Fun with Finance - You Dare

Broadband and India - New market opportunity?

noreply@blogger.com (Hemant Kumar) — Wed, 29 Jul 2009 04:06:00 +0000

Yesterday I saw a writeup on net that average broadband speed in NI (Northern Ireland) is 4.1 Mbps while for whole UK it is 3.6Mbps. In india MTNL and BSNL offers top speed of 2 Mbps (when saying top, it is available to retail customers as well in practical). May be it is just my unknowingness, but I have not seens anyone saying that they have seen anything near 1Mbps from airtel, reliance or TATA in India.
Today there was news about Airtel that it is gowing to aggressively reduce its broadband tariff, upto 43% cut in existing. MTNL and BSNL are following lead by further reducing their prices if Airtel actually does it. While there is no one cheaper than BSNL and MTNL, post sell services which forms a major factor for wowing customers could bring Airtel in front while it is already biggest private mobile service provider in India.
Anyway, in this post I wanted to put forth idea of what it could mean for India in future? When we are talking computers and internet, there is still a lot to grow in india. It is mainly people related to software industry and their relatives who are actually buying PCs and using internet. factors contributing to it are -
1. Awareness - people are not aware of what all can be done through internet.
2. Litteracy - only a portion of our population know how to use PC and browse internet. Forget about if they can actually go to website they need and use services provided there.
3. Cost - Average income per person in india is still 3000 per month and this is a news :(.

Now with cost coming down and already plans being laid to reduce PC prices could mean better reach to more people in india. Opportunities it presents -
1. Increase in domestiv market - Internet is fastest way to reach people if you are selling anything - given that people are using it. With internet within reach of more people, sellers will start putting more and more information on internet.
2. Web market - Most of selling happens in india in person. Now people will start buying from net as well and new market areas and competetive ground will imerge from internet.
3. Increase in courier services - As selling will increase, it will require a better supply chain management in india. While DHL and Fedex both collabarating with indian partners, they will be planning to grab their shares.
4. Small website development market - For all above there will be need to develop websites on small scale and cost effective way. Indian young people can gearup to do this by using tools and creating expertise in this area.

While I am myslef is in software line, it sounds a good idea to get in touch with young force who is willing to do point 4 above and that could be a start of small company for serving india:). what do you say?

Recession over for US?

noreply@blogger.com (Hemant Kumar) — Wed, 20 May 2009 11:28:00 +0000

I was reading this news and it seems to me like, is recession really over, especially for US? Checkout this news where few of top US banks are returning bailout money given to them by governement. and it is not less, they are returning a whooping $45 billion back while total bailout planned by governement was $700 billion.

Why? There could be many reasons but mainly it has been stated that it is to avoid restrictions posed by accepting this bailout money which could hamper their way of operating and is not a very good offer to them. Main restrictions to companies are limiting bonus and pay for their top employees and not to hire workers from outside US. While one will increase unsatisfaction in company, other will force a company to work in a less productive way with more cost.

Critical times ask for extreme measures and highly innovative environment for work. Putting a low money condition in it will hamper the work and insert a demotivation feeling among employees when they should be free to come up with brilliant ideas. These companies might be thinking that by accpeting bailout money, they will be forced to go on a conservative path which is always diverted from an innovation path. While they would be able to recover for sure, company who opt for it, might left out way behind in the race when economic situation is improved. In today's world of cut throat competition, lagging behind could mean closing down sooner or later. So why not keep doing the same and apply same formula which you are confident of getting result. Things have anyway improved from worst and confidence have built up. Sentiments of people have strengthened by many policies which was one of the main factor to keep pulling economy down for a country.

If requests from these banks are accepted, it will surely improve more sentiments and it clearly will be taken as a sign of strength. Do you also think same or of view that it is too early? Please share your thoughts -

Satyam Bidding - latest news

noreply@blogger.com (Hemant Kumar) — Mon, 23 Mar 2009 06:51:00 +0000

Satyam bidding process started last week where request for proposal was sent to many companies who have shown interest in taking over Satyam. Few of these names were - L&T, Spice Group, iGate, Hinduja group and also IBM, HP names were mentioned.

Due to ambiguity of pending class action suits, its impact and current financial situation of company, IBM and HP didn't even proceeded further while iGate and now Hinduja have stepped out of race. It leaves only two front runners - L&T and Spice Group. Both have shown a strong interest as it would be strategically a big step for any of them to acquire a large IT service provider company with presence in more than 50 countries and a good skilled resource base of more than 40,000.

On morning of 23rd March 09 L&T and Spice group have been selected for second phase of bidding. It has not been disclosed who else has qualified or have bid for Satyam. There are expected to be seven players who are shortlisted for second stage of bidding which may show Tech Mehindra also in race..

iGate has issues a statement before that its bidding price will be much lower than current market price. Typical market sentiements are also in line with this feeling and from the time bidding process has started, Satyam share is slidding down on Indian stock exchange. Today it has already gone down by 2.7% of its previous close 43.9 to 42.7 and still going low.

It is expected that Satyam share might trade in range of 30-40 this week because of high risk invovle in this bidding process (for company who will buy Satyam). Rating agency Fitch withdrew its AAA rating for Tech Mahindra citing the risks involved in bidding for the software company

24th March 2009
------------------
Seems like Modi, Spice group chairman, is not happy how things are panned in Satyam bidding process. Name of all players are not revealed and goign forward news are not in public.

