When to buy? When to sell? When to divorce?

BEIJING (Reuters) - Fears of a prolonged recession in China have triggered a sharp increase in divorce inquiries addressed to lawyers and financial advisers, state media reported on Monday, with timing a key issue.

Wealthy spouses were keen to strike a deal while asset values were low, the China Daily quoted the director of the China Divorce Service Centre, Shu Xin, as saying.

"While facing tough financial times is not usually the main reason couples split, it can serve as the last straw for already strained marriages or add new concerns to divorces under way," the newspaper said, quoting "marriage advisers".

Ming Li, who works for China's first marriage and finance firm, Shanghai Weiqing, said: "Many questions are about how to avoid paying off debts after the divorce and the number of such telephone inquiries has increased from 200 to 300 in recent months."

But China University of Political Science and Law professor Wu Changzhen said it may be too early to know the impact of the financial crisis on divorce rates.

"It seems the rates may have dropped since the downturn, because divorces are expensive," he was quoted as saying.

"It has become extremely difficult for couples wanting to divorce to sell their homes at a reasonable price and to maintain two separate households."

According to a separate story carried on the China News Service website (www.chinanews.com), the number of people seeking divorce advice increased by 30 percent in the second half of this year.

Most of the inquiries were about how to protect property, it said.

There were 2.1 million divorces in China in 2007, nearly seven times the figure of 1980 when nationwide economic reforms were launched, the China Daily quoted the Ministry of Civil Affairs as saying.

Hindu Rituals and Routines Why do we follow them?

Introduction :


Hinduism is not a religion but a way of life. Unlike other religions, Hindu dharma has many specialties. This is not known as a religion, it is known as the dharma; Sanaathana Dharma. Sanaathana means, according to Bhagavath Geetha, which cannot be destroyed by fire, weapons, water, air, and which is present in all living and non living being. Dharma means, the way of life which is the ‘total of all aachaaraas or customs and rituals’.
Sanaathana Dharma has its foundation on scientific spirituality. In the entire ancient Hindu literature we can see that science and spirituality are integrated. It is mentioned in the 40th chapter of the Yajurveda known as Eesaavaasya Upanishad that use scientific knowledge for solving problems in our life and use the spiritual knowledge for attaining immortality through philosophical outlook.
Remember that in each and every aachaaraa there will be a component of spirituality in it. Without spirituality, nothing exists in Sanaathana dharma. Generally everyone bear a wrong impression that this spirituality is religion. Spirituality is different in Hindu dharma. Here the question of religion does not exist at all, because Hindu dharma was not created by an individual, prophet or an incarnation. Spirituality is a part of every Hindu custom in the normal life of a Hindu.
Aachaaraas are to be followed based on their merits available from the self experience; you need not blindly follow a teacher or someone who gives advice without reasoning. All these aachaaraas are mentioned for the prosperity of the human beings and it should be the prime focus for practicing the Hindu aachaaraas.
Achaaryaath paadam aadatthe
paadam sishya swamedhayaa
paadam sa brahmachaaribhya
sesham kaala kramena cha
This is an important advice given in smruthies. It means a person can get only one quarter of knowledge from Achaarya - the teacher, another quarter by analyzing self, one quarter by discussing with others and the last quarter during the process of living by method addition, deletion, correction, and modification of already known aachaaraas or new aachaaraas.
Aachaaraath labhathe hi ayu:
aachaaraath dhanamakshayam
aachaaraath labhathe suprajaa:
aachaaro ahanthya lakshanam
Aachaaraas are followed for the psychological and physiological health and long life; Aachaaraas are followed for prosperity and wealth; Aachaaraas are followed for strong family and social bondage and following the Aachaaraas give a fine personality, dharmic outlook and vision, says our dharmasaastra.
In India everyone followed Aachaaraas for the above mentioned psychological, physiological, family relation, social benefits and national integration based benefits. It is your right and duty to understand scientifically, rationally and logically the meaning of each and every Aachaaraas and follow the same in your life systematically.


1. Why do we light a lamp?

In almost every Indian home a lamp is lit daily before the altar of the Lord. In some houses it is lit at dawn, in some, twice a day – at dawn and dusk – and in a few it is maintained continuously - Akhanda Deepa. All auspicious functions commence with the lighting of the lamp, which is often maintained right through the occasion.
Light symbolizes knowledge, and darkness - ignorance. The Lord is the "Knowledge Principle" (Chaitanya) who is the source, the enlivener and the illuminator of all knowledge. Hence light is worshiped as the Lord himself.
Knowledge removes ignorance just as light removes darkness. Also knowledge is a lasting inner wealth by which all outer achievement can be accomplished. Hence we light the lamp to bow down to knowledge as the greatest of all forms of wealth.
Why not light a bulb or tube light? That too would remove darkness. But the traditional oil lamp has a further spiritual significance. The oil or ghee in the lamp symbolizes our vaasanas or negative tendencies and the wick, the ego. When lit by spiritual knowledge, the vaasanas get slowly exhausted and the ego too finally perishes. The flame of a lamp always burns upwards. Similarly we should acquire such knowledge as to take us towards higher ideals.
Whilst lighting the lamp we thus pray:
Deepajyothi parabrahma
Deepa sarva tamopahaha
Deepena saadhyate saram
Sandhyaa deepo namostute
I prostrate to the dawn/dusk lamp; whose light is the Knowledge Principle (the Supreme Lord), which removes the darkness of ignorance and by which all can be achieved in life.

2. Why do we have a prayer room?

Most Indian homes have a prayer room or altar. A lamp is lit and the Lord worshipped each day. Other spiritual practices like japa - repetition of the Lord’s name, meditation, paaraayana - reading of the scriptures, prayers, and devotional singing etc are also done here. Special worship is done on auspicious occasions like birthdays, anniversaries, festivals and the like. Each member of the family - young or old - communes with and worships the Divine here.
The Lord is the entire creation. He is therefore the true owner of the house we live in too. The prayer room is the Master room of the house. We are the earthly occupants of His property. This notion rids us of false pride and possessiveness.
The ideal attitude to take is to regard the Lord as the true owner of our homes and us as caretakers of His home. But if that is rather difficult, we could at least think of Him as a very welcome guest. Just as we would house an important guest in the best comfort, so too we felicitate the Lord’s presence in our homes by having a prayer room or altar, which is, at all times, kept clean and well-decorated.
Also the Lord is all pervading. To remind us that He resides in our homes with us, we have prayer rooms. Without the grace of the Lord, no task can be successfully or easily accomplished. We invoke His grace by communing with Him in the prayer Each room in a house is dedicated to a specific function like the bedroom for resting, the drawing room to receive guests, the kitchen for cooking etc. The furniture, decor and the atmosphere of each room are made conducive to the purpose it serves. So too for the purpose of meditation, worship and prayer, we should have a conducive atmosphere - hence the need for a prayer room.
Sacred thoughts and sound vibrations pervade the place and influence the minds of those who spend time there. Spiritual thoughts and vibrations accumulated through regular meditation, worship and chanting done there pervade the prayer room. Even when we are tired or agitated, by just sitting in the prayer room for a while, we feel calm, rejuvenated and spiritually uplifted.room each day and on special occasions.
Each room in a house is dedicated to a specific function like the bedroom for resting, the drawing room to receive guests, the kitchen for cooking etc. The furniture, decor and the atmosphere of each room are made conducive to the purpose it serves. So too for the purpose of meditation, worship and prayer, we should have a conducive atmosphere - hence the need for a prayer room.
Sacred thoughts and sound vibrations pervade the place and influence the minds of those who spend time there. Spiritual thoughts and vibrations accumulated through regular meditation, worship and chanting done there pervade the prayer room. Even when we are tired or agitated, by just sitting in the prayer room for a while, we feel calm, rejuvenated and spiritually uplifted.

3. Why do we do Namaste?

Indians greet each other with namaste. The two palms are placed together in front of the chest and the head bows whilst saying the word namaste. This greeting is for all - people younger than us, of our own age, those older than friends, even strangers and us.
There are five forms of formal traditional greeting enjoined in the shaastras of which namaskaram is one. This is understood as prostration but it actually refers to paying homage as we do today when we greet each other with a namaste.
Namaste could be just a casual or formal greeting, a cultural convention or an act of worship. However there is much more to it than meets the eye. In Sanskrit namah + te = namaste. It means - I bow to you - my greetings, salutations or prostration to you. Namaha can also be literally interpreted as "na ma" (not mine). It has a spiritual significance of negating or reducing one’s ego in the presence of another.
The real meeting between people is the meeting of their minds. When we greet another, we do so with namaste, which means, "may our minds meet," indicated by the folded palms placed before the chest. The bowing down of the head is a gracious form of extending friendship in love and humility
The spiritual meaning is even deeper. The life force, the divinity, the Self or the Lord in me is the same in all. Recognizing this oneness with the meeting of the palms, we salute with head bowed the Divinity in the person we meet. That is why sometimes, we close our eyes as we do namaste to a revered person or the Lord – as if to look within. The gesture is often accompanied by words like "Ram Ram,” "Jai Shri Krishna", "Namo Narayana", "Jai Siya Ram", "Om Shanti" etc - indicating the recognition of this divinity.
When we know this significance, our greeting does not remain just a superficial gesture or word but paves the way for a deeper communion with another in an atmosphere of love and respect.

