BMTC bus services in Bangalore-a review

While googling Bangalore's public transport system before coming here(that sounds weird but I like to stay prepared and informed before arriving in any city), I noticed that they have two bus passes(Rs 45 valid on non-AC routes, and Rs 90 valid on all AC/non AC buses except the BIAL operated airport buses). The pricing is quite generous given the otherwise high price levels in this city. So having used these bus services extensively in the two weeks I'm here, my observations are below-hopefully they may help somebody else new to the city who wants to save money, carbon emissions(at the cost of time however!)

1. Use Google Transit to find the best bus routes(AC only) between places in Bangalore. The transit times indicated in these are usually quite accurate(god knows how!)
2. Be careful of the bus numbers/routes, as some routes have different numbers/routes while going and returning. For instance, 201R does not pass via Jeevan Bhima Nagar while its counterpart 201RC passes through that same bus stop
3. As the driver/conductor are remunerated partly basis their collections, they try every trick in the book and then some to fill the bus. While that results in the bus sometimes departing late from its starting point, it ensures that the buses do make unscheduled stops to pick up the lone passenger on the desolate road who could really use the bus service then!
4. Hindi is spoken almost universally by the bus conductors/drivers, and many speak English as well. In any case, if you state the place, they will atleast tell you the roads or so. 
5. A slight drawback is the music played in the bus-local Kannada songs-which may turn off those not able to sleep/concentrate on other work in midst of noise. Not applicable for those with headphones.
6. The digital indicator on the bus nameplate also states the route in brief in English AND Kannada. Very helpful to slowly master the routes. 
7. The Volvo AC buses are worth every rupee you spend on them, and quite economical-much more than auto and WAY more comfortable. Only thing, frequency is poor when it gets late, so do call the toll free BMTC helpline to find out details of first and last bus at the odd hours. 
8. Even from the airport, there are the special BIAL buses which take you to many corners of the city. For the individual travellor, that makes tremendous sense than paying 800odd bucks to ferry you to the city centre and so on. 

In short, quite good bus services I must say, both 'bus' and 'service'

Travails of searching paying guest/short term flat in bangalore for men

Bangalore is a city with the best weather, but with the worst peak hour traffic! That pretty much sums up the city from a migrant perspective. Being posted here for 6months to do my functional training, I(and other friends) needed to look for accomodation for 6months only(till we return to Gurgaon/are sent elsewhere). And that is where the issues began. We essentially wanted a service apartment type facility without the hassle of 11months rental agreement. Most PGs(paying guest) are small rooms, with 2-4 people cramped inside with just a cot and basic cupboards('semi furnished) with a common bathroom for a floor! While that does seem repugnant to us, I recognize that such an arrangement serves the need of the 99%(just kidding, but not everyone in Bangalore is in the IT industry to afford better accomodation) and helps the landlord make more money as well. While searching for PGs itself, following problems arise

1. Not as advertised:-Many PG owners just seem to copy paste the description of one PG on to their own listing. So I've seen ads for 'fully furnished', 'attached bathroom' PGs which did not have that facility at all! So I've now learnt to cross check before going about facilities. 
2. Brokers too busy to call back/show place!! Unlike other cities where brokers virtually chase you for seeing places, brokers here are quite busy(or atleast seem so) when it comes to showing PGs. Hence, dealing directly with the owner seems inevitable. 
3. So many higher end PGs meant for girls!! I've lost count of the number of ads I've seen offering deluxe PGs for girls/working women, but very few meant for men! It seems that owners believe only women will pay their rates! 
4. Rs 500 standard deduction from deposit while refunding:-PGs usually ask a token deposit of anywhere from 0.5months-2months of rent, and deduct 'maintenance charge' of Rs 500 while refunding the deposit! This seems an unfair trade practice but can't do anything about it except of course walking away.
5. Domlur/Indira Nagar quite far away from Bannerghatta Road:-My office being on Bannerghatta Road, I wanted an accomodation nearby to avoid 1.5hrs commute each way. But the best residential areas(in terms of solitude, amenities etc) being located so far away, the quality of PGs/flats here not upto the mark except say places like Mantri Elite and so on.

There is hopefully an happy ending, with me having seen atleast 2 backup places I liked, and our aiming to see another such place today afternoon when the owner returns to Bangalore. But the system is not easy for an outsider, especially for one who does not speak Hindi, Telugu or Kannada(Hindi is spoken widely here, Telugu as well especially among PG owners, and Kannada being state language). Luckily, my Hindi knowledge gets me thru but things would not be easy anyone just speaking English.

A friend Umang Rathi(based in Trivandrum, working for ISRO), suggested that there is tremondous scope for a C2C website or a network of migrants who would help newcomers find their place in the city. While these exist on a small scale(say college level mail chains/social media), they are of little use presently.

A few great e-commerce sites

I blogged earlier about how I love Redbus(http://andy161.blogspot.com/2012/03/10-reasons-why-i-book-bus-tickets.html) but there are other sites out there, which are superb in execution, customer service yet value for money(managing all 3 is unusual and hard)

1. Myntra.com:- Funded by Accel Partners among others, they are quickly becoming the gold standard in apparel, with their very fast shipping, easy returns policy(they even send a returns-bag and feedback form!) with a no-fault policy(even if you return it for non quality defects, they either collect it free or give you a Rs 100 credit towards shipping) that I'm yet to see elsewhere. By far the best customer service I've seen(I had to return a product once so I speak from firsthand experience). They give a Rs 500coupon on purchases above Rs 1250 for new users, so make hay while the sun shines and buy something from there
2. Flipkart.com:-Again a Accel funded venture. Great choice of books, quick delivery, impeccable and polite customer service. They do not do much price discounting, but you know that what you see is what you get.
3. Dropbox:-A very good way to share files easily without the risk of putting them on filesharing sites. Best for sharing with a limited group.
4. Whassup:-The new craze, excellent to send messages, files and MMS to friends. For smartphone users looking to save on data charges, seems a great way to go ahead
5. Minus.it and ifileit:-Very clean interface, free, and fast. In the era of fast vanishing file sharing sites(that are converting into file storage sites), very good
6. Stayzilla.com:- They are focusing ONLY on 'affordable' hotel booking, and focussed like Redbus on one segment. Should be interesting to see what happens next(I've not used them yet though, this is only from their site and googling for reviews)
7. Ixigo and isbn.net.in:- Price comparison sites for travel, and books respectively. Both have saved me tons of money, and seem quite neutral and accurate. 
8. Bookmyshow.com:- As the name indicates, focussed on movie tickets but more recently branched off into cultural, sports and other events as well. Their convenience fee is a slight turnoff but then the ease of booking and comparison is unparalled. 
9. Google Transit: Like the site gothere.sg, this gives multiple paths(bus,train, car) for reaching from point A to point B. Great for metros(especially Bangalore) but still evolving in cities. Not exactly e-commerce, but facilitates public transport in a great way..

 These are all great sites I've used(except stayzilla and Whassup of which I've no personal experience), and are making things really easier. Will add to this list when I see more, as we really need more of such

The power of counterfactual thinking in business

'What if'. This powerful question forms the base of counterfactual thinking, where you try to imagine what might have happened under a different scenario/circumstance. It is not intellectual heroism to do so, but rather those who want to illustrate improvements, compare things under changed circumstances etc would find this sort of thinking very useful. The below business situations illustrate the importance of

1. Stress analysis/scenario analysis:-'What if' analysis tries to model the effect of stress testing and analysis. That is counterfactual analysis
2. Proforma financial statements in prospectus for past data:- As IFAC puts it,  Pro forma financial information included in an issuer’s prospectus illustrates the impact of a proposed acquisition, equity or debt issuance, or other transactions on the issuer’s historical financial information as if such event or transaction had occurred at an earlier selected date.  This is nothing but counterfactual thinking.
3. 'Improvements' after consulting assignments:-When consultants claim to have implemented projects resulting in savings of XXX, these amounts are often counter factual.
4. Opportunity Costs/Benefits:- For example, Delhi International Airport(DIAL) had taken interest free Refundable Security Deposit (RSD) from the lessees/shop owners. For purpose of setting tariffs under cost-plus rate of return regulation by AERA, they stated that the RDSs have an opportunity cost and hence the Authority should provide a reasonable return on the same because if  DIAL  had  not used these deposits for the project, then  additional  funds would have been raised through equity or debt, on which the Authority would have provided a return. This is nothing but counterfactual thinking. 
5. Avoidable costs:- Suppose an activity had not have been carried out(if deemed wasteful/unnecessary/imprudent), then what would have been the costs saved? Regulators do not generally permit such inefficient/non regulated activity related costs. For example, the  primary  activity  of the  airport  is to  provide  aeronautical  services and the users  should bear  the  cost of these.  Where,  however,  the  presence  of  non-aeronautical  activities  has  generated  an additional  requirement   for  space  or  facilities,  which  would  otherwise  not have been  needed,  the  resulting  otherwise avoidable  costs  should  be regarded in full as non-aeronautical.