Also for bidders now there are mixed news in market. Business standard has reported that there are six bidders and not seven which may include IBM, HP and KKR Private equity investors.

Watch out this space for more news on Satyam Bidding. Please leave your comments on what you think will be share price for bidding and who will be the ONE.

Murthy, Satyam's new CEO

noreply@blogger.com (Hemant Kumar) — Thu, 05 Feb 2009 13:08:00 +0000

AS Murthy, a vetreran of Satyam has been appointed as new CEO. Previous CEO Raju was arrested on charge of 7,000 crore fraud in company in Jan, 2009. Mr. Murthy has been associated with Satyam for 15 years and was heading company's global delivery unit.

Though it could be a concern for many that an internal face will not be able to clean Satyam's name in international community (as it is still not clear who are all were invovled in scam), it could be positive for current clients as they will be comfortable dealing with a known person than a strange new face.

Another good news for Satyam is to get sanction of Rs 600 crore of loan from banks for meeting operation expenditure of company. Company board was already putting effort to collect pending receivables from client and along with this loan, company could have enough cash in hand to plan a month wise strategy for improving situation.

What do you think? Will Satyam strike back or go down?

US Stimulus package and Indian Industry

noreply@blogger.com (Hemant Kumar) — Thu, 05 Feb 2009 12:43:00 +0000

The almost $900-billion American stimulus plan for reviving the beleaguered economy has many interesting and intriguing aspects and will be analysed and discussed for long. One which is best for India is that most of the jobs (create or save 111,300 jobs) will be created in private sectors.
Image courtesy: http://uk.biz.yahoo.com/03022009/323/photo/main-points-president-barack-obama-s-economic-stimulus-plan.html
Also three hi-tech areas have been specifically mentioned in the new plan —
1. The computerisation of medical records
2. The creation of smarter electrical grids
3. The expansion of high-speed broadband access to the Internet in rural and undeserved communities.
While last point could seem as a favour to the already favour-able Obama public and not actually for reviving economy, mind you that much of today’s economic crisis is because of sentiments at various levels which are working against reforming measures and so letting the situation worsen by itself ex. Banks are not offering loans even to some enable candidates in fear of loosing money and so actually helping in making economy poorer. This is the time for creating new jobs which is one of the major actions for bringing economy back to its feet. So you don’t know, may be the least important point might turn out to be the revolutionary one in future. Do you think different?

With advances in Internet to bring availability of unlimited broadband will change the course of many industries like education, entertainment and many other businesses. Long distance learning could prove useful for India where services can be provided by IT giants and intellectual people of India can leverage technology to find employment (at reasonably good price:)).

New $11 billion amendment to help auto industry will surely help India as many of big auto makers are client for Indian industry (mainly IT). Improvement in health of General Motors will surely means some good news for Indians who are directly (India operations) or indirectly (IT Vendor) working for GM. Aid to create new highways and improving infrastructure will also in turn motivate increase in sale of automobiles which is part of this stimulus package.

Business using new concept like cloud computing can cut cost of their current application licenses and provide services on a more global sense. While US jobs will increase for new opportunities in health care, infrastructures and networking, India can support at lower level providing services in area where it is expert.

What are your views on this stimulus package – how this will help India and especially IT?

2009 Top 100 Employers. Where do you work or will work?

noreply@blogger.com (Hemant Kumar) — Mon, 26 Jan 2009 11:56:00 +0000

Fortune 500 magazine has announced top 100 companies in US for best emplyer. Alas, dream company of many, Google, has fallen to 4th place from its 1st position in this list. Below are the top 10 in this list -
NetApp
Edward Jones
Boston Consulting Group
Google
Wegmans Food Markets
Cisco Systems
Genentech
Methodist Hospital System
Goldman Sachs
Nugget Market

Adobe is on 11th place and couldn't make it to top 10 for 2009.

Though these are best employer, it doesn't mean that people are happy there becuase of a big fat paycheck. You will be surprised to see list below who are actually giving a hefty pay to their employees. Looks like, lower the pay and better is employer :). So think before you join company just based on what is coming in your pocket.

Company Name	Pos in Top 100	Role	Annual Pay
--------------------------	------	-----------------------	---------
Bingham McCutchen	30	Associate	$256,312
Lehigh Valley Hospital & Health Network	76	Physicians	$244,605
Orrick Herrington & Sutcliffe	87	Associate	$240,955
Alston & Bird	36	Associate	$203,655
Perkins Coie	82	Associate	$190,126
Devon Energy	13	Engineer	$186,882
Chesapeake Energy	73	Toolpusher	$178,108
Salesforce.com	55	Senior Sales Engineer	$172,303
Arnold & Porter	21	Associate	$172,192
Adobe Systems	11	Sr. Computer Scientist Software Development	$165,947

If you sutdy the other details for top companies, you might find that people are more satisfied due to facilities and perks being offered in these companies. While 2nd position Edward Jones has a 8th position for work life balance list, it also offers fully paid Sabbaticals. So it is great for your career inside and outside company. Also most of good companies are now allowing telecommuting and flexible office timing, which are much easier to employee in this internet world.

It will not hurt Indian IT - How many time??

noreply@blogger.com (Hemant Kumar) — Thu, 15 Jan 2009 05:41:00 +0000

In recent news, Nortel is filing for bankruptcy. Nortel is a telecom giant which originated from company 'Bell Telephone Company of Canada '. It is based out of Canada and employed more than 32,000 employee worldwide. Though troubles were going on in company, there were plans to revive company and pull it out of problem and reap profits again. A New innovation transformation was planned for company to set its foot in emerging technologies like web2.0. Unfortunately, things went still bad and today (14th Jan 2009) it has to file for bankruptcy. It was indeed a good plan but not perfect while its competitor CISCO has mastered process to move innovation in market in short time period. That's the key for business profit on which company survives.

