The urban spirit!!

A blogpost after a long time.. And what brings me to table now? A relatively mundane issue - City bus travel.

To travel in a city bus in a metro in peak hours is not for the weak hearted. It requires tremendous guts, will power and an indefatigable attitude. Most buses in the popular routes carry passengers at least 2-3 times their originally intended capacities. With a sizeable proportion of passengers travelling on foot-board, One side of the bus leans towards the ground and keeps you guessing, what makes this marvel defy gravity? A few really aged buses in MTC's fleet make it through this dairy chore of ferrying passengers, purely by god's grace. ... And yet these buses (in Chennai) transport over 45 lakh passengers per day, making over Rs. 2 crores collections per day. A truly commendable feat.

Well.. this post is not to douse you all with my woes against the MTC transport. Through my many travels in these buses, I have observed two things which create inconvenience to other passengers and/ or more accidents.

1. Voluntary foot-board travel by many aspiring youths, probably in a bid to showcase their adventurous spirit and woo eligible partners
2. Left side overtaking

My hypothesis is that both these problems can relatively easily be solved if the MTC officials make a small change in the seating arrangement. For historical reasons, the fairer sex takes the left side seats in the MTC buses. If they are instead made to take the right side seats, the following welcome changes can happen:

1. Dis-incentive to voluntarily travel on foot-board due to absence of the right audience/ platform
2. Reckless left hand overtaking for similar reasons described above would stop, as people would be incentiviced to now overtake from the right hand side..

Anybody listening?

Indianblogger

I have become a guest blogger at www.indianblogger.com and I hope to publish various articles on finance and stock markets.

Here is my first article on "What is a QIP and why is it hot today?" - http://indianblogger.com/2009/06/05/what-is-a-qip-why-is-it-hot-now/

Risk

To laugh is to risk appearing the fool,
To weep is to risk appearing sentimental,
To reach out for another is to risk involvement,
To expose feelings is to risk appearing your true self,
To place your ideas, your dreams before
a crowd is to risk their loss,
To love is to risk not being loved in return,
To live is to risk dying,
To hope is to risk despair,
To try is to risk failure,
But risk must be taken because the
Greatest hazard in life is to risk nothing.
Those who risk nothing do nothing,
Have nothing and are nothing.
They may avoid suffering and sorrow but
They cannot learn, feel, change, grow
Love or live.
Only a person who risks is free.

Author unknown

Markets for Maharajas

I have started another blog - http://marketsformaharajas.blogspot.com

I endeavour to write on various topics in finance and economics in this blog. I have started with some really basic stuff and aim to gradually cover more ground. Check this out when you find some time.

I will of course continue this blog too.

What’s an attractive business?

Who amongst these three is a more inspiring leader? - Abraham Lincoln (AL), Mahatma Gandhi (MG) or Alexander (A)

It’s difficult to say… Let’s briefly see what these leaders are remembered for..

AL: Humility, perseverance and practical leadership. Knew the importance of infrastructure to an economy. Fought against racial discrimination. Leadership during civil war. None of the things he did was rocket science. He did small things.. yet he did them consistently and achieved a number of small victories.....

MG: Truth, simplicity, non violence.. Fight against the British and the Indian independence... Father of an entire nation. A leader who did simple things.. Yet had the mettle to inspire millions to follow him.

A: One of the most successful military commanders of all times. Conquered the entire world. He did not do small things. He did great things that continues to inspire us even centuries after his time..

Ok.. What have these leaders got to do with my original question on what is an attractive business? Here you go...

If we agree that shareholder returns is a reasonable measure on evaluating business attractiveness, there are three important components which constitute shareholder returns:

1. Margins

2. Asset Turnover

3. Leverage

 

That’s because

(Net Profit/ Sales) i.e. Margins X (Sales/ Assets) i.e. Asset Turnover X (Assets/ Equity) i.e. Leverage  = (Net Profits/ Equity) i.e. Shareholders Returns

It’s great if a business scores well on all these three counts. But even if it scores extremely well on one of these counts, it can constitute an attractive business..

High Margin businesses are like Alexander. He did great things. It’s almost impossible for a common man to imitate his deeds. High margin businesses are like that.. They do big ticket deals. Small number of deals but great margins. It’s difficult to imitate them.. Eg. Fashion, Jewelry

High turnover businesses are like Abraham Lincoln. He did not do earth shattering feats. He did small things, down to earth deals.. But he did a 1000 small things, consistently over long periods of time, which put together made him a great leader. High turnover industries are like that. They do small things, yet make up these insignificant deals through volumes.. Eg. Retail stores

High leverage industries are like Mahatma Gandhi. Gandhi gained his fame not because of his own feats. He gained it because he could inspire a million others to follow him which ultimately led to the freedom of an entire nation. Would a strategy of non-violence be exactly effective, if people were not ready to follow him? High leverage industries are like that. They use so little of their own money, get others to lend them money and manage to make a neat profit using the entire pool of cash.. Eg. Financial institutions

DuPont Analysis is a great way to look at businesses. Understanding these levers of business can help us identify and profit from opportunities.

An year since placements

Its almost a year since my placements concluded at ISB. I was browsing my hard disk and going through the list of companies to which I had applied while at ISB.

Here are the statistics:

• Number of companies applied through placements - 37
• Number of shortlists - 11
• Number of offers through campus - 5
• Number of off-campus offers - 3

Here is some interesting stuff on what had happened to these 37 companies over the past one year:

• 18 of these 37 are listed
• The average drop in the share prices of these 18 firms (since the time i had applied) is 62%. The range is 19 to 81%
• Of these 18 firms,
  5 firms have been bailed out
  1 has been taken over
  1 restructured
  1 expected to default on its loan in the next 3 months

Its interesting that i finally took up an offer from IFC,

• To which i had never applied
• Never knew that such a job existed even 2 days before placements
  

And yet IFC is probably one of the best spots to be in, in today's environment (as compared to the 37 companies i had applied)

Moral of story:
Most often we do not recognize if its a blessing or a curse when something hits us. You can well imagine the anxiety i went through when my strike rate at ISB (Shortlists/ Applied) was not that good. There was a point of time during placements, where I had rejected almost every offer I had got and the future looked totally uncertain. Yet in the hindsight, when you are able to connect the dots, it all ends well. Take life as it comes. Have faith - In yourself, in your destiny and in god.