We will get out of consumer loans and focus on a few segments such as the credit card and infrastructure financing business, may be do a bit of commercial loanToo bad. Although I left GE Money way back in 2007, it is still close to my heart. It was my first job post MBA and it was an awesome learning experience. Unfortunate that we weren't really made for each other and I decided to part ways.
And more importantly the report says that GE would miss its 2010 revenue target of USD 8 billion. Worried about my friends back at GECF :(
I finally bought Milind Gunaji's (apart from being an actor, he is a photographer, traveller and author) Offbeat Tracks in Maharashtra (from FlipKart). I think in 2009, I will use that book as a guide. I will select a destination and strike it off the index once I have visited that place. Let me start with Amruteshwar Temple in Ratanwadi (close to Bhandardara - a pic of Bhandardara). I was there last weekend.
Milind Gunaji's Book in Marathi
Somehow I am bored today and I think I go back to the old style blogging. Where I talk about things I do, did and will do. I am writing this while talking to a friend on phone, watching Rambo III on TV, fidgeting with Steve Jobs wallpaper on my Macbook. And thinking what to write. All at the same time. Talk of multitasking.
So, I am almost nearing the end of Snowball. Its a nicely written book on Warren Buffet's life. Apart from his personal life, it chronicles his business adventures and obviously, his lessons. Although, individual chapters are bit long, it is still a very readable book. The problem with reading thick books is that by the time you reach the 648th page, you forget what you read on the 37th. For the record and umpteenth time, Warren Buffet is one of my idols and if I could become just one-tenth of what he is, I would consider myself lucky.
I also started reading Value Investing for the second time. I am supposed to return it to Sandesh on the Meeting 2 of Value Investors Mumbai gang and hence the hurry.
This brings me to yet another thing that I have been thinking about for some time. Information. Its management and flaunting of the same. I read tons of things everyday. This includes newspapers, reviews and personal blogs. Mostly online. And as with all things, there is a lot of noise and a bit of signal. The trouble is archiving all this information and then retrieving it when required. Like, if I try and recall important events of the day, they would be Satyam's new consultants (BCG) and investment bankers (GS and another boutique investment bank), 3 odd percent jump in the market, Supreme Court's judgment in Vodafone's tax case, TRAI's call for companies who want to offer number portability services, Pfizer and Wyeth deal, usual noise in the press over Mangalore pub incident and then thousands of small noises in the startup scene in India and abroad.
I am sure I have forgotten lots of things that I would have found relevant while reading them. And am sure that by the time I want to use any of these things, I would not be able to conjure them up. So, how do you manage all that information? And more importantly, you know that you know all that but the world at large does not. And until the world at large knows it, there is no way you could put all this information that you know to use. It will become yet another Herculean effort in vain. Anyways, this is a rant for some other day.
A two point summary of the entire thing is that I need to understand information and its management and two, I love brainstorming, ideation and mental masturbation on things and I think I should be working towards a career ideating. But as they say, ideating is as commonplace as potatoes. Execution is what matters. Need to find someone who can execute things faster and better than I can ideate. Are you the one?
And this is when we realized that jam was not because of a pothole or a faulty signal but it was a roadblock setup because a VIP was passing by. He was going to attend some award function at Hyatt hotel. His cavalcade had some 20 odd cars and an ambulance in the tow. After he passed through, the fat policeman lazily ambled and opened the road block. I dont even know what would have happened to the person in the ambulance who was in dire need of medical attention.
I mean VIP by definition is Very Important Person and its us, the common man who has made another common man, an important person. Why should a VIP thus get a priority over a common man when it comes to using roads and other public infrastructure? And especially over a dying man stuck in an ambulance that is forced to wait because a VIP has a party to attend?
Understood that very important people have very important tasks to do and they are busy and they cant afford to get stuck in the traffic. And since they are important, their security is also of prime concern. But is roadblocks a solution? It they are getting late, cant they leave early enough? If they are important, cant they schedule meetings at nearly locations? And if all this is unavoidable, why cant they take a route and a time that is not inconvenient to everyone else?
Talking of security, if I were to hit a VIP running on an empty road, all I need is to hire a sniper perched on top of a roof. And then there are other easier, more efficient ways to target them in hotels, news conferences, restaurant openings, movie premieres etc. After all these are the things that take bulk of a VIP's time.
How about looking at alternative modes of transport? A helicopter ride for example. It costs some Rs. 50,000 per hour. I am sure it will be less than what it costs to run 20 cars, atleast 100 personnel, another 500 policemen to man the route, about 500 cars affected because of the jam and one or two odd people stuck in ambulances.
