Monday 26 January, 2009

Things to be done before you’re in a B-School for a course in Finance

I know it sounds funny and far fetched but last week a friend of mine asked me for advice on pre-preparation before an engineer joins an MBA Finance course. The advice was for another friend of hers who had just finished engineering and was about to join a B-School. Obviously, she has chosen a wrong engineer for advice but however awkward as it may be for me, I generally never waste an opportunity to impart Gyaan onto others. So here’s my advice for all those engineers who are about to join a B-School and have time for trivial things such as preparation and all...

“Engineers need not study anything before the course has begun. They can manage everything you see... ;-)”, I told her. But, on a second thought, I think I would have had a better time in the class if I had brushed up little stats or read a chapter or two of basic accounting. So here it goes:

Statistics and Mathematics
Most of the part is covered during the 5 semesters of mathematics during engineering. Basic concepts of measures of central tendency (Mean, Mode, Median, etc), graphical representation (Frequency Polygon, Histogram), limits, sequences and series, calculus, matrices is what you are supposed to know

Financial Institutions
NCFM book for Securities Markets – Basic Module is a good read here. Different financial institutions, regulators and intermediaries in the Indian Financial System and their functions is what you need to know (You can download this book from NSE website http://www.nseindia.com)

Word, Excel and PowerPoint
I have seen many of my fellow classmates struggle with this. You at least need to have skills to make a ‘not-so-good-presentation-so-far-as-the-content-is-concerned’ look extremely good with different layouts and animations. For those who are already comfortable using office, some knowledge of macros and VBA programming will prove to be a great help...

Accounting Basics
If you don’t want to be in a position where you don’t have a clue what your accounts or FSA (Financial Statement Analysis) professor is talking to other commerce background students, you need to grab an 11-12 standard commerce book for basic accounting.

Laptop and Basic working knowledge of computers
Decide which laptop model are you comfortable with. Is it a Mac or a PC? Check out different models out there. See which one are you comfortable with. Another must have is a USB Drive or preferably a USB hard disk. If you are not comfortable with computers/ Internet, spend some time exploring and using the Internet

Meet-up with Friends
This is the best thing you can do during the holidays is that you can meet up all your friends. When the course will start you will not have time to do such things. The presentations, projects and other such activities will keep you occupied for your two years in the B-School.

I think you’re all set once you are through with the things I’ve mentioned here... Have I missed anything? Fellow capmarks students can chip-in with their suggestions...

Wednesday 21 January, 2009

Bogie Number B2 / Seat Number 6



Team Fintellect

My IIM Lucknow sojourn is almost over now. As I sit comfortably in Bogie Number B2/ Seat Number 6 on my way back to Mumbai, it is almost compelling to look back at the experience. It has been a couple relaxing and still busy days at IIML. For the uninformed, I was at IIML campus for last 3 days for ‘Call for Arms’ – a team event to adjudge the best B-School in India. We finally finished as eighth best B-School in India (I am aware that the B-School rankings are controversial and subject matter of a lot of debate, but eighth spot will do for me :-)). IIML guys had planned the event well and did all they could to make sure that we had sleepless nights.

Talking about IIML campus, the first thing that came to my mind when I reached the IIML campus was that it was damn spacious with greenery and over capacities observable everywhere. Large lush green grounds, smaller buildings spread wide apart from each other, large canteen, large library, large classrooms and large ‘almost everything than can be large’. For a guy who comes from a crammed B-School having a few tall buildings and no more than a few hundred square meters of campus in space starved Mumbai, this was an overwhelmingly overwhelming experience. In fact I wonder how IIML guys manage to study in such serene and scenic surroundings

Talking of ‘Call for Arms’- Different shortlisted B-Schools across India, three days, eleven events... It was an action packed venture... I could see the commending and commanding IIMs, long established XLRIs, FMSs, SPJIMRs, MDIs and NMIMSs all fight in the same arena for the best B-School title. The contrasting cultures of different B-Schools were apparent at each step of the tournament and it was indeed a learning experience for me.

Throughout the tournament, I observed the differences between ‘a winner’ and ‘a loser’. A loser cribs, attempts rationalization and most important of all misjudges his abilities whereas a winner regrets, analyses and most important of all is well aware of his abilities as well as weaknesses. Being a winner is as much a part of one’s attitude as it is of one’s abilities.

Another important thing which was observable was the rivalry between B-Schools and their willingness to go to any length to achieve the supreme spot. So much so that add Madhur Bhandarkar to a B-School fest and the outcome would be a Bollywood flick on the B-School rivalry.