As soon as this news was in market, our IT companies started words that it doesn't matter to them and they are not hurt due to this company. Like TCS, which is saying that it includes in less than 1% margin of their revenue, still it is there right? In last few months there have been at least 5-10 companies gone flat to ground and every time it doesn't matter to Indian IT industry. Fine, may be not as a single company, but what about combining all of these? And Citibank, Lehman, General Motors, Toyota, ICICI all these were well renowned leader of banking and Manufacturing industry. With a telecom giant going down, doesn't it give signal that recession is now spreading to telcom sector?

With banks already down, Manufacturing crawling on their knees and Telecom ready to fall, where does Indian IT companies think they are gonig to sell their services? Most of countries will put laws to hold the jobs within country so that employment can be improved. How are we going to fight a double battle? There is already less work and over it outsourcing will be restricted. IT need to come up with their innovation and reform the process to approach other countries for work. Now it is no more just cheap labour (though it still remains one of most attractive point) but also about expertise and quality, thinking of turning service into business profit.

Its time Indian IT industry, its time... do something or else we might not see it but we are also on verge of falling with others. Beware...

Infosys Q3 results - Will market improve?

noreply@blogger.com (Hemant Kumar) — Tue, 13 Jan 2009 04:08:00 +0000

Summary of Infy Q3 -results -

1. Slightly above expectation
2. More revenue coming from North America while it reduced in Europe.
3. Increased revenue from product and Infrastructure services.
4. Good thing is that they are able to reduce expenses by a good amount (YtoY by more than 7%)
5. Revenue increase in BFSI domain and Energy domain.
6. 30 clients are added in this quarter.
7. 2772 employees were added and billable headcount is increased. Attrition reduced to 11.8% from previous quarter of 12.8%
8. YoY growth is 8% while sequential growth declined by 3.7%

Overall a promising future... wait for their guidance for next quarter and year coming ahead...:)

IGate may buy Satyam

noreply@blogger.com (Hemant Kumar) — Sun, 11 Jan 2009 18:58:00 +0000

In latest news, iGate CEO, Mr. Phaneesh Murthy, showed his interest in buying Satyam. he mentioned that he was planning on this thought even before Satyam fiasco. At current stage, Satyam will be a very cheap buy and it will give iGate a very good strategic position against other Indian IT companies.

Not to remind anyone that with present in about 66 countries and 54,000 strength of employees, Satyam was India's 4th largest IT company. Phaneesh was involved in growth of Infosys before iGate and believes that he has a good mangement team to handle such a large organisation. Satyam on the other hand currently strugling with lack of management while it has a skilled workforce and a lot of domain expertise to utilize.

With so much strenght and presence in his hand, he can change the face of Indian IT and rewrite the position of IT companies when market situation improves. Watchout this space for more info as the stiuation unfolds:)...

Latest Updaet on Satyam - Running post

noreply@blogger.com (Hemant Kumar) — Thu, 08 Jan 2009 12:27:00 +0000

I think it would be good for readers to see all important links for news related to Satyam at one place instead of running around in search engines. It would save a lot of effort on your side, so I have created this post for you (reversed the sequence to reflect from bottom to top with top being latest. It would be easier for you to get latest news without scrolling)-
9th Jan 2009
12. No salary for Satyam Employee for 2 months. Officials have denied any layoff but has commented that is cash position is bad. SEBI have summoned Raju at Satyam's corporate office at 4:30 PM.
11. CID has started probe into Satyam fraud after state govt gave a green flag for operation.

10. While it is recession time, things are not too bad if you are a Satyam employee and good in your area. Checkout this news about opportunities for Satyam employees.

9. Satyam's CFO who has put papers, tried to commit suicide. It is really a shame but running off like this is not going to help things. We expect cooperation from these people so that no one else in future could try this scam.

8. SEBI has seized all finance files of Satyam. Investigation has formally started with this step.

7. Infosys has instructed its HR to not hire Satyam employees. I feel sorry about Satyam employees that their association with a bad name is bringing bad time for them. Also this statement from Infosys has been criticised by Satyamites.

6. Top leaders of Satyam, new CEO Ram Mynampati including vertical and regional division heads and HR head, has vowed to stay with company in this crisis. They have committed that they won't resign and will work together to bring it out of crisis.

5. While there is news that Satyam may fire 10,000 employees in Feb, new CEO has assured that Decemeber salary of Employees has been taken care of. Main issue company is facing for its operation is liquidity crunch.

4. Hoping news for investors and traders that Satyam trading will not be suspended in India.

3. KPMG raised doubt on Raju's confession. According to them, it is no a one man show and it could be a larger crime where someone has actually pulled out the money while actual money was with Satyam. If it is true, it could act positive for Satyam as a company.

2. Satyam share plunged to 18.75 while in morning it touched lowe than 12.

1. Satyam has got a major Irish contract. Under the contract, Satyam will drive FETAC’s implementation of Business Process Management (BPM) solutions for its core business processes.

8th Jan 2009
7. Despite all speculations, LIC is not planning to sell its stake in Satyam. It could be a soothing news for Satyam investor or could start worrying LIC investors who are taking ULIP from LIC. Other institutional stakeholders like ICICI, Citigroup,Fidelity etc are evaluating their option and have not made any decision till now while Aberdeen and Swiss Finance has sold their stakes.

