Investing in India

During an inter-corporate competition in 2003 at Bengaluru, one of my responses seemed to have worked in my favor to be selected as a finalist in ‘Mr. Silicon Valley’ (I was part of the winning team in ‘Dumb charades’). It was similar to these ‘public contests’ where we had to complete the slogan and I had to complete ‘Money is …’. I wrote ‘Money is something but not everything.’ On stage, the judges apparently impressed on my response, asked me to further elaborate on my ‘point’. That was the point. I was not making a point! I just wrote what I felt.

It is no trick to make a lot of money, if all you want is to make a lot of money

Indeed I have felt this to be a truism, because the key is ‘all you want’. It is one thing to simply talk and another to walk the talk. With two of my classmates – Raghu Ganesh and MV Varadarajan, we initially did dabble with a measly amount of Rs.3000/- each. Apart from the fact that I contributed in the form of donation rather than real investment, I also did not like ‘trigger happy’ investment, buying and selling based on mood or paranoia. I did not want to invest as a ‘non-serious’ person. I wanted to start my serious investment at the time of resigning from my first job at Texas Instruments which coincided with the IPO announcement of TCS. All my sisters were married then and now I could afford to ‘risk’. In fact that was another reason why I resigned. I always liked tall people in corporate world, who don’t come in TVs and never give ‘media bytes’. TCS and CTS fell in that category.

Also given my visit abroad and the phase that India was in, at that time, I was more convinced that Indian business will show rapid progress. Apart from the fact that I had minimal expenses and that I had entered in to a home loan for purchasing a flat in Bangalore, I really went full length into IPOs and chose LKP for my demat account because they were the only ones who were willing to do it real quick. Other traders/investment companies asked me to come after a week, submit documents which I felt were irrelevant. Anything other than my PAN card is irrelevant for investment. I never wanted to dabble in the secondary market, despite so much of ‘prompting’ from LKP. For one, I did not intend to monitor the stock markets 365/24/7 and I did not want to get distracted from my job, which I was convinced, was my bread winner.

I don’t have any great philosophy behind carrying minimal cash. In fact when a thief broke into our house and stole the purses of my friend, my sister and mine, he would have gone Rs.4000/- or more from my friend’s purse, but would not have got more than Rs.15/- from mine ;) I thought that money in the form of money, i.e. currency is just garbage. That was another reason why I went into purchase of flat. It should be in different ‘forms’, which have differing levels of liquidity. Currency is ‘instant’, shares takes a bit of time, gold even more and fixed assets would take the maximum time. I believed that bulk of the finances should be in this ‘intermediary’ form, i.e. shares/mutual funds/gold.

I followed my ‘internal voice’ in choosing the IPOs and am not flippant. Given the political climate and trend, I was convinced that I can readily invest in ‘disinvestment’ IPOs. Though I sensed Depression which had effect on my ‘career’, I knew that my portfolio can only get a boost. Thus some of my stocks which were performing below par till say 2007 or 2008, have performed exceeding well in the last one year and my whole portfolio has shown 80% growth as on date. With an investment of more than Rs.1.2 million, that is a reasonable ‘success’ according to me. Indeed my recent investment in Coal India has met with an allotment of 199 shares. Hindu’s editorial just reaffirmed my opinion as far as Coal India is concerned that there is indeed a digging for value.

Coal India's initial public offer (IPO), which opened for public subscription on October 18, is expected to fetch over Rs.15,000 crore, making it by far the largest public offer ever made in India. Coal India is the only Navratna that has remained unlisted, and its entry into the capital market has been welcomed with a rare degree of unanimity by a wide range of analysts and investment bankers. Three of India's credit rating agencies have accorded the highest rating to the offer.

I am not sure of how this ‘IPO honeymoon’ is working in India. Especially when there is so much talk of recession, it really looks like the gap between haves and have-nots is increasing. I don’t see the reason why they increased retail investment cap in IPOs.

