Test Testy

Thursday, June 26, 2008

Comparison of cities and My take on Real Estate in India

While I am settling in Delhi, I keep comparing it with Mumbai and Hyderabad. While Hyderabad is my hometown, Mumbai is a city I liked a lot. I have spent first week of June at Mumbai and then moved to Delhi, so I've some recent Mumbai experience that I can use for comparison.

If I have to say it in short, it will be like this - Delhi is comparable to Hyderabad in terms of weather, locality, attitude of people etc and is comparable to Mumbai (atleast Navi Mumbai) in terms of cost of living, diversity of people, footpath business etc. What Delhi lacks is the attitude of Mumbaikars. Despite having smaller roads, heavy rains and many other problems, Mumbai people live on and are very nice. You would see innovation in everything at Mumbai and the quality of things is much better in Mumbai. People are quite aggressive and proud in Delhi but they are not better in anyway when compared to people in Hyderabad. You can observe these things with the Autowallahs, rentals agents, house owners, craftsmen, bank employees, bus conductors and drivers. Mumbai people are highly efficient and always focus on getting things done quickly while Delhi guys talk big but do little.

I have been disappointed by the service I get despite paying premium, which is comparable to what I would pay in Mumbai. At this cost I get much better service in Mumbai. Hyderabad, on the other hand, is slowly moving towards Delhi in the sense that all the service providers started demanding premium without improving the service in anyway. In Mumbai you atleast get better service. Hyderbadis are known to be laid back people but because of IT and ITes boom, things are getting expensive in Hyderabad.

One unrelated but nevertheless serious one is about the real estate scenario in India. I was going through the Knowledge at Wharton's latest article and felt that Indian Real estate has gone through very similar cycle with certain minor exceptions and excesses. While the Indian financial sector has not gone as far as US guys did due to various reasons including market not being fully developed, they followed their US counterparts in many things. They have been overlending beyond the normal limit of 80% but inflating the property value. The cap rate in India is quite high compared to any other similar market making it vulnerable for a fall. But there is a significant difference between US and Indian cultures that would not allow a big crisis to happen here. First Indians believe in lifetime employment and generally wouldn't leave jobs in difficult time. Though most of the service sector jobs are dependent on global market, predominantly US, these firms are trying hard to diversify and they are still competitive despite talks about US recession and weak dollar. Indian non-services sector has also been going global particularly non-US, which can insulate it to certain extent from US recession.

But as the interest rates go up, and new job creation slowing down, there will be pressure on rentals and new real estate purchases, which would lead to drop in property prices. While most of the deals that are underway may sail safely, some may have to face rough weather. New deals would be delayed and may not happen at previously projected figures and this would be first indication of the change.

I have been an investor in the real estate and though I see property rates coming down, I don't foresee loosing much as I have entered it 3 years back. But those entering now or have entered in the last two years will see some erosion in value.

While most of India will be able to manage slight slowdown and would be happy inflation coming down, there is a limit to what it can handle.

All these developments hint at a grim situation, which can only change if the political forces join hands with the intellectuals and don't get carried away into any one path too deep. Patience, prudence and judgment are required. I hope the Man of India comes up with some magic and save us all.

Tuesday, June 24, 2008

Random thoughts about Politics, Economics, and Society

Finally the last major party in AP that was not supporting Telangana has a rift. Devender Goud decided to resign and come out of TDP and pursue telangana on his own. This puts a big question on Naidu's hope to come back in the next elections. While Devender Goud is not a big crowd puller, he can get all the telangana guys in TDP and weaken the party. Devender Goud must be fancying his chances after KCR's TRS failed miserably in the recent bye elections.

One question that occurred to me while thinking about this issue is - How are these politicians able to get so many supporters. I guess the reason is totally economical and then sociological in nature. One side of India's story is that more and more youngsters are getting educated and getting good jobs. On the other hand there are many others for whom life has not changed in any way, in fact it becoming worse for them. While democracy provides the biggest intangible benefit of "freedom" though curtailed due to different forces, tangibles are becoming a problem. The free market economy that is talked about is non-existent in its ideal state anywhere in the world. Even the so-called free market proponent's - UK and US, are not allowing free market fully. The social objectives are not being met by Democracy fully due to the individual indiscipline.