6. Ram MynamPati is new CEO of Satyam in place of Raju. He holded a conference on 8th Jan evening to assure investors and clients of Satyam. He also revealed that Satyam's CFO has resigned while resignation is not approved yet, may be as all senior member of company are already out of company.

5. Brokerage firms have stopped coverage on Satyam share and advising new investors to stay away from this stock.

4. Maytas Infra along with other Satyam subsidiaries will be scrutinized for its link with Satyam. It might uncover another fraud. As per recent news (8th Jan, 4:00 PM IST) RC Sinha, chairman and independent director of Maytas Infra has stepped down. Mendu Rammohan Rao, a former director on the board of scam-tainted Satyam Computer Services, has quit as the Dean of the prestigious Indian School of Business in Hyderabad.

3. Law firms Izard Nobel and Vianale & Vianale have filed class action suits in the US on behalf of those who purchased American Depository Receipts (ADRs) of Indian outsourcer Satyam Computer Services.

2. Satyam was listed in New York stock exchange. It halted trading for Satyam in US as well as Amsterdam in Europe. National Stock Excahnge of India has removed Satyam from its Nifty 50-share index. BSE may follow later. Also it could be that Satyam is de-listed from stock exchanges.

1. SEBI announced that it will take strict action against Satyam Chariman for fraud. It even gave hint that it could be removed from Nifty and trading could be stopped for its share.

Till 8th Jan 2009
1. Ruchika Sharma has comiled a very nice list of events along with dates as it unfolded. It is a must start for reading and getting a history feed of what all has happened with Satyam till 8th Jan,2009.

(Plesae help me by leaving comments if you find any good link which should be here)

Fate of Satyam after Raju Resigns

noreply@blogger.com (Hemant Kumar) — Wed, 07 Jan 2009 09:30:00 +0000

This is today’s shocking and hot news for India. Chairman B. Ramalinga Raju’s admission that Satyam Computer Services Ltd’s Balance Sheet was completely fabricated got the stock
Crashing down by 66.5 per cent to Rs 40 from Wednesday’s high of Rs 188.70 (check here)

Company share hit a lowest of Rs 30, while previous 52 week low was marked at 114, as details of the extent of fraud perpetrated by the promoters shook the stock market.
Not only the prices of own company share but this news has brought down the whole Sensex. The BSE IT Index plunged 7.70 per cent and BSE Realty tumbled 11.20 per cent.

Satyam fraud raised question over corporate governance of other companies also, especially IT. The Satyam fiasco has left a big question mark on corporate governance in India while sending a negative signal to the foreign institutional investors, analysts said. Company was already in news for bad governance over decision to invest in family business and 8 year ban from World Bank. Check my previous post on this topic.

The Satyam story poses a big question over the credibility of auditors in general, as PricewaterhouseCoopers was auditor of the company. The bankers to Satyam included Bank of Baroda, BNP Paribas, ICICI, HDFC, Citi Bank, HSBC.

Chairman’s letter to the company board and SEBI revealed a fraud of unprecedented proportions. Raju stated that Satyam’s balance sheet as on Sep 30, 2008, carries an inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 reflected in the books). Further, it carries an accrued interest of Rs 376 crore which is non-existent. The books carry an understated liability of Rs 1,230 crore on account of funds arranged by Raju, and an over stated debtors position of Rs 490 crore (as against Rs 2,651 crore in the books).

The Securities and Exchange Board of India on Wednesday said it would take all steps under the law for which it has started discussions with government and bourses. As Raju mentioned in his letter that neither he nor managing director have been benefited from this and it is a result of inflated profits company was showing over the past few years (source unknown, and I am not responsible for validity of this statement).

There may not be much impact on the other IT companies, except a bad name in general for Indian corporate and one may see Infosys, Wipro or TCS go up in next trading sessions. Companies in competition of Satyam overseas can look it as opportunity as management will take some time to get hold on company and it may not pursue its growth that aggressively like it was doing before. It can act as advantage for Satyam’s competitors.

India IT Future in 2009

noreply@blogger.com (Hemant Kumar) — Mon, 05 Jan 2009 13:15:00 +0000

Indian IT industry has mature a lot from time when it started in 70s with body shopping. Though it looks a bad term now a days, this was the crude face of today's IT at that time where capable people were offering their services to needful client of US. Today, IT industry not only provide maintenance service and customised solution, but looking forward to partner with client and get involved in strategic thinking for benefit of business. It is just not offshoring anymore.

If things have been good for some more time, we could have seen Infosys, Wipro and other bumping their shoulders with IBM, Accenture for consulting assignment. With economic recession slowing down growth of industry, what should we expect in 2009 for India? Instead of making a blind attempt, it is better to look into few of facts and then devise a plan to battle in this ground. I am hopeful that if you are in software industry, this post will help you organise your thinking and make a better decision.

While 30-40% revenue of Indian IT was coming from BFSI segment, as some of major player of this sector are going down, there will be a big impact on Indian IT firms. Situations ranging from job cut, downsize, slowdown to domain change can occur. While subprime lending could be said a result of mere greed, it is also asking for a better solution in loan and credit area for better governance and long term view. Going forward, it might not be just maintenance, but more money will be pushed for innovation which can help improving core systems. Most of BFSI applications are decade old which are not efficient in fast growing global economy and innovation will be the key for dominating in new era.

