Saturday, February 24, 2018

Quest for learning vs Overqualified

As a person who has cleared the final exams of ICSI/ICMA(Institute of Company Secretaries of India; Institute of Cost & Management Accountants of India) along with Chartered Accountancy, and also PGDM(from IIM Ahmedabad), I sometimes run into this query from others whether I still feel all these qualifications as relevant. Coming from a Tam-Bram household where all learning is valued, my core philosophy is that no investment in learning goes waste. And then, I do see many folks doing CA+CFA, CS+LLB, as also the new kids on the block such as CFP/FRM etc. But does learning need a credential, or is learning for the sake of it also good?

Udemy/Coursera initially started their courses with a free for all approach, before they realized that employers seek verifiable evidence of course completion. They therefore introduced the certification track and in some cases, supervised exams at Pearson centres. That gave employers and stakeholders greater confidence in the academic integrity, and inspired some universities to offer part/full courses on the online model. So even for self driven learning, some employers may seek evidence of completion and hence a credential is born.

But why pursue higher learning in the first place, assuming its not directly related to job? Some people do this to prepare for a step-up, yet others for career change, and others just for accumulating knowledge and a possible Guiness book of records. The last category who do not directly apply their knowledge in work or projects, could be considered overqualified, but others  merely as quest for learning. Here I rest my case

Wednesday, February 21, 2018

Why online executive MBA like ePGP from IIM may not be worth it

Below is a comparison table I prepared for various PGP programs of IIM Ahmedabad
IIM Ahmedabad Courses
Particulars PGP PGPx ePGP
Duration(Mths) 21 9 12
Base Fee(Lakhs) 21 24.5 17.45
Min age NA 27 NA
Min Workexp 0 4 years 3 years
Test Scores NA GMAT NA
Placement  Yes Yes No

The recently introduced ePGP is an online MBA program aimed at working professionals. It confers alumni status, but without the placement support. So for those seeking the brand, they can get it if they otherwise qualify for admission and manage to complete the program. As per the training partner Hughes Education 
  1. pedagogy followed for the program will be on blend of lectures, case studies, online lectures, projects, peer to peer learning, self- learning and simulations. Mentoring by faculty and access to learning resources of IIMA will also be made available. 
  2. Campus modules (three or four) of one week or more each conducted at the IIMA Campus.
  3. Thursday 06.45 pm - 09.55 pm; Friday 06.45 pm – 09.55 pm; Saturday 06.45 pm - 09.55 pm
    Sunday 12.10 noon – 03.20 pm
  4.  two-year post-graduate diploma programme (with added flexibility of completion within maximum 3 years) offered on Interactive Onsite Learning (IOL) platform
While the education quality and peer group interaction will doubtless be good, the question is whether it is worth the investment or not. In my view
  1. the admission criteria is nowhere as rigourous as the mainstream MBA. So the signalling effect is lost. 
  2. Can a working professional really spare these many days this often? Needs real discipline
  3. Lack of placement support will encourage companies to sponsor this(considering even a MDP costs 0.5-1lakh, this is way more value for money), but lower value to the candidate
What else is an option
  1. Focussed courses with Certification Track in Udemy/Coursera/HBS/Wharton-Approx Cost between $10-$100 excluding certification cost
  2. Networking Groups
  3. In person training of hard skills like financial modelling

Saturday, February 17, 2018

Of recruiters/executive search firms and kickbacks

This week, I read the article about India's leading ride-sharing firm Ola investigating its HR head for alleged bribes taken during the employee recruitment process This reminds me of some other incidents that I have seen/heard about from friends

  1. Talent Acquisition(TA) leads working only with certain empanelled firms(usually this is needed for quality reasons in procurement but less reason here) who agree to pay them 1/3rd-1/2 of the recruitment fee-which is usually 8%-15% of candidate's annual CTC
  2. If the candidate is sourced through another new firm, this firm is usually forced to subcontract to the empanelled vendor, who then gives its share in cash
  3. If candidates are referred internally or though other sources, the TA lead usually ignores it. In a recessionary job environment, they anyways get enough leads otherwise
  4. New firms are not given consideration if they are not willing to bribe

Hopefully, the Ola adverse publicity(I really hope it is false) will deter others from this

Sunday, August 6, 2017

When doctors turn money minded-an example of Dr X

Yesterday, I experienced a 'catch' in my back muscles due to which my body tilted. While analgesics did alleviate the pain, it was not better on Sunday too. After a referral by our family doctor (whom we trust blindly), I visited his clinic on Sunday. This doctor will stay unnamed on public forums, to avoid

This particular doctor has a very high rating on Practo(though I did not use that platform), and has a website/clinic seemingly focused on patient care and welfare. The notice boards emphasizes on the continuing professional education(CPE) and certifications attained by him, as also the 'sacrifices' made by doctors and the need to respect them. So far, good. It is however the aftermath of the visit which left me poorer by ~Rs 4,000 and shocked

  1. A cursory 10min examination asking me to do some exercises in front of a haggled looking doctor, which concluded in his "Diagnosis" that I had come just in time to avoid slip disc. The bedside manner was not seeming ok
  2. The team interested in starting treatment instead of asking how do i feel or validate issues. 
  3. X-Ray not feasible since his entire team busy in operations. However, he felt confident to start lumbar traction(that too instructing the medical support staff without explicitly pointing it out). This procedure btw is not medical current practice, as per 2nd opinion. 
  4. Extreme and undue hurry to admit me into bed rest even before X-Ray/MRI, in a 'premium room' with billing of Rs 6000/day(albeit including price of nursing, doctor) and no medicines
  5. Starting IV drip(for which Rs 950 charged finally)
  6. Drawing blood without prior explicit consent, for a battery of tests with desired billing Rs 6,500
  7. Charging Rs 800 for X-Ray(Whereas the clinic standard pricing Rs 400). 
  8. Finally, consultation in #1 and #6 charged Rs 2000 instead of his standard billing price on Practo of hardly 1/3rd of this. 
This doctor is successful commercially having 3 clinics in/around Mulund(E), and yet I lost all respect today for him. To protect yourself from such doctors, one should ensure that
  1. Discuss the cost of treatment UPFRONT and do not mention your mediclaim coverage(Btw this doctor prominently displays insurance TPA tieups)
  2. Ensure that PROS/CONS of treatment are mentioned by  him
  3. Never get yourself hospitalized BEFORE diagnosis is complete and a written opinion(this can nail him for overmedication)
  4. Refuse procedures like I.V/Bloodtests if not necessary 