I also got a chance to see the Rock competition at IIML. It was the first time I attended one. With all due respect to those who love rocks of any kind, I really could not digest the whole thing. Being in Mumbai, I had numerous opportunities of visiting rock shows. But I managed not to visit any of them somehow. Here at IIML, on a chilled grey Saturday evening, I finally decided to attend one while I was passing by the brilliantly lit competition area with people screaming and loud guitar accompanying their chorus. My first impression when I entered the competition arena was that it was insane but Power-packed. The lead singer (Though I am calling him a singer for the lack of a better word, most of the time he was screaming in a language I could not comprehend), was moving his head as if he had the shaft of a generator attached to his head and the power supply of the whole campus will go down if he stops. The guitarists and the drummer were louder than the singer and the show could have gone on even without the lead singer. As I watched them perform and watched people near the stage go crazy here’s an excerpt of my conversation with Jigar (Jigar, by the way, is my roomie and is one of those guys who believe they understand and like Rock...)

Me: Nice show... Seems interesting but I can’t understand why...
Jigar: Hmmm... (Giving me a ‘I-am-Harsha-Bhogle-and-you-are-Navjyot-Singh-Siddhu’ kind of a look
Me: Those people near the stage have gone crazy... They are mimicking the guy on the stage... This guy must be like very famous... Who is he?
Jigar: He’s a participant... Not famous at all... In fact these guys must be watching him perform for the first time...
Me: Oh... It is the song then... The song he’s singing must be like very famous in the world of Rock.
Jigar: Not a famous song either... It is his composition...
Me: Then, how on earth are these guys near the stage able to understand what that hairy and swinging guy on the stage is screaming and enjoying it?
Jigar: No answer... Just a laugh

Giving it a second thought, if I get drunk like crazy and have a lot of worries in life regarding my placement, exams, scores, etc even I can enjoy the thing called ‘Rock’.

I kept the conclusion to myself as the hairy and swinging guy promised the crowd for third time that it was going to be his last performance and the crowd raised their hands in the air as they did for his earlier performance...

More on IIML, the event and my take away from the trip once I reach Mumbai... Right now, the battery promises to die in a few minutes and thus time for me to go play some ‘Teen Patti’ in the train...

Tuesday 13 January, 2009

B-School, Bad news and a trip to Lucknow

Third trimester has begun... Before I realize it, first year of my MBA experience is almost over... I realize that I haven't really jotted down anything on my B-School experience as yet and now is the time to do so.

After more than two years of work experience (Or whatever experience that was), I finally joined a B-School. I must admit that given the fierce competition, what people say about different B-Schools in India and different B-School rankings floating around, mine qualifies to be 'A B-School' and not 'The B-School'. The experience has been value adding and interesting nonetheless.

After working in the field of stock market for real-time trading software development at TCS, I, like any other mortal who likes money, got hooked onto the market. A few certifications and I started thinking that I know how the world of finance works. Finance seemed the most obvious choice for my MBA specialization. I knew I was made for Finance. I was born for Finance. As a matter of fact, I believed that I was born for Computers and everything there is about computing back in 2001 when I had to choose my specialization in engineering ;-). (Fortunately for me it turned out to be not so wrong and I still think I like technology and everything there is about technology and I hope it turns out to be true again this time too)

So I became a student again and after a big gap of three years, attending lectures and submitting assignments was quite a task. The strangest part and a significant difference between MBAs and Engineers comes from the fact that unlike Engineers that are programmed to mass-replicate the assignments, MBAs seem to be less into team work... This means that I have to do all my assignments on my own. Working hard throughout night, passing on work to group members, last minute changes, pretending to know everything during presentations is fun nevertheless.

Other important difference is the improved quality of the pedagogy. With all due respect to the teachers in my engineering colleges (Last time I visited my engineering college, my professors still remembered me... I am dead sure that none of them reads this blog though...), I can safely say that teachers in the B-Schools know what is teaching. Here, there's more to teaching than reading out of a book when you know that no one around is listening. Here, most of the students listen to what the professors have to say and most of the professors know what they are teaching. (The word most is of utmost importance here ;-))

The title of the post also says something about bad news. The bad news this time comes from a probable scam in the Munis Bond market in the US. Read this story in New York TImes

After Satyam, it is turn of Wipro to get punished from the World Bank. Read this Bloomberg story
The disclosure came almost 18 months after the actual ban was imposed. After world bank made the information public, the company did whatever it could to assure market of its negligible share of revenues from World Bank project but the scrip was still hammerred down 10 percentage points. In the context of the overall grim sentiments, markets seem to be in the mood of punishing even the slightest mistakes of the corporates. This also brings out the fact that disclosure norms in India need to be improved.

For the last part of the title, I am going to IIM Lucknow a couple of days hence to represent my college for an event there. Visitng an IIM campus was always a dream and I have a chance to put it into reality and that too as an all expenses paid trip by IIML :-). As I am packing my stuff and deciding things to do and movies to wathc during the 24 hours long train journey, I find this post that lists great business related movies of all time

Now that I have covered the whole title, I can hit the bed...

PS: Song Playing - Kahin to hogi woh - Jaane Tu Ya Jaane Na....

