Degree Coffee by the yard by Nirmala Lakshman

Interesting read. It is a "short biography of Madras or Chennai as it is called now. The author deals with aspects of the origins of the city as it stands now , geographically, how several small villages cobbled together progressively made up for Madras or Chennai

Madrasapatnam  was supposed to have been a Village off Coromandal Coast , and parts closer to Fort George etc belonged to Chennakesava Nayaka,the local "in charge" of the Nayak Kings.Some of these areeas were taken on lease by the English and gradually annexed as theirs possibly. Initial occupation was by the East Indai Company. The author traces the aspect of how Madras was more or less thge first post for the English. At some stage  , the Comapny gets official approval of the throme from English

Each of the area , Triplicane, Mylapore etc were supposed to have been small  villages at some point .

The author traces the Portugues coming in sometime in the middle of 16 th century , coming in of St Thomas after whom the Portuguese named the area they occupied as SanThome.

The English were  occupying and built Fort George and in and around the same place. 

The author traces the aspect of various parts of the current day Chennai being under occupation of the Cholas, and later of Pallavas etc .

Most of the streets get their name from various British Governors or some top ranking British official of charge at the relevant time. Names like Chamiers, Binny and so one. The tale of how Buckingham Canal, was used as canal by the Brotish for trade etc also nicely captured.

Apart from this, the author talks of how carnatic music flourished , the key players like MS. MLV etc . Talks of the devadasi system and shifting of devadasis ( great dancers) shifted from Tanjore etc to Madras.

Author talks of the 60 s and 70 s millieu in chennai. Talks of how Chennai has kept pace with the changing world , the modernisations ,at the same time still having a connection and keeping  to  its old values and cultural ethos

Talks of the anti Brahmin movements, anti Hindi movement, domination by Brahmions and touches upon how this was sought to be nullified by the Atheist party , DK etc.

Author talks of the almost unique  local obsession of coffee, "degree coffee" possibly means the strength of the coffee or as the author mentions use of milk of a certain strength and also delves a bit in to the way coffee is cooled by transfer between the glass and the dubara.

The author has relied a lot of existing material and for such a short biography , you obviously have to do that . Considering the restriction in terms of the size, I think she has done justice.

Of course no one worth his or her salt and who writes about Chennai can skip the movie making and the Political connection.

Chennai , being a port city had attracted a lot of traders, the Armenians, the Portugues, the English and the French . It had also attracted the merchant community like the Marwaris, the chettiars and of course since was the seat of education et , it attracted the Brahmins from Tanjore, etc

The author is part of The Hindu family

She also talks of the less fortunate ones who contribute significantly to the wheels of the city moving but who personally have been less fortunate in terms of quality of life etc.

She just about  touches upon the dirty side of the City. It is almost an after thought and almost to make sure that it adds to the credibility factor. Can't blame her. After all when one talks of the History of a place, they would like to by and large talk of the good aspects, though I feel that a little more space for the seamier aspects of Chennai , namely the auto wallas fleecing , the degeneration of the Tamil language , of course one can appreciate this as a innovative approach to bring in a balance amongst the various migrant population and their differing lingo.

Consumer Protection in Financial services –Some aspects

Consumer Protection  in Financial services –Some aspects

Recent move by the Reserve Bank of India, putting a stop to the so called “Zero Interest schemes by Banks was a very welcome move. Just as one was feeling happy reading this, clearly a step towards greater transparency and a good progressive  measure towards increased consumer protection, came the dampener   a few days later,  that RBI’s announcement  could possible apply only to  Banks and not to NBFC s( Non-Banking Financial Companies) meaning that all the Finance Companies can continue to offer Zero Interest rates.

Why Zero Interest schemes are really not Zero Interest? Most of the lenders charge a significant amount as “processing charges”. Actual processing effort may be insignificant and charging a large processing fee on the “buyer/borrower” is nothing but an upfront interest collection. Such Zero Interest schemes are generally operated in respect of “Durables” and run for a period of just about a year (12 Equated Monthly Installments ) or in some cases could be a bit longer period. On a Consumer durable of Rs. 25,000, processing fee of Rs. 4,000 is 16% PA and the entire processing fee is collected upfront. Calling interest as “processing fees” does not change the fact that there is an underlying financial cost.

There is need for transparency. Precisely for this, that is, for protection of all types of consumers, that the Government had progressively brought in various measures like the compulsory need to have an all-inclusive MRP (Maximum Retail price), the need to clearly mention the weight of contents on the label etc. Old timers may recall a period when the packages used to carry “Price…..Rs…” plus local taxes. This used to give ample scope for misuse.

Government also had enacted a Consumer protection Act, 1986 providing protection to consumers on various aspects, like price, quantity and quality.