Sunday, February 19, 2017

Judiciary-Heal thyself while reforming all and sundry

As someone who has earlier studied law(during professional courses in accountancy and company secretaryship), I've been avidly following the practice of law. While judicial activism is a welcome trend to fill the institutional void in the executive and legislative branches, it should now extend to fill the judiciary and legal professional itself. For example, below points

  1. Refusal of Supreme Court to disclose information on judges's financial status etc under the Right to Information Act-do note this decision cannot be litigated as the Supreme Court is itself the final legal arbiter in India
  2. Hearing celebrity/high profile cases out of turn while allowing other cases to languish for a long time. There needs a transparent mechanism to decide out of turn vs regular cases, else the spectre of speedy justice for some will exist.
  3. Judicial Appointments-The existing collegium mechanism has its documented faults in preventing nepotism etc. The Modi government should be lauded for sticking to its guns in this regard
  4. Blatantly favouring the legal professional: Whether it is about levy of service tax on advocates, restricting tax tribunal hearings only to legal professionals, entry of foreign law firms in India, asking censorship cuts in already approved Movie Jolly LLB 2 which lampoons the legal profession, these decisions favour the legal profession in India, at the cost of other stakeholders
  5. Non transparent court ordered appointments: In the case of BCCI Committee of Affairs, the Supreme Court ordered appointments of 4 professionals who would be remunerated and not on a honorary basis. This appointment was not competitive or application based, unlike say a normal UPSC appointment. 
  6. Caustic remarks during proceedings/inability to tolerate critiques: While judges routinely pass strictures during hearings like Sahara case, BCCI, if there is critiques by even retired judges,like M Katju the courts take offence and initiate contempt proceedings. Is this fair?
  7. Revision of allowances/pensions: The Courts award merit increases to themselves-to be fair this is done by the legislature also. But is this fair?
The following points if fixed, would go a long way for judges to be perceived truly as neutral arbiter

Politicians and bureaucrats should be subject to the risks public face

  1. Minimum qualification/guidelines for bureaucrats should be applied to their political bosses. For example, codes on conflict of interest, corruption proceedings for accumulating assets disrportionate to known sources of income
  2. Fit and Proper Norm for political party leadership-NOT just elected representatives
  3. Democracy within the party-Regular inner party elections under independent observer
  4. Performance linked pay and redundancies/exits without golden parrachutes-Pay Commission hikes to be accompanied by exits, to avoid life long employment promise. After all, pay commission salaries are good compared to private sector entry norms
  5. Piercing the corporate veil to avoid remote control from jails: Be it Lalu Yadav controlling the RJD from jail, or Sasikala now ruling the AIDMK from jail, prisons do not end the rot. So extending the ban on political party 

Saturday, February 18, 2017

ICAI 67% member fee increase in 2017-Is this fair?

As a member of the ICAI(Institute of Chartered Accountants of India), I visit their website to keep updated with events. During that time, I noticed an announcement of fee hike The numbers were quite high so I decided to analyze the impact on ICAI finances. For this, I looked at the annual report  With total income of 66624 lakhs, the operating surplus of 6820 lakhs represents a surplus of nearly ~10%. Interestingly, nearly 50% of this surplus is generated from classroom training programs(excess of receipts over costs) of 3729 lakhs.

The member fee income for 2015-16 was Rs 5636 lakhs. The approximate breakup of this is analyzed in the 5th column which assumes all members to be below 60, and charged the statutory slabs-this is almost the reported fee. If we replace the tariffs with the proposed one, the institute's income increases by nearly 3800lakhs to 9339 lakhs, which represents nearly 50% of the operating surplus

The question is that for a revenue source accounting for just under 10% of the overall receipts, is it fair to increase member fees without a public consultation, justification and updates on efforts to do cost management? Otherwise, we risk a bulging bureaucracy with Pay Commission Indexed salaries.

Friday, February 17, 2017

The tale of 2 young Presidents & dynasties-ICAI vs ICSI

Recently, the ICAI elected Mr Nilesh Vikamsey as its President and Mr ND Gupta(Jr) as its Vice President. Mr Vikamsey's brother was the ICAI President around a decade ago, while his father was on the ICAI Central Council decades ago. While for Mr Gupta, his father was the ICAI President in 2001. While Nilesh has come up the hard way of WIRC-Central Council-President, Mr Gupta was directly elected to the Central Council in 2010 without even contesting his regional council elections(NIRC), and is now catapulted to the Vice President post, which all know is a stepping stone to the Presidency post in a year. I cannot think of any other ICAI President in recent history, who has been able to achieve this milestone of direct elections to the Central Council without any 'great' individual achievements.

In sharp contrast is the election of Mr Sham Lal Agarwal as the ICSI President. While Mr Agarwal is quite young and with just 12yrs practice, he came up the pyramid of chapter-Regional Council-Central council, and won support by his work, without any visible family heritage or godfathers.

Saturday, January 14, 2017

Uber/Ola value proposition fast eroding

Over the last year, both Ola and Uber have began to increase prices and/or make consumer experience worse for those. Some observations are below. At this rate, both often charge for share bookings the same tariff as black/yellow auto and taxi, while not being much faster. Also, this is without offering a clear differentiation like passenger insurance, impartial dispute redressal etc. Guess this is the start of the end

When Introduced
Fare calculation
Transparent distance and time
‘Upfront fares’
Surge pricing display
‘x’ surge’ displayed transparently
Inferred from the upfront fares multiple-you need to calculate
Ride time fare
Rs 1/km
Rs 1.5/km
Pool/Share rides
Usually 50% of Uber Go/Ola Micro
Even 70%-100% of the fares
Pool/Share rides routing
Detours usually not much
Sometimes 30min detour to worsen the experience
Pool/Share rides
‘Express’ rides where you hop on/hop off routes like highway-now its like hailing cabs
Short distance rides
Perception that where regular cabs refuse/Ola uber will agree
With high min fares >=Rs 60, Uber/Ola will be costlier anyways
Payment via Wallets
Usually useful to avoid cash payments
Wallets like PAYTM side with Uber/Ola, so its better to use credit cards only

