely beyond his control. Although his tea tastes best in that area but there are very few students seen around his shop nowadays.

Govind misses the previous batches of NM, as per him those students were much more closer to him. They used to sit around his shop for long hours. Even now when they come to that area for some work they don’t forget to land at his place for a tea. He has lost the taste in business now as student nowadays does not interact much with him.

Tough Job !

When we people crib about job satisfaction, salaries and work life balance, half of India is still struggling to get the very basic necessities in life. I just came across a character who I was ignoring from last one and half year of my stay in our society. It was not intentional, maybe at times we just get too engrossed in our life that we ignore the most important part of humanity. Interaction

I met Mahendra , our society Guard while taking a late night walk today. I see him daily but never interacted with him, When I saw him today, he just smiled and I started a casual talk with him only to find how tough his job is. He is a short character of slim built aged 25 but looks 35 due to malnutrition and difficult nature of his job. The guy came from a place in Jharkand 6 months back where he was working as a day laborer and was finding it difficult to earn enough to feed his family. 

His duty starts at 8:00 pm in night and goes on till 8:00 am in the morning when the next shift guard takes over the charge. A 12 hour job when he has nothing to do, but just sit or walk off the time. He is ill equipped to take on any thefts but is being appointed just to make society people sleep comfortably in their cozy apartments. If any of the society inmates finds him sleeping during the duty hours, he is scolded brutality without any respect or concession. And after all this he is paid just 3000 Rs per month. He can’t afford to eat out and prepares his own food after the finishing his grueling job. 

The worst part is that he gets no vacations, has to work seven days a week, and can only travel once to his village to meet his family for whom he has made his life a living hell. 

I don’t understand when will these people get a respectable place in our society and when will we people start think of doing something fruitful for them except targeting them to sell our products and calling them the ‘Bottom of the Pyramid ‘. I don’t have any solutions yet.

Bollywood Underworld Mystery !

Bollywood and underworld linkage is a mush debated topic in the past and time and again it has been found that a lot of greedy film industry people have connections with the underworld. The worst part is that these underworld people are the people who actually promotes and finance host of illegal activity in India like drugs and terrorism . 

Dawood Ibrahim who has been repeatedly accused for having direct involvement in the Mumbai blasts. He is one of the world’s biggest terrorist and has repeatedly harmed India by his involvement in various terrorist activities in Mumbai .He was No. 4 on the Forbes' world's Top 10 most dreaded criminals list of 2008 as per Wikipedia . 

The recent terrorist attacks in Mumbai and alleged involvement of Dawood in it really makes me wonder how we people have such short memories. How can we people tolerate movies made on Dawood just for the sake of glorifying him . Dawood is one terrorist who has been glorified by host of Indian celebrities. Ram Gopal Verma has put great efforts in attaching glamour to his image by making movies like D and Company . In all the movies made by Ram Gopal Verma I could never found him portraying the character of dawood as cruel.This is nothing but the abuse of freedom of expression, just because India is a democratic country and we have got rights to express our self does not mean that these directors can make terrorists the heros. Interestingly Mr Verma was also seen at Taj after the carnage, Only God can know if he was thinking of another plot to showcase the ‘ bravery ‘ of the terrorists which only he can see.

Mr Anu malik along with lot of Indian celebrity were also once reported and shown praising and performing for Dawood in Dubai , nothing ever happened to them .Anu Malik was actually singing for Dawood ‘ Sabka bhai , gareebo ka masseha , dawood bhai ‘. India might not be able to have access to Dawood but why don’t they teach a lesson such celebrities and set examples for the generations to come. 

We have suffered so many terrorist attacks in last six months that the people of the country are in a state of total insecurity. The time is ripe now for the government to take some swift actions and stop testing the patience levels of people of the country.

Employees are our biggest Strength ?

IT companies are the major recruiters from Indian Engineering colleges and are one of the most attractive career destination for the students in engineering colleges. Some of the major IT services companies recruits thousands of people every quarter and are well respected in all the campuses. 

If we actually see the reality of the matter these companies are simply sucking life out of their employees, these companies are hiding their inefficiencies by hugely underpaying their employees. As a matter of fact the starting salary of a fresh graduate is nearly 12000 to 15000 in most of the Services companies, after 1-3 months of training most of people gets billable and work for nearly 8.5 hours a day which has now been increased to 9.5 hours a day in many companies. The billing rate for a fresh engineer is nearly 20$/hour here in India compared to 80-100$/hour in US which is one of the most important factor which brings work to India is this cost arbitrage. For 20 working days a month, the companies are making a pretax income of nearly 3800 $/month/Employee and paying just 240-300 $/month/Employee. In this business the companies are having a contribution margin of nearly 93% which is huge comparing to the other businesses. For working 9.5 hours on job a person has to stay for nearly 11 hours a day in office. If we include the traveling time too, nearly half day is gone in doing office duties itself the employees does not have any motivation left for other recreation activities.

The second point of distress is the quality of work which is being given to Indian software engineers , nearly 80% of the work in all top services firm is either application maintenance , Testing or doing minor changes in the old code which can be done even by a 12th class student . Infact in USA most of the work of this kind is being done by far less skilled people. Due to this skill mismatch the Engineer dont use their knowledge and the whole creativity and education gets wasted. The effects of the whole process are clearly evident as even after so many years India has not developed any great software product , the entrepreneur here lack the risk appetite to invest in research , they are simply too happy in earning through revenue contracts with assured returns by underpaying their employees. 

The third issue which is often ignored is the lack of efficiency and the abundance of middle managers in Indian IT companies. In any company it’s the engineers who are doing the real work of developing of maintaining the code but we have huge number of managers who don’t add any tangible value to the company. 

One issue which has been highlighted off late is the affect of large bench size on the efficiency of the company .Nearly 25-35% of Indian engineers are always sitting on bench due to improper demand supply estimation which impacts the earning of rest 70% of the people who are working 9.5 hours a day. This inefficiency, which is very high in India compared to western companies. It is not a healthy sign for the Indian software industry as working engineers have to compensate for it in the form of low wages. The coordination between Marketing and HR teams is under a big question mark here as they are not able to forecast the requirement of the human resource and the flow of services projects.

Nowadays the IT companies are not giving joining dates to the fresh graduates and causing lot of problems to them. Many of the new engineers have been assured of joining only in 2010. This kind of treatment when a company has once assured the person of a job and is not making good the contract is a very biased tool which makes life of a common man tough . In most of the engineering colleges students are not allowed to apply for other companies once one gets placed in a company. The student’s suffering starts after the end of the course when he has to just keep waiting for the joining letter from the HR offices.

So are the IT companies really caring for their employees ?