(Sebi) today raised the investment limit for retail investors in an initial public offering (IPO) to Rs 2 lakh from Rs 1 lakh earlier even as it tightened norms governing the preferential issue of equity shares.

Already there is this comedy called HUF (Hindu Undivided family) and people are misusing this to the core. The increase of ‘retail investment cap’ is only playing to this gallery. I don’t know when or how soon will see the 'militant' reaction of the haves vs have-nots in India.

Islamic banking!

Early this year, my Wharton newsletter subscription enabled me to read an article about growing interest: Islamic banking expands from the Gulf to India. Now I read that PM asks RBI to look into Malaysian Islamic banking model. I had pointed this quite some time back in one Orkut community as well.

As a kid or a school boy, I had never thought much about other religions/castes, though I was brought up amidst really diverse people. Coming to think of it, I don’t think I can hope to even (seek to) meet such diverse people NOW. I was probably brought up secular unknowingly! It was in fact great that I never knew the 'second names' of anyone at school. It was always AR Suresh or KP Manikandan or R Gayathri, with most of us not knowing/caring what the initials stood for. We were 'natural' Periyarists, I guess ;) Similarly when I went to temples, usually accompanied by my mother, I hardly remember any 'human' form. Mostly it was the Pillaiyar, basically in the form of elephant, or Siva, aniconic representation for God in Shaiva philosophy. Since my sisters studied in a Christian convent, I came to know of Jesus as well. Islam was in some sense a pleasant surprise, though mostly our insight into Islam was burqa that only very few wore or the cap that some guys wore at their homes especially during some festivals. When I was doing graduation and my Tamil professor inadvertently sowed the seeds of non-existence of God, Islam acquired even more sense. I thought Islam is in fact atheism in the pure sense.

There can be only two beliefs. Either one believes that something beyond the power/will of humans, (is it 'unnatural' or is it supernatural? ;)), is dictating our course of life or one believes that there is a 'cause' for every event in life and nothing is unexplainable. I don’t believe in the former, so I don’t count :)) In the case of former, if we believe that 'supernatural' is indeed responsible, why should we give some sort of form to the same? Once we give form, why human form? Once we give human form, why male? All such inherent contradictions and loopholes led to the pantheon of zillion Gods in Hinduism, making it ridiculous. Even Christianity stumbled a bit, because the 'prophet' Jesus was taken as God by some people. On the other hand, Islam has remained strikingly simple, pure and powerful. To the point that they even resisted from creating a 'form', for the prophet Muhammad cartoon met with severe backlash.

I have come to believe that Islam is so profound that it is not at all surprising that people in the current environment of lower IQs and given 'posts' like mullah, ulema etc give their own version of Sharia. Though many idiots in India talk about Hinduism being a way of life, I think Islam should have made the first real effort towards religion as a way of life. While Ramayana and Mahabharata, the two epics of Hinduism, promote inequality 'religiously' to the point of perpetuating it in Indian society, I don’t think Hinduism has any 'code' for ethics or living which is FAIR. If 'formless' (rather Godless?) Islam surprised me, then Islamic banking was really an eye-opener.

Maybe courtesy my experiences till date have taught me that people are interested in us only if they get 'interest'. Of course, I do understand that a bank which does not know me, can lend me money only at an interest. Islamic banking which charges NO INTEREST is actually counter intuitive! The obvious ones or even the exceptional ones are not interesting. Ian Chappell talking about some of the good captains, listed out some non-so-obvious one like Mike Gatting and it does make it an interesting perspective. I did wonder how the hell can Islamic banking work. How can a Muslim lender, forget a bank, TRUST an unknown person lending money WITHOUT interest? Courtesy Depression, they are now trying to increase spending and one of the ways to increase spending is to cut down the interest rates. They have apparently brought it down to nearly 0% which is nothing but Islamic banking :)) Now they are wondering how Islamic banking has been functioning, as going by above link

Currently, close to USD 1 trillion is being managed by about 400-500 Islamic banks worldwide and by 2020, the figure is expected to touch USD 4 trillion.