A complicated law or a law which draws oblique references or a law which gives rise to varying interpretations or even a law which is not laid out in simple and clear terms become just laws in the books and do not really contribute to ensure what it was enacted to achieve.

People availing of Banking and financial services are in fact covered by the Consumer Protection Act, 1986. The Act does talk of shortfall in services and misleading statements, which can be a cause for “complaint”, but let us look at some aspects in the Financial services Industry which are misleading without appearing to be so. The players in financial services Industry, at least many of them if not all of them, mislead borrowers /lenders in very subtle ways. Let us examine some aspects.

Companies quoting Simple interest rates-termed as Yields

Companies which take in “deposits” from the public talk of Annualized yields. What is this yield? A,     Rs. 1,000, 5 years cumulative deposit on which, a 12% PA interest is payable, would be Rs. 1762 at the end of 5 years. Companies quote it as yield of 15.24% per annum. People who have some basic understanding of finance and interest methodologies know that this is nothing but “simple interest”. Compare this with an honest Company which has very similar terms but announces that they pay on a 5 year cumulative deposit an annualized interest rate of 12% at yearly rests. There is absolutely no difference  at all in the terms but the consumers would gravitate towards the 15.24% interest  after all a 15.24% interest is better than a 12% interest, never understanding the simple Interest  Vs. Compound interest aspects.

Interest accumulations at monthly Vs. Quarterly vs. Annual rests-Compounded

We all know that Interest at monthly or quarterly or yearly rests make a difference to the overall returns. A 12% coupon rate at monthly rests is 12.68% on an annualized basis, the same at quarterly rests is 12.55% and at annual rests is 12%.

When a retail depositor compares, he has to be given a logical comparison. The attempt is always to give out a comparison computed on different assumptions. To evade the long arm of the regulatory authorities, the Companies which come out with advertisements always have a footnote or fine print where so much information is loaded that one finds it difficult to make the critical ones from the non-critical ones, the result is nothing gets read by the depositor.

Flat rate Vs. Reduced balance method

Just as Companies beef up the rates of interest when they borrow to make it seem attractive to the depositors, they take exactly the opposite tack when it comes to lending. Obviously when lending, the Financial services Companies have to communicate how attractive their lending rates are Vis a Vis the Competitors. Lower the interest rate, real or illusory, better for the finance companies to attract borrowers. A very common method is the bold, headline grabbing interest rates, which come with a footnote or qualification, “flat rate”. “Flat rate” is nothing but charge of interest on the original amount borrowed, ignoring the EMIs (Equated monthly installments) paid on a monthly basis. The normal and the correct method is “reducing balance method” would obviously be much higher. Such lending is resorted to on “Cars” and “vehicles”. To illustrate the disparity, a so called flat rate of 7% for a loan taken for 5 years on which repayments are made on a monthly basis would be a little over 11% under the “reducing balance method”. When Companies advertise “Flat rates”, what incentive would be there for other Companies/competitors to be transparent and honest, after all, it would cost them business.

In some of the countries like United States of America, there is a requirement to quote the rate only in APP or Annual Percentage points or APR (Annual percentage rate), which is nothing but expressing the rate of interest at annual rests basis. The idea is to make it really comparable.

Consumer protection in the financial services does not require a great enactment; all it requires is making standardization a compulsion. Standard terms and methodologies can be defined to make the financial services company express their cost as an equivalent of MRP (Maximum Retail Price), or in this case we can evolve something called a Maximum Interest Cost Percentage-MICP.

We all know that even stalwarts and seasoned finance professionals got hoodwinked a few years back on so called “esoteric” derivatives by top class and reputed Banks in the Country. The unknowing and sometime gullible public definitely requires protection and transparency and standardization can be starting points towards that.

Submitted to CA Club 

Sundaram Clayton

18 -Oct-2013

Very surprising , TVS Motors has been going up from mid 30 s to mid 40 s(almost 33% increase), the Company which holds 57% in TVSM , Sundaram Clayton has gone down by almost 20%.While most Holding Companies quote at 30-40% discount Vis a Vis the intrinsic value, SCL is less than 50% of the Subsidiary market cap embedded .

Each share of SCL has 14 shares of TVSM ownership , which at current rate is Rs 630 per share of SCL and SCL is selling at Rs 290 less than half , not counting the value it has as a standalone operation in Auto ancilliary

Definitely worth a buy , there is also a possibility of TVSM picking up well. TVSM has almost Rs 1200 Crs export revenue, net forex revenues of Rs 700 Crs almost. With the rupee having depreciated by 20%, the upside in bottomline could be anywhere between Rs 30-50 Crs unless the management had got in to hedging or derivative mess.