Why accountants should master information systems

When I refer to accountants in this context, it does not refer just to 'financial accountants' but also to 'management accountants' and corporate financial analysts, who handle internal corporate data. Of course, external auditors etc are anyways dutybound to evaluate client information systems to decide the extent of reliance on records/nature of assurance they can give, so I do not include them in this. Before understanding the ISACA study material of the ICAI, I felt that information systems was a geeky subject best left to engineers, but then I realized its real importance later. After all, accounting is an information system by itself, and therefore the IT approach to IS is just one aspect(but very helpful too, though it focusses more on automation and lesser on controls which accountants are expected to design).

1. System framework is quite useful for analyzing organization phenomenon. Skills using data flow diagrams etc are quite helpful while designing, auditing and improving systems.
2. To preserve their identity, autonomy and core competence, organizations are a closed system in many aspects. So are accounting systems-closed when it comes to basic principles, but quite open in the adaptation/interpretation of them.
3. IPOS cycle(Input process storage output) misses out in fact that feedback loops lead to output affecting input/virtuous cycles etc. This is true for accounting as well(which has evolved as per the way various users accounted their transactions).
4. Once we define the system boundary, we are much closer to defining the problem and our focus.
5. Example of buffer is cache memory, inventory, queues etc. This concept helps while scheduling work during peak seasons.
6. Way to decouple databases(lessen need for communication) is having common database standards, which is exactly what is done by many organizations(auto generated invoices between partners sharing same standards).
7. ERP is a more subtle form of putting in best practices, which can improve controls and performance substantially.
8. Post Implementation reviews like in PDCA cycle must to see how to get better next time, especially in the project management scene of IT. Those lessons useful for audit/control.
9. Outsourcing needs among other things, source code escrow, risk/controls and metrics for SLA. These should involve the finance function as well.
10. User signoffs not just CYA(cover your a**), also way to ensure buy in/proper needs built in etc

There can be tomes but this is all for now. 

Management lessons from Madagascar 3

Yesterday, I watched the third part of the animated film franchise Madagascar, and it was clean wholesome 3D entertainment totally worth the price of admission. Just having finished 2yrs in bschool at IIM Ahmedabad, my mind was still on MBA mode in the background, trying to dissect and glean management lessons from all and sundry! I did not watch the first two parts of the movie but that did not detract from my understanding. A brief review of the film as on the blog http://vagabondmind.blogspot.in/2012/06/madagascar-3-europes-most-wanted-review.html states Our famous quartet(of circus animals who have escaped from the New York Zoo)-, Alex the Lion (Ben Stiller), Marty the Zebra (Chris Rock), Melman the Giraffe (David Schwimmer), and Gloria the Hippo (Jada Pinkett-Smith) are in Africa. The penguins have left them and taken off in a plane to engage in some gambling. The heroes swim their way to Europe to get to the penguins and fly back home. Plans fail and events start unfolding at a frenetic pace. Animal control chief Chantel DuBois wants Alex’s head on her wall. The New Yorkers somehow manage to convince – Circus Zaragoza who is touring Europe in a train. We meet a few new characters - Vitaly the Tiger, Gia the Jaguar, Stefano the Sea-lion and others.  The story moves forward with the train moving to Rome and then to London. The action at London is a treat to watch in 3D with excellent pyrotechnics and some breathtaking acts. Finally, the New Yorkers get back home. But are they happy? For a more complete review, read http://en.wikipedia.org/wiki/Madagascar_3:_Europe%27s_Most_Wanted

The background now set, the lessons in brief are

1. Fake it till you make it! The escaped quartet had taken refuge with the circus under the pretense of being circus animals. Leveraging that credibility, they persuade the other (real) circus animals to try the often risky acts that they conjured up.
2. The power of passion:-As Alex talks about later in the film, the famous Canadian circus Cirque do Soleil that uses humans instead of animals in their performances, cannot compete with the real animals when it comes to passion. Hence, he inspires the animals to give their 101%.
3. Getting buy in for change:-Vitaly the tiger represents the old guard-trusty, competent yet resistent to change the way things have been done! However, Stefano and Gia the Jaguar reassure him of his importance in the scheme of things, stating that they will not move ahead without him. This makes him agree to try out his old act(jumping through loops again!)
4. Business process reengineering! This is quite evident in the new way the circus acts were reengineered. After all, if one keeps on doing what does not work, that is insanity. Having Vitaly use non flamable hair conditioner instead of the inflamable hair oil to jump through flaming loops, is another example of the same. 
5. The importance of integrity:-Though the penguins are able to foil DuBois' plan to capture Alex, the latter is forced to confess that the four of them are just zoo animals trying to get home, disappointing the others who feel used and lied to, as they had blindly trusted the four and done risky and new acts. While the film ends on a good note, in real life often, one lapse of integrity proves expensive in the zero tolerance envt of organizations. So 'fake it till you make it' is fine for internal use, but not necessarily for external use, as the Yahoo CEO Scott Thompson found out to his expense after being fired for inventing a non existent credential.

I am sure that academics with much more time for research/thinking than I do, will come out with a case study/session on this, but this is all I could do! Adios! 

Indian Broadcasters Federation rips apart TRAI in its consultation paper response

Handling regulators is a fine art-be it appealing adverse orders, indulging in regulatory capture or responding to draft policies. Judging by its response to the Indian telecom regulator TRAIs proposal to cap advertisement time per clock hour on pay TV channels, the Indian broadcasters federation(IBF) pulls no punches and has gone for the jugular using some very cuastic language. Read the full response here(http://www.trai.gov.in/WriteReadData/ConsultationPaper/Document/Indian%20Broadcasting070412.pdf) but some sample paras indicate the frustration of the writer and leave the reader in no doubt about the angist felt by the association. Whoever the person is, great job done! Just sample some paras

1. not only an attempt of regulatory overeach but also of regulatory oversight
2. ..reflects a basic lack of understanding of the business model of the broadcasting industry
3. We will not attempt to catalogue all the errors in the description...instead..
4. No rationale has been given for the same except the traditional TRAI mechanism of drawing a golden mean between two unrelated figures

the rest of the response is a bit more temperate but on the same lines. If any brave soul wants to respond to regulatory proposals adversely affecting them, the extent of research done here and the caustic remarks here are a role model for use, but not advisable to be repeated given the potential to piss off the regulators, which can affect business in any market, let alone a highly regulated one like India.

Data protection laws in India relating to sensitive personal data under IT Act 2000

To ensure data privacy and security, the Government of India inserted Section 43A in the Information Technology Act 2000, to ensure that corporates handling sensitive personal data(as defined in the rules) take adequate precautions, and are subject to certain minimum obligations and liabilities even when not specified in the contract. For this, they framed the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011(read it at the link
http://www.mit.gov.in/sites/upload_files/dit/files/GSR313E_10511(1).pdf ) which gives some comprehensive guidance on the subject. Rule 3 defines sensitive data, with a focus on financial/health records, with a safeguard clause that information accessible in public domain is not considered sensitive.

3. Sensitive personal data or information.— Sensitive personal data or information of
a person means such personal information which consists of information relating to;—
(i) password; (ii) financial information such as Bank account or credit card or debit card or
other payment instrument details ; (iii) physical, physiological and mental health condition;
(iv) sexual orientation; (v) medical records and history; (vi) Biometric information;
(vii) any detail relating to the above clauses as provided to body corporate for
providing service; and (viii) any of the information received under above clauses by body corporate for processing, stored or processed under lawful contract or otherwise:
provided that, any information that is freely available or accessible in public domain or furnished under the Right to Information Act, 2005 or any other law for the time being in force shall not be regarded as sensitive personal data or information for the purposes of these rules.

Besides the requirement for explicit opt-in consent from individual(that can be withdrawn at any time), privacy policy, restrictions on sending data abroad etc, Rule 8(3) gives a safe harbour of what does reasonable safety practices mean for the purpose of these Rules.
The body corporate or a person on its behalf who have implemented either IS/ISO/IEC 27001 standard or the codes of best practices for data protection as approved and notified under sub-rule (3) shall be deemed to have complied with reasonable security practices and procedures provided that such standard or the codes of best practices have been certified or audited on a regular basis(atleast annually or when significant upgradation takes place!) by entities through independent auditor, duly approved by the Central Government.