Think about a middle-aged guy who studied till high school and couldn't further it due to various issues - self, family, society etc etc. What can he do in today's economic scenario? Many times his life is stagnant and he is looking for something that he can do enthusiastically, something that can give him social and economic benefits and participation in political action seems to fit the bill accurately. This exactly works in the opposite for a young and educated person in India, which is why we don't see any smart guys entering politics. As the economic divide is becoming bigger and bigger, there will be different forces that try to reduce the disparity, some of them are quite crude. The form of these forces include corruption, theft, cheating, mafia, terrorism, corrupted and self serving politicians etc and etc. Only after the scenario becomes worse by which time the loss from these forces is more than the benefit of ignoring them, educated people would take action to eliminate these forces.

While corruption, theft, crime, mafia, terrorism, naxalism are all viewed negatively, one must keep in mind that all these are due to the failure of political system in achieving social objectives that they are entrusted with.

End of the day what does every human being living wants? They want a happy life, while the "happy" word has different definitions and meanings to different people but broadly everyone should be able to lead a life that he/she would like to as long as their actions do not harm others. Others should not only include human beings but also all other things on earth. The word "Survival" generally indicates a short-termness in nature but similar to "life" it is continuous in nature. One survives or lives every moment, so there is no short-term or long-term to it, it is only our limited knowledge and thinking capabilities that make it short-term or long-term.

There is so much that we human beings have no clue about - including the environment about which there is so much of "green talk" happening, that our ability to take decisions that are good for Earth can be questioned.

As a race we have moved so much away from "basic living" that we have forgot why we are doing all these things. One side is the inquisitive nature of ours that keeps pushing us to explore and understand everything, on the other side we have the pleasure seeking nature that keeps us at work and trying to improve things of comfort. The pleasure seeking nature is the main fuel behind the business world and therefore the search is endless.

Sometimes I wonder that we are forgetting what we need basically need and instead take things for granted. For some reason, human race has chosen to live together and thus created the "Society," which is constantly evolving and the increasing population is a proof that it has been successful so far but the miseries of so many human beings alive is also an indication of its shortcomings. In earlier days, religion attempted to correct the social shortcomings but now religion seems to have lost this capability due to overuse and increasing knowledge.

Looks like it's time for us to cool down a bit and think why we are doing what we are doing and then take a call about what to do next. I know that one person thinking wouldn't make a difference but it can make a beginning. Let's think about this and do something that makes sense.

I know that this post is quite long, complicated and intertwined but I would greatly appreciate thoughts from the readers. Have fun

Wednesday, June 18, 2008

Random thoughts - mergers, synergy, markstrat etc

The key reason given by business leaders and consultants for acquisitions is "Synergy." Synergy could be in different areas - operations, marketing, financial, value chain, strategic, competitive scenario and so on. One question that I have is, who actually gains from the Synergy - Shareholders of the acquiring firm, shareholders of the acquired firm? If the findings support that no one is worse off, then there is a case for supporting acquisitions and developing specific competence.

CEO's constantly strive to see that they are not a target and spend lot of resources towards this. Consultants keep coming up with different strategies to keep big firms away. But my question is - is it worth all this effort? If higher value is being created overall, then isn't it fine to be get acquired or go and acquire someone else. Yeah, some individuals loose every time an acquisition gets through, so what? Aren't we more bothered about collective welfare than individual welfare

Information asymmetry, integration blues, overestimations that make most of the merger proposals questionable but if more effort is put in this area, it may improve the overall welfare surely.

It must be Markstrat time at ISB and I know that people would be aggressively searching for solutions. My advise is not to search for solutions but search for information and come up with solutions. After one year your job would be to come up with solutions than cookie-cutting. There will be lot information but identifying what is useful and what is not and then taking decisions sensibly is all Markstrat about. Our group was going down steadily during the first three quarters but then we made a turnaround and stood at the top by the end. Good luck for all those trying to sell Sonites and Vodites.

Tuesday, June 17, 2008

Say bye bye to Incandescent lamps

It's high time that we say good-bye to incandescent lamps and replace them either with CFL or a tube light. Whoever is reading this blog post, I request them to see that if they find any incandescent lamp in use and ensure that they are replaced with a CFL or a tube light, whichever is suitable.