I think the key here is it is not just the lending rate that is 0% but also the fact that savings interest rate is 0%. So no matter how much ever money that you dump into the bank and for however long, it is not going to increase a bit, forget multiplying! It is better to spend it than to just lock it idle in some bank for months/years. If Islamic banks have trillions of US $s, then it means that they can spend that money, rather lend it in countries which pay interest and thus the money multiplies even further. Islamic banking promotes spending, obviously in a non-obvious way. Islam goes up further in my ratings :)

Chennai attacked?

I am not sure if I should take pride in my 'immunity' mechanism, but I have been able to stave off rampant illnesses many a time. When chikungunya made a massive strike in Chennai, I was fortunately 'missed' while some of my friends spent weeks in bed to recuperate. Even if it is not fatal, it basically puts the brakes and it is very difficult on companies or people who depend on those affected. Couple of weeks ago, I heard of my chithi's daughter being hit by a mysterious illness and the body temperature apparently rose alarmingly. My Chithi reasoned that it was because of her visit to Bengaluru. Closer home, my father was attacked by some mysterious illness as well (doctor call it 'விஷக்காய்ச்சல்') and even after 3/4 visits to the doctor, we still are seeing temporary surges. Of course, given the age factor, low body immunity is also something that we have to take care of.

Unlike in case of chikungunya attacks, the current trend is spurious because the source remains unknown! In case of chikungunya, water and mosquito joined to create the problem and so some level of disinfectant spraying mitigated the problem. Now, the healthcare dept may have no clue. There is quite a bit of talk and discussion in different fora/media on neglected tropical diseases “killing India”. At the risk of sounding xenophobic, I remember the Thackerays raising an alarm connecting migrants to the raise in Malaria cases in Mumbai. The problem with the personalities involved probably resulted in denying any serious look on the allegation.

Chennai has been mentioned in the list of fastest growing cities by Forbes, especially about an addition of 100,000 jobs this year. Even the new secretariat in Chennai could only be built by thousands of workers from North. Of course, I do personally see lots of non-Tamils in the buses and even in my office. I have to say that I am scared of the prospect of changing demography in Chennai, if not entire TN. Atleast many of my thoughts are put into words by my fellow passengers in buses or trains, who too probably feel the same. Rather than the 'invasion' of people, I am worried about the 'invasion' of diseases. My guesstimate is that old-aged people are forming the bulk of population in Tamil Nadu, if not India. With their immunity being low - my father known for his robust health/body being kept low is a good indicator, influx is not about/just people but also of diseases. It is imposible to control contagion through air, after all of us need to breathe! All have the right to live.

Update 1 (17 Oct 2010): It looks like xenophobia (or is it?) has caught on in Germany as well. Merkel has said that 'multicultural' society has failed - 'integrate or emigrate' policy is finding another voice.

Update 1 (18 Oct 2010): It was indeed shocking for me to wake up in train before it reached Perambur to find 20 odd people sleeping in the floor! As usual, I wanted to get down in Perambur to go to the first compartment after engine. At the other end of the compartment, one lady was shouting at these guys, who dont know Tamil, for entering into 'reserved' compartments. I asked three guys who were sleeping in front of the door to get up so that I can get down in Perambur. They had the audacity to ask me to go to next compartment and get down from there! I guess the pent-up frustration is so much in people that to my surprise (infact delight) 10 other passengers came to my 'rescue' automatically, shouted the hell at these non-Tamils and drove them out even before the train halted at Perambur! What is happening to Chennai? :o

Applying Thought!

I am not sure if it is the case of after-thoughts, that I did think of working in a company in Bengaluru, after coming to Chennai. Though I didn't have big reasons to complain here (infact more reasons to be content/happy), I don’t know if being in a 'permanent' job will be helpful in my matrimonial search and so I did seek for a role in permanent position in one of a 'services' company back in Bengaluru. Even though pay maybe only 'slightly higher', I thought a permanent position will be a 'promotion'. After initial discussions (technical and HR) in Chennai, which were very encouraging, I even planned to live in Hosur to reach Electronic City in Bengaluru. Going from my flat (near HAL) to electronic city will be simply energy sapping. Also I had seen in websites of some builders that there are company buses for employees in electronic city from Hosur. I can still live in Tamil Nadu after all! As always, there is this proverbial 'many a slip between the cup and the lip'.