4. Why do we prostrate before parents and elders?

Indians prostrate before their parents, elders, teachers and noble souls by touching their feet. The elder in turn blesses us by placing his or her hand on or over our heads. Prostration is done daily, when we meet elders and particularly on important occasions like the beginning of a new task, birthdays, festivals etc. In certain traditional circles, prostration is accompanied by abhivaadana, which serves to introduce one-self, announce one’s family and social stature.
Man stands on his feet. Touching the feet in prostration is a sign of respect for the age, maturity, nobility and divinity that our elders personify. It symbolizes our recognition of their selfless love for us and the sacrifices they have done for our welfare. It is a way of humbly acknowledging the greatness of another. This tradition reflects the strong family ties, which has been one of India’s enduring strengths.
The good wishes (Sankalpa) and blessings (aashirvaada) of elders are highly valued in India. We prostrate to seek them. Good thoughts create positive vibrations. Good wishes springing from a heart full of love, divinity and nobility have a tremendous strength. When we prostrate with humility and respect, we invoke the good wishes and blessings of elders, which flow in the form of positive energy to envelop us. This is why the posture assumed whether it is in the standing or prone position, enables the entire body to receive the energy thus received.
The different forms of showing respect are :
Pratuthana:
Rising to welcome a person.
Namaskaara:
Paying homage in the form of namaste
Upasangrahan:
Touching the feet of elders or teachers.
Shaashtaanga:
Prostrating fully with the feet, knees, stomach, chest, forehead and arms touching the ground in front of the elder.
Pratyabivaadana:
Returning a greeting.
Rules are prescribed in our scriptures as to who should prostrate to whom. Wealth, family name, age, moral strength and spiritual knowledge in ascending order of importance qualified men to receive respect. This is why a king though the ruler of the land, would prostrate before a spiritual master. Epics like the Ramayana and Mahabharata have many stories highlighting this aspect.

5. Why do we wear marks (tilak, pottu and the like) on the forehead?

The tilak or pottu invokes a feeling of sanctity in the wearer and others. It is recognized as a religious mark. Its form and colour vary according to one’s caste, religious sect or the form of the Lord worshipped.
In earlier times, the four castes (based on varna or colour) - Brahmana, Kshatriya, Vaishya and Sudra - applied marks differently. The brahmin applied a white chandan mark signifying purity, as his profession was of a priestly or academic nature. The kshatriya applied a red kumkum mark signifying valour as he belonged to warrior races. The vaishya wore a yellow kesar or turmeric mark signifying prosperity as he was a businessman or trader devoted to creation of wealth. The sudra applied a black bhasma, kasturi or charcoal mark signifying service as he supported the work of the other three divisions.
Also Vishnu worshippers apply a chandan tilak of the shape of "U,” Shiva worshippers a tripundra of bhasma, Devi worshippers a red dot of kumkum and so on).
The tilak cover the spot between the eyebrows, which is the seat of memory and thinking. It is known as the Aajna Chakra in the language of Yoga. The tilak is applied with the prayer - "May I remember the Lord. May this pious feeling pervade all my activities. May I be righteous in my deeds.” Even when we temporarily forget this prayerful attitude the mark on another reminds us of our resolve. The tilak is thus a blessing of the Lord and a protection against wrong tendencies and forces.
The entire body emanates energy in the form of electromagnetic waves - the forehead and the subtle spot between the eyebrows especially so. That is why worry generates heat andcauses a headache. The tilak and pottu cools the forehead, protects us and prevents energy loss. Sometimes the entire forehead is covered with chandan or bhasma. Using plastic reusable "stick bindis" is not very beneficial, even though it serves the purpose of decoration

6. Why do we not touch papers, books and people with the feet?

To Indians, knowledge is sacred and divine. So it must be given respect at all times. Nowadays we separate subjects as sacred and secular. But in ancient India every subject - academic or spiritual - was considered divine and taught by the guru in the gurukula.
The custom of not stepping on educational tools is a frequent reminder of the high position accorded to knowledge in Indian culture. From an early age, this wisdom fosters in us a deep reverence for books and education. This is also the reason why we worship books, vehicles and instruments once a year on Saraswathi Pooja or Ayudha Pooja day, dedicated to the Goddess of Learning. In fact, each day before starting our studies, we pray:

Saraswati namasthubhyam
Varade kaama roopini
Vidyaarambham karishyaami
Sidhirbhavatu me sadaa

O Goddess Saraswati, the giver of Boons and fulfiller of wishes, I prostrate to You before starting my studies. May you always fulfill me?

7. To touch another with the feet is considered an act of misdemeanor. Why is this so?
Man is regarded as the most beautiful, living breathing temple of the Lord! Therefore touching another with the feet is akin to disrespecting the divinity within him or her. This calls for an immediate apology, which is offered with reverence and humility.
8. Why do we apply the holy ash?

The ash of any burnt object is not regarded as holy ash. Bhasma (the holy ash) is the ash from the homa (sacrificial fire) where special wood along with ghee and other herbs is offered as worship of the Lord. Or the deity is worshipped by pouring ash as abhisheka and is then distributed as bhasma.
Bhasma is generally applied on the forehead. Some apply it on certain parts of the body like the upper arms, chest etc. Some ascetics rub it all over the body. Many consume a pinch of it each time they receive it.
The word bhasma means, "that by which our sins are destroyed and the Lord is remembered.” Bha implied bhartsanam ("to destroy") and sma implies smaranam ("to remember"). The application of bhasma therefore signifies destruction of the evil and remembrance of the divine. Bhasma is called vibhuti (which means "glory") as it gives glory to one who applies it and raksha (which means a source of protection) as it protects the wearer from ill health and evil, by purifying him or her.

Homa (offering of oblations into the fire with sacred chants) signifies the offering or surrender of the ego and egocentric desires into the flame of knowledge or a noble and selfless cause. The consequent ash signifies the purity of the mind, which results from such actions.
Also the fire of knowledge burns the oblation and wood signifying ignorance and inertia respectively. The ash we apply indicates that we should burn false identification with the body and become free of the limitations of birth and death. This is not to be misconstrued as a morose reminder of death but as a powerful pointer towards the fact that time and tide wait for none.
Bhasma is specially associated with Lord Shiva who applies it all over His body. Shiva devotes apply bhasma as a tripundra. When applied with a red spot at the center, the mark symbolizes Shiva-Shakti (the unity of energy and matter that creates the entire seen and unseen universe).

Tryambakam yajaamahe
Sugandhim pushtivardhanam
Urvaa rukamiva bhandhanaan
Mrytyor muksheeyamaa amrutaat

"We worship the three-eyed Lord Shiva who nourishes and spread fragrance in our lives. May He free us from the shackles of sorrow, change and death – effortlessly, like the fall of a rip brinjal from its stem."

9. Why do offer food to the Lord before eating it?

Indians make an offering of food to the Lord and later partake of it as prasaada - a holy gift from the Lord. In our daily ritualistic worship (pooja) too we offer naivedyam (food) to the Lord.
The Lord is omnipotent and omniscient. Man is a part, while the Lord is the totality. All that we do is by His strength and knowledge alone. Hence what we receive in life as a result of our actions is really His alone. We acknowledge this through the act of offering food to Him. This is exemplified by the Hindi words "tera tujko arpan"– I offer what is Yours to You. Thereafter it is akin to His gift to us, graced by His divine touch.
Knowing this, our entire attitude to food and the act of eating changes. The food offered will naturally be pure and the best. We share what we get with others before consuming it. We do not demand, complain or criticise the quality of the food we get. We eat it with cheerful acceptance (prasaada buddhi).
Before we partake of our daily meals we first sprinkle water around the plate as an act of purification. Five morsels of food are placed on the side of the plate acknowledging the debt owed by us to the Divine forces (devta runa) for their benign grace and protection, our ancestors (pitru runa) for giving us their lineage and a family culture, the sages (rishi runa) as our religion and culture have been "realised", aintained and handed down to us by them, our fellow beings (manushya runa) who constitute society without the support of which we could not live as we do and other living beings (bhuta runa) for serving us selflessly.
Thereafter the Lord, the life force, who is also within us as the five life-giving physiological functions, is offered the food. This is done with the chant

praanaaya swaahaa,
apaanaaya swaahaa,
vyaanaaya swaahaa,
udaanaaya swaahaa,
samaanaaya swaahaa,
brahmane swaahaa
After offering the food thus, it is eaten as prasaada - blessed food.

Publish Post

40 Tips good reading

1. Take a 10-30 Minutes Walk Every Day And While You Walk, Smile.

2. Sit in Silence for At Least 10 Minutes Each Day.

3. Sleep for 7 Hours.

4. Live With The 3 Es -- Energy, Enthusiasm, And Empathy.

5. Play More Games.

6. Read More Books Than You Did last year.

7. Make Time to Practice Meditation, Yoga, and Prayer. They Provide Us with Daily Fuel For Our Busy Lives.

8. Spend Time With People Over The Age Of 70 & Under The Age Of 6.

9. Dream More While You Are Awake.

10. Eat More Foods That Grow On Trees And Plants And Eat Less Food That Is Manufactured In Plants.

11. Drink Plenty Of Water.

12. Try To Make At Least Three People Smile Each Day.

13. Don't Waste Your Precious Energy On Gossip.

14. Forget Issues Of The Past. Don't Remind Your Partner With His / Her Mistakes Of The Past. That Will Ruin Your Present Happiness.

15. Don't Have Negative Thoughts Or Things You Cannot Control. Instead Invest Your Energy in The Positive Present Moment.

16. Realize That Life Is A School And You Are Here To Learn. Problems Are Simply Part Of The Curriculum That Appear And Fade Away Like Algebra Class But The Lessons You Learn Will Last A Lifetime.

17. Eat Breakfast Like A King, Lunch Like A Prince And Dinner Like A Beggar.

18. Smile And Laugh More.

19. Life Is Too Short To Waste Time Hating Anyone. Don't Hate Others.

20. Don't Take Yourself So Seriously. No One Else Does.

21. You Don't Have To Win Every Argument. Agree To Disagree.

22. Make Peace With Your Past So It Won't Spoil The Present.

23. Don't Compare Your Life To Others'. You Have No Idea What Their Journey Is All About. Don't Compare Your Partner With Others.