Page Industries Market Capitalisation etc

Read a piece in ET on how Page Industries which is an exclusive licencee of Jocky International in India has a market cap of around Rs 4900 Crs when Companies like Unitech, Ashok Leyland, Indian Hotels, Apollo Tyres and similar better knwo and larger Companies are valued lower. The reason of course is ,Page Industries has been growing at 30% plus , has a high recall brand at it its command, has some 23,000 outlets and planning to expand to 40,000 outlets, operates in 1100 or so cities and towns.

The report also mentions that the Company has a capacity to produce 13.6 Crs pieces up from 2.1 Crs pieces in 2007.

It is quoting at Rs 4460, a PE multiple of 40 plus. It has a revenue tunrover of Rs 864 Crs and an EPS of Rs 110.

The report also talks of how the innerwear market is still underpenetrated (?) in India and that there is enough headspace to grow Vis a Vis markets like Vietnam, Thailand etc , per capita spend being 90% less than the markets mentioned

The big catch of course could be  the fact that Page Industries does not own the Jockey Brand and one has to see how long the exclusivity will run.

The sort of logic of Indian per capital consumption being lower is true of almost all products,commodities etc.While the Comparison does make sense, it does not make more sense that what it makes in relation to other Companies. It is not a big differentiator Vis a Vis other Companies and Industries.

Industrials and Infra fares badly in Comparison at this point of time since most of then are in deep debt and the investment cycle appears to be at its low. 

Brand and Franchise model works out very well for valuations but a Franchisee itself being valued so high, does not look like a long term story unless it is an irrevocable exclusivity for atleast 10 years or the compensation for revocation is so high that the revocation will not happen.Debt did not look too high but one has to look at the current assets to get an idea of whether the profits are all "Cash" profits or contrived, i suppose ,it must be okay on operational parameters , it could be the strategic one in terns of the period for which exclusivity will run and also the other aspect of whether similar brands can come up and set shop and outlets in quick time ?

Visiting Faculty in SJCBA-Teaching Financial accounting

Started teaching Financial accounting in SJCBA (St Joseph's college of Business administration ) from Jun 13. People at the helm very dignified and good to deal with. It takes some time to understand the level of the students and tailor the teaching to a way that they understand.Endeavour has been to make concepts as simple as possible ,starting with the simplest examples. Initial 5-8 sessions , might have been a bit fast for the class. Based on feedback have also increased the no solved examples in the class. Students appear to be warming up to that. The first assessment test was a bit tough but the correction was liberal. After initial complaints , that is after the test, the students quietened after seeing that the evaluation was liberal.

A chance for me to go back and relearn concepts. In trying to simplify the methods to teach concepts, one gets a good and new perspective oneself.

I have communicated to the management  that I can teach Corporate Finance, Financial management and costing . The remuneration is quite ordinary. As a visiting faculty, one can take this kind of assignment up if one is genuinely interested in teaching and is okay with some remuneration. Teaching a subject for the first time, takes a lot from one in terms of making ppt . working out some examples etc, repeat of the same subject  should be simpler. Let me see how things shape up. Have sent across application, resume to a few more institutes but for a sector which finds it difficult to get good quality people to teach, the lack of response has been very surprising. May be I am wrong in thinking that it does not attract good people. Another thought, may be a bit naughty and nasty is that there could be a vested interest in terms of the existing faculty  may not be comfortable with some one who they could find a challenge and could feel insecure.It could also be a case of that the  current faculty that is the full time faculty being available to teach , asking  visiting faculty to teach means hour based pay and additional cost.For the second trimester , they have asked me to frame a tax course involving direct and indirect taxes.

Trip to Wayanad May 14-17 ,2013

Around 300 Kms from Bangalore. Took a hired Innova. Could have done with a better driver. Arrogant , glum fellow who when told that he needs to follow signals explained no one in Bangalore follows rules , in fact he challenged me to show one driver who follows rules.

Apart from that the trip was great. Only when we go to a place, you do a bit of research and the confusions and our own wrong notions about the place get cleared. To start with Wayand is not a town, it is a district which has a few towns. When we go from Bangalore, the first place in Wayanad that you cross is Sulthan Bathery, nest Kalpetta and then Lakkidi . We stayed in Upavan resort in Lakkidi. Kind of hill station or shoud we say hill district, picturesque , beautiful. Lakkidi is at a good elevation, should have been around 1500 Mtrs , we realised it only when we got down the other side down to some town in  Kozhikode district going down a 9 hair pin bends through ghats and hill sides 

The resort is located very well, bang on the main road but tucked in slightly to ensure that the traffic does not affect the occupants.The first day, we had the resort almost all to ourselves. Spent time in the games room located at a good height within the resort , close to the cottages . 