Indian IT firms are majorly operation from SEZs. It is planned to end Tax holiday for these companies in 2010 which will shoot expenditure cost for these companies and bring down profit margin by a great extent. While companies are trying to extend it, it would not be good for Indian society to depend on it for long and keep its eye closed on this fact. IT companies need to think of increasing growth and minimizing expenditure at other places then avoiding tax to Indian govt. If all these companies will start giving tax to govt. growth in other sectors could be increased which will help Indian society in general. Be ready to expect some impact of this on your salary in 2010 or 2011.

China is next emerging country for IT services. While it is starting on field where India has matured, its threat should not be ignored for competition. Indian companies have already thought of taking its advantage and major giants like Infosys have opened development centers in China for future time. If it grows, they will be sharing the profit from these locations. Only one thing can keep us ahead in race and that is up-the-ladder services and strategic partnership with client. If we keep working in down the chain in service ladder, China will soon take over and give you a hard time.

Onsite is not the only charm of industry. With many of Indian companies (other than IT) are making their presence globally, it is time to look into domestic market and slot in your position for future. Idea has given a multi year $80 billion contract to IBM for its IT service management. Why not one of our Indian company? Because while we were trying in US for opportunity, an US company bargained domestic work out of India. Reliance, TATA, ICICI and many others are now global companies and should have a lot of need of IT support. These are nowhere less in revenue than any US or Europe company, so don't underestimate our domestic market. Even SBI could give a fight to any international bank for its customer count and money it handles.

And as I started, this is era of automation. Lame coding is outdated in current time. You need to be sensible to client business and provide a solution which could be mapped to a final income. If you are not thinking in that line, you are not growing up and cannot keep up with new race which is going to begin. So sharpen your skill, look for long term opportunity and make your position to be in front when race starts.

Wish you a happy and prosperous future of 2009. Good luck.

Major Financial news of 2008

noreply@blogger.com (Hemant Kumar) — Thu, 01 Jan 2009 20:16:00 +0000

I want to begin New year by summurazing what happened in last year. It will help one to do a better financial planning and take into factor many events which normally people skip and consider as non-related. Below are few major events which happened in India in 2008 and what could be its economical impact -

Mumbai Terror Attack: It is being remembered as 26/11 in line with 9/11 of US attack. Went on for 3 days, leaving at least 173 dead and more than 300 injured. While most serious loss is human lives in this incident, it impacts economy as well. And it is not only Mumbai but a concern for security in whole country. In 2008, hundreds of lives were lost as a series of blasts shook various Indian cities. While short term equity fall and rupee value depreciation was expected, it is not that negative as long term impact. Companies will worry about safety of their employees and establishment and so could impact foreign investment and industry growth. Tourism industry will be impacted for reducing foreign visit to India.

Sunsex: It started with a very promising 21,206. 'Black Monday' (21 Jan) as it is named, is famous for 2000 point fall in Sensex in a single day. And then it touched an unimaginable low 0f 7697 giving heart attack to many traders and even investors' belief was shaken. Trading market rules will be written again after this year and equity is no more a promising product for investors. Mutual funds are even worst performer and loosing faith of their customers.

Crude Oil: Oil price touched a all time high of $147 per barrel in July 11 and it was expected that it is not going to come down. With recession news it came down to <$40 surprising everyone but still not able to help economy to stablize. Inflation: Inflation neared 13% in mid jan while it was normal when year started. Comforting news is that it soothe down to single digit when year ended. Else it was a bouble impact on public to face inflation and economic recssion impact at same time.

Debt relief to Farmers: The Finance Minister, in his Budget Speech for 2008-2009, announced a Debt Waiver and Debt Relief Scheme for farmers. It was amounted to Rs 60,000 Crore.

Nuclear Agreement: Govt made historical civilian deal with US. On August 1, 2008, the IAEA approved the safeguards agreement with India. Us expect to bring $150 billion for nuclear power plan which will help India increasing its electricity production and improvising transportation.

Confidence Vote: In lieu of nuclear deal, govt had to go through confidence voting. Communist parties - Left fron withdrew its support from got on July bringing uncertainty in India. Govt survived with support from SP.

Nano: TATA announced world's cheapest car Nano. It planned to setup production plan in Singur, West Bengal. Later it was forced to move out becuase of opposition from Mamata Benerjee of Trimul Congress. It delayed roll out of car and TATA accepted Gujarat offer of setting production plan in their state. There are news for electric version of Nano as well (e-Nano) which might come up later.

Banks: HDFC Bank and Centurion Bank of Punjab announced their merger, creating India’s largest bank in terms of branches. India’s top private lender ICICI’s share price dipped more than 50 pct on various news of economic recession impact on this bank.

Satyam: IT major Satyam Computer Services faced some tough questions about corporate governance after a botched attempt to buy two of its sister firms for $1.6 billion. It was further impacted by World bank 8 year direct contract ban on company.

Jet Airways Layoff: Jet Airways faced staff ire over efforts to downsize and survive. 1900 employees were asked to go which was after Kingfisher and Jetairways shook hands. It was considered to be impact of this deal. Later Jet Airways chairman offered all employees to join back and keeping survival issue on hold and promised to look into other options for handling it.

Cricket: Cricket changed its shape when IPL was introduced in India in April 2008. The success of the inaugural IPL 20/20 league conceptualized a new business strategy and brought cricket again on top of sports while expanding opportunity in this field multiple times for sportmen. Even other sports are now trying to change how the games are played and increasing revenue.