24. No One Is In Charge Of Your Happiness Except You.

25. Forgive Everyone For Everything.

26. 26..What Other People Think Of You Is None Of Your Business.

27. GOD ! Heals Everything.

28. However Good Or Bad A Situation Is, It Will Change.

29. Your Job Won't Take Care Of You When You Are Sick. Your Friends Will. Stay In Touch.

30. Get Rid Of Anything That Isn't Useful, Beautiful Or Joyful.

31. Envy Is A Waste Of Time. You Already Have All You Need.

32. The Best Is Yet To Come.

33. No Matter How You Feel, Get Up, Dress Up And Show Up.

34. Do The Right Thing!

35. Call Your Family Often.

36. Your Inner Most Is Always Happy. So Be Happy.

37. Each Day Give Something Good To Others.

38. Don't Over Do. Keep Your Limits.

39. When You Awake Alive In The Morning, Thank GOD For It.

40. Please Forward This To Everyone You Care About.__._,_.___

The world will end in 2012, say experts

Several experts from across the globe are predicting that the earth is likely to end by the year 2012. The reason could be a human effect or natural disaster. From Chinese theories to scientific predictions the most likely date is the year 2012.


SCIENTIFIC EXPERTS from around the world are predicting that five years from now, all life on Earth could well come to an end. Some are saying it’ll be humans that would set it off. Others believe that a natural phenomenon will be the cause. And the religious folks are saying it’ll be God himself who would press the stop button. The following are some likely arguments as to why the world would end by the year 2012.

Reason one: Mayan calendar

The first to predict 2012 as the end of the world were the Mayans, a bloodthirsty race that were good at two things -- building highly accurate astrological equipment out of stone and sacrificing virgins.

Thousands of years ago they managed to calculate the length of the lunar moon as 329.53020 days, only 34 seconds out. The Mayan calendar predicts that the earth will end on December 21, 2012. Given that they were pretty close to the mark with the lunar cycle, it’s likely they’ve got the end of the world right as well.

Reason two: Sun storms

Solar experts from around the world monitoring the sun have made a startling discovery. Our sun is in a bit of strife. The energy output of the sun is, like most things in nature, cyclic and it’s supposed to be in the middle of a period of relative stability. However, recent solar storms have been bombarding the earth with lot of radiation energy. It’s been knocking out power grids and destroying satellites. This activity is predicted to get worse and calculations suggest it’ll reach its deadly peak sometime in 2012.

Reason three: The atom smasher

Scientists in Europe have been building the world’s largest particle accelerator. Basically, its a 27 km tunnel designed to smash atoms together to find out what makes the universe tick. However, the mega-gadget has caused serious concern, with some scientists suggesting that it’s properly even a bad idea to turn it on in the first place. They’re predicting all manner of deadly results, including mini black holes. So when this machine is fired up for its first serious experiment in 2012, the world could be crushed into a super-dense blob the size of a basketball.

Reason four: The Bible says it

If having scientists warning us about the end of the world isn’t bad enough, religious folks are getting in on the act as well. Interpretations of the Christian Bible reveal that the date for Armageddon, the final battle between good an evil, has been set for 2012. The I Ching, also known as the Chinese Book of Changes, says the same thing, as do various sections of the Hindu teachings.

Reason five: Super volcano

Yellowstone National Park in United States is famous for its thermal springs and old faithful geyser. The reason for this is simple -- it’s sitting on top of the world’s biggest volcano and geological experts are beginning to get nervous sweats. The Yellowstone volcano has a pattern of erupting every 650,000 years or so, and we’re many years overdue for an explosion that will fill the atmosphere with ash, blocking the sun and plunging the earth into a frozen winter that could last up to 15,000 years. The pressure under the Yellowstone is building steadily, and geologists have set 2012 as a likely date for the big bang.

Reason seven: Earth’s magnetic field

We all know the Earth is surrounded by a magnetic field that shields us from most of the sun’s radiation. What you might not know is that the magnetic poles we call North and South have a nasty habit of swapping places every 750,000 years or so -- and right now we’re about 30,000 years overdue. Scientists have noted that the poles are drifting apart roughly 20-30 kms each year, much faster than ever before, which points to a pole-shift being right around the corner. While the pole shift is under way, the magnetic field is disrupted and will eventually disappear, sometimes for up to 100 years. The result is enough UV outdoors to crisp your skin in seconds, killing everything it touches.

Kotak puts ACCUMULATE on Voltamp Transformers

Voltamp caters to a broad spectrum of industries across the core sector. Within the industries, metals, construction, sugar and cement account for roughly 45-50% of the turnover.

Given the sharp correction in metal prices and moderation in demand, several players have cut down on fresh capex commitments, which is resulting in severe slowdown in new orders.

While the utilities (SEBs) remain the largest customer segment for the transformer makers, Voltamp has traditionally focused on the non-utility segment or the industrial segment.

Marquee client base includes Reliance Industries, Jindal Steel, Hindalco, DLF, Infosys Technologies ABB, Siemens, Larsen & Toubro, Torrent Power and Suzlon.

However, with the industrial segment showing signs of cyclical downturn, the company has started taking orders from the SEBs as well.

The company is spending around Rs350 million for creating greenfield manufacturing facility. On completion in Q4 FY09, the total installed capacity to manufacture transformers will increase to 13000 MVA from the present 9000 MVA.

The company is comfortably placed to post a net revenue of around Rs7-7.5 billion in FY09. It has achieved net revenue of Rs3.4 billion in H1FY09. With an order backlog of Rs3.5-4 billion, Voltamp has adequate comfort in achieving the target revenues.

Outlook and valuation

The stock is currently trading at inexpensive valuations of 3.8x and 4.9x FY09 and FY10 earnings respectively. At the current price, dividend yield works out to 3.9%, which is attractive.

Dividend payout has been low at 16% in FY08, and we see scope of increase in dividend payout as the company has adequate cash surplus.

We are however, reducing our target price for the company by building in stresscase scenario. In our DCF model, we have forecast a 6% CAGR in revenue growth beyond FY10 till perpetuity.

Similarly, in the model, we have forecast operating margins to decline from 21% in FY08 to 14% in FY11 and thereafter. We have taken a WACC of 13.6% and reduced terminal growth rate to 3%. Thus we arrive at a price target of Rs472.

Analysis - Mumbai attacks rattle already shaky investors

By Rina Chandran and Tony Munroe

MUMBAI/HONG KONG (Reuters) - The attacks that left dozens dead in India's financial capital have dealt a fresh blow to the country as an investment destination, but India's size and growth will retain their allure over the long term.

India's shine had already been dulled as foreign portfolio investors fled from risk around the globe, helping send the country's once-soaring stock market down 55 percent this year. Tight liquidity, a battered currency and a slowing in its once-scorching economic growth add to the gloom.

The attacks on two luxury hotels and other targets were a reminder that risk in India extends beyond the red tape and crumbling infrastructure that investors accepted as a cost of doing business in the world's second-most-populous country.

"In the near term this highlights the risk of investing in markets which have instability of some form or the other," said Ashish Goyal, Chief Investment Officer at Prudential Asset Management in Singapore.

India, like other emerging and developed markets, has endured militant attacks before and managed to bounce back. Goyal said the long-term picture for India changes only if the latest attack hurts business, slows the economy and scares off foreign firms.

"It could raise the cost of security, it could raise the effectual cost of doing business, and at the margin that's not positive, but doesn't fundamentally alter the investment view or the perceived risk of investing in India," he said.

The timing of the attacks, which comes as the central bank struggles to defend a weakening rupee and stabilise credit markets, may hurt more than previous attacks, wrote Nikhilesh Bhattacharyya, an associate economist at Moody's Economy.com.

"This means that capital outflows will have a greater impact than they did in the past, though history suggests that any reaction to attacks in Mumbai will only be temporary," he said.

India's central bank expects the economy to expand by 7.5-8 percent in the 2008/09 fiscal year, but many private economists and some government officials see growth closer to 7 percent.

"We don't think there is any immediate impact on the Indian economy, although longer term, it will get that much harder to attract and retain foreign capital, at the margin," said Daniel Chui, Head of Investor Communications at JF Asset Management.

"Sentiment in India, particularly Mumbai, will be dented even more," he said from Hong Kong.

BRAVE FACE

Indian Trade Minister Kamal Nath on Thursday said he was confident the deadly attacks would not slow investment.

"This does not have an economic component," he told Reuters.

His confidence was echoed by Jan Masiel, a member of the European Parliament, who is visiting Mumbai with a trade delegation of eight.

"I don't think this affects India's image as a good place to do business in ... neither do we consider India to be an insecure or unsafe country to be in," said the Polish national, who was waiting to go back into the Taj Mahal Hotel, at the centre of the hostage drama and where many died.

Some investors said that after the initial shock of the attacks wears off, attention will return to the fundamentals.

"India's fiscal position is not in particularly good shape, so this is my focus instead of the political," said Clement Ho, chief investment officer with Hang Seng Investment Management in Hong Kong, which invests a small portion of its $10 billion portfolio in India.

Markus Rosgen, head of Asia Pacific equity research at Citigroup, said that the political unrest in Thailand is proportionately more damaging to that country's markets. In the MSCI Asia index that excludes Japan and Australia, Thailand has a weighting of 2.2 percent, compared with 10.2 percent for India.

"As a global investor, as an Asia investor, I can ignore Thailand now. It's become very small in terms of market cap, relative to my index. But I can't do the same for India."

(Additional reporting by Narayanan Somasundaram in Mumbai and Jeffrey Hodgson in Hong Kong)

source:© Thomson Reuters 2008 All rights reserved

Is Indian industry slipping into recession?