Thursday 8 January, 2009

The tale of A Satyam Computers

In what promises to be India’s biggest corporate scandal till date, Mr. Ramalinga Raju, founder and chairman of Satyam Computers, one of India’s four premier IT companies, admitted of a fraud through a letter addressed to the board of the company. The controversial and seemingly absurd acquisition proposal of Mytas, an infrastructure company of Satyam promoters by Satyam computers a few weeks back suddenly started making sense once the letter by Mr. Raju to the board of the Satyam was out.

Here’s how the story unfolded...

Full Text of Mr. Raju’s letter to Satyam Board

Mr. Narayanmurthy reacts... It is important to remember that one Satyam does not make the entire Indian software industry. I believe it is an isolated case

ICAI, ICSI say they are working on the facts of the case... Will soon take action

Satyam to be thrown out of NIFTY, SENSEX?

The Fraud
There is Rs. 5040 Crores worth inflated cash and bank balance
Non-existent accrued interest of Rs. 376 Crores
Understated liability of Rs. 1230 Crores
Overstated debtor position of Rs. 490 Crores
For last quarter,
Overstated Revenues by Rs. 588 Crores and overstated operating profit by Rs. 588 Crores

Added together, it is a discrepancy of Rs. 7724 Crores on the face of it for a company having annual revenues of Rs. 10000 odd Crores, a gigantic fraud by Indian standards. 

The After-effects
  • Satyam Scrip on NSE, BSE crashed 77% to Rs. 40.25 on the news and the great story for a seemingly successful Indian IT company ended. Fingers were pointed, concerns were raised, complaints were filed and dreams were shattered. What happened at Satyam and why it happened will be contemplated by regulators and chewed by business media for days to come but I think it is time for some quick action on part of the regulators, corporate India and the government
  • The event has left Satyam with virtually no board as most of the independent directors have resigned and promoters will be kicked out. The Acquirer or the government must appoint able directors quickly to ensure business sustainability
  • There are about 53000 able employees of Satyam which need to be taken care of. They are at no fault for the current crisis at Satyam and still make Satyam a valuable enterprise
  • Many customers of Satyam still expect to be serviced and in case of an unfortunate event of bankruptcy, the contracts should be sold to other Indian companies (By the government of course) so as to make sure that Indian IT story is not dented
  • The auditors and their inability to verify even the cash balances of Satyam is a fact that concerns me. There should be higher accountability or responsibility on part of the auditors and those found guilty should be severely punished
  • Other Indian IT companies should do all that they can to prevent their image from denting. This includes assuring customers and investors about sound corporate governance (If it exists that is) and introducing transparency and stringency in the disclosures

Finally, my first recession gives me my first big scam in India. The crisis times like these separate good companies from ordinary ones and expose ill-managed organizations. The crisis could dampen India’s image as a good investment destination. It could affect badly, the businesses of Indian IT, BPO, KPO firms. We should remember that the position India is in, as an emerging and promising market, we cannot afford such mistakes and this event should and hopefully will have enough impact to trigger India’s Sarbanes-Oxley so that such mismanagement can be prevented in the future

PS: The word 'Satyam' means 'The truth' in Sanskrit whereas 'Asatyam' means a lie.

Saturday 3 January, 2009

My First Recession

There is a special place for all the firsts in our lives... First day at school, first day at college, first drink, first job, first salary and many other firsts... These firsts in a way are milestones that define the journey of our life. As I was going through the newspaper in the morning today (which was full off grim business outlook, layoffs, etc) it struck me that this happens to be my first recession... Not something to be celebrated but interesting nonetheless... As far as the facts and figures go there has been a recession in India during 1996 but this one is the first one ever since I have become literate in economical sense and thus deserves its share of attention...

The times are exciting. Yes, I dare to say so and I say so during a recession at that... Living in this part of the world, I should call it a slowdown rather than a recession as India will still continue to grow with estimated GDP growth rate of anywhere between 5-7% in the next couple of years. I think as a student of the subject of finance the opportunity to learn is immense during these times. Not that there are no opportunities to learn when there is a general feeling of well being all around or when financial system around the globe is operating smoothly as it should unlike in the past few months but because there are a lot of things happening around which I may not seen again in my lifetime. Take for example the historic 700+ billion dollar bailout package in US, historical fall of the stock markets around the globe, the Iceland crisis, the historic rise and fall of crude oil prices and so on...

The good thing about slowdowns, recessions and bad times in general is that they help in weeding out the weak and unwanted excesses and result in many reforms or at least that is what we’ve seen in the past... I intend to look at this recession from an emerging markets’ perspective and focus on following aspects as India rides on this trough of the business cycle:

  • The action in the Indian stock markets
  • Actions of RBI in relation with the FED
  • The policy reforms in India
  • Indian businesses pre and post recession
Every week I will be taking up one important event pertaining to these aspects and discuss it at length. Your views, comments and inputs are welcome as always...