Ranbaxy: FDA has banned 30 generic drugs made by Indian drug-maker Ranbaxy Labs from import to the US. It impacted one of largest pharmacy of India is big.

Please let me know more major events which are worth mentioning here and I will add those in above list.

Satyam - Going down or coming Up

noreply@blogger.com (Hemant Kumar) — Tue, 30 Dec 2008 13:47:00 +0000

With latest two blow to Satyam, it is expected that company would go down and so much that it may be hard to recover. If you don't know about these two blows, here are the details for you -
First Blow - Satyam decided to invest in real state companies to diversify and to de-risk company asset. Unfortunately these real state companies, Maytas Infrastructure and Maytas Properties, were owned by family member of its main promoter Raju and were not doing very good in market.

Second Blow - World bank posed a 8 year ban on Satyam. Ban was meted out for "improper benefits to bank staff" and "lack of documentation on invoices".

Satyam share plunged down to 50% after these. 4 of its director resigned, few taking moral responsibility of supporting its decision and its board of director strength reduced to 6. It actually worked positively for Satyam as few of wrong doers were going away. Even chances of somebody buying Satyam rose and so the share price of company.

Satyam has engaged DSP Merrill for analysing company's strategic move at this time and have promised stakeholders that all concerns for last two week incidents will be addressed in maltiple ways.

Even it announced that share of few of directors will come in market as those share have been financed by various lenders and so lender will sell those shares to cover margin. It will reduce stake of directors in company and a new identity could take over management if bought a good proportion from market. Thinking that new identity will be more desciplined then current directors, it has given company a better future possibility.

Satyam was surely a grwoing company and was having a strong place in IT service provider companies. If management really cares about company and proper corporate governance are put in place, it is no doubt that it will not only recover its position but also reach new levels. What do you think?

US-China friction on Recession Policies

noreply@blogger.com (Hemant Kumar) — Tue, 30 Dec 2008 13:23:00 +0000

Recession is here and is confirmed by many economy experts. Now two world leaders, US and China, will try to do everything to save their country and minimize the impact on their country. But can they do it without crossing path of other side?

Obama have made a $850 billion plan to bail out US economy from this recession. From where this money will come? China is largest buyer of Treasury Securities, so surely US need to work with China for pulling this money out of US Treasury. Basically as China hold major US dollar, US will take loan from China for arranging this money.

And, Money doesn't come free, boviously it's money. China will like to have some advantage in terms of increasing its export to US and tax relaxation. But that would be just against US bailout plan. This move will actually go against stablizing it's doemstic market and current bailout plan might fire back if this is the case.

Making the situation worse, what could happen if China dumps its major Treasuries in US to arrange money for its own use? It is difficult for US to give a good return and so it makes sense to invest elsewhere where China could see a better advantage..may be a gonid down Us company??

US can't let it happen and would plan something to stop China from doing all this which won't make China happy. All this could create tension between two World Leader country and who knows, what it has in store for result... Keep watching..

Note: Let me know what you think on this topic. Please leave comment to discuss on this.

Leaders of Tomorrow - No job cut

noreply@blogger.com (Hemant Kumar) — Tue, 23 Dec 2008 05:55:00 +0000

Seems like a labour cost cutting is much more appreciated then a job cut over the world. In that sense what Infosys is doing is very much impressive. Below is one example of what other companies are following - "Dell (extended unpaid holiday), Cisco (four-day year-end shutdown), Motorola (salary cuts), Nevada casinos (four-day workweek), Honda (voluntary unpaid vacation time) and The Seattle Times (plans to save $1 million with a week of unpaid furlough for 500 workers). " (for full story, read http://www.nytimes.com/2008/12/22/business/22layoffs.html?_r=1)

Everyone is trying to survive in this recession time, but leaders will be those who survive with pride and honour. They would be first in race of progress when it is over.

Share your views on what do your think about these moves by companies. What would you suggest if you don't like it.

US slowdown & India IT - Loss or Opportunity?

noreply@blogger.com (Hemant Kumar) — Thu, 16 Oct 2008 09:40:00 +0000

US Financial slowdown is today's hot topic everywhere. It has made so much news that equity market of other countries are being driven by sentiments of news coming out of US market. If there is a sharp fall in Dow Jones then surely there would be a fall in Asian, Europe and Indian market too. And while US market is not able to recover from its bad situation, things are going bad in India too with a single thinking that most of money in India is coming because of industries in US. Especially in IT. Is that really true? Is Indian industry so dependent on US that it will loose its base if US goes in recession? Why do we think that we are so much leaning on US -

1. Customer for our IT industry are mainly from US. If business closes for them, then IT industry will loose money and jobs. It makes a good part of money coming to India.
2. Many of foreign investors were feeding money in Indian industry seeing it as a good growing market. With them being in problem, money would stop coming to India and there won't be funds to continue growth plans for these industries. Few might close down as they has not reached a sustenance level yet.
3. Many more....

Is US a big market for Indian goods? Are most of Indian company partner with US companies? I think we are still very much independent to keep things going on our own and we should not worry so much about it.