By D.H.Pai Panandiker, President RPG Foundation

There are certainly apprehensions. The Advisory Council to Prime Minister had warned earlier that industrial recession is likely and recent signals only support that view.

Not that recession is inevitable. If right measures are taken at the right time industry should be able to bounce back.

Industrial production in September was up 4.9 per cent. That certainly is improvement over the 1.4 per cent growth in August.

What is of concern is that 9 out of 17 industrial groups had negative growth. They constitute a third of the industrial sector.

Whether the improvement in September will continue in future months is doubtful because there are other signals that are blinking red.

Look at exports. They were down 15 per cent in October after a mere 10 per cent increase in September. Many export industries like textiles, leather products, gems and jewellery have been hard hit and forced to retrench workers.

Exports take up about 12 per cent of the industrial production. As such a drop of 15 per cent in exports equals to a drop of 1.8 per cent in industrial growth.

Look at tax collections. Excise duty is the most relevant and collections from that declined 8.7 per cent in October after 3.8 per cent decline in September.

Excise collections have not always been commensurate with the growth of industrial production. Nevertheless, the fall in collections is ominous.

Look at corporate balance sheets. Forty one per cent of the companies announcing their July-Sept results registered a fall in profits mainly because of the 40 per cent increase in interest payments, apart from almost a rise in the cost of raw materials.

Naturally, the advance corporate tax collections shrank; so also retained earnings which fund new investment.

Why has industry been exposed to such cold winds?

There are three main reasons.

First, inflation diverted a larger part of the consumer expenditure to food articles. That reduced demand for industrial goods.

Second, the increase in interest rate sharply raised the EMI in respect of house loans and consumer credit. Construction activity nearly stopped; production of cars dipped 6.6 per cent and of commercial vehicles 35.9 per cent in October.

Third, exports shrank but may revive a little if the rupee remains depreciated.

Currently, growth in both investment and consumption is depressed and hits precisely the industrial sector.

If no decisive action is taken soon, industry is quite likely to slip into recession. What is required is a resurgence of demand.

Pump priming is one way out.

But that may not work because investment by Government takes time. The decision making process is slow and implementation of decisions even slower.

A better option is for the Government to cut excise duties and for the Reserve Bank of India (RBI) to reduce CRR and repo rate. These measures will instantly increase demand and help industry to bounce back without any loss of employment.

(You can e-mail Dinker H. Pai Panandiker at: dpanandiker@hotmail.com. The views and opinions expressed are the writer’s own and not those of Reuters. The article above is not intended to be a financial advisory. Readers must seek specific advice from experts before making investment decisions.)

Brazil mulls its own bailout as it heads to G20

Brazil, home to Latin America's largest economy, may be the next country to announce an economic stimulus plan, a move that could inject a measure of stability into its equity and currency markets, analysts said.

Alfredo Coutino, Latin American economist at Moody's Economy.com, said he expects "an aggressive" fiscal stimulus for next year that could include tax deductions, subsidies, and more spending on social programs," in addition to already announced liquidity-boosting measures.

Latin American neighbors Chile and Mexico have already announced more than $6 billion in extra spending designed to shore up their economies. Fellow emerging-markets powerhouse China is pumping $586 billion into its economy.

A comprehensive stimulus package is "the missing piece" from Brazil, Coutino said.

An announcement could come as soon as the completion of this weekend's emergency meeting of the Group of 20 in Washington, D.C.

Brazil's Central Bank President Henrique Meirelles told Bloomberg earlier this week that the country will consider a stimulus package after first evaluating the impact of its previous efforts to loosen its credit markets.

Brazilian finance minister Guido Mantega has supported a package that spreads funds on infrastructure and social programs, as well as doles out tax breaks, Coutino said.

A message to the markets

Like China's, a Brazilian stimulus plan could include outlays on some previously announced or modified projects.

The market is a market of perception and sometimes it takes proper packaging to have something interpreted the right way," he said.

Brazil landed this year's chairmanship of the G20, a rotating position, just as the global securities markets buckled under an international credit crisis and the world economy headed into what threatens to be a prolonged recession.

Brazil's benchmark equity index, the Bovespa, has lost roughly 44% since the beginning of the year, largely because of the index's heavy weighting from commodity-related stocks, such as oil giant Petroleo Brasiliero

Risk appetite for emerging market assets has waned in part due to the swift drop in commodity prices, which had supported fast growth in resource-rich countries like Brazil. Prices of metals and energy have tumbled since the summer as expectations of a global recession mounted, and the U.S. dollar gained against its rivals.

When the credit market crisis began to accelerate, Brazilian President Luiz Inacio Lula da Silva frequently voiced confidence that its economy would be shielded from the credit-market crisis that kicked off in the U.S. and Europe, noting that Brazil had foreign reserves of more than $200 billion.

But stresses began to show up in Brazil's financial system in the past few months, and the central bank and the finance ministry issued a number of measures to stave off the effects of the credit crisis.

The government spent $23 billion to defend the slide of its currency, the real, against the U.S. last month. It pulled back capital requirements on banks have been pulled back, scrapped a tax on foreign investments, and granted government-run banks authorization to purchase stakes in other financial institutions. Brazil also gave the auto industry a credit extension of 4 billion reals after automobile sales fell in October, the first decline in two years.

Cooling GDP, halted projects

Despite these efforts, concerns are growing about the impact the credit crunch is having on Lula's Growth Acceleration Plan. He launched the five-year, $250 billion program last year to improve the country's infrastructure and keep gross domestic product growth at about 5% a year.

Brazil recently reduced its 2009 gross domestic output forecast for growth of 3.7% to 3.8%, from its previous estimate of about 4.5%.

Plus, investors have been unsettled by some recent events, including the cancellation of nearly $2 billion port project in Sao Paulo by LLX Logistica, a firm privately run by Brazilian billionaire Eike Batista, and the delay of an auction by the government for the construction of a high-tension power line from the Amazon basin to Sao Paulo.

"The news flow has been negative in terms of Brazil's ability to fund some of the plans, and that perception needs to be reversed," Riedel said.

Analysts say a fiscal stimulus won't do much good without help from the central bank, however.

It recently left its key interest rate on hold at 13.75%.

"If they do not relax monetary conditions in the coming months, the effectiveness of any stimulus will be reduced," Coutino of Moody's Economy.com said.

Another shoe to drop

Bad credit-card debt could be next shot to economy, researcher says

CHICAGO (MarketWatch) -- Credit-card debt is on the brink of imploding and will be the next storm to hit the fragile finance industry, an investment research firm predicted this week.

According to Innovest StrategicValue Advisors, banks will charge off $18.6 billion in delinquent credit-card accounts in the first quarter of 2009 and $96 billion in all of 2009, more than double the research firm's forecast for all of this year.

nnovest projects that amount would be high enough to damage some of the biggest card issuers.

Credit-card charge-offs are "defying gravity" when compared with the problems in the mortgage market, according to Gregory Larkin, senior banking analyst for Innovest. But that will change as they catch up with mortgage charge-offs, which have spiked eightfold since the third quarter of 2007.

"If history is any indicator, there should be an equivalent surge of credit-card charge-offs very soon," he said, though he concedes that an eightfold increase would be very aggressive.

Comparatively, charge-offs reached $4.2 billion in the first quarter of this year and $3.2 billion in the same period a year before, according to the Federal Reserve, which only reports non-securitized debt. Innovest's projections include all credit-card debt, which the firm believes is double what the Federal Reserve reports. For all of 2007, charge-offs tallied $26.6 billion, according to Innovest's calculations, and the firm estimates they will reach $41.5 billion at the end of this year.

The jump in credit-card charge-offs is linked in part to the credit crisis now in play. As banks have tightened lending standards, they have mostly done away with the once-popular roll-over options -- usually at 0% introductory rates -- that allowed borrowers with delinquent accounts to get new cards elsewhere. Larkin believes all that bad credit is going to surface quickly and could have a similar impact as the mortgage crisis has had on banking.

A matter of scale

But credit-industry analysts shake those prognostications off, noting that the number of dollars involved in credit cards loans versus mortgages is substantially lower.

"Defaults on $2,000 or $5,000 in credit-card debt are entirely different than someone defaulting on a $500,000 mortgage," said Greg McBride, senior financial analyst for Bankrate.com.

"I'm skeptical that the magnitude of credit quality is going to be as severe as some say," he added.

The average credit-card debt is $2,200, according to the Federal Reserve. On a revolving basis, there was roughly $970 billion owed on credit cards at the end of July. However, because many people use credit cards for the rewards programs and pay off their debt each month, it's unclear how much of that total is actually outstanding.

What's more, as delinquencies rise -- and they will because of the weakness of the economy -- credit-card issuers will take steps to stem the tide. That will include cutting credit off from problem borrowers and tightening restrictions on new cards.

"Banks already are starting to minimize their risk and drop their credit limits that they extend to people and especially those at a higher risk," said Bill Hardekopf, a partner at LowCards.com. Read more.

American Express, for example, upped its loan-loss reserves to $2.6 billion in the second quarter compared with $1.4 billion in the year-ago period.

In the second quarter, Capital One's provisions for loan losses nearly doubled to $1.1 billion compared with $535 million in the second quarter last year.

"There's no doubt there's going to be pain in the credit-card markets," said Justin McHenry, research director with IndexCreditCards.com. "But I don't see anything to the magnitude of what we've seen in the mortgage market.

"This is a different financial animal in terms of how much is being loaned out," he added. "And credit-card companies can take that credit and cut it in half. That's a tool that they have."

Larkin admits that Innovest's projections run against the financial tide: "I think they're wrong," he said.

Companies could take a hit

Laura Nishikawa, Innovest's consumer finance analyst, said the credit-card crisis will hit earnings, in particular at companies that glean high percentages of net revenue from their U.S. credit-card revenues.