Next day  (15 May ), we made a trip to the Pookkote lak , located very close to the resort ( just a couple of kilometers ) , went for boating , from there proceeded to Thushargiri falls ( about 30 kms ) down the ghat secton and through some rough terrain also. With some effort got to the place. Hardly any water. Falls or false ? not sure. There was some pretense of falls. Should be good after the monsoon.

Really enjpoyed the baoting. Taken around by Surendra, the boatman.

Vishaal spent time on the small swimming pool, Enjoyed himslef

Later went up to the recreation room , played TT etc. Very enjoyable. 

My impression was that in this kind of a place ( height above sea level was around the same as Yercaud or could be a bit lower also) ,one thought , coffee and pepper only are grown

Was told and in fact the next day (16 May ), also saw , on the way to Banasura sagar dam, few tea gardens of Harrisons Malayalam ( Achoor estate) and in fact on the earlier day (on way to Thushargiri falls) saw several rubber trees with pots tied to collect rubber fluid.

Banasura sagar dam was quite hot, ( around 20 kms from the resort) , pretense of water and some boating (speed boats unlike Pookoote lake which has only row and pedal boats )

Wayand has Tea, coffee and rubber and some pepper also.

Cool in Lakkidi. Came to know and partly we ourselves realised that , staying in Lakkidi was the best thing since that appears to be the coolest.

Stay was excellent, well maintained and reasonably large rooms , food was average , not bad at all

On our way back had food in Kamath Madhuwan. I recall that we had one earlier in the same place. They serve North Karnataka food. Place best avoided. We would have been better off eating inside the city in a place like Siddharth or President.

Takes aorund 6 hrs and add the break of 30-60 mts , total could be around 7 Hrs

Drive through the forests was great. You pass through some parts of Bandipur, Moole hole and Muthangi wild life sanctuary.

Route from Bangalore to Chennapatna to Ramnagar. Mandya, Srirangapatna, Mysore, Nanjangode, Gundipetla,Sulthan Bathery,Kalpetta, Lakkidi.

Cricketer of the Century - Sachin Tendulkar by Vimal Kumar and Warne by Gideon Haigh

The book on Tendulkar by Vimal Kumar is just a rehash of so many things already written or said about him. Vimal Kumar has made the effort of getting some write up from people who either have not said much about him or where he wanted elaboration. Obviously he is a big fan and admirer of Sachin Tendulkar. Most of such books including the one I read a few months back by Mani Krishnaswamy are more a chronicle of events , Tendulkar's innings or rehash of what has been already said.

Not that the books are bad, they are readable but do they bring in the man behind .his struggles, his emotions, pressures, critical nature of some of his innings, etc no is the answer  . Tendulkar as a person has always been what they call an enigma wrapped in a riddle. People know that he had conquered odds and made a terrific comeback after injuries. People also know, as one of the Physios mentioned, was it John Gloster ?, that the whole nation got down to learning what a tennis elbow meant , what kind of stress can cause back or shoulder problems. Sachin Tendulkar's injury is prime time discussion. In our ordinary and relatively pressureless life , where we are not under national scrutiny , we have our own personal problems and are trying to cope with the same. There is always desire to know the champion's mind or someone to tell us what went through his mind during his best years and worst years, how he planned , whether he targeted some bowlers, (recall Olonga) , how he coped with failures, why he is still playing inspite of the fact that he is way past his best, who advises him ?????.Not saying for a moment that all these have to be dealt with, but some of it atleast should have been dealt with. It is quite possible that , Tendulkar is so well protected or has insulated himself that journos can never be privy to such information. These days reading a book on Tendulkar is like a re reading a newsreport , nothing more nothing less.

As against these, book by Gideon Haigh on Warne, though  not an authorised biography, has dealt with the champion, his cricketing ability, his personal struggles, weaknesses, his mentoring etc.Of course one has to concede that Warne's life has been like one of those TV serials , always in public glare/eye, with great on field achievements, spicy off field conquests etc. Haigh has dealt with and analysed  the physical , that is the purely cricketing aspects of the success, how he kept the art simple with few variations but being on top of such variations, how competitive he had been. The author also brings out how Warne was genuinely appreciative of great performers like Tendulkar and Lara and generous with even his so called bunnies like Darryl Cullinan.He also talks of the rivalry for captaincy between Warne and Waugh , literally making Warne declare that Waugh was a much lesser batsman than many, in fact the author delcares that at some stage, Warne thought that Waugh was even better than Tendulkar and Lara.This was a turnaround which the author  substantially attributes to their personal rivalry . Warne's captaincy ambitions are put paid by his off field advetures including a hobnobbing with an Indian bookie through Saleem Mallik.

Good book.Better than a racy TV serial, which was how Warne led his life. The author also talks of how Warne has kept himself relevant even after retirement.