Wednesday, November 2, 2016

The Satyam of the CS profession-Company Secretaries-heal WIRC before preaching governance

The Institute of Company Secretaries of India(ICSI) is organized into 5 regional councils. Of these, the WIRC(Western India Regional Council) got a stinker in terms of adverse audit report due to financial iregularities pointed out by the statutory financial auditor-incidently a chartered accountant

The report goes into deep detail but to quote a few examples, the adverse observations include procurements at high prices without comparative quotations, organizing events in 5 star hotels without HQ approval, incurring hotel tariffs over authorized limit, purchasing luxury pens worth Rs 4 lakh and keeping with self, giving staff overtime via inflated conveyance vouchers, purchases via non substantiated invoices, giving sponsorship without written agreement resulting in potential NPAs. These observations led to AGM being adjourned, speculation in CS community and finally the supercission of the regional council, with the ICSI Central Council finally making its actions public below

While a single instance does not tarnish a full community, the institute employees are akin to public servants, and the office bearers being elected representatives of professionals, have a duty not to bring the profession into disrepute. What happened at the WIRC ICSI appears a failure of internal control, collusion/overlooking of employee fraud by elected council members who themselves were not setting a good example. And despite the audit taking 6mths to close, the council members did not comment on the audit report and just blamed the earlier President. This is not good governance.

While this is bad for any profession, it is especially ironic that ICSI which brands itself as a governance expert, did not nip the WIRC issues in the bud. One only hopes that the WIRC issues are investigated, corrective action is taken including reprimand/dismissals so that further episodes don't repeat. And here may I point out that it took a chartered accountant to detect the fraud, and not a CS/CWA. This only reiterates that financial audit is a job best left to CAs, and that having an auditor independent/not regulated by the institute(A CA is not regulated by ICSI) does help to detect fraud.

Saturday, October 29, 2016

Why are Indian lawyers more businessmen than professionals

Recently, I had read books on the medical profession such as  and  _encoding=UTF8&psc=1&refRID=1CTG40KCX9RYQRE0FVWW
This got me thinking about other professions including law, and therefore this law. The reason I write about law is the importance of it in the growing litigious environment amidst the legal shambles. No other profession gets such negative coverage, be it the advocates agitation/strikes, 'tareek pe tareek'..While reading about this topic, I saw that the list of misconducts cited in the below article is mind boggling

Without much ado, I proceed to my grouses
  1. ·         Advocates strikes/hartals/bandhs-even at the cost of their clients 
  2.  ·         The culture of adjournments
  3.  ·         ‘Eternal’ arbitrations
  4.  ·         Probono very care, legal services cell hardly in vogue
  5.  ·         Preferential treatment to Senior Counsel-unjustified that their reputation is formalized and fee earning capacity enhanced, by the result of a opaque process without any continuing obligation
  6.  ·         Too much separation of work-Advocate, Solicitor, Counsel-many folks to pay fees
  7.  ·         Limited effort to insert ‘Plain English’ in drafting
  8.  ·         No scale of fees/standard rate chart-

  1. ·         Startups to assess win/loss odds like in UK basis type of matter, number and outcome of hearings, case status(upheld/overturned)-This is a formal assessment of succcess rate and efficiency which could help for mass litigation matters
  2.  ·         Automate ‘routine’ stuff like legal contracts-This while reducing bread/butter business, would help lawyers do more value adding work
  3.  ·         ADR allowing for other professionals such as CA/CS/CWA, who are regulated more strictly
  4.       Simplication of laws, procedures and court/police procedures, so that the common man can represent himself/herself in court and largely via written submissions 
  5.      Restriction on # of matters a lawyer can take at a time(~ceiling on tax audits of CA) so that the culture of adjourments reduces
  6.      Court Management Introduction to address delays in proceedings     

Tuesday, October 25, 2016

Dear CAs in industry, just 3000 votes can elect a ICAI Central Council Member from Western Region

I have often felt that members in service despite constituting 52% of the overall members of ICAI, are not adequately represented on the ICAI Central Council. I decided to delve deeper into the 2015 election results to see why this is so.

I noticed that the Western region with 88000 members saw a 44% turnout for 11 seats, thereby needing 3230 votes(total of first preference and others). This represents merely 3.7% of the total members, or 6.5% of members in practice! Imagine the power of CAs in industry, if they turnout to elect, even taking the 40% turnout, they can combine and ensure that around 5-6 members of their choice are elected from WIRC.

Also, if we notice the votes secured by the 11 finally elected members, we notice that 6 members obtained merely between 50%-65% of the required votes on the first ballot, with remaining votes via 2nd/other preferences. Therefore, there is still hope for those who marshall above 1600 votes on the first preference ballot. 

Member Finally Elected
1st preference votes 1st Pref as % of threshold
Others tranasfer
Others voters 13433
Votes lost    

When will ICAI presidents stop regionalism?

Last week,  I attended the ICAI international conference in Hyderabad. There, the chief guest Venkiah Naidu(Urban Development Minister, also from Hyderabad) said he had accepted the invite because "A local person has brought this event to Hyderabad". It struck me then that the very reason for chosing Hyderabad is because it is the president's town. But this is not an isolated instance as one can see below, each past president brings atleast ONE major/international/annual event to their home city.

When Railway Ministers used to relocate Railway headquarters/launch special trains to their hometowns, I used to laugh at their power hungry nature. But when such a thing happens at my own professional body, I wonder what to do!