"Companies that have pursued aggressive portfolio growth and higher yields at the cost of prudent risk management will struggle to manage rising loan losses, which will definitely cut into earnings or even worse," she said.

Nishikawa is also worried about companies that target lower-income consumers and use delinquencies and late payments as a means of making money.

"Delinquent borrowers become cash-flow generators," she said. "At the extreme end, the goal becomes, 'How do we get borrowers into delinquent status as soon as possible, in order to maximize returns?'"

J.P. Morgan and Amex are what Nishikawa considers best of class, while Capital One has an unsustainable business model that's based on penalty pricing -- high fees for missed payments, shooting interest rates for surpassing limits -- and that she thinks has a high exposure to subprime credit-card holders and low payment rates.

"When the economy turns bad, this strategy clearly cannot be sustained," she said.

"While a hit to topple credit cards may not topple the bank completely, it will cut into core earnings," she added.

Top rated stocks to make the grade

TOP PICKS FOR BARE MARKET


1.Container Corporation Of India Ltd

2. Cummins India Ltd

3 Engineers India Ltd

4.ESAB INDIA

5.K S B PUMPS

6.HONDA SIEL POWER

7 VOLTAMP TRANSFORMER

8 VST Tillers Tractors Ltd

9. TIL Ltd

10 Sathavahana Ispat Ltd

11 NETWORK 18

12. Ess Dee Aluminium Ltd

13.Pratibha Industries Ltd

14.Aditya Birla Nuvo Ltd

15.Triton Valves Ltd

16 CCL Products (India) Ltd

17.Aurionpro Solutions Ltd

Honeywell Automation India Ltd

OPERATIONS :

The Company operates in five business units and the operations details are provided below:

1 Honeywell Process Solutions (HPS) :

In line with Honeywells brand promise of building a world that is more safer & secure, more energy efficient, more innovative and productive, Honeywell Process Solutions has taken significant steps in 2007 to expand its solutions and products portfolio to address core and adjacent markets. These products and solutions will help improve our customers business performance, safety, reliability and efficiency. Some of these, which can significantly improve our customers performance are:

1. Energy Management Solution to meet complex load management requirements of industrial utilities.

2. Launch of new state of the art programmable automation controller to address fast growing metals, cement, power and chemicals market.

3. Integrated fire and gas solutions which significantly improve the response mechanism in case of fire or gas hazards.

4. Launch of new revolutionary one wireless solutions, which will reduce the cost of wires and installation time. Wireless sensors will also make it possible to get much more data than before which in turn will help to reduce cost, improve compliance and safety.

5. First of its kind corrosion monitoring solution to proactively avoid / reduce down time / disaster on account of corrosion

6. New product / solution launches like flow meters, wireless transmitters, flow provers & tank farm management system

7. Indian industry is facing major challenges in terms of skilled manpower availability, cyber security, efficiency improvement and faster project implementation cycles. Our services business has launched host of services to address above concerns.

HPS was won prestigious Frost & Sullivan Excellence Awards for Product Leadership and Brand Leadership for the year 2007. These awards recognize Honeywells relentless drive to meet customer needs and product demands. This award also stands testimony to the range of products offered by your company, your companys technology and reliability of your Companys products. HPS also won many prestigious orders in 2007 from its existing and new customers like Reliance Industries, Hindustan Zinc Ltd., Larsen & Toubro, BHEL, EID Parry, Hindustan Petroleum Corporation Limited, Indian Oil Corporation, Oil & Natural Gas Corporation, Tata Steel Limited, Haldia Petrochemicals etc. to mention a few.

HPS Services business also grew significantly in 2007 both in terms of contract services to maintain our customer installation and outcome based services by our advanced services organisation. With robust Indian economy forecasted for 2008 and significant investments in core sectors, we see a promising 2008 for this business.

3.2 Honeywell Business Solutions (HBS) :

Honeywell Building Solutions continues to grow with the market on all major business quantitative and qualitative parameters. This performance rides on the backbone of consistent business performance of all our lines of business - Install, Service and Energy.

The Install Business made significant progress in bagging major orders from major customers such as Reliance Group, TATA Group, Indian Oil Corporation, Delhi Metro Rail Corporation, VSNL, etc. Order booking is healthy and consistent ensuring sustained business performance and capacity management. Major macro trends of the construction industry bode well for continued and sustained Installed Business Performance. The Service Business continued to expand its site and scope presence across all major accounts, verticals and territories, reflecting the success of multiple customer contact mechanisms and SLA driven responses and performance.

The Energy Business performed well bagging prestigious contracts such as Ruby Hall Clinic and delivering earlier committed reductions to it customers. Diverse factors such as Energy costs coupled with Environmental Awareness are all going a long way towards creating a tremendously positive environment for the energy business.

Overall, the business continues to maintain business, technology and brand leadership and received awards from Frost & Sullivan for best integrated solutions provider, best security solutions provider and best energy services provider.

3.3 Environment and Combustion Control (ECC) :

ECC achieved good Revenue growth over 2006. ECC have won Building Management Solutions order for first Green Building Hotel Project in India, Claridges Hotel in Delhi along with other prestigious projects like GVK Mall, Sahara Hospital etc. Water Control products business have grown strongly in construction segment with new products like Balancing Valves, Motorized Butterfly valves and executed prestigious projects like Amritsar Mall, Bangalore Airport, Reliance Corporate office etc. Combustion business had a strong growth in Food and Metal processing industries.

This business continues to grow rapidly with growth in rising Construction Industry. It has a strong product portfolio to service this industry and with its premium brands it is poised to maintain its high growth momentum.

3.4 Sensing & Control (ECC):

S&C products business serves OEMs, Core Manufacturing segments viz. Automotive, Off-road Equipments, Medical, IT and Test & Measurement, etc by providing leading edge sensors and switches.

The Business has achieved revenue growth with start-up of local manufacturing lines of TPS and LCD hour meters for Automotive and various industries. The factory has received TS16949 letter of conformance from DNV. It will enable us to address growth opportunities in automotive market segment. The integration of sales in India for new line of business "Test & Measurement" was completed.

3.5 Global Engineering Services Business (GES) :

This business saw good growth of engineering work in 2007. The business saw some challenging environment due to Rupee appreciation in 2007, which has impacted its profitability. We are driving all actions to sustain both profitability and growth of this business in 2008. These actions include seeking better rates from our customers, improving our productivity and introducing higher end services. This business is also implementing Honeywell Operating System (HOS). HOS would elevate the level of productivity and quality of these operations and make it more competitive moving forward.

Your Company has started major operations towards product hardware export. Two Honeywell lines of products have already been approved for manufacture for global demand in 2008 and we expect this operation to expand in the coming years.

4. COMMUNITY DEVELOPMENT WORK :

HAIL has started a Child Sponsorship Program in close co-ordination with Sadhana Village an NGO. We have sponsored 40 children from Kolwan Valley Mulshi Taluka. This sponsorship monitors the child health and education. The funding has been made possible by the contribution from employees. This is used for various CSR activities that HAIL intends to undertake in the current year.

HAIL conducted Safety & Security Sessions for Schools in Pune - Dastur School, Rewachand Bhojwani, Abhinav Vidyalay, MMES Rathi School, Hutchings school were amongst the first batch of schools where HAIL organized demos and lectures (conducted by Usha Fire). These interactive sessions were to help the children understand the dos and donts of Fire safety and actions to be taken in case of an emergency. "Road safety" and "security at homes", were the other topics also highlighted. This was an awareness programme and was well attended by all the school children. Keeping our children safe and alert were the key reasons for conducting these sessions.

The Company continues its activities with community development work under the employee engagement program called DISHA. Volunteers also visit The School for the Handicapped Children at Wanowrie. Computer classes are organized for these children, besides lessons in English speaking, Mathematics and Science.

TOP RATED STOCKS

This is the time to buy a high profile stocks like ....


1.Honeywell Automation India Ltd

2.Bharat Bijlee Ltd

3. Bilcare Ltd

4.TRF Ltd

5.Engineers India Ltd

6.TIL Ltd

7. Numeric Power Systems Ltd

NIFTY TRADING RANGE

NIFTY TRADING LEVELS FOR MY BLOG
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5000-4820-4750-4620-4507-4400-4350-4302-4224-4160-4102-4047 3940-3860-3800-3730-3645-3620-3564-3470-3360-3220-3143-3023

"HUGO BOSS SELECTS POKARNA

Pokarna Ltd has informed BSE regarding a Press Release dated September 25, 2008, titled "HUGO BOSS SELECTS POKARNA". This relates to collaboration of HUGO BOSS Ticino SA, a strategic business unit of HUGO BOSS Group with Pokarna Ltd in the Shifting Manufacturing segment.

Press Release :

"HUGO BOSS Ticino SA, a strategic business unit of HUGO BOSS Group is starting a new collaboration with Pokarna Limited in the Shirting Manu acting segment. Pokarna Ltd would be manufacturing high end premium Shirts for HUGO BOSS Ticino SA.

Commenting on the collaboration with HUGO BOSS Ticino SA, Mr. Gautam Chand Jain Chairman & Managing Director of Pokarna Ltd said “Pokarna is excited about the confidence HUGO BOSS has shown in our company. There is great potential to optimize synergies of both Companies which would help rapid growth of our apparel business and improve its profitability. We hope this is a long and rewarding partnership into the future".