For IT industry which seems to be worst hit due to US situation, what are the impacts one would expect this will have -
1. Market for IT will reduce in US and in some cases may even shut down. In India people working on those projects might go on bench or get fired.
2. When laying off, outsiders (contractors in US) will be let go first. Being already low employment situation people will come back to India. Unemployment rate in India will grow.
3. Hikes would reduce or not happen at all. Spending from IT group will reduce including company and employees of these company.
So it will result in a situation where a large share of our population will not be able to put same money in Indian market which it was putting. In some cases, it might create a bad situation like bad credit where people have lost job and not able to meet their commitments. It will indirectly impact other areas of Indian industry like Banks, real estate and retail. These are all under one assumption that IT industry of India will not grow and actually shrink from its current status.

Now let us look at positive side of same situation. Do we really think that all US industry will close down and will not try to overcome the problems. Society has grown and it need these industries to go on. Can we do away with banks in today's time? Can we accept a situation when there won't be any television, mobile or Internet? I am sure answer would be a big NO.
Also if these need to go on, can today an Industry make a good profit without involving anything from IT and keeping everything manual? Again a NO.
Automation is an important key to make profit in any industry which is possible only by IT. And who will supply a cheap and cheaper IT solution?

It may happen that if IT will just wait and watch, things would actually turn to their profit and they would get more work than they have currently in future when US will overcome its financial slowdown? Yes, there is a risk that nobody knows when things will improve and will they really improve at all? While later question is having a very low probability, IT need to prepare itself for surviving in situations like this. One cannot go on like earning its daily bread on a daily basis. Surely those companies are in problem which are not having a future plan and no alternatives. Only the better will survive and that is the law of nature. Even in a totally unnatural concept like business these nature rules apply. Survival of fittest and elimination of weakest is mantra for improving and maturing a life.
So when this phase will be over, we would have learnt to do much better in same situation which we are capable of current time. We need to make ourself better to compete in diverse situations and provide more profitable solutions. Solutions which are directly addressing end user need and converting real business into profit. We need to keep patience for the time when demand will come again and we need to be in a position where we could present us as a valid candidate to meet that opportunity.

South Africa Economy - Its hot

noreply@blogger.com (Hemant Kumar) — Fri, 08 Aug 2008 11:01:00 +0000

- Shifted from blog 'Life Movie Fun'
I am currently living in south africa and so could not help myself getting involved with coutnries situation and its future in economic world. That's why I put a question to myself and you to think about this country (see post -http://lifemoviefun.blogspot.com/2008/08/some-provoking-thoughts-on-economics.html).

I did some reading which I have mentioned as reference at last of this post on this topic. Based on these I can word my own thinking of where this country might go and achieve in future. These all are just possibilities but thats what one need to start a venture :).

South africa as a country is rich in resources. Its geographical situation brings a good atmosphere, not too hot, not too cold.. a lot of sea shore which can help in trading, a big land area for ground development, not much large population to keep consumption low, mines of precious metals gold/platinum and other minerals to feed its economy with lot of money and raw material required for development, what not. Then why there is problem? May be it is not managed properly or it is just a phase in development of a nation.

Opportunity is aleready knocking in SA when it is giong to conduct 2010 FIFA world cup. It will have a huge chance to utilize its production which can be done totally using internal resources and manpower. It will boost industries, create employment, provide world wide exposure, open market for cheap import, open market for SA good in other countries and a lot.

SA seems to be good equiped to do all this if a good effort is put in all this as some of basic things need to be completed before it can encash this opportunity to its best. Infrastructure, literacy, skilled people are few points which need to be addressed before it happens. Time is less but it need to be done.

Industries are already seeing this and are ready to help SA in achieving this target. Even US and China are hungry for its natural resources and showing continuous interest in SA so that they are on boat when it sails in deep sea. SA need to keep a good eye on what exposure it gives and what it keeps to itself so that a nation grows and not the other countries by using its resources.Ref:

Few links which I read on above topics-

Latest in Indian IT, what next?

noreply@blogger.com (Hemant Kumar) — Wed, 06 Aug 2008 10:57:00 +0000

- moved from blog 'Life Movie Fun'

Inflation is everywhere, not only in India but in whole world. US is on verge of recession or some say that it has already started from last year end. Many other countries are also in similar financial condition. Anyway who cares about rest of world when problem is around us, so what actually going to happen to India?Will living cost keep on increasing and now a days high earning software people will actually look like same middle class of yesterday? Most of them have taken loans to fulfill their dreams - house loan, car loan, personal loan, education loan, credit cards, salary advance... long list? ha..So what would happen if recession is actually hit India as well.

Economic cycle says that a bad country recession occurs every 8-10 years. When is the last time it had happen in india.. 2001 or 2000.. that was a bad time.. and that too for IT industry. India is too much looking for these IT companies to bring money inside country. But has anyone thought that actually these companies are standing on a very ..very very risky concept of an industry?

How does an Industry work? It has resources and it has market. It utilizes resources and sell in market and whoa.. money is produced.. Lets see an IT company for it. It has resources.. (ya we have a big population). a lot of it. where is the market then.. In India? 'No'. In Asia? 'No' ..

It is Mostly US (which is already in recession) or Europe (which is also not in very good shape). So if both market are not at all in our control and in bad shape, why there will be a chance to India. Because India offer cheap solutions and that would help them reduce cost.. good point. but is recession cured by reducing cost?No.

Recession is reduced by controlling money flow within country and providing chance to internal industry to keep growing. Stopping outside hands to take away money from country. So what is going to happen? Will India stop getting more work from US/Europe till they recover? What will happen to Indian IT? Will they be able to survive till then? Where this man power will go if they are not needed for all this time?These are few questions which can bring slepless night to any of our IT guy.. so What next?