President  Year Zone City Event Held in the city
CA. Amarjit Chopra 2010-11 CIRC Delhi International Conference on Accountancy Profession: Catalyst to Sustained Economic Growth
CA. G Ramaswamy 2011-12 SIRC Chennai International Conference: Leveraging Challenges for Inclusive Growth
CA. Jaydeep Narendra Shah 2012-13 WIRC Nagpur International Conference (ICON 2012) for CA Students 
CA. Subodh Kr. Agrawal 2013-14 EIRC Kolkata Accountancy Profession: Emerging Frontiers of Future Growth” from November 21-23, 2013
CA. K. Raghu 2014-15 SIRC Bangalore  Accountancy Profession: Building Global Competitiveness; Accelerating Growth from January 29th-31st, 2015
CA. Manoj Fadnis 2015-16 CIRC Indore Accountancy Profession: Spearheading Excellence
CA. M. Devaraja Reddy 2016-17 SIRC Hyderabad ICAI International Conference-Hyderabad-2016

Thursday, August 25, 2016

How finance professional regulators like ICAI ICSI ICWAI are failing the public interest test

In a recent article, Prof Ajay Shah of NIFP advocated the separation of powers of professional regulators to ensure that 'poachers cannot be gamekeepers'. He cites the example of stock brokers regulation as a success model here.

Ever since the Medical Council of India(MCI) which was plagued by corruption was dissolved and a new body asked to be created with 4 verticals of UG education, PG education, Licensing and New College creation/Infra, there has been interest in figuring out models for others.

As regulators like CVC and CAG have put it below, professional regulation is not working enough: 

My view is that unless the disciplinary arm and academic arm is divorced from the membership body, we will have issues like lax disciplinary measures, pass rate depending on economic conditions(or so it appears to the outside world) and people joining the councils for reputation/business enhancement(eg coaching class owners who are clearly conflicted) rather than public service motto

Sunday, August 21, 2016

Indian startups suck at customer service-PAYTM is the latest example

Despite its higher charges and less attractive reward points, the reason I have retained my Citibank credit card is the fantastic customer service-right from the low IVR wait times, to the considerate customer service team who reminds to redeem reward points before surrendering the card. Unfortunately, I cannot say this about many other companies, and hardly any Indian startups. The reason I single out startups (and not established companies) is that they claim to be customer centric without hierarchy. The reality however is far different. This blog is a pent up series of issues prompted by my latest experience with PAYTM-where Uber added a toll to my fare and refused to remove it, and PAYTM(via which it was paid), refused to get involved.

  1. PAYTM: They delayed my premium wallet registration by 2 weeks. Also when I raised a vendor dispute with Uber, they said that they will not get involved. Bottomline: PAYTM CANNOT replace your credit card and is not a neutral marketplace. If you want safety and ability to chargeback, do not use the PAYTM wallet. Also, the customer care team has long wait lines and has very poor email etiquette 
  2. Citus Wallet: The one occassion I had to check for fraudulent withdrawal, they dragged their heels. Also, hardly willing to commit on phone and insist on an email
  3. Quikr: Nearly lost Rs 10,000 here when they disclaimed an escrow account claim. Only repeated threats of credit card chargebacks got them to budge
  4. Flipkart: Not tried it for a long time but lack of live chat is a bad thing
  5. Makemytrip: Technically this is no longer a startup but is quite bad in resolving issues fast
  6. Travel Triangle: My brother booked a tour package through them, the driver was quite bad, but they did not help/hold the fee. Finally he had to settle for a lower amount after much persuasion
  7. Zerodha: If you need help with technical issues like pending trades, god help you

To balance out the above negative view, some stellar examples in my experience

  1. OYO: I accidently missed a booking but they gave me a complimentary room to make up. 
  2. Ebay India: They helped me get the seller to cancel the order after he refused to change the shipping address. The team was helpful at a personal level
  3. Amazon India: Their live chat with a 2min wait time is just amazing.
  4. CityFlo: Prompt refund of unused balances despite stopping business
  5. Lifto: Customer care wanting to know 'VOC'(Voice of customer) often

Some foreign startups I have used and which have great customer service

  1. Getabstract: Willing to extend Indian/student discount without much procedure

We Indians have brought it upon ourselves by not (seemingly) being willing to pay a premium for customer service-but as 5 star hotels would attest-and 2 star OYO-there is a market for such things.
Just that Indian startups maybe feel that UX/UI/Ad/Promos are enough, and that customers will do 'JUgaad' to fix things. They might-but then you eventually pay for it

Has Zerodha lost its mojo?

Nearly 4years ago, I began using Zerodha inspired by its discount brokerage philosophy. Since then, the following are the good things I have seen

  • Android App: Changed from clunky app to the 'Kite' softwate
  • Technology: Kite and Backoffice are great features to use. 
  • Small investor helped with Order Types+Charting+Algos: This is a feature earlier only available to HNIs/Institutions but now available to other investors
  • Knowledge base: Zerodha Varsity is one of the best modules I have seen-far better than NSE-NCFM or any other paid material
  • People: Many of the people have stayed with them since start-this I recognize from the names of the people I speak to whenever I need support etc
  • Pricing: Still at the same levels-and removed for equity delivery trades. 
The disadvantage which I see is
  • Inadequate backup/redundancy: Whenever the website/app fails or slows down, the call centre strength is not ramped up. This leads to possible order loss and real losses if not able to exit the position. 
  • Compensation for failures is stopped: On an occassion last year, when the networks failed, Zerodha apologized and reversed brokerage charges for that day. But the last 2 times It has happened, there was only 1 apology and no talk of brokerage reversal
  • Frequent technology failures: I have faced inability to access/place orders, around once a month. 
  • No flexibility for third party demat accounts: One cannot sell from a non Zerodha demat account(but can take delivery). This inhibits safe custody of assets if one is not comfortable with IF&FS/Zerodha/CDSL
  • Poor support for demat/updates: Their ability to support for demat needs a change. Also they insist on physical signed requests instead of an online interface
  • Possible order flow leakage/Prop Trading competition: Zerodha runs its own prop trading arm and startups. They MIGHT be using the order flow data to trade/front run.
  • Non transparent revenues-do they earn for order flow routing: It is not clear whether like some brokers abroad, Zerodha earns money to route orders to the preferred exchange. While customer has the right to choose exchange, Zerodha could nudge him towards NSE/BSE for reasons other than best price..
  • No fund transfer on Saturday: They allow to fund the account 24*7 but not to withdraw the balance on Saturday. This is unfair
  • Mistakes on the app and/or Backoffice: Recently, I saw an absurdly high amount on my "Kite' page, and my father saw an incorrect ledger statements. These errors are not acceptable

Above are maybe common with other brokers but if the tech failures continue, I might reduce my usage of Zerodha.