Commenting on the collaboration with Pokarna Ltd Mr. Jan Huger of HUGO BOSS said
“As we aim for perfection in our manufacturing standards we were observing this opportunity since we first met more than three years ago, but now we feel that the time is right to start working together on a regular basis. We believe in long term relationship and consider our suppliers as partners rather than suppliers. Due to this we go through many tests and procedures before we add a new business partner to our portfolio. It is our objective to keep a business partner for minimum seven ears and therefore we have to exclude all potential risks. We also do not want to perform inter-regional transshipments of raw-materials and trimmings, which was another reason for having waited that long. We believe Pokarna Ltd's manufacturing skills would enable is to produce Hugo Boss Quality Standards following or even exceeding our expectations. Having done various test orders we are very optimistic and look forward to a prosperous and growing business relation with Pokarna Ltd".

Tulsyan NEC Limited

Tulsyan NEC Limited, a flagship company of the Tulsyan group, has reported a turnover of Rs.21036.90 lakhs for the quarter ended June 2008, an increase of 94.74% over the corresponding period last year. The net profit after tax has gone up to Rs.985.88 lakhs for the first quarter this year, against Rs.272.96 lakhs for the same period {last year(07-08) it has posted 535Cr.turnover and net profit of 13.34cr.}

The company was able to achieve substantial growth in sales due to increased demand for steel and plastics and also partly due to better sales realization. The additional demand for steel was met from the new rolling mill plant which had started commercial production from 1st July 2007 onwards.

About Tulsyan NEC Limited

Tulsyan NEC Limited is the flagship Company of Tulsyan Group. It is listed in the BSE and was established in the year 1947. Tulsyan NEC is one of the leading manufacturers of Thermo Mechanically Treated Bars (TMT) and Billets in the country. It is privileged to be the first Licensed Rolling Mill in South India to produce TMT Rebars and has got ISI 1786 and ISO.

The Tulsyan Group of Industries was founded by Late Shri. G. L. Tulsyan in the year 1938. The group, since its then has come a long way backed by well-planned diversification and expansion policies with its present annual turnover being Rs. 680 crores.


i am expecting net profit between 30-35Cr on an equity of 5Cr e.p.s should be 60-70rs. currently it is available at 09 earnings 1.3 p.e. current price 90 rs. it has fallen form 125 level expecting 150 level before second quarter results.(in a month time)

Credit crisis – Impact on us

The crisis is now full blown. I have not seen panic at this scale personally. I have read about it, but not seen it personally. It almost feels as if companies are being targeted one at a time. Lehman went into bankruptcy and AIG just survived through government help, though equity holders have been wiped out (almost). Now it seems the market has moved on to Morgan Stanley, Goldman Sachs and Washington mutual. It almost feels as if the market is killing one company at a time. Scary!

How does it impact us in India?
I think, the impact would initially be limited to companies with Global businesses. So IT companies with revenues in this space could get hit in the short term. However I think it should work out for these companies in the medium to long term as they find new clients, geographies and start growing again. The business model for IT companies is not under threat. However in the short run, IT companies are and could keep getting hit. However I would be worried about small IT companies with high exposure to the Financial and associated sector.

The next in line to get hit could be banks like ICICI bank and others, which have foreign operations and derivatives on their balance sheets. I am currently analyzing ICICI bank and I can tell you that complexity for most banks have gone up. As I wrote earlier, I exited banks quite some time back when I realized that I could not evaluate the risks correctly. That said, I think none of the Indian banks are under serious solvency threat. The profits could get hit, but most of the Indian banks do not have massive exposure of derivatives. I am analyzing ICICI and other banks from a depositor’s point of view and not from an equity investment point of view. So I am looking at these banks from a safety point of view.

Other than the above two sectors, I cannot think of any broad sectors, which could get hit hard by this crisis.

Second order and higher order effects
What is missed out in most analysis, is the second and higher order effects of an event. Indian companies may not get hit directly, but a recession in developed countries and lack of liquidity and risk aversion is bound to affect us in the medium term.

For the last, 3-4 years almost every asset class in India has gone up. There were all kinds of reasons given for this rise, but rarely was liquidity mentioned as one of the key reasons. Now with the liquidity drying up, I don’t think we will be seeing such double-digit growths in Real estate and other markets.

What am I doing?
I don’t get worried about drops in stock prices. Such drops are a part of the game. When I invest in equity, my main worry is permanent loss of capital and not temporary losses due to volatility.
Personally, I had put my buying on hold for the last couple of months. For some reason, I felt that the markets could go south in the medium term. As a result I stopped buying some time back. However I did not back this hunch by going short, as I may very well may have been wrong. I did buy some puts, but did not build a decent position as I was not sure. I think I should start trusting my gut more.

I am still standing pat and not planning major activity for some time. I personally don’t expect these issues to get worked out in a few weeks and feel that I could be getting better bargains in the near future.

I have a question and would appreciate if some could answer, as I have not been able to figure it out – If the bank/ DP fails, what happens to my shares. Is it similar to a savings account where you can lose your savings or are the shares held by NSDL or someone else and hence I am safe?


source:valueinvestorindia

Wall Street Meltdown: Warren Buffett Told You So

The old man has been proved right once again.

As I've watched the mess on Wall Street unfold over the past few days, I can't help but think back to my earlier career as a financial reporter, more specifically, to the warnings Warren Buffett delivered about derivatives -- the complex financial instruments that are playing a central role in the current market crisis.

While the housing market was booming and derivatives were all the rage on Wall Street, it was Buffett who said they were a "time bomb, both for the parties that deal in them and the economic system" and he dubbed them "financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal."

Back in May of 2004, I made the trek to Omaha, Nebraska, to cover the annual meeting of Buffett's holding company, Berkshire Hathaway. Unlike most annual meetings, which are tedious affairs featuring slide presentations and a series of pre-written speeches by top executives, Berkshire functions more like the corporate equivalent of a town hall meeting. Buffett and his longtime partner, Charlie Munger, sit behind a table and spend a day answering questions from the roughly 20,000 shareholders and admirers in attendance.

That prior year had seen Freddie Mac rocked by a scandal resulting from its failure to properly account for the value of its investments in derivatives (which was only a tiny precursor to its more recent problems).

Buffett seized on the news to deliver a lecture on the danger of such investments, noting the fact that Freddie was a company overseen by a board of directors, the U.S. Congress, and a separate regulatory body, and yet nobody was able to get a handle on them. And he informed the crowd that even the CEOs whom he knew didn't understand the investments.

"I know the people that run these companies and they don't have their minds around what is happening," he said.

And then Buffett predicted: "Some time in the next 10 years, you will have a huge problem that will either be caused by or accentuated by people's activities in derivatives."


THE HOUSING CRISIS that started by affecting a small number of subprime loans has now triggered the collapse or takeover of some of the biggest names in the mortgage industry (Countrywide Financial, Fannie Mae and Freddie Mac) and three of the top five U.S. investment banks (Bear Stearns, Lehman Brothers, and Merrill Lynch). And last night, the Federal Reserve initiated an $85 billion bailout of insurance giant American International Group (AIG).

It gets to be a chicken in the egg argument as to whether the availability of these new and ever more creative financial instruments caused the housing bubble, or if the expansion of the housing market created more demand for more of these types of investments. But either way, it's pretty clear that the instruments helped accentuate the problem by fostering the easy money-lending environment in which mortgage brokers were able to pump up sales by granting mortgages to borrowers with patchy credit.

The derivative market served a useful function by allowing banks to bundle loans and to sprinkle different parts of the risk among investment firms, which is one reason why as chairman of the Federal Reserve, Alan Greenspan posited that the benefits of derivatives outweighed the costs. But unfortunately, by spreading the risk around so widely in ever more complex ways, financial firms lost sight of what they actually owned, and became overleveraged.

Conservatives aren't generally fans of Buffett, now 78, because he's a loyal Democrat who has advocated higher taxes, and this year, is supporting Barack Obama. But there's still room to admire Buffett's strength of conviction when it comes to investing, and his application of his simple Midwestern common sense to complex financial matters.

Even though he's the richest man in the world according to Forbes, with a net worth of about $62 billion, Buffett still lives in a modest house in Omaha that he purchased in 1958 and maintains a small office in the city. Though he's a numbers whiz, Buffett built a lot of his fortune making long-term investments in classic American companies, including American Express, Gillette, and Coca-Cola.

His success as an investor has been as much about knowing when to stay away from the latest fads as it is about when to buy, and he refuses to invest in things he doesn't comprehend. During the Internet boom, some dismissed Buffett as a dinosaur, because wouldn't put his money in companies when he didn't understand how they could make a profit. When that bubble burst in 2000, he was vindicated, and revived his reputation for prescience that earned him the nickname "The Oracle of Omaha."


BUFFETT'S CONCERNS about derivatives were heightened when Berkshire purchased the large insurer General Re in 1998, and he had to spend years merely trying to close down a derivatives business that came with the deal, because of the difficulty of untangling the web of transactions.

Looking back, what's amazing about Buffett's warnings on derivatives is not merely that he said they could be dangerous -- many others did -- but that the scenarios he spoke of were eerily similar to what we're witnessing today.

AIG faltered because in addition to its regular insurance operations, the company owned a massive amount of credit default swaps, which insure large bondholders against the risk of default. As a result of rising defaults stemming from the housing crisis, AIG suffered tremendous losses, leading to a dwindling stock price and Monday's downgrades by the major ratings agencies. Collapsing under the weight of huge collateral obligations, the company was forced into the arms of the Fed, which will take an 80 percent stake in what was once the world's largest insuerer.

Back in his 2002 annual letter to his shareholders (which was written in February of 2003), Buffett theorized:
Another problem about derivatives is that they can exacerbate trouble that a corporation has run into for completely unrelated reasons. This pile-on effect occurs because many derivatives contracts require that a company suffering a credit downgrade immediately supply collateral to counterparties. Imagine, then, that a company is downgraded because of general adversity and that its derivatives instantly kick in with their requirement, imposing an unexpected and enormous demand for cash collateral on the company. The need to meet this demand can then throw the company into a liquidity crisis that may, in some cases, trigger still more downgrades. It all becomes a spiral that can lead to a corporate meltdown.


source:sigcarlfred.blogspot

The worst is yet to come

Jeffrey Gundlach, chief investment officer at Los Angeles-based mutual-fund company TCW Group Inc., told clients on a conference call late Wednesday that the crisis in credit and housing may not abate for several years and is actually getting worse.