In my experience, there are not many people working in my domain of work, i.e. DFT. It was thus intriguing all the more that DFT was slotted with back-end in the current company. Though it was mentioned for 'administrative purposes', hopefully the 'customers' don’t ever get to know that DFT is sitting under the 'Physical Design' umbrella! Even if we don’t know DFT personnel in other companies by face, through conferences and other forums, we can get to know the names (especially of experienced/'higher ups') and the bottomline is that there are only few. Though the pay was lower than the last company, where I was an employee as well (i.e. AMD), I still didn’t realize that I am dealing with an Indian company after all. Even in my current company, I got two 'offer letter's with differing pay.

HRs are probably the most hated personnel in the IT world. I haven’t seen till date any HR of the company that I worked in being 'praised'. It is also fairly obvious. The company is basically made of people who 'work'. Once a person enrolls into a company, he may not even look at the face of the HR ever. Maybe because of this, HR personnel want to exercise their power as much as possible before or till the person joins the company. The ten minutes of glory is important after all! Nobel Prize for Economics in 2010 has been awarded to people who have done great work about 'search costs' and its 'application' especially in job markets. In particular I was attracted by the following mention

Why are so many people unemployed at the same time that there are a large number of job openings?
How can economic policy affect unemployment?

If someone who is unemployed increases his, or her, search activity, it will become more difficult for other job seekers to find employment.

I am not sure of the 'appraisal' process for an HR - is (s)he rewarded if candidates are recruited at lower pay and lower job grade? - but the guys in this Bengaluru company were simply out of sync with what transpired in Chennai. The 'negotiation' started with a job grade and pay, both being lower than what was discussed in Chennai! I don’t know if going by the latest Nobel Prize on Economics, search costs are low in India and these people can afford to start their negotiations thus. Apart from this, their 'process' apparently demands copies of all certificates to be submitted BEFORE the offer is given. For one this is ridiculous. Especially for me! My first company, Texas Instruments, enrolled me as an EMPLOYEE before I even finished my MCA degree and here is this company asking for my Xth marksheet! Sure, I have given the copies of similar documents in the Chennai company but that is at the time of joining the company, not even before getting the offer. This company wants copies of all pages of my passport (both old and new), all offer letters, all exit letters, all F-16s for the 10 years! All this BEFORE EVEN GIVING ME AN OFFER LETTER!

Secondly, when I asked how to send all that, the HR says 'matter-of-fact'ly, 'Just scan it and send it', as if it is so obvious. Scanning minimum of 30 pages for all these documents will cost. WILL THE COMPANY BEAR THE COST? When I said that the certificates and passport are in my flat at Bengaluru, he asks when am I coming to Bengaluru or if my friends have the keys to my flat. What NONSENSE? If you want to recruit, you have to bear this incidental expense, atleast after I join the company. I told them over mail and phone the same - I WILL GIVE all this but after the offer is given, not before. Still I made two visits to Bengaluru and informed them. They neither showed initiative nor cooperation. They took refuge under 'process' of that company and the fact that I have to be 'understand'.

The best part was saved for the last. I am not sure of the provocation but the HR mailed responses ccing his 'higher up'. For a change, it was good that they made a direct contact (over phone) with me. I had apparently sent 'nasty' emails and that they are 'closing' my application. That was infact fine! What followed was - if you send any more mails, then I will take it up with your higher-ups and other forums! Maybe he thought that I am a 'spammer' or jumped the gun of taking to forums (what forums? sounds so ridiculous!) to prevent me from 'spreading the news'. He sounded like one who had worked in a Govt company, giving such 'veiled threats'. Maybe in times of 'recession' or 'depression' companies think that they can dictate the terms. Maybe they can, but NOT TO ME. Period.