How hyperlocal services startups are increasing/causing inflation

Have you ever used Urbanclap, Quikr or other hyperlocal startups to book a service like plumber, electrician, beautician, painter etc? If so, you may have unwittingly contributed to the growth of inflation for now and later. While it is good to have more visible choice online, this does not necessarily help the end consumer if there is no increase in supply. The reasons are manifold

  • Migration from informal sector to 'organized sector': With the activity getting recorded, there is only a matter of time before service tax/GST and TDS(on professional services deducted by the platform from payments made to the service provider) kicks in. And at ~19% and 10% respectively, you are already looking at a 30% inflation.
  • Premium for language skills/soft skills/training: While skilling of these workers is a good thing, it often results in expensive rates even for people who do not need this level of sophistication.  
  • Cross subsidization via standard ratecards: For example, an expat in Malabar hill and a housewife in the suburbs need not pay the same rate but they often end up doing so. 
  • Lack of fresh supply: When talent becomes more mobile and goes online, the rates would go up since the demand does not reduce
  • GMV Inflation: To increase GMV, these startups sometimes do a 'Lenskart' with high sticker prices and daily sales. This has the risk of increasing offline prices too for those not savvy enough to use the codes.

Other factors which seemingly affect inflation but which may not in reality
  • Platform fee/commission: The 10%-30% cut taken by the platform(in steady state) merely replaces the fee taken by the neighborhood shopkeeper. 
To sum up, an end-end integrated business model like one suggested by Sramana Mitra in her book India Vision 2020 might allow such services at affordable prices. But I am not holding my breath for this, since anything which might provoke deflation even if win-win might not be implemented fast

Monday, August 8, 2016

The bearish case for the Indian cotton Industry

It has always puzzled me why do good clothes cost so much in India-recently my parents went to Singapore and purchased a T shirt made in Thailand for Rs 500, which would have cost me around Rs 800+ in India. One reason could be export pricing being applied to India, very much like an Ipad, with no thought for PPP. There is already pushback against brands like Zodiac who are now struggling to make profit. While analysts are bullish on the industry and have lead investors to bid up shares like Page Industries, Kitex, Ambika Cotton, Indocount, Arvind Mills etc to new highs, there are global winds in the offing which are not so favourable. The Zodiac online annual report does a good job of flagging this. Thats probably the only notable thing in the otherwise bland report

  1. The TRANS PACIFIC Partnership (TPP Agreement) is expected to come into force circa end 2017. Of the currently 12 participants, Vietnam and Malaysia are the two TPP members who can pose a serious threat to India’s export of clothing, due to tariff concessions, practically zero duty access, that they would get in the US market. Vietnam is already one of the fastest growing major exporters to the US market, even without any tariff concessions. Also relevant is that Vietnam is already in negotiation with the EU for a FTA, expected to be finalized by 2018.
  2.  India’s own FTA with the EU, negotiations for which started in 2007, has not progressed substantially. In textiles and clothing there is already tentative agreement, that all customs duties can be abolished on both sides, but there are issues outside the Textiles space that remain to be resolved. While EU importers of India’s clothing are currently paying customs duty of 9.6%, many of our competitors, notably Bangladesh, have zero duty access. The FTA agreement is therefore of utmost importance, and can be a game changer. It needs to be signed at the earliest to harvest the competitive advantage that the economic package for clothing, announced in June 2016 by the Government of India envisages
  3.  Britain’s decision to leave the EU is likely to add to the complexity. From India’s export, 37% or USD 6.25 B goes to the EU, from which 15% or USD 1.8 billion goes to the UK, the risk being recession/contraction of growth, as well as further depreciation of their currencies. 
  4.  China diversifying its supply base to service their customers out of low cost/tariff benefit countries and thereby, yielding less ground. 
  5. In this decade of volatility, Forex volatility witnessed in the last few years constitutes a threat.
  6. How long will the global economy/consumer demand and the Indian consumer demand (including the additional constituent of fresh demand from the Demographic Dividend) take to revive? -
  7. The internal barrier to trade in India of Entry Permits needs to be extinguished forthwith.
While Point 1 & 2 may not emerge with the TPP almost dead, and Point 7 to be solved next year with the advent of GST, the danger is real.

Monday, June 6, 2016

Will business books get replaced by abstracts/summaries anytime soon?

As a subscriber to book summary service Blinkist( and a past one of Getabstract), I believe in the view that one can get the maximum out of business abstracts rather than read the full book. Reasons for this are

  1. Much crisper-5 pages vs 300-500 pages
  2. Cheaper-Perhaps not in emerging markets where the price($10) is enough to buy 2 or more business books to keep, but certainly for developing markets
  3. Time-Saves a lot of time
  4. Format-Digital format and mobile/tablet friendly-easier than paper

Cons against this is
  1. Usually 'Cloud' and unable to download-so you lose access after subscription ends-you do NOT own the summary/asbtract-Access is not permanent
  2. The vivid stories/anecdotes which help remember otherwise dry concepts/lessons are not captured in the summary, so retention could be lower
  3. Gradually one might lose the ability to read longer text, and therefore lose the pleasure of classics or books like that of Adam Smith/Mises
  4. Book summaries may not be for the 'long tail' which one may still need to buy
While the market is up for disruption, the services may not continue in their present subscripton based form due to competition from Kindle Unlimited-This allows you to read the entire book. Also, many enterprising folks are creating unlicensed(?) summaries of popular non fiction books which are included under Kindle Unlimited, and hence at zero marginal cost for the reader

I would say overall that the business book market is inefficient, but if the prices are lowered or if unlimited book libraries continue, then people would still prefer to skim/speed read the book than resort to an expensive summary. 

Meena Ganesh 100% successful serial entrepreneur tag fading away with Portea?

'Able was I ere I saw Elba'-this quote attributed to Napolean, indicates that every successful person eventually meets their Waterloo. In this case, Portea seems to be the one crack in the success story of Ms Ganesh, who otherwise has a great record( They purchased the firm in 2013, and scaled it up getting capital from Accel even as late as Sep-15. However, this did not halt them from being among the firms who withdrew campus offers as reported widely in the media( While the other companies here may be run by first time entrepreneurs or have burnt through funding, that is not the case for this firm with such excellent management. The couple have ensured profitable exits for all their portfolio firms so far.