Gundlach based his assessment on a belief that housing prices still face several more years of decline, a protracted slump, he said, not seen since the Great Depression. Moreover, Gundlach said it's possible that home prices could be sluggish until 2022.

"If it's like the Depression experience -- and it sure is shaping up that way -- it could take several years. Maybe we won't see a bottom in home prices until 2014," he said.
Write-offs could top $1 trillion
As a forecaster, Gundlach didn't just climb aboard the gloom-and-doom wagon. He was early to spot the cracks that subprime loans were making in the financial system, and among the first to warn that an era of easy money would come to a bad end.
"The subprime market is a total unmitigated disaster and it's going to get worse," Gundlach told money managers and financial advisers at an investment conference in June 2007. See full story.
And Gundlach has put his shareholders' money where his mouth is, shunning derivatives and counterparty risk in his bond fund portfolio.
That defensive posture should offer protection in the continuing credit storm that Gundlach foresees. In this bleak scenario, an unprecedented -- and growing -- number of home foreclosures, along with mortgage loans that are under water as soon as they're originated and a glaring lack of buyers for even modestly risky assets keeps the financial system under enormous stress.
Expect loan default rates to rise, Gundlach said, not just in the subprime market, but among the top-drawer prime borrowers as well. The prime default rate could approach 10% from a current 2% before the carnage is over, he said.
"The current environment is maybe a little worse that what was experienced in the Depression in terms of the housing market," Gundlach said.
More troubles ahead
Accordingly, financial institutions may suffer write-offs that could surpass $1 trillion before conditions improve, he said. As of late August, credit losses and writedowns at the world's 100-largest banks and brokerages topped $506 billion, he noted.
Among the casualties, Gundlach said, is Citigroup. The company's balance sheet problems could be on a scale similar to that of insurer American International Group, which the U.S. bailed out this week.
"I would give a very meaningful probability to the biggest, next AIG-size debacle being Citigroup," the strategist said.
"I would definitely not be a buyer of Citigroup stock," Gundlach said.

Other financial giants also won't escape the crisis unscathed, Gundlach said. "I don't see how Wachovia can make it as a stand alone," he said. He expressed the same sentiment about Morgan Stanley.
Indeed, late Wednesday the New York Times reported that Morgan Stanley was exploring a merger with Wachovia or another bank. See full story.
Europe's financial giants are in similar or even worse shape than their U.S. counterparts, Gundlach said, with "substantial exposures to assets which U.S. banks are now getting taken to the woodshed over. I would rate all European banks as not a buy."
The breakdown will take a further toll on U.S. stocks, Gundlach added. The S&P 500 will tumble below 800, he said, about 35% below its 1156 close on Wednesday.
Said Gundlach: "None of us have ever seen this, and it's no market for old men, but risk aversion is the order of the day." End of Story


Jonathan Burton is an assistant personal finance editor for MarketWatch, based in San Francisco.

Financial mess may prompt Fed to cut rates: Analysts

Washington: The financial market turmoil stemming from the collapse of Wall Street giant Lehman Brothers has boosted odds for a cut in interest rates by the Federal Reserve on Tuesday, analysts said.
The failure of weekend talks to save Lehman has sparked worries about a financial tsunami, prompting the Fed to open up new liquidity to avert a knock-on effect.
Some economists said the Fed also needs to cut rates to keep credit flowing, even though last week most analysts had been expecting the Tuesday policy meeting to hold the federal funds rate at 2.0%, below the level of inflation.
“Markets are now expecting the Fed to cut rates 25 basis points tomorrow (Tuesday), although there was no real macroeconomic reason for them to do so prior to last night,” said Sherry Cooper, chief economist at BMO Capital Markets.
“One thing is certain, the Fed will do whatever it takes to calm financial markets. Inflation is no longer a major concern with oil and other commodity prices falling.”
The futures market was pricing in a 68% chance of a quarter-point cut in rates, up from a 9.0% chance last week.
Global stock markets were in a freefall amid fears of contagion from Lehman, already believed to be pressuring American International Group, one of the world’s biggest insurance firms whose shares were down over 60%.
Rating agencies Standard & Poor’s, Moody’s and Fitch all lowered AIG’s credit score, and the Wall Street Journal reported Tuesday that people close to the situation say AIG may be forced into filing for bankruptcy if it can not secure sufficient fresh funding by Wednesday.
Cary Leahey, senior US economist at Decision Economics, said he believes the Fed should fight the urge to respond to market pressure for a rate cut.
He said a rate cut might be construed as a sign of panic: “It might send a signal that they (Fed members) know something we don’t know” about the financial crisis, Leahey said.

New York Governor Says AIG Can Access $20 Billion

Sept. 15 (Bloomberg) -- American International Group Inc., the largest U.S. insurer by assets, has been given special permission to access $20 billion of capital in its subsidiaries to free up liquidity, New York Governor David Paterson said.

The move ``is not a government bailout,'' Paterson said today at a New York City press conference. The arrangement allows AIG to make a bridge loan to itself, and the New York- based insurer remains ``extraordinarily solvent,'' he said.

AIG may need to raise $20 billion in capital and sell $20 billion of assets to ease a cash crunch brought on by the collapse of U.S. mortgage markets, people familiar with insurer's plans said. Prospects dimmed today when Lehman Brothers Holdings Inc. went bankrupt after failing to find new funds or a buyer. Bank of America Corp. Chief Executive Kenneth Lewis said today AIG's failure would be a ``much bigger problem'' than Lehman's demise.

AIG has a ``liquidity problem'' and will be able to use assets held by units as collateral for cash to run the ``day to day operations'' of the insurer, Paterson said. ``We have seen some of the companies that serve as the bedrock of our financial system unraveling before our eyes,'' Paterson said.

AIG plunged as much as 71 percent in New York trading. The stock was down 50 percent to $6.05 a share as of 12:30 p.m. in New York Stock Exchange composite trading after Paterson's statement.

Eric Dinallo, the New York State insurance superintendent, has become the lead regulator charged with finding a solution to AIG's financial crunch, according to two people familiar with the situation. The people declined to be identified because talks between Dinallo and AIG are confidential.

Lehman-investment loss

Lehman Brothers’ move to file for bankruptcy on Monday wiped off more than Rs2,000 crore from the market valuation of those Indian companies in which the US financial major has made equity investments.

Lehman itself recorded a loss of more than Rs50 crore on Monday on its investments in India, which is nearly 10% of its current holding worth an estimated over Rs500 crore.

The loss would have been much higher if Lehman had not started offloading its equity holding in Indian companies late last month.

In a major selling spree that started on 21 August, Lehman has sold shares worth close to Rs400 crore in nearly 10 companies, including NIIT Ltd, Cranes Software, Amtek Auto, Amtek India, Fedders Llyod, Northgate, Mastek, Triveni Engg and Prajay Engg.

Prior to this sell-off, Lehman’s Indian equity portfolio is estimated to have been worth more than Rs1,000 crore, which has now nearly halved to about Rs500 crore.

Most of the shares offloaded by Lehman in India, including those in NIIT, Cranes, Amtek Auto, Amtek India and Northgate, has been purchased by Deutsche Bank, according to the bulk and block deal data available with the bourses.

Besides the 10 companies where Lehman has offloaded its shares, Lehman had equity holding in about two dozen firms at the end of June quarter.

These firms include Spice Communications, Spice Mobile, Anant Raj Industries, Edelweiss Cap, IVRCL Infra, Tulip Telecom, Consolidated Construction, PSL, Orbit Corp, Development Credit Bank, Champagne Indage, Godawari Power, KPIT Cummins, West Coast Paper, IOL Netcom, Dhampur Sugar, Prithvi Info, Golden Tobacco, Emkay Global, Vijay Shanti Builders and Pioneer Embroidery.

A failure a week

First it was Bear stearns, but the US treasury (similar to our Finance ministry) and the Fed (similar to our RBI) engineered a bailout. Bear stearns, an investment bank was bought out by J P morgan, a commerical bank, in March. This bailout was done to calm the markets and reduce systemic risk.

Well, next in line were Freddie Mac and Fannie Mae which were nationalized (federal takeover) for the same reason last week. Now this week it is the turn of Lehman brothers which seems to be on the verge or ready to file for bankruptcy protection. Merrill lynch, another Investment bank and brokerage, is in merger talks with Bank of america. After Lehman brothers, Merrill lynch seems to be the weakest firm and so it could come under attack.

More companies at risk
AIG, one of the largest insurers has fallen by 30% and is at risk now. So is washington mutual, another large bank. So we have a situation where the credit crisis (acutally bad investments on part of the banks and institutions) is now engulfing the financial system. Finally the S*** is hitting the fan !

We could very well see a domino effect and the US government may decide not to bail out any more companies. We could be in for some nasty times.

What does it mean for us ?
So how does it effect us ? Well if you are into medium to long term investing, not much. Actually the panic could create opportunities for us in india. I really don’t see Indian companies getting impacted (other than IT or export oriented companies due to a possible recession in the US and other economies). The impact for IT companies in the long run should not be too much. However there could a short term impact in companies with a high percentage of revenue in the BFSI segment.

All this mess, makes you wonder what kind of risk our banks and financial services firms are taking. I am repeatedly reminded of this statement by warren buffett


source: valueinvestorindia

9 great management lessons from Dhirubhai Ambani

Dhirubhaism No 1: Roll up your sleeves and help.