As this law applies to all companies, they better be careful else for those not getting audited, proving good faith/due diligence will be difficult

Eagle Travels-exemplary 'customer service' or great disaster management?

Eagle Travels(trade name of 'Falcon Travels Pvt Ltd'-the owner seems having a fetish for birds) was the operator by which I'd booked a 7:45pm bus from Mumbai to Ahmedabad(boarding Sion). I got a call from them apologizing for their having to delay the departure by 2hrs(guess they cancelled that bus due to poor occupancy and booked me to the next bus). Since my arrival at Ahmedabad was not that time sensitive, I decided to carry on and boarded the bus at 9:45pm, but it turned out it was a Surat bound bus which would drop me to Borivali for a 11pm bus from there. At 10pm, the bus broke down at a signal on the Western Express highway near VileParle, and nearly 1hr was lost in pushing the bus/trying to repair etc. Mechanics and a manager came quite quickly and tried to solve the problem.

I was fretting about my connecting bus, but was assured that it would be managed. Suddenly at 11:10pm, I was taken to a sumo where the owner dropped me to the boarding point(while stopping at one of his shops to collect the cash and accounts!), making some small chat etc and apologizing for the delay. After a 15min journey in AC comfort, I reached Borivali where the bus was waiting for me. When I entered it(was allocated the same window seat), the passengers were somewhat irked saying that the bus had waited 30min for me!(dunno what the bus driver told them). Anyways, the bus was quite comfortable(no jerks/great seats) and small things like water etc was provided, and it reached Ahmedabad without incident and just in 9hrs.

I was quite impressed by their holding up the bus for one person(it was their fault but perhaps they could have used some other operator..) and also by the fact that a person from their end was calling me up around 15min/30min before the scheduled boarding to confirm I'd reached. Not sure whether this is standard practice or not, but I did feel I was in competent hands and they had  a great tracking system. Taking me in the AC sumo did do the trick and eased my mood considerably, else I'd all but decided to sue them for deficiency in service! In all, an eventful 2hrs, I lost that much of sleep, but was impressed by how they managed the whole thing. 

10 reasons why I book bus tickets through Redbus

I admit it! The title was my feeble attempt at SEO optimization, but I do really love Redbus. Their customer service and sleek web interface rivals my other favorite e-commerce portal(Flipkart). 

1. Easy refund-the acid test of any merchant is the ease with which they process your refund/chargeback requests. I had cancelled tickets thrice by Redbus, twice through email and once through phone, and the service was efficient, polite and prompt on all occasions.
2. 100% effort to get passenger ratings:-I get an emailed survey around 1hr after the scheduled arrival of the bus, requesting for feedback on the operator and Redbus itself. This also leads to ratings you can trust, that will be uncensored, genuine and somewhat exhaustive.
3. M-tickets:-This is a new innovation, which they did not have to do, but very convenient. It also had the boarding point contact numbers, which can be directly dialled from the message itself.
4. SMS before bus timing:-I was quite wowed to get a SMS at 3:45pm before my 4:15pm bus, reminding me of the bus, 'from your friends at Redbus' with a smiley! Though probably not needed, it is a good way to reach out!
5. Sleek website interface:-Loads quite fast, and very user friendly. One can finish a booking in as less as 3min! No unnecessary junk/logins needed.
6. Periodic offers:-Mostly small amounts(Rs 50/100) but amounts to about 10% of the fare at times on using HDFC/ICICI debit/credit cards.
7. Bridge to the unorganized bus sector-Do not wish to critique agents, but there is a world of difference between educated young people and the bus agents, and Redbus helps bridge the gap.
8. Handle refund of differential fare if bus type changes:-Doing this on the bus/even from the boarding point would be inconvenient physically, but Redbus can credit the amount online
9. Focused and loyal promoters-A venture capitalist who had funded them early on, gave a talk at IIM-A recently, and mentioned that they(Redbus promoters) resisted the temptation to get into ancillary streams like travel packages, hotel bookings etc, and instead are building the bus bookings business. Also, though they now account for a significant share of revenue for many operators especially on 'non popular' routes, they have not hiked the commission upwards.
10. Prompt and Friendly Customer Service:-I have spoken with their customer service at both Mumbai and Ahmedabad, and have got through quite fast on both occassions in evening peak time. Whether this means lack of complaints/phone service or just awesome Operations Management(remember these guys are from IIM Indore..) is something I do not know.

 Keep up the good work, guys(and gals!)

Should retail investors stick to value equity investing to safeguard careers?

When I refer to 'retail investor', I do not imply any maximum level of knowledge/skill/expertise/experience, but only refer to a person who does not intend to make investing his full time profession. Hence, even a MBA Finance from a top notch college who aced his investing courses/simulation games, would be a retail investor if the main job is anything other than full time investing. Now, there are many investing styles for the lay investor, and in comparison to derivatives, exotic asset classes like art/commodities etc, the slow compounding effect based conservative value investing style may not appeal to many people, atleast not in the short run. But the perils in any other investing style is(especially the last point)

1. Disadvantaged in terms of information recency/execution speed and costs:-Without multiple terminals, access to recent data feeds and cheap trading costs, a retail investor is disadvantaged compared to his institutional counterpart. 
2. Information asymmetry widening:- In equities, the level of analysis is much lesser(DCF etc) as compared to options/FICC wherein pricing models accuracy matters as well. The improvements/refinement in those areas are much more prevalent and frequent, hence someone not having access to those would be at a disadvantageous position.
3. Limited structures/market access/positions:-Institutions by virtue of their market access, lower margin needs and liquidity can access more markets than retail investors, who are therefore better off investing along with them via structured notes/fund of funds etc.
4. Distraction from 'core'/'ongoing' business/career:-My father's friend who has a ball bearings business and who dabbles in stocks, once confessed that if he had focused on his bearings business, he would have been much wealthier than he is today. This is much more true in professions, with an entry of young often better trained blood. If you are not on your toes/upto speed, there is risk of permanently being left behind. And that is an intangible damage which no amount of investing success can compensate for. For day trading, F&O etc, that needs a lot of time commitment/intra day distraction and BP/pulse rate tracking the market. That does take a toll on one's performance at work. 
5. Value investing inherent advantages:- By contrast, value investing needs a one time major time investment, and then not so much effort at monitoring. Also, it is not very time sensitive job, so does not affect your work performance. Plus, the playing field is much more level(in fact retail investors even have an advantage as they do not need to report to someone/less herding risk etc). 

Of course, to 'get rich fast', it either needs a great career with bonuses, or else great trading gains/informed investing. While selecting the path, one would be advised to consider the above points.

My experience at Delhi Airport-well worth the passenger service fee!

Earlier in Jan-12, I had the occasion to wait for a few hours at Delhi Airport-the domestic departure terminal IB. Having done the same at Singapore and Mumbai airports, I was curious to compare the experiences. And surprisingly, once I was inside the airport, things were quite good. For instance

1. Affordable beverages/food inside the airport(like a Haldiram's stall) and even nearby, as opposed to the exorbitantly priced F&B which are a standard fixtures of airports
2. Wifi connectivity free of cost and although for max 1.5hrs or so at a time, that can be renewed free for any duration after that.
3. Laptop charging stations and tables are readily available beyond the security clearance area, and allow passengers to work/be entertained while waiting for departure. 
4. Interestingly, DIAL had a prayer room as well(location could have been better since it was near the toilet!) but that is a very good gesture
5. A shoe polishing roller which allowed the passenger to just rest the shoe on the roller and it would be polished then. A great idea
6. Other standard fixtures like clean loos, metro connectivity(metro station reachable by escalators/nominal priced AC bus service), water jets etc.

Of course, there is a controversy on the proposed hike in the passenger service fee which I'll address on my financeandcapitalmarkets blog, but the experience was quite good.

Immoral/Illegal/Against public policy-yet taxable or tax deductible in India

During my study of both direct tax and indirect tax law, I saw quite a few instances where although the activity in question was illegal or prohibited, that fact was not considered for the purpose of tax law. That does seem a bit strange that tax law does not recognize the constraints imposed by other civil/criminal law, but on closer reflection it does make sense because both laws operate in different spheres, and also because tax does not concern itself with moralities/strict legal form, and therefore even illegal income can be taxed.