Future for Petrol Prices

noreply@blogger.com (Hemant Kumar) — Tue, 05 Aug 2008 10:53:00 +0000

- moved from blog 'Life Movie Fun'

I am late in doing research about my own posted questions, but the topic was so wast that it took time to find proper stuff on even one point. Here it is for Petrol -

Price for petrol is mainly a result of typical 'Supply and Demand' rule. Many factors are contributing in this demand which are -

1. World population is increasing faster than rise in oil production.

2. More countries are growing fast (mostly developing countries) and so for growth more energy requirement are increasing oil consumption.

3. Almost 1/4th of oil consumption is subsidised in world. Due to this even though price has increased, demand is not reducing.

4. Transportation is increasing day by day and it mainly is running on oil. It is very difficuly to cut down on this sector as it is main need of developing nations.

While above factors are increasing demand, there is another concept of future buying. In this countries/industry quote a future price of crude to reserve an amount of oil for them. This also gives a higher end indication of how much demand has increased and so hikes the price.

Supply is mainly from oil well in Saudi coutnries where reserves are being used more and more while new resources are not being found to provide enough oil to meet demand. It is also getting difficult to extract oil from current resources and that increases the cost of production. Result - an increase in price so that where it is not feasible to continue running the work with increased price, work will be stopped and so consumption will reduce. Pressure is more on developing nations to cut down subsidy (like India and China has agreed to increase price due to hike in crude price) so that consumption will reduce. These measure will help bring a stability in price and an equilibrium will be reached where market will continue its progress.

Major support in this will come from alternate resources, like in Canada - Tar Sand. These are big amount of oil reserves and very big in Canada. Till now it was not profitable to extract oil from these due to lower prices. As price has increased which makes if feasible to extract oild from these places, there would be additional production at price where stability would reach for oil production. On that price, for some more time, it would be better for market to utilize these extra inlet of oil in industry and grow at higher rate.

So, Price is surely going to increase in future for petrol, but what we can expect is that there would be better supply of oil at this price and one can think of utilizing it better way and balance the advantage such as to neutralize the loss due to increase in price. Way to go :)

Some Provoking thoughts on Economics :)

noreply@blogger.com (Hemant Kumar) — Fri, 01 Aug 2008 10:52:00 +0000

-Moved from blog 'Life Movie Fun'
Today is 1st August 2008. Just yesterday I attended a good session about economics of world. Though topic was not that but speaker drifted to that side and he shared quite a few thoughts on how the market is going and how it is going to hit India particularly. Interesting provoking thoughts.. :)

I am thinking of doing some research on those myself and then update this page later. Just so that I keep the interest, points were -
1. How petrol price are going up and down. what is the benifit and to whom.

2. How US is playing other world markets to keep its economy going. It lends money to other groups/currency and later gets it back when that currency is strong against US dollar, result, more US dollar and that also with interest. Wow thats double benifit.

3. Why SA is currently hot for all industries and why it is next center for economic revolution. A lot of natural resources are present in SA which industry need to utilize and current inside industry is not able to consume it, so money is going to pull in from various places in SA. Time to catch the boat when it is still onshore.

4. Recession is going to hit India hard and may be some other coutries as well. Recession cycle is 3 year long and it comes every 7 years in a contry. LAst time it was in 2001 for India and now 2008. But this one is going to be worse than before and for next 3 year it might be even problem to survive in a good manner with same growth.

Let me try what all I can find out on above points. Keep thinking and leave me comments if you have anything to share on above points :)

Started in share market

noreply@blogger.com (Hemant Kumar) — Mon, 21 Jul 2008 10:42:00 +0000

- Taken from blog 'Life Movie Fun'
For a long time I was thinking of entering in share market. Never got a chance to do so while I was in india.. reason - most of employer have blocked trading sites in their workplace so that to increase productivity. In other countries it is not so - may be becuase people are not so much into it? Naaaa.. I think may be because they believe in their employees more than indian companies do. Anyway this is a never ending debate...
My experience to share market is good till now.. When I opened my demat account, share market was booming like anything and I was dying to enter into it. Something inside me told me to hold and not enter into it that time.. good decision I would say as otherwise I would have fell flat on mouth.. :(. I invested in few mutual fund at decreasing slope of market and it still went down taking my money into it.. I am hopeful that mutual funds are supposed to be investment for long term so over the time it will bring me returns..
Share market though has started going up a bit and I managed to enter just before it was touching its long time bottom mark. Result, it has started showing returns. Though I didn't put much of money, it was a good experience. I felt like I learnt a lesson of patience here. I would say few points which I felt are really needed if someone don't want to get hurt in here -

1. Keep an eye and ear on market news. Take a bit of risk as economic cycle is never on a single trend. If it is going up, it will come down. You should be watchful to enter in it while it is down.

2. Take a decision when it is good enough down for your risk appetite. It may go down even further which might make you panic. If you try to exit at that time, you would be actually loosing only. Keep faith in company where you have invested. If it is good, it will come up.

3. Don't try to play lucky. Invest in good companies where you are confident of returns. when you have learnt a lot, may be try something adventurus.

I think this 3 point lesson is enough for starting. If you try to learn all before entering, you might be sitting like me never entering it. so make a start :).
Good bye

rpc_relay

noreply@blogger.com (Hemant Kumar) — Sun, 02 Jan 2005 12:08:00 +0000

Canvas

noreply@blogger.com (Hemant Kumar) — Sun, 02 Jan 2005 12:07:00 +0000