How about having all the important functions at one place? Something like the parliamentary building where all the not so important ones who want to meet the very important ones are summoned and meetings are conducted in a safe environment?
There are one thousand questions that we can ask. And we should. India asks Y.
Originally written for Mutiny.in
every time an elderly person dies, newspapers lose a reader they will never get backHe is of the opinion that newspaper as an industry thrives on revenues from advertisements and with competition and alternative access modes of information, these revenues would fall.
According to this latest article on PSFK,
the paper’s online advertising revenue is now sufficient to cover the cost of the LA Times’s editorial team - for both print and online.May be its time to revisit few predictions. Could Warren Buffet be proved wrong by the New Media?
P.S.: Another article by Seth Godin on future of Newspapers.
The story started on Dec 16 2008 when Satyam (promoted by Mr. Ramalinga Raju) said that they are going to acquire Maytas companies (Maytas Infra and Maytas Properties - both promoted by Mr. Raju's sons). Everything was fine about the acquisition except two things. One, Maytas companies are real estate players and Satyam being an IT company has no business to acquire a real estate company. Second, the Maytas companies were promoted by Satyam promoter's immediate family and clearly violated ethical code of conduct.
When this acquisition news was made public, people were of the opinion that Mr. Raju was stealing money (Satyam reportedly had about 1.6 bn of free cash that was being used to finance this acquisition) from Satyam (and Satyam shareholders) and rewarding himself and his family (as a part of the deal, the promoters of Maytas were to receive cash component against their shareholding). Eye brows were raised because apparently Mr. Raju owned just about 8% of Satyam and he did not have complete ownership over the free cash flow.
The stock analysts did not like the deal. Here is the confrence call transcript.
The stock obviously took a beating and as WEB says, there is seldom just one cockroach in the kitchen, this acquisition news opened a can of worms for Satyam. Suddenly everyone was analysing Satyam's books and all this additional scrutiny revealed that promoter holding in Satyam is less than 8% (promoters had pledged their shares against cash flow to meet Satyam's opex). And then the World Bank 8 year ban for data theft became public. And then there were all sorts of other rumors on the street.
It was still all ok till today (Jan 07, 2009), but when Mr. Raju resigned from the board and wrote this letter to SEBI and board members of Satyam stating
It is with deep regret, at tremendous burden that I am carrying on my conscience, that I would like to bring the following facts to your notice:
The Balance Sheet carries as of September 30, 2008
Inflated (non-existent) cash and bank balances of Rs.5,040 crore (as against Rs. 5361 crore reflected in the books)
An accrued interest of Rs. 376 crore which is non-existent
An understated liability of Rs. 1,230 crore on account of funds arranged by me
An over stated debtors position of Rs. 490 crore (as against Rs. 2651 [cr.] reflected in the books)
For the September quarter (02) we reported a revenue of Rs.2,700 crore and an operating margin of Rs. 649 crore (24% Of revenues) as against the actual revenues of Rs. 2,112 crore and an actual operating margin of Rs. 61 Crore ( 3% of revenues). This has resulted in artificial, cash and bank balances going up by Rs. 588 crore in Q2 alone.
The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance). What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years. It has attained unmanageable proportions as the size of company operations grew significantly (annualized revenue run rate of Rs. 11,276 crore in the September quarter, 2008 and official reserves of Rs. 8,392 crore). The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations — thereby significantly increasing the costs.
Every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was that poor performance would result in a take-over; thereby exposing the gap. It was like riding a tiger, not knowing how to get off without being eaten.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas’ investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam’s problem was solved, it was hoped that Maytas’ payments can be delayed. But that was not to be. What followed in the last several days is common knowledge.
And this nudged the stampede on Satyam's stock price (as since Satyam is a large part of sensex, eventually the sensex fell by 7% or 700 odd points). Here is a chart that indicates both the Maytas deal and Raju's resignation from the board.
This is a perfect example of how not to run a company.
I cant even imagine the spread of its impact. Apart from impacting the India story, more than 50, 000 careers are in jeopardy. Creditors (and banks) stand to loose their investments and money. The suppliers of Satyam would be hit. Most importantly the customer would be left in lurch. Not to mention the shareholders who have invested in Satyam.
Anyways, what's done is done. Questions that we need to find an answer to now, are ...
- What were auditors and chartered accountants doing when the books were being cooked? How could they sign the quarterly reports?
- What is the point of having a board of directors in place if they cant detect these things and bring them to the notice of shareholders?
- What can SEBI and other industry associations do to salvage corporate India's reputation?