1. Physician samples of patent/proprietary medicine is statutorily prohibited from being sold under the Drugs & Cosmetics Act 1940, and therefore a pharma company contended that since those samples were not 'marketable', excise duty could not be charged. But in Medley Pharmaceuticals vs CCE(Daman) 2011SC, the Supreme Court held that despite the statutory prohibition, the samples were capable of being sold, and that restrictions under one law could not result in revenue loss. Therefore, excise duty was held to be chargeable.
2. Under wealth tax however, if a plot of urban land is vacant due to land planning prohibitions, then its value is not considered for purpose of charging wealth tax.
3. Smuggled goods(if detected!) cannot be given benefit of exemption notification:- In CCus(Preventive) v M Ambalal & Co, the Supreme Court held that since the Customs Act had one of the primary objectives as curbing smuggling, it would be contrary to the purpose of exemption notification to accord the benefits of 'imported goods'(entering through legal channels) to those smuggled goods as well. 
4. Under the Indian income tax transfer pricing laws, any revision in transfer price(it will be always upwards IF made) cannot entitle the other party to the transaction to reduce its taxable income. Also, the party affected by transfer price that increases its taxable turnover, cannot claim export benefits/other benefits under law. This provision recognizes the commercial reality that despite the transfer pricing adjustment, the funds have left India(in case of international transactions). In case of domestic transactions under Section 43/80IA-ID, I guess the rationale is not to reward those who cook the books..
5. Under wealth tax law(again!), cash, to the extent recorded in books, is not subject to wealth tax. This means that questionable accounting practice/sloppy accounting of having unrecorded tax, would lead to its being taxed for wealth tax purposes. 
6. Charitable trusts ordinarily enjoy income tax exemption, but in case the tax authorities recompute the business profits and find concealed income, or make other additions to the income due to related party transactions, those additions are not eligible for that favorable tax treatment
7. The tax avoidance provisions under 69A-D subject unexplained expenditure to tax under the presumption that that would have been from undisclosed income(i,e black money). To avoid the claim of net zero income(gross income minus that expenditure), the law expressly debars any tax deduction of those expenses even under business income
8. Payments seemingly contrary to law still deductible-heroin drugs stock-in-trade of an doctor assessee and ransom payments. The loss of heroin drugs was held as tax deductible by the Supreme Court, which reversed the verdicts of the lower courts, stating that moral considerations did not belong to jurisprudence. Hence in 2006, the case Dr. T.A. Quereshi v. Commissioner of Income-tax, Bhopal stated that although the law had barred business expenditure incurred contrary to law, it did not state anything about business losses. In the K.M Jain case, the MP High Court held that where a company had paid a ransom money of Rs 5.5 lakh to the dacoits and secured the release of their director(who had spent 20days in captivity), the payment was deductible because the law did not expressly prohibit payment of ransom. Hence, this is seemingly contrary to the intent of the explanation to Section 37(1) that no allowance shall be made in respect of expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law. But technicalities and deep legal interpretation allowed tax deduction in the above cases. 

The point of the above examples is that sometimes tax law works in interesting ways.

The Abilene paradox proves Silence is not golden-and its implications

The Abilene Paradox was first described by Professor Jerry Harvey, from the George Washington University. He described a leisure trip which he and his wife and parents made in Texas in July, in his parents’ un-airconditioned old Buick to a town called Abilene. It was a trip they had all agreed to – or at least not disagreed with – but, as it later turned out, none of them had wanted to go on. “Here we were, four reasonably sensible people who, of our own volition, had just taken a 106-mile trip across a godforsaken desert in a furnace-like temperature through a cloud-like dust storm to eat unpalatable food at a hole-in-the-wall cafeteria in Abilene, when none of us had really wanted to go”.

Hence, the Abilene Paradox describes the situation where everyone goes along with something, mistakenly assuming that others’ people’s silence implies that they agree. And the (erroneous) feeling to be the only one who disagrees makes a person shut up as well, all the way to Abilene. In short, silence is not golden, and does not always imply assent. Some practical implications of this

1. Teachers often stress that no question is a dumb question. This is partly to avoid the Abilene paradox where students often have a common doubt but the silence of other students stops them from asking, as they mistakenly think that they are the odd man out. 
2. In a contract(unless by tacit actions), silence does not imply acceptance. That is an old maxim of English contract law(and I think in other juridictions also), subject to certain carveouts to cover assenting to deception etc. 
3. Many decisions often need a certain affirmative vote-for example in the World Trade Organization(WTO), rejecting an expert panel discussion needs a majority General body vote. And corporate law(often needing charter etc) often imposes a quorum for making certain important decisions, be it at the Board level or the shareholder meeting level, to ensure that those who are silent are also made to attend(atleast in part)
4. Great investors and managers often make their team speakup, to ensure that contrary opinions are not sidelined due to groupthink/awe.
5. Good communicators often restate for understanding, to ensure that understanding gaps are ironed out and not hidden behind the wall of silence. In fact, lack of response/questioning often indicates communication gap/disinterest. 

I could go on and on, but I think that principle needs more attention and application.

ICICI and Uninor-the tale of 2 contrasting customer service organizations

Below is the email I sent to my mobile service operator Uninor last Sunday on why I would be shifting from them after Mar-12.

1. Customer calls getting transferred repeatedly to Hindi speaking operators although I select the right option 'English'
2. VAS being wrongly charged to my account in May, and reversed after lots of hassle
3. Website among the worst in the industry-details of add on/top ups not available online
4. IVRS very unfriendly, almost impossible to get thorough to customer care executive
5. And to top it all, tariffs among the highest-local/SMS now 60paise for me without any intimation-even Vodafone(best quality network) is much cheaper and user friendly.

Even after a week, I did not get any response(not that I was expecting one after the hassle I had in getting a Rs 30 VAS charge reverse). Contrast that to ICICI's customer service. They are impeccable in the call centre wait times/service, have a great site, awesome technology and polite personnel. And when I blogged day before yesterday(http://andy161.blogspot.in/2012/02/icicis-incredible-customer-analytics.html) about their incredible analytics, imagine my surprise when the Blogger Dashboard showed 4 visits from ICICI Social media console, within a period of 24hrs. Obviously, someone is tracking the mention of ICICI on a third party social media forum like this blog!

In the era of customer choice, the person who is most attuned to customers wins. While ICICI is no saint(sometimes accused of sharp practices/not having the benevolent image of PSU banks), it is living its motto 'khayal aapka' by keeping its ear to the ground and being responsive to customer issues/feedback not only that given directly but also elsewhere. It is such organizations which would win in the long run.

Learning about the real facts of life online

A side effect of surfing online is that you stumble across plenty of interesting stuff. But thanks to the surfeit of PR material masquerading as content, it is sometimes difficult to get the true picture. Below are some useful resources I found in that regard.

1. IIM tips/NIT tips/ CA tips-a new fad has sprung up on Facebook where groups are made ending with 'tips' that give tongue in cheek one liners about anything under the sun, right from IIMs to Gujjus. This community is growing by the day, and chances are you will get information on any profession/aspect of life on that soon
2. Memes:- Many sites have memes which are again one liners, mostly on communities but often on other things as well. Sites like tumblr are a classic example of this.
3. Jokes: They say there is no smoke without fire. Hence, even the 'racy' jokes have a factum of truth, and can be very illuminating on the profession
4. Glassdoor:-This is often more reliable than Vault Guides in my view, because people can safely state even negative aspects online, which is not possible always in standard publications.
5. Quotable Quotes:-Sites like brainyquotes have a very rich collection of quotes online, and most are quite insightful
6. Classics:- Thanks to Project Gutenburg and other sites, one can read classics online for free(even the Kindle Store has free classics for Kindle). They say that the past repeats itself, so reading classic novels can give deja-vu when those situations are unfolding around you.
7. Anonymous blogs:-For example, a famous finance blog-the Eipcurean Dealmaker has an anonymous writer who frankly writes about the industry, unafraid of the consequences on his day-job. This is a luxury which only anonymity confers.  (http://epicureandealmaker.blogspot.com/)
8. Comment section on certain sites:-Often, the comments section is entire spam as in Rediff and TOI, but on more reputed forums like Economist/HBR/FT, the quality is comments is great and often surpasses the result of the post itself. And many commentors supplement their views with real life examples.
   