And to ensure that it is done 100%, I think it would be great if the government mandates this by making:
1. Ban usage of incandescent lamps and restrict sales only to medical and measuring devices. It may be useful to levy high tax on these lamps and see that they are not available in the market easily
2. Reduce sales tax on CFL's
3. Provide incentives for incandescent lamp manufacturer's to set up CFL manufacturing by providing them replacement incentive

One question I always had about government's role is about the usage of tax collected. While there is certain level of income distribution/leveling is happening, many times tax is not being used properly. For example huge amount of tax is collected on Oil and other petro product sales however government spends nothing on efforts that will lead to re-creation of these natural resources. While it is fine to utilize some portion of taxes towards welfare, it also important to maintain a ecological balance. You can't keep on drawing like this forever.

10 days in Delhi - House search, guest house, movies, rain, spam etc

I landed here on 8th June and it is ten days in Delhi now. As the title says my time is divided between house search, guest house, movies, rain, spam etc. Looks like there will be no respite for me for another 10 days or so.

I managed to push myself into a movie theater this Sunday to watch Sarkar Raj. The previews were good and it appeared quite neat. After Aag, lot of people started thinking that RMV has lost the touch. After hearing such comments my expectations were quite low from the film. The movie is well made drama and is a good watch. Background music and photography are good and incidentally sub-plot of this movie happens to be about a power plant in Maharastra. Suddenly everything around me seems to be linked to power in some way.

Monsoon has arrived early in Delhi and it rained quite heavily on Sunday and Monday. After the movie when I stepped out, I was in the feeling that I am in Mumbai. Hang over from the one-week induction and the plot being in Maharastra seems to have affected me.

There was an excellent article on CSR in ET yesterday. I was surprised to see lot of MBA's talking about CSR in a way that is contrary to economical rationale. This article is a must read for all the MBA's without work ex. Here's quote from the article:
The real meaning of CSR
"The corporate social responsibility must aim at achieving the targets for which companies were set up, without incurring cost and time overruns" - R C Bhargava, Chairman, Maruti Suzuki India Ltd.

Yesterday night I watched "Scent of a woman" and was quite impressed. I have been saving this movie for a day when I totally bored day and yesterday happened to be the day. I regret not having watched this movie long back. It's an amazing movie and a must watch. I must thank my ISB classmate Sasi who is currently in Egypt for introducing me to English Classic movies. Thank you buddy.

After the hectic one-year it's time to learn how to live life fully. Lot of things have changed and things are becoming more and more interesting. Many of classmates including me have started feeling that MBA sets lot of expectations but in reality things move very slow and all is not what it appears to be from a B- School lens. Welcome to reality.

Thursday, June 12, 2008

Using Solar Power in business world

One of the key limitations to use solar energy apart from availability is the requirement of batteries to store energy. I was thinking on these lines and suddenly it occurred to me that there is a low hanging fruit.

Today almost all the offices, small or big, have UPSs and they all have batteries attached to them. These batteries are always connected to power and will be on trickle charge all the time. They would surely be ticking the energy meter.

If one uses solar panels to keep the batteries on trickle charge and use grid power only when needed, then you can reduce the energy consumption. If you do a cost-benefit analysis based on this set up, I'm sure solar would be more viable. I am gonna get in touch with my old colleagues who are in maintenance and the new colleagues in the infratel business to prepare a viability report shortly on this.

Wednesday, June 11, 2008

First week at work

Despite strong attempt to get immersed in work, ISB still is occupying majority of conversations. I think this is one experience that will play a dominant role in my life from now, not just academics but friends, life and everything else.

ISB's website has been redone and it is looking quite beautiful now and here's link to the Graduation ceremony coverage.
ISB Scholar's of excellence. I'm happy to see my name in print.

Now that my induction is over, I have moved to Delhi. Delhi while appearing to be a different place from Hyderabad it shares lots of similar characteristics. More about them later. I'm now on the net most of the time using my mobile to connect through bluetooth. I am liking this technology.

It's time now to get ready for office. Will come back shortly

Tuesday, June 10, 2008

Number changed

One of the most difficult things these days is updating your mobile number everytime you relocate or change your service provider and I am facing this challenge now.

Those of you who want my new number, request you to mail me - I'm sure you have my mail id