However, there were indications that this was coming. For example, when my aunt needed a full time medical attendent, another aunt(a qualified MD) thought to use Portea, but given the quality of the attendants and the shoddy customer service, she repented her decision since the service did not even match basic standards, forget justifying its premium pricing. So given the operational issues in the firm, cancellation of offers is just an outcome, indicating underlying business issues.

One hopes that the company can be salvaged, however present situations do not seem good. Read more about the company at the below link
Meena is MD & CEO of Portea Medical, India’s largest and fastest growing home healthcare company, which she co-founded in July 2013. With 4500+ employees and operations across 24 cities in India and 4 cities in Malaysia, Portea ( brings in-home to patients the full range of geriatric, chronic, post-operative care as well as allied healthcare services. Meena is leading the charge as the company expands to 50 cities over the next 2 years providing affordable and convenient healthcare solutions.

Saturday, June 4, 2016

Why Indian startups suck at customer service compared to Western peers

In these days of Startup India, homegrown startups can do little wrong-except maybe when they delay joining offers to students hired from campus. So this

Let me give a few examples

  1. Flipkart vs Amazon: Amazon is WAY easier to contact using multi channels-you can write an email after logging into the account, or call or chat. They respond quickly and helpfully. It is not that they are pushovers or that they bend policy-for example when I wanted to convert an ongoing monthly subscription into an annual subscription to save money, they said I need to cancel the monthly one first and then take the annual one. But when it comes to resolving a genuine customer grievance(as opposed to a wish), they are unmatched. For instance, I ordered L'oreal Kajal eyeliner for my wife, which got over in 2mths vs normal usage of 5mths. When I pointed this out through email, Amazon did not reply but directly placed a free replacement order. This is customer delight indeed. In contrast, Flipkart takes time to respond to emails, and is not too well known for timely or helpful resolution. While Flipkart's hiring of people from customer centric industries may change this trend, I believe Flipkart has a long way to go here
  2. Uber vs Ola: While Ola is more tuned to the Indian marker(for example Launching Ola Share before Uber Pool in India, and launching Ola Outstation), 
    1. its customer service is slower than Uber and can be reached through a NON toll free number. Whereas Uber has a super helpful drop down menu where customers can select their grievance category, and drill down to the sub type. In case of a common complaint of overcharging/poor route/wrong distance, Uber compares the fare to its database and estimate of the best fare, and adjusts if any difference. For example, the fare from my home to Mumbai Airport Terminal 2 is around Rs 220 by UberGo. When a driver missed a turn leading to a detour of ~5km and 15min, Uber corrected the fare by ~60. However, they do not do this for cases where the distance is small, or the best route was not taken. For the same complaint type, Uber can resolve it faster and better than Ola, who seem wedded to a manual process itself. 
    2. However, Uber is NOT free of murk-it has introduced a long distance surcharge in Hyderabad where distances over 15km are charged at 2x the normal rate. This is quite unfair and not shown on the app, still they have done this. Still, considering it is an aberration, I can forgive it. 
    3. Credit Card integration has not yet happened in Ola, so if the wallet balance runs out, one needs to pay in cash which is an irritant. I suppose this is a business call to minimize credit risk, however this is an irritant and does not leave the option to dispute fare components such as toll. 
  3. Quikr not getting involved into post delivery complications such as refund or escrow balances. I had ordered a sofa set which was delivered to the society watchman(hence I could not reject it on the spot) however this was a kit involving assembly which the seller had not mentioned, and refused to help in. While Quikr initially said I need to solve it with the seller, when I raised the threat of credit card chargeback, they started getting involved and trying to persuade the seller. However, they STILL released the payment to the seller, who thankfully saw the light and agreed to refund the amount. Lesson learnt: Make payment through credit cards so that you can chargeback the amount in case of fraud. This is where bank accounts and wallets are absolutely of NO use. 
  4. PAYTM nearly non existent customer care-Very tardy to respond to emails/tickets, and no phone number worth the name. One of the worst customer care processes I have seen-if your problem does not fall within their defined types, you wait 4 days for a response, and then some drone on the other end dutifully raises a query(instead of calling), and then extends the whole loop again. 
How can you protect yourself in this scenario?
  1. Transact preferably through credit cards so that you can chargeback if needed
  2. Prefer websites who offer an escrow mechanism-for example fulfilled by Amazon
  3. Be comfortable writing detailed emails to minimize to and fro

Wednesday, April 20, 2016

Books to understand the dark side of Indian corporates

One can easily get in a filter bubble by reading the same set of newspapers, magazines and all. Hence, to avoid confirmation bias especially about India Inc (4yrs of work experience has removed the blinkers even if they existed earlier), it is good to seek out and read books that aim to reflect the dark side.
While picking the books, though not having read many/all of them, I adopted the following criteria.
·         Indian Business environment-The book should impart insight on the Indian business environment-I have excluded equally great books like that of P Sainath
·         Fact based/Objective-Should not be a set of leftist propaganda nor should it vilify business for their mere existence. Hence, does not include books of Ms Arundhati Roy.  
·         No hagiographies aka business biographies-These should not be written by the person themselves-I have noticed this leads to too much rosy picture, which is anyways available.
       Non Fiction ONLY-There are several excellent business novels which are on thinly guised events but not many may recognize the characters so I have ignored these

Without much ado, we proceed to the books classified by sector
If confused whether to buy these books, read the reviews on Amazon, often these will give the essence and help you decide whether to buy them. Also, I have given Amazon links since these are the cheapest source I have seen-I do NOT earn any affiliate income from these links!
Infrastructure/Natural resources
Unsurprisingly, this sector accounts for many books due to the way resource allocation was perverted and twisted in the pre NDA times.  The book by an IIM Ahmedabad professor and reputed journalist, examines the gas pricing dispute

Corporate Failures
The VUCA Company This outlines the failures of prominent listed companies such as SKS, Wockhardt, Renuka, Suzlon
Why I failed-

E Commerce This book is making waves, and while receiving mixed reviews, is among the few ones on the sector, in India or globally

Scams/BQ Quotient in General

Land Acquisition/Naxal areas

Scams in General


Saturday, April 16, 2016

Cement Industry Association prebudget memorandum-crossing the line to ask for policy changes!