The end of 'free' digital content looms nearer than thought

The one day Wikipedia blackout made the otherwise obscure SOPA and PIPA bills of the USA Congress get global limelight. Those bills aimed at ensuring that sites which hosted pirated content, would have to comply with content owner's take down notices, and risk being stripped of their payment gateways/advertising networks if found to be 'persistent defaulters'. This lead to a Silicon Valley vs Hollywood media battle, which Silicon Valley seemed to have won due to the deferral of the bills. But that win was a Pyrrhic victory as the post below would show. In my Apr11 post(  http://financeandcapitalmarkets.blogspot.in/2011/04/why-end-of-free-content-looms-aheadand.html), I had predicted that downloading pirated content would be more difficult. But recent events have accelerated the rate of change

1. After the megaupload owner was arrested without bail in New Zealand, websites like filesonic panicked and have restricted the download facility to only the person who posted the links! In essence, they changed the business model from filesharing to file storage. While sites like mediafire etc are bravely going on, it is tougher to access pirated content, especially the legacy ones.
2. Content owners are shifting towards the idea of a central content repository, against which filehosting/sharing sites can ensure that uploaded content can be screened to check for piracy. If that materializes,most advertising dependent sites will find it difficult to avoid compliance with that. 
3. Youtube now screens uploaded content for digital footprint of copyrighted content, and then gives the rights owner the choice of profiting from that(by showing ads before/during viewing those videos) and explictly tags who owns the content. That makes the content piracy more difficult. 
4. Thanks to the telecom scam in India, hard landing fears in China and other emerging economies, capex on telecom/broadband is reducing and therefore the ease of piracy(always on high speed broadbands DO make it faster to access that content) falls.

 As I'd suggested in that post, free content seems the only way out, and to ensure Wikipedia like commons grow, we should prime the well by giving back to those commons.

ICICI's incredible customer analytics even on single non ICICI ATM usage!

Yesterday evening, I used a non ICICI ATM near IIM Ahmedabad. Imagine my surprise when I received an email from ICICI(mass mailer) with the attention grabbing header 'We have missed you'! I thought this related to my demat account but on probing further, realized that related to my use of the ATM card! Below is an extract from that mailer.I must say that this is remarkable customer analytics and does show why ICICI is still the technology leader among Indian banks. I have routinely used non ICICI ATMs and never received such emails till yesterday, so maybe this is a new feature on their part.Whatever the reason, such prompt response deserves credit. If it was toll free SMS,  then maybe I would use it but otherwise given that I do not exhaust the 5 free transactions/month, this is perhaps a failed effort on me.
Dear Customer,

We’ve missed you! We understand that you felt the need to use a Non-ICICI Bank ATM recently.

We would like to inform you that transacting at your ICICI Bank ATM is not only safe and fast, but it also comes along with various benefits...To locate your nearest ICICI Bank ATM, simply SMS ATM to 5676766.

Why is your ICICI Bank ATM safe and fast?

	Dip Card facility: Most ICICI Bank ATMs are equipped with a Dip Card Reader - a feature that enables you to transact safely while the card stays in your hand.
	Ultra Fast Cash facility: This feature, available at all ICICI Bank ATMs helps you complete the transaction in less than half-a-minute.
	Feel at home : Any disputes for queries will be taken care of by ICICI Bank. No need to deal with other banks to resolve your disputes.

Getting the most out of conferences-without actually attending them!

Today, I was scheduled to attend a conference at Ahmedabad Management Association(just down the road from IIM-A), but some pressing commitments came in the way. However, I still wanted to learn about the topics in question. So I merely Googled the titles of the speaker sessions, and to my surprise, hundreds of search results(some very relevant) popped out from the wordwork. Now, I'm sure that reading on my own would take more time than attending the session. But for a birds eye view of the content, one just needs to know the search strings, and the program agenda provides this. For new areas(new to you), this method of learning could be especially useful, as it helps one focus on the relevant and somewhat controversial areas(if NOT controversial then usually no conference would feature that!).

Other ways to learn from conferences without attending them are

1. Request/Purchase/Download the presentation material/handouts:-This is often sold at a nominal price on CD/bound value(as done for AMA sessions) or uploaded freely on the website as done for WIRC-ICAI. 
2. Ask a friend/attendee to take notes and share them:-This is another mutually beneficial way. The person taking notes retains them in memory for a longer time, while the person with whom it is shared(in this case YOU!) gets the flavour of the session. 

BT investor presentations-a study in the art of spin and euphemisms

As I read through BT Plcs investor presentations and conference call transcripts, I was struck by the extent of 'spin' and euphemisms. Some examples are

1. Referring to cost reduction/restructuring as cost transformation
2. Referring to staff retrenchment payment as leaver costs
3. Exceptional gains/costs as specific items
4. Economic downturn as economic headwinds

To be fair, they are probably just trying to make it easier to understand. But it seems to me as sugar coating, something more expected from a USA company than a UK one. Still, the company IS transparent in other ways. For instance, during the Q2'11 conference call, it highlighted that
Revenue in Global Services was up on an underlying basis excluding transit, up 3%. A big part of that  however, whilst it was on any metric a significantly improved  performance, was due to a milestone recognition which came  forward from Q3 into Q2. Basically we delivered really well and we  accelerated the recognition into Q2. That was worth £60m. Excluding  that milestone basically, revenue was flat. As I said, that's quite an improved performance from previous quarters, but it did come out of Q3.
Very few CEOs would prominently highlight that(instead leaving it to the analysts to pick it out from the notes or speculate), and that took up my respect for them by a few notches. Still, their surprising choice of vocabulary does not change with this.

We overrate 'new' things in the wrong ways

After the death of Steve Jobs, I've lost count of the leaders/writers who praised his innovative nature. In the Indian context, while doing that, some also trashed the innovativeness of us Indians. If we define innovativeness to mean churning our new products/variants frequently, then yes one may not be innovative. But the way I understand innovation, is merely an improved way of doing things(improved by resource consumption/functionality) and not necessarily just design/art work. And what may be innovation for the early adopter, may not be so for Joe Citizen, whose needs are limited. For example. one may not need to throw out the old smart phone for the iphone4, if that does not give any more relevant functions for that user. Of course, being seen with that brand is a different psychological  push which I don't address

There is even a logical fallacy around this(http://www.nizkor.org/features/fallacies/appeal-to-novelty.html), titled appeal to novelty, which is explained well below.

Appeal to Novelty is a fallacy that occurs when it is assumed that something is better or correct simply because it is new. This sort of "reasoning" has the following form:

1. X is new.
2. Therefore X is correct or better.

This sort of "reasoning" is fallacious because the novelty or newness of something does not automatically make it correct or better than something older.This sort of "reasoning" is appealing for many reasons. First, "western culture" includes a very powerful committment to the notion that new things must be better than old things. Second, the notion of progress (which seems to have come, in part, from the notion of evolution) implies that newer things will be superior to older things. Third, media advertising often sends the message that newer must be better. Because of these three factors (and others) people often accept that a new thing (idea, product, concept, etc.) must be better because it is new. Hence, Novelty is a somewhat common fallacy, escpecially in advertising.The age of thing does not, in general, have any bearing on its quality or correctness (in this context), except of course food quality etc.

In my view, in fields like economics, law and philosophy, old is gold for sure! After all, people read classics for a reason, and not just to give publishers money. They are rich of ideas and philosophy, and if anything is eternal, that is. Given that the focus today is on self managing teams and human beings(as opposed to technology only), the old lessons assume much more importance. Of course, we should not swing to the other extreme and accept 'time tested' things due to Appeal To Tradition. Blindly doing that would discount survivorship bias, institutionalized prejudice etc. For instance, anyone using Tintin comics to support racism  is committing this fallacy.

What should an university be like-lessons from John Henry Newman

The classics often have great lessons for today's situations, because they oft contain eternal truths uninfluenced by the mass media/indoctrination of today. After reading the book The Idea of a University Defined and Illustrated: In Nine Discourses Delivered to the Catholics of Dublin (http://www.gutenberg.org/files/24526/24526-h/24526-h.html),  I felt some of the ideas deserved a wider audience especially given the debate about how higher education should be/education bubble etc. I tried to do justice to the main ideas but given it was written in old English and digressed a lot on the Church-University relationship, it may not be 100% faithful to the old text. 