You and your team share the same DNA.

Reliance, during Vimal’s heady days had organized a fashion show at the Convention Hall, at Ashoka Hotel in New Delhi.

As usual, every seat in the hall was taken, and there were an equal number of impatient guests outside, waiting to be seated. I was of course completely besieged, trying to handle the ensuing confusion, chaos and protests, when to my amazement and relief, I saw Dhirubhai at the door trying to pacify the guests.

Dhirubhai at that time was already a name to reckon with and a VIP himself, but that did not stop him from rolling up his sleeves and diving in to rescue a situation that had gone out of control. Most bosses in his place would have driven up in their swank cars at the last moment and given the manager a piece of their minds. Not Dhirubhai.

When things went wrong, he was the first person to sense that the circumstances would have been beyond his team’s control, rather than it being a slip on their part, as he trusted their capabilities implicitly. His first instinct was always to join his men in putting out the fire and not crucifying them for it. Sounds too good a boss to be true, doesn’t he? But then, that was Dhirubhai.

Dhirubhaism No 2: Be a safety net for your team.

There used to be a time when our agency Mudra was the target of some extremely vicious propaganda by our peers, when on an almost daily basis my business ethics were put on trial. I, on my part, putting on a brave front, never raised this subject during any of my meetings with Dhirubhai.

But one day, during a particularly nasty spell, he gently asked me if I needed any help in combating it. That did it. That was all the help that I needed. Overwhelmed by his concern and compassion, I told him I could cope, but the knowledge that he knew and cared for what I was going through, and that he was there for me if I ever needed him, worked wonders for my confidence.

I went back a much taller man fully armed to face whatever came my way. By letting us know that he was always aware of the trials we underwent and that he was by our side through it all, he gave us the courage we never knew we had.



Dhirubhaism No 3: The silent benefactor.

This was another of his remarkable traits. When he helped someone, he never ever breathed a word about it to anyone else. There have been none among us who haven’t known his kindness, yet he never went around broadcasting it.

He never used charity as a platform to gain publicity. Sometimes, he would even go to the extent of not letting the recipient know who the donor was. Such was the extent of his generosity. “Expect the unexpected” just might have been coined for him.

Dhirubhaism No 4: Dream big, but dream with your eyes open.

His phenomenal achievement showed India that limitations were only in the mind. And that nothing was truly unattainable for those who dreamed big.

Whenever I tried to point out to him that a task seemed too big to be accomplished, he would reply: ” No is no answer!” Not only did he dream big, he taught all of us to do so too. His one-line brief to me when we began Mudra was: “Make Vimal’s advertising the benchmark for fashion advertising in the country.”

At that time, we were just a tiny, fledgling agency, tucked away in Ahmedabad, struggling to put a team in place. When we presented the seemingly insurmountable to him, his favourite response was always: “It’s difficult but not impossible!” And he was right. We did go on to achieve the impossible.

Both in its size and scope Vimal’s fashion shows were unprecedented in the country. Grand showroom openings, stunning experiments in print and poster work all combined to give the brand a truly benchmark image. But way back in 1980, no one would have believed it could have ever been possible. Except Dhirubhai.

But though he dreamed big, he was able to clearly distinguish between perception and reality and his favourite phrase “dream with your eyes open” underlined this.

He never let preset norms govern his vision, yet he worked night and day familiarizing himself with every little nitty-gritty that constituted his dreams constantly sifting the wheat from the chaff. This is how, as he put it, even though he dreamed, none of his dreams turned into nightmares. And this is what gave him the courage to move from one orbit to the next despite tremendous odds.

Dhirubhai was indeed a man of many parts, as is evident. I am sure there are many people who display some of the traits mentioned above, in their working styles as well, but Dhirubhai was one of those rare people who demonstrated all of them, all the time.

5. Dhirubhaism: Leave the professional alone!

Much as people would like to believe, most owners (even managers and clients), though eager to hire the best professionals in the field, do so and then use them as extensions of their own personality. Every time I come across this, which is much too often, I am reminded of how Dhirubhai’s management techniques used to be (and still remain) so refreshingly different.

For instance, way back in the late 1970s when we decided to open an agency of our own, he asked me to name it. I carried a short list of three names, two Westernised and one Indian. It was a very different world back then. Everything Anglicised was considered “upmarket.”

There were hardly any agencies with Indian names barring my own ex-agency Shilpi and a few others like Ulka and Sistas. He looked at the list and asked me what my choice was. I said “Mudra”: it was the only name that suited my personality. And the spirit of the agency that I was to head.

I was very Indian and an Anglicised name on my visiting card would seem pretentious and contrived. No further questions were asked. No suggestions offered, just a plain and simple “Go ahead and do it.” That was just the beginning.

He continued to give me total freedom — no supervision, no policing — in all my decisions thereafter. In fact, the only direction that he gave me, just once, was this: “Produce your best.”

His utter trust in me was what pushed me to never, ever let him down. I guess the simplest strategies are often the hardest to adopt. That was the secret of the Dhirubhai legend. It was not out of a book. It was a skillful blend of head and heart.

6. Dhirubhaism: Change your orbit, constantly!

To understand this statement, let me explain Dhirubhai’s “orbit theory.”

He would often explain that we are all born into an orbit. It is up to us to progress to the next. We could choose to live and die in the orbit that we are born in. But that would be a criminal waste of potential. When we push ourselves into the next orbit, we benefit not only ourselves but everyone connected with us.

Take India’s push for development. There was once a time our country’s growth rate was just 4 per cent, sarcastically referred to as the “Hindu growth rate.” Look at us today, galloping along at a healthy 7-8 per cent.

This is no miracle. It is the product of a handful of determined orbit changers like Dhirubhai, all of whose efforts have benefited a larger sphere in their respective fields.

In a small way, I too have experienced the thrill of changing orbits with Mudra. In the 1980s, we leapt from the orbit of a small Ahmedabad ad agency to become the country’s third largest ad agency — in just under a decade.

However, when you change orbits, you will create friction. The good news is that your enemies from your previous orbit will never be able to reach you in your new one. By the time resentment builds up in your new orbit, you should move to the next level. And so on.

Changing orbits is the key to our progress as a nation.

7. The arm-around-the-shoulder leader

I have never seen any other empire builder nor the CEO of any big organisation do this (why, I never adopted this myself!).

It was Dhirubhai’s very own signature style. Whenever I went to meet him and if on that day, all the time that he could spare me was a short walk up to his car, he would instantly put his arm around me and proceed to discuss the issues at hand as we walked.

With that one simple gesture, he managed to achieve many things. I was put at ease instantaneously. I was made to feel like an equal who was loved and important enough to be considered close to him. And I would walk away from that meeting feeling so good about myself and the work I was doing!

This tendency that he had, to draw people towards him, manifested itself in countless ways. This was just one of them. He would never, ever exude an air of aloofness and exclusivity. He was always inviting people into sharing their thoughts and ideas, rather than shutting them out.

On hindsight I think, it must have required phenomenal generosity of spirit to be that inclusive. Yes, this was one of the things that was uniquely Dhirubhai — that warm arm around my shoulder that did much more than words in letting me know that I belonged, that I had his trust, and that I had him on my side!

8. The Dhirubhai theory of Supply creating Demand

He was not an MBA. Nor an economist. But yet he took traditional market theory and stood it on its head. And succeeded.

Yes, at a time when everyone in India would build capacities only after a careful study of market expectations, he went full steam ahead and created giants of manufacturing plants with unbelievable capacites. (Initial cap of Reliance Patalganga was 10,000 tonnes of PFY way back in 1980, while the market in India for it was approx. 6000 tonnes).

No doubt his instinct was backed by years and years of reading, studying market trends, careful listening and his own honed capacity to forecast, but yet despite all this preparation, it required undeniable guts to pioneer such a revolutionary move.

The consequence was that the market blossomed to absorb supply, the consumer benefited with prices crashing down, the players increased and our economic landscape changed for the better. The Patalganga plant was in no time humming at maximum capacity and as a result of the plant’s economies of scale, Dhirubhai’s conversion cost of the yarn in 1994 came down to 18 cents per pound, as compared to Western Europe’s 34 cents, North America’s 29 cents and the Far East’s 23 cents and Reliance was exporting the yarn back to the US!

A more recent example was that of Mukesh Ambani taking this vision forward with Reliance Infocomm (which is now handled by Anil Ambani). In India’s mobile telephony timeline there will always be a very clear ‘before Infocomm and after Infocomm’ segmentation. The numbers say it all. In Jan 2003, the mobile subscriber base was 13 million, about 16 months later, shortly after the launch, it had reached 30 million.

In March 2006, it has touched 90 million ! Yes, this was yet another unusual skill of Dhirubhai’s — his uncanny knack of knowing exactly how the market is going to behave.

9. Money is not a product by itself, it is a by-product, so don’t chase it

This was a belief by which Dhirubhai lived all his life. For instance when he briefed me about setting up Mudra, his instruction was clear: ‘Produce the best textile advertising in the country,’ he said.

He did not breathe a word about profits, nor about becoming the richest ad agency in the country. Great advertising was the goal that he set for me. A by-product is something that you don’t set out to produce. It is the spin off when you create something larger.

When you turn logs into lumber, sawdust is your by-product and a pretty lucrative one it can be too! It is a very simple analogy but extremely effective in driving the point home. Work toward a goal beyond your bank balance.

Success in attaining that goal will eventually ring in the cash. For instance, if you work towards creating a name for yourself and earning a good reputation, then money is a logical outcome.

People will pay for your product or service if it is good. But if you get your priorities slightly mixed up, not only will the money you make remain just a quick buck it would in all likelihood blacklist you for good. Sounds too simplistic for belief? Well, look around you and you will know exactly how true it is.