In 2012, I had blogged about how prebudget memorandums by professional associations were blatantly self serving

However, the same is true of those circulated by industry associations-of course the very act of a memorandum is to ask for a change-so one should not be surprised. But when the logic of that change is so blatantly self serving, then one is surprised. For example, the Cement manufacturer's association  desire free fly ash as raw material, restriction on participation in e-auctions and making it mandatory for the indirect tax administration body CBEC to reply to their clarifications within 60days OR else have the industry version deemed to be accepted. All these are quite rich from an industry accused of cartelism. The full version of the memorandum is below 

but I have taken the liberty to put extracts in italics, with my comments then.
  • Cement Industry’s initiative of popularizing PPC has helped thermal power plant in overcoming the menace of fly ash. However, what started off as a free offering has now been converted into a revenue stream by certain power plants. This is leading to a situation wherein an innovator is being penalized and a polluter is profiteering. It is high time that cement industry is supplied fly ash ‘free of cost’ on long term basis on the worldwide principle of ‘Polluter pays’ Cement industry wants free fly ash!
  • Spot E-Auction Scheme Under E- auction any entity (irrespective of actual user, trader etc) can participate. It has been experienced that the traders are able to get substantial quantities of coal under E- auction which are then sold to actual consumers at higher margins. This unnecessarily increases the cost of coal for actual consumers. It is suggested that only actual consumers are allowed to participate under E- auction with some mechanism for monitoring which may include self-declaration & stringent action on diversion of coal etc.  Want coal auctions to be restricted to end users, so that they can pay less!
  • It is suggested that a suitable provision may be incorporated in the Rules making it mandatory for the CBEC to give clarification sought for by Association of the industries or an individual assessee on the point within 60 days from the date of such communication. It should also be provided in the Rules that if no communication is issued by the Board within the stipulated period, the interpretation understood by the Association of industry or assessee will prevail upon the department. Insistence on a ‘RTI’ for Government to address policy representations, even though private sector reserves the right not to address shareholder questions!  When even advance rulings reserve the right to avoid answering possible tax evasion questions, then why should a free service have this SLA? 

Friday, April 8, 2016

Spreadsheet mastery no longer mandatory course-ahead of the curve or eroding competitive advantage of IIM Ahmedabad students?

Recently, I read an article in Livemint by an IIM Ahmedabad professor who described the rationale of no longer keeping the mandatory excel course in the first year. I have reproduced the relevant section below, and I strongly suggest reading the article in its entirity. 

There is no denying the utility of a spreadsheet software, and given the ubiquity of Microsoft systems in organizations, perhaps even unavoidable. It remains useful for prototyping, basic data analysis and teaching elementary statistics, but, in my opinion, it is not exactly suited for large projects and serious scientific research….We have done away with our compulsory Excel course in the first year, and many of us use R and Python in the classroom regularly.

From an academic perspective, IIM Ahmedabad is doing the right thing by being 'medium' neutral and teaching students to handle big data sets with R/Python, and not to depend on an inefficient error prone medium. This is very helpful for students heading to technology or such firms with big data, and to instill a caution for the limitations of excel. However, in my view, Excel is no where near the redundancy path (despite clarion calls for the limited use of it in finance) , and first year MBA students need to learn this for the following reasons

  • Excel is best for 'Small Data'-Excel can handle 1Mn rows and 64,000 columns. Most data sets in corporate life can be dealt with in Excel, or even if analyzed in MS Access, are best summarized in Excel. 
  • Interoperatable with legacy software-Be it a ERP, planning or other application, chances are it will have ability to export in excel or txt. Ability to manipulate this well will save a lot of time. 
  • Self study options limited in first year-Usually, students with corporate exposure especially with accountancy/Big 4 background would have mastered Excel before setting step into the campus but others would not. Realizing after securing that internship that you need Excel, and that your learning it will impact your grades or other commitments, will make you lament not having learnt it earlier
  • Advantage over other colleges-For whatever reason, IIM Ahmedabad students have better excel skills than their peers from other colleges-this may seem a jingoistic statement from this IIM Ahmedabad alumnus, but I think the mandatory course is responsible, and many seniors have attributed this to their outperforming their peers and completing the projects

Instead of scrapping the course, it would be great to add a session on error proofing or best work practices/spreadsheet audit, so that the tool's limitations are well appreciated. Else, it would be great to advise the incoming students to pursue advanced courses from provides like so that they can prepare for something not taught on campus, but needed in India Inc and helpful in general life. 

Sunday, November 25, 2012

Rajeev Dubey's book 'Bullshit Quotient'-a great read

Bullshit Quotient: Decoding India's Corporate, Social And Legal Fineprint

This blog has been inactive for quite some time, given my workload and the risk of treading on bloated egos/scared cows. Its mostly the former though, because truth is an absolute defence under Indian libel laws, and I make sure to differentiate fact and opinion. Recently, I stumbled upon Rajeev Dubey's book 'Bullshit Quotient' while browsing for books at a Landmark store. The book title caught my attention, and I picked up a copy. It was a great read, though covering many areas familiar(corporate and legal stuff) and unfamiliar(social part). If there was ever a book which combines critical thinking, connecting the dots and wide range of topics, this is it. Your bullshit quotient will indeed go up after reading this book, as would your economic/political understanding. 

The book costs hardly 2 McD supervalue veg combos at a current price of just around Rs 235( Ok that was a random comparison, but better than many of the analogies in print,

Sunday, October 28, 2012

Financial reporting and taxation a zero sum game?

As a qualified chartered accountant, the above may sound heresy when I'm questioning the two pillars of the profession(atleast in India!). However, I am NOT saying that they do not have any utility, just that the utility to the overall economic system might be doubtful-this is not the fault of the people involved, but just a consequence of the rules of the game.