1. Teaching Focused:- University is a place of teaching universal knowledge. This implies that its object is diffusion and extension of knowledge rather than the advancement. If its object were scientific and philosophical discovery, I do not see why a University should have students..
2.  Separate research and teaching:-To discover and to teach are distinct functions; they are also distinct gifts, and are not commonly found united in the same person. He, too, who spends his day in dispensing his existing knowledge to all comers is unlikely to have either leisure or energy to acquire new. The common sense of mankind has associated the search after truth with seclusion and quiet. The greatest thinkers have been too intent on their subject to admit of interruption; they have been men of absent minds and idosyncratic habits, and have, more or less, shunned the lecture room and the public school. Examples given are Pythagoras, Thales, Plato ,Aristotle ,Friar Bacon,Newton etc. There were  great examples the other way, perhaps Socrates, certainly Lord Bacon; still I think it must be allowed on the whole that, while teaching involves external engagements, the natural home for experiment and speculation is retirement. 
3. The tendency for professional overeach/rent seeking Every professional man has rightly a zeal for his profession, and he would not do his duty towards it without that zeal. And that zeal soon becomes exclusive, or rather necessarily involves a sort of exclusiveness. A zealous professional man soon comes to think that his profession is all in all, and that the world would not go on without it. This collision, this desire on the part of every profession to be supreme,—this necessary, though reluctant, subordination of the one to the other,—is a process ever going on, ever acted out before our eyes. The civilian is in rivalry with the soldier, the soldier with the civilian. The diplomatist, the lawyer, the political economist, the merchant, each wishes to usurp the powers of the state, and to mould society upon the principles of his own pursuit.I remark, moreover, that these various usurpations are frequently made in perfectly good faith. There is no intention of encroachment on the part of the encroachers. 
4. The danger of  too much liberal arts education:-Nothing is more common in an age like this, when books abound, than to fancy that the gratification of a love of reading is real study. Some have a taste for reading, but in whom it is little more than the result of mental restlessness and curiosity. Such minds cannot fix their gaze on one object for two seconds together; the very impulse which leads them to read at all, leads them to read on, and never to stay or hang over any one idea. The pleasurable excitement of reading what is new is their motive principle; and the imagination that they are doing something, and the boyish vanity which accompanies it, are their reward. Such youths often profess to like poetry, or to like history or biography; they are fond of lectures on certain of the physical sciences; or they may possibly have a real and true taste for natural history or other cognate subjects;—and so far they may be regarded with satisfaction; but on the other hand they profess that they do not like logic, they do not like algebra, they have no taste for mathematics; which only means that they do not like application, they do not like attention, they shrink from the effort and lab-our of thinking, and the process of true intellectual gymnastics. The consequence will be that, when they grow up, they may, if it so happen, be agreeable in conversation, they may be well informed in this or that department of knowledge, they may be what is called literary; but they will have no consistency, steadiness, or perseverance; they will not be able to make a telling speech, or to write a good letter, or to fling in debate a smart antagonist, unless so far as, now and then, mother-wit supplies a sudden capacity, which cannot be ordinarily counted on. They cannot state an argument or a question, or take a clear survey of a whole transaction, or give sensible and appropriate advice under difficulties, or do any of those things which inspire confidence and gain influence, which raise a man in life, and make him useful to his religion or his country. 
5. Need to study theology:-When was the world without it? Have the systems of Atheism or Pantheism, as sciences, prevailed in the literature of nations, or received a formation or attained a completeness such as Monotheism? We find it in old Greece, and even in Rome, as well as in Judea and the East. We find it in popular literature, in philosophy, in poetry, as a positive and settled teaching, differing not at all in the appearance it presents, whether in Protestant England, or in schismatical Russia, or in the Mahometan populations, or in the Catholic Church. If ever there was a subject of thought, which had earned by prescription to be received among the studies of a University, and which could not be rejected except on the score of convicted imposture, as astrology or alchemy; if there be a science anywhere, which at least could claim not to be ignored, but to be entertained, and either distinctly accepted or  distinctly reprobated, or rather, which cannot be passed over in a scheme of universal instruction, without involving a positive denial of its truth, it is this ancient, this far-spreading philosophy.
6. The need for active reading/learning We must carefully distinguish,  between the mere diversion of the mind and its real education. Supposing, for instance, I am tempted to go into some society which will do me harm, and supposing, instead, I fall asleep in my chair, and so let the time pass by. The opportune sleep has but removed the temptation for this once. It has not made me better; for I have not been shielded from temptation by any act of my own, but I was passive under an accident, for such I may call sleep. And so in like manner, if I hear a lecture indolently and passively, I cannot indeed be elsewhere while I am here hearing it,—but it produces no positive effect on my mind,—it does not tend to create any power in my breast capable of resisting temptation by its own vigour, should temptation come a second time. A man may hear a thousand lectures, and read a thousand volumes, and be at the end of the process very much where he was, as regards knowledge. Something more than merely admitting it in a negative way into the mind is necessary, if it is to remain there. It must not be passively received, but actually and actively entered into, embraced, mastered. The mind must go half-way to meet what comes to it from without. You have come, not merely to be taught, but to learn. You have come to exert your minds. You have come to make what you hear your own, by putting out your hand, as it were, to grasp it and appropriate it. 
   
   
   
   
   
   
   
   
   
   

Why we need border-less interdisciplinary thinking

In a speech at IIM Calcutta, Dr Mashlekar(ex DG, CSIR) made some interesting points that triggered some further thinking. While I reproduce those salient points below for the sake of brevity, I would suggest reading that entire speech in full there(http://nif.org.in/Mahatma_Gandhi_Memorial_Oration). His points were

1.  Explosive advances in adjacent sciences are shaping up the future of core disciplines. New paradigms of “seamless sciences” and even “seamless engineering” are emerging. 
2. We work and think in isolation. The examples are
•  Mixing is a challenge in diverse disciplines. In the case of astrophysics, one is concerned about the mixing of the interior of stars. In mechanical engineering, it is combustion. In environmental sciences, we are concerned with mixing and dispersion in the atmosphere. Oceanography deals with mixing and dispersion in oceans. Chemical engineers are concerned with mixing in chemical reactors. Physiologists look at mixing in blood vessels. Bioengineers are interested in mixing & aeration in bioreactors. Geologists deal with mixing in the mantle of the earth. All these diverse mixing phenomena occur on diverse time and length scales, differing by several orders of magnitude. However, these disciplines rarely benefit from each other, and discovery & rediscovery of concepts and ideas is common place.
• Scientists from different disciplines have turned to the study of the human mind.  These days one meets engineers who work on speech perception, biologists who investigate the mental representation of spatial relations, and physicists who want to understand consciousness. And, of course, psychologists continue to study perception, memory, thought and action. However, I have not seen a meeting of these computer scientists, linguists, neurophysiologists, anthropologists, engineers, and so on! Understanding of mind cannot be made possible without meeting of minds of all of them.
3. We need to ensure that our mind moves through diverse disciplines in a borderless way. The ability to correlate and link the non-obvious can lead to major breakthroughs. In the management context, an example is creation of  flexible management structures by using the concepts of self-organisation in chemical and biological systems- van der Waals model of Management

Prof JR Varma made a similar point in his Mar-11 IIM Ahmedabad working paper on improving MBA(Finance) education, where he sought the integration of conventional investing theory with neurology, economic history and other relevant disciplines. 

And in fact, the oft-cited fact of 'MBA broadening one's horizons/perspectives' can be attributed to the exposure to cross disciplinary functions and hearing those diverse perspectives during class discussions. But these are incremental innovations so as to say. 

The biomimicry(adapting insights from Nature to create business models) is in its infancy in India, with a few salient exceptions like Prof Anil Gupta, who devised and named an entire organization inspired by the honeybee behaviour. And in the field of organizational dynamics, this has ample potential, given that there is ample debate today about the role of and purpose for existence of corporates.

How to ask better questions for an email interview

Recently, as part of my responsibilities of editing my club's finance magazine, I've had to write questions for sending to very busy people, who'll respond at their leisure. Now, that exercise is easier said that done. In a live interview, one can use the feedback to adjust the pace/nature of questions, or even improvise on the spot. But in a long distance interview, that is just not possible. You are stuck with the questions you sent. And godforbid, if they are cliched/very general/beyond the person's specialization, then the person may even decline to answer them. Therefore, the exercise is tricky and needs thought. Some pointers which I've found useful are

1. Understand your theme:-This is quite obvious but in case you were not involved in the brain storming sessions which led to the theme/concept behind the publication, then get a clear understanding of it from someone involved, so that you do not deviate too much
2. Understand WHY you asked that person/decide what you would like from him:-Some people are invited for their knowledge, others for their brands and yet others because they are easily available. Decide which category your interviewee is in, that will inform your other decisions.
3. Google is your saviour:-One has NO excuse to remain ignorant about people in this digital era..
4. But try not to duplicate content of publicly available data:-Remember you are not a reporter/friendly analyst just interested in filling space. Remember that you want good original content from that person. So try not to be too close to earlier interviews.
5. People like answering about their passions:-Whether it be distressed debt, economic cycles, corporate governance etc, people are usually passionate about one or more work related aspects(assuming we can't ask about hobbies in a serious publication). Try to find that
6. For academics, read their latest research/course outlines:-Academics's interests can be gauged by their research publications(remember these take months/years to create!) and by what they teach(assuming they have a fair level of choice/discretion in that). So questioning in those areas would probably produce a very good answer.
7. For those in industry, read up on their company/sector: Remember the person is daily focusing on that sector/company and literally lives it. So asking related to that, would ensure instant recognition and act as warm up for next. The research would also supply context to explain many of the answers.
8. Try asking open ended questions instead of those to which you know the answer:These are the most difficult questions but the most rewarding. Prefer 'what'/'why' over 'how'.
9. Try to sequence the questions in a logical flow:-That makes it easier for the person to get a birdseyeview of the questions, and to structure the answers accordingly

Does it make sense to self publish on Kindle Store?

 Amazon has recently been making waves by signing up 150 authors in the last quarter, to write books on its platform. Naturally, the mainstream publishers are unhappy about Amazon's ambition to transition from retailer to publisher, but for the author, this represents wider choice. Now, even before Amazon entered, it offered authors a 70% royalty, with some caveats like $0.15/MB charge for electronic delivery, 30% IRS withholding tax, and 70% only on few areas(else 35% w/o the delivery fee)! So I can my own analysis of the 70% scheme, assuming sales are in the eligible countries at different list prices, and found that to get that $100 royalty check(threshold to issue check is $100), one needs to sell 74 books priced at $2.99. Considering that a print run of 10,000 copies is considered good for a book on which an author may get say Rs 20(max)=>$0.4/copy, those figures are quite good. Lets see if I use that platform someday as a test drive of my writing talent

Analysis of Amazon 70% royalty scheme
List price($)	0.99	1.49	1.99	2.49	2.99
Royalty @ 70%	0.69	1.04	1.39	1.74	2.09
Data Cost @ $0.15/MB	-0.15	-0.15	-0.15	-0.15	-0.15
Net From Amazon	0.54	0.89	1.24	1.59	1.94
Net After 30% witholding tax	0.38	0.63	0.87	1.12	1.36
Sell these many for $100 check	264	160	115	90	74
Net Realization to author(% of list price)	38%	42%	44%	45%	45%

Tips on how to analyze economic time series data

Be it stock prices, index valuations, budgetary spending, deficits, exchange rates; virtually any significant economic data is analyzed using time series data. In these days of Excel 2007, it is a great temptation to just plug the numbers in, select a graph and use it for whatever purpose one wants. But such a simplistic approach would be doing an injustice to the analysis, and also would reduce the chance that the data is analyzed, understood and appreciated in the way it should be. So what to do? Based on my not insignificant experience of this, I add some guidelines below. I don't claim this to be an exhaustive list, and comments are welcome

• Adjust for Inflation:-Specially for monetary values and interest rates, this is crucial. And sometimes it gives very interesting insights. For example, the real interest rates in India have been negative for quite some time, and that makes us appreciate why the RBI is chary about reducing it.
• Try per capital/per unit numbers:-It allows for adjustments for population/volume growth, and yields interesting results. Thanks to its population, India lags behind on such data
• Put the numbers in context:-Expressing as market share, budget share, relative data etc puts the numbers in context, like in per capita.
• Use Indexing if possible:-That makes the growth trend easier to understand
• Use secondary axis if useful:-For example, you want to show that FDI inflows fell when the exchange rate appreciated. Instead of using 2 graphs, you can use 'Plot on Secondary Axis' option in Excel, and plot them on the same graph
• Try to cover an entire economic cycle:-Otherwise, the result may just be because we are in a boom or a burst. This is true especially for stock price/valuation data
• More the better:-We often tend to forget history, and that is a reason why bubbles repeat, whether it be across countries or across time periods. Hence, a longer data set with more sources, helps to triangulate trends and have a broader perspective. 
• But be careful of underlying structural changes:-With Excel 2007, one can use callout and other options to depict the reasons for inflection points. Use those with care where warranted. For example, the 1991 liberalization would have lead to inflection point in most Indian data.
• Strike a balance between aggregates and subclasses:-Given the high Gini Index/Digital divide etc, one should be careful about what the data signifies for India as a whole. Often, the divide between states/castes/gender/urban-rural population parameters, would be large enough to vitiate any extrapolating of the conclusions. For example, India telecom boom should be read in the context of rural teledensity just being 32%(versus urban of 140% or so).
• Focus on outcomes not just on spending:- Especially in case of data on spending, avoid the tendency to mistake spending for outcomes. Try matching the spending to the outcome(say education and pass rates, health spend and mortality rate/life expectancy). For share price data, that may mean investor participation, retail folios etc

Prof Anil Gupta's ideas on pushing the frontier of education

I had blogged earlier about Prof Anil Gupta's innovative approach(http://iimaexperiences.blogspot.com/2011/10/prof-anil-gupta.html). As his electives on intellectual property and sustainable agriculture draw to and end, his approach is even more in evidence. For example

• Crowdsourcing of exams:-He invited 3 questions from each student, stating that he may modify and ask these good questions in the exams. He said that since his purpose was to increase the learning(not to assign a letter grade), he would be more than happy 
• Focus on learning by doing:-He gives higher grades for projects/reports which can be built into something rather than gather dust somewhere. For example, studying local waste management or making a small change locally, is valued highly by him.  
• Building on ideas built earlier:-He lamented that there was no repository of projects, and that each batch may end up reinventing the wheel without making any institutional progress towards knowledge. And to counter the concern of copying, he said that peer pressure/fear of being called out in public would stop people from copying, and also ensure that the topics are reasonably original. Actually, this is quite an obvious idea, but not done so far anywhere. He suggests having it on the intranet, and later on the internet for all and sundry. 
• Feedback on projects:-He uploads the project proposals on the blog, and gives credit for students giving useful projects on each other's projects.
• Student presentations given importance to:Despite his huge intellectual stature, he pays deep attention to student presentations and is free with compliments and suggestions. And to ensure that others pay attention to that, he sets questions based on the class presentations etc. 
• No attendance sheet:-This is rare, but his logic seems(he has not explained it explicitly) is that since the outputs are graded(report, presentation), monitoring inputs are not that essential.

Not documented equals not done-leads to great quality or checkbox mentality?

While reading professional standards, it struck me that the basic premise of documenting a professional services engagement is that in case the professional is sued for malpractice, the working papers will prove the extent of, and diligence put in, the work done. Of course, it has positive uses also such as helping plan the assignment, building the knowledge bank for recurring assignments, and infusing a general discipline into the whole process. Also, there is always merit in having a checklist to avoid making mistakes during complex processes. Hence, I cannot reasonably argue the merits of following a checklist/process. The only issue is whether the person performing the assignment, will consider the checklist/standard as the end of his responsibility, given the protection from negligence lawsuits filed by disgruntled clients.

So now we are at a corundum. The protection from negligence lawsuits is the trigger to motivate professions to comply with service quality standards. But senior professionals themselves write the standards, so chances are they would incorporate recent memory, and rarely include future looking requirements identified from academic research. For example, India is going through several paradigm shifts in terms of introducing IFRS/XBRL/e-filing. But while ICAI has been quick to clamour for new professional work in these areas, it has been slower to issue fresh/modified guidance. And this is not a new phenomenon. New standards are often issued after the horse has bolted from the stable(viz scams/issues/controversies). For instance, while complex financial instruments valuation made the headlines in 2008, their formal auditing guidelines were published only in Oct-11. So for mistakes done before that, the auditor could claim protection. And some standards have been issued only when the ICAI has been dragged kicking and screaming. For example,the reporting standard on segment reporting/cash flow statement needed SEBI to step in, and cut the red tape.

So how do we motivate professionals to go beyond the minimal standards? There could be a best practices repository, and the professional submitting the most/top rated ones could be awarded. Or there could be awards for uncovering the highest amount of scam, mistakes, issues(subject to client confidentiality agreements) etc. Also, the data base could have a weightage while selecting auditors for key assignments and complex work. Lets see if this idea sees the light of day in my life!