For example, information asymmetry and stewardship are the two main theories for providing historical financial(and other) information to outsiders, which are usually audited as well. Now, auditors play a watchdog(but not a bloodhound!)'s role in ensuring that there are no material errors in the information. The auditor's role adds value to the extent financial reporting becomes reliable/internal controls become stronger. But for the financial reports themselves, lets think a bit. Usually, the recipient of those reports-be it investors, lenders, regulators, NGOs etc-have certain set expectations from the provider in terms of dividend/earnings expectations, lending covennants, fees/taxes and not earning beyond a reasonable profits. Some of these expectations can be met by reporting higher earnings, other by reporting lower earnings. Now, what many non accountants do not know is that most accounting numbers are estimates/approximations, best expressed as a range. Now, though global accounting standards are converging in form of IFRS which aims at eliminating choice to the extent possible, that elimination happens usually only when a particular choice has been overtly abused(merger accounting, leasing etc) and hardly proactively. Otherwise, principles based accounting gives management a wide discretion to report numbers aggressively, with only the auditors or alert active investors to rein them in. In this scenario, the financial reporting function may see its role as reducing tax payouts, meeting the earnings expectations etc. Those fringe benefits justify hours/days of detailed discussions on which accounting treatment to adopt for a transaction-the treatment per se does not add economic value to the decision once taken, but due to those other benefits like earnings management, time may be spent on this rather than on BP&A/other economically productive work like reporting fair numbers.

However, financial reporting does have consequences on a huge scale when messed up-value transferred to those to fudge their books-both in corporate sector(Enron, Worldcom, Satyam) and the public sector as exemplified in this (in)famous IMF working paper on public sector accounting.
* “Accounting Devices and Fiscal Illusions”, by Timothy Irwin, IMF Staff Discussion Note, March 2012

About taxation, one of India's most famous jurists(said to be the best Finance Minister India never had) Nani Palkiwala once deplored that thanks to India's complex tax code, the best brains in the country were wasting their talent working out loopholes in the code. This was said decades back, but the tax laws have become more complex since then, both in India and even in "developled" nations like the USA. In fact, this zero sum nature of taxation was what persuaded me not to take this up as a full time career, despite having topped the tax paper at the Chartered Accountancy exams, and loving the subject. I was not convinced on the value addition to society as a whole, in this.

 This has been a long blogpost/(rant?) and so I conclude by saying that besides financial reporting and taxation, there are plenty of overall zero sum games like 'active fund management'. The reason I singled out those two was lack of searchable writing on Google, and my own experience in the field. These fields are full of market imperfections, and can divide value between parties like Company-Investor, Tax Payer-Tax Officer etc-but does not create it in the long run. Hence, I described it as a zero sum game, in that sense, especially if done wrongly.

Wednesday, May 30, 2012

TCI sues Coal India-morally and legally flawed

For the past few months, one of the UK activist hedge funds TCI(The children's investment fund) and Coal India have been locked in a tussle, with TCI objecting to the Central Government directives to Coal India on pricing, fuel supply agreements and the like. Following standard corporate governance principles, TCI feels that a third party(the government) should not interfere in the commercial matters that are in the domain of the board. However, as my IIM Ahmedabad Professor Dr TT Rammohan commented while lambasting TCI on his blog investors cannot expect a PSU to follow a private business model. Investors were well aware of this while investing in Coal India, and indeed the issue was considered underpriced by global benchmarks for many reasons including this one. Legally, the government plays the triple role of the sector regulator, majority owner of Coal India and the sovereign. These roles are often contradictory and lead to conflict of interest when 'populist' decisions/'national interest decisions' taken as a soverign/regulator conflict with the interest as a shareholder. In the prospectus risk factors(who really reads that but still its here, there were multiple warning points including on the very topic(public interest versus company interest) as below

  • Risk factor 14- Our business, operations and prospects may therefore be affected by various policies and statutory and regulatory requirements and developments that affect the thermalpower industry in India in general or public sector power utilities in particular, including those introduced oradministered by the Ministry of Power, GoI and the Central Electricity Authority ("CEA"). 
  • Risk factor 17- The price of raw coal sold under our FSAs does not fully reflect market prices for coal in India or in international coal markets. Inaddition, in the event that our production costs or other costs associated with the purchase of our coal that arepayable by our customers, such as transportation cost and statutory levies, were to increase, there can be noassurances that we would be able to increase the price of coal to offset any such increases. For policy or other reasons, we may not price our coal at levels that would adversely impact the power sector or the Indianeconomy. 
  • Risk factor 55- The interests of the GoI may be different from our interests or the interests of our other shareholders. As a result, the GoI may take actions with respect to our business and the businesses of our peers and competitors that may not be in our or our other shareholders' bestinterests. The GoI could, by exercising its powers of control, delay or defer or initiate a change of control of ourCompany or a change in our capital structure, delay or defer a merger, consolidation, or discourage a mergerwith another public sector undertaking.In particular, given the importance of the coal industry to the economy, the GoI has historically played a keyrole, and is expected to continue to play a key role, in regulating, reforming and restructuring the Indian coalmining industry. The GoI also exercises substantial control over the growth of the power industry in India which is dependent on the coal we produce and could require us to take actions designed to serve the public interestand not necessarily to maximize our profits.
 The above risk factors made it explicit(especially risk factor 55) that the Government of India could, had and intended to act like a robber baron(as perceived by private investors). If TCI had any concerns, it should have raised it before purchasing the shares. I'm sure the Goverrnment would have been much more receptive to concerns raised during the road shows. But instead, like the anecdotal eternally optimistic wife who marries a man hoping to change him, TCI purchased Coal India shares, took the high risk approach of moral suasion/persuading the Government to change its policy, and when it failed hired its top legal gun Luthra & Luthra to try recouping its losses! One who plays with fire should not complain of getting burnt. And that is the moral side of the issue-of all people, an activist hedge fund cannot take the plea of ignorance of law/not having read the prospectus! And as Prof Rammohan points out, Coal India's high ROE shows that perhaps the customers are getting gouged not the shareholders!!!

As an aside, as pointed out in the economic survey Chapter II, In a market where all dominant players are public-sector companies, ‘market price’ is not a very meaningful concept. It is easy for government to control state-owned companies through nods and winks. Hence, even if TCI wins an injunction for stopping such actions(very unlikely), the Government can still get its way. Hence, Luthra & Luthra will laugh its way to the bank, but TCI is not likely to see a single rupee of compensation.