Burning issues remain that way because people don't delve into data

Recently, I presented a business plan to set up a chain of rural warehouses for storing post harvest produce. Amongst the 4 member jury, 2 of them had no prior experience in the agriculture sector(investing/operations) etc, and this showed in the slightly naive questions they asked. While my team's rigorous ground work helped, it opened my eyes to the fact that people often do not seek out publicly available data on the internet, and prefer to rely on the sensational and biased media reporting. This is why several burning issues/misconceptions prevail on the net. Some of them are below

• Human rights violations by police/armed forces:-Activists are prompt to critique the 'rampant' human rights violations under AFSPA and other laws, but forget that the members of police/army are often drawn from the same poor classes whom they oppress. Also, the numbers are not analyzed(how many incidents vs overall scale of violence) etc
• Agricultural input subsidy:-Lobbies commission exquisite reports about how agriculture needs subsidized electricity, seeds, fertilizer, higher MSP, cheap loans etc. What is not highlighted is who gets the lion's share of these(not small farmers), and whether these are effective or not(Prof Anil Gupta cites evidence that non sustainable farming is costly AND a failure).
• Actual volumes/outcomes:-India has good patent laws, but very few design registrations(even though at Rs 100/design it is the cheapest IP). Similarly, the number of beneficiaries of certain schemes are quite low. It is easy to understand spending trends, but not that easy to search for outcomes. But how many of us bother to do that?
•  Election result analysis:-With a wealth of data about voter turnouts, victory margins, constituency trends, election expenditure etc, there is scope for an entire website devoted to analyzing in an user friendly way(dashboards, drill down, export to Excel) election data. But this is not done, and often the only time it happens is the day post elections. Thankfully, papers like TOI are giving this wide coverage and hopefully election analysis will soon go way past the number of seats won/vote share.
• Ticking timebombs like budget deficits:-As an equity research analyst would know under the mosaic theory, weaving together numbers from different perspectives gives a good view to avoid '7 wise men of Hindustan' type of tunnel vision. Unfortunately, only consultants/investment bankers do such narratives, and in the public discourse space, this is not done. 
• Reservations:-Few issues match this in the public divide, vitiated debate and lack of data/research. there is no way to settle this issue one way or the other. But unfortunately, worthwhile data/stats are tucked away in obscure sociological research. and are not part of the public debate sphere. 

The Way forward:-Google Scholar gives access to otherwise unreachable data, and the same is true for Wikileaks/Google Public Data explorer. It is now the public duty to delve into data, atleast for data one is interested in, and then share the results with the public via open source platforms like updating Wikipedia entries, editing Wikibooks or publishing on blogs. 

Knowledge-the major new factor of production

Knowledge is power-but only when applied and commercialized. In the minds of some, knowledge is something which is taught, discussed, published and understood-with the burden of its application passed on to those in the sordid 'industry'. But they forget that one cannot separate knowledge and its application, because what use is knowledge which cannot be applied?

History is replete with examples of wars won by superb battle strategy/tactics(Genghis Khan, Alexander's win, USA civil wars, British East India conquest etc) where smart warriors used their minds to win battles over much larger foes). In the retail industry, WalMart used its information centres and data analytics to introduce JIT/improve supplier coordination etc to improve sales and profits, while actually shrinking the need for inventory. That is a great example of replacing physical assets('inventory') with information(via RFID/barcoded inventory). An interesting example is the online retail of goods, music, books, insurance search, banking etc which have replaced the need for brick and mortar store. Yes, they do depend on a physical logistics backbone for execution, but that is much smaller than the cumulative assets they replaced.  The low carbon movement has led to a spurt in energy efficiency, green supply chain planning etc which drastically lowers the resource requirement. Even in the military era, the use of nukes as a deterrent may reduce the need/size of standing armies in future. This is true also given the new dangers of cyberwar, where a handful of hackers can bring down entire countries on their knees.

Of course, the limit to this is that knowledge is always a complementary factor of production, which would always need some other factor. That said, applied knowledge can cut resource use substantially. And that is why it is necessary to increase interest, improve curriculum quality etc of the STEM subjects(Science Technology Engineering Medicine)-since the fruits of these can really help the economy in future. But non STEM graduates also should not shirk their responsibility to think innovatively on how to replace assets with knowledge. If that leads to more virtualization, so be it.

Are shareholder value maximizing managers like Valmiki of Mahabharata?

Those who have read the Mahabharata would recognize what I'm alluding it. For the others, it is suffice to explain that saint Valmiki was originally a highway robber, who robbed others for a living. Once, he tried to rob a wise person who asked him about whom was he doing all that for. When the robber replied that he was doing this to support his family, the wise person asked him to return home and confirm with them whether they endorsed his actions or not. Hea was quite confident that the very people he was doing it for, would endorse and support his actions. To his shock, his wife and children(for whom he was robbing others) said that they did not want his sins to rub on to them. They felt that a basic living was his duty to provide, but they certainly did not want to share in his sins. Shocked by this, the robber saw his error and then reformed, to become the renowed saint Valmiki.

So what is the point of this parable? Under the garb of shareholder value maximization, other stakeholders are often squeezed. Suppliers are compelled to sell at unremunerative prices and often paid late; employees are underpaid and overworked; society is denuded of clean air/water and loaded with congestion/pollution; Governments are deprived of their due tax revenues etc. But it is often argued that this is what shareholders want! But in the absence of direct democracy for routine issues, it is not possible to ask them. But if companies did ask their shareholders, I'm sure their response would be similar to that of Valmiki's family. After all, psychological studies show that humans are not 100% rational, and are often suckers for a sob story.

Now, some may point to the 'Knowing Doing' gap i,e the importance of looking at people's actions instead of their professed sentiments. There is some truth in this because people are aware of the causes and ill effects of smoking, obesity and a host of other vices. Still, they remain addicted to it OR inertia stops them from changing habits. Similarly, in the investing context, though many investors especially the institutional ones have learnt the importance of inclusive corporate governance etc, it is doubtful that they give a damm, With the exception of Norway SWF, Calpers and a handful of other investors; few investors have behaved like Valmiki's family(censure and repudiation) when confronted with evidence of corporate wrong doing. The market capitalization may suffer in fear of economic penalties but not otherwise. So the managers may not be wrong, when they feel that they have the support of their shareholder family, in whatever they do.

The online forum users who get my hackles up.

Be it Rediff/Facebook pages/online job postings etc, one invariably sees a lot of spam and clutter. This is because of the people below.

• The Q jumper:-This person does not bother to use the 'report abuse'/'customer service ticket' options but straight away plugs in a forum message
• The spammer:-This person advertises their product/services ranging from Nigerian letter fraud to work from home to online retail for certain err..drugs.
• The English challenged:-This person posts rants in broken English. Nothing wrong in that per se, just that I dislike it.
• The Agenda pusher:-This person has a rant against a person(say AzimPremji/Sonia Gandhi/Congress/missionaries) and whatever be the topic, somehow finds a way to insert their views into the fray and create a mess. 
• The CAPSLOCKER:-This person imagines that by  writing everything in caps, they will somehow get more attention. Nothing can be farther than the truth.
• The hoarder:-When a kind soul states that s(he) will email/share a resource with all those who email them, the hoarder is too lazy to send an email, but instead decides to
• The potential social engineering victim:-This person gives their personal details like name/address/contact details and even account numbers, hoping that the customer care person will take care of it OR that the

The Vocabulary premium-part 2

The limits of my language are the limits of my world-Ludwig Wittgenstein(Philosopher)
 
Earlier, I blogged on the importance of vocabulary(http://andy161.blogspot.com/2011/09/vocabulary-premium-how-digital-words.html). This post takes those sentiments forward, as I take a break from completing those umpteen assignments in the twilight days at IIM-A.

As a kid, my parents and teachers emphasized the importance of having a good vocabulary. What I am today, is significantly attributable to my reading habit, which stoked a virtuous cycle of curiosity driven reading. Yes, I did miss out on watching the TV serials/comics and other junk, but I think it was a good bargain. Of course, for some periods in between, I did get addicted to fiction, which then became a hobby. Thankfully, that hobby did not break the mental concentration and interest necessary to complete a non fiction book. I know people who can spend the night reading the latest best seller, but get bored of reading a non fiction book after just 30min. And that is NOT because of the dry writing style.

While any kind of reading will improve vocabulary, some kinds of reading are better than others for that purpose. Reading biographies, classics and the kind of stuff which could be mandatory school readings; not only improve vocabulary but are also time tested ways of boosting critical thinking and analytical skills. Therefore, do not think that reading that pulp fiction bestseller will confer that vocabulary premium, but do widen your reading,