Cleaning out the junk - shares

When you have your home painted, all the junk stares you in the face.

In my case, this includes a dusty old plastic file, with paper shares of companies that are no longer traded.

Since I had converted all the family's shares to demat form in 2003, it is extremely unlikely that this paper is worth anything; nevertheless I google the first name of the company on the first bunch of shares that come to hand. This is Hada Steel products, and my father bought the sharesf from Shri G.R. Hada, the promoter, in 1976. 

(The shares had been allotted to Mr. Hada in 1971, with a first call of Rs. 2.50; he paid another Rs. 2.50 in May of 1972 and the balance Rs. 5 in November of the same year).

Mr. Google throws up a list of companies under liquidation* in Chandigarh. The commentary, dated July 2013 has this to say: "It is pertinent to note that the said list is updated only till 2008". 

And, I love this comment: "

 "apparently the Ministry is not in business thereafter". 

Further, "You will also notice that  considerable time has elapsed from the date of Liquidation of some of these companies but hardly any company has disbursed the Liquidation proceeds to the shareholders till date."

Hada was liquidated on the 14th of May 1987, liquidation proceedings were Rs. 1.96 cr. Of course we haven't seen 1 paisa.

Unfortunate as this as, and poorly though it reflects on the processes of the Ministry of Corporate Affairs, my wife will be happy with the outcome - junk the junk paper.

*https://junksharesindia.wordpress.com/tag/hada-steel-products-ltd/

My first triathlon

I woke up before 5 a.m., with a sense of anxiety whose locus I couldn’t immediately locate. Aah, this was Abu Dhabi, and I was worried about whether I would be able to complete my first triathlon. I tried to meditate, to rein in my racing pulse. It didn’t work, and my worried heart continued to feed its anxiety back to itself, and roll on at 72 beats per second, way higher than my normal resting rate of 52-54. I figured it would stabilise once I got onto the course, and there was nothing I could do about it, since my body was clearly not ailing in any way.

The water in the Abu Dhabi Corniche is a cool jade, and at 22 degrees in early March, it had me pull on my wet suit for the first leg of the race. At 8:20, to the sound of a hooter, I launched into the water, in a wave of some 100 athletes. The water was astonishingly clear, and seeing the sand at the bottom helped calm me, and settle into an easy stroke, made easier by the unaccustomed buoyancy of salt water and wet-suit. A hundred meters into the course, I slowed, and surveyed the scene - the massive yellow buoys that marked our course out towards the mainland, in the direction of the handsome silver and copper buildings of the business district; the safety kayaks that set up broad channel guidelines, with smiling paddlers to ensure we didn't bypass any buoys. 10 minutes into my swim, I pulled around the outer buoy, hung a left, and headed down the coast, for the long leg. I was stroking strong and clean, my body streamlined; perhaps a trifle too fast? Remember, you have a long way to go. I turned on my back, suspended the race from my mind, and the warm sun and cool air. Just for a bit, then I focused on the buoys again - two more before another hard left, for the home stretch. At the ramp that marks the end of the swim, 4 young men dressed in yellow and red hauled me on to the indigo synthetic carpet that marked the way to the bike racks. I had done the 1.5 km in 36 minutes, well within my target. I unzipped my wetsuit as I walked to my bike, juggled between eating a banana and pulling off my neoprene layer, drank some Electral, then pulled on a t-shirt and shoes, helmet, racing number. The transition took me far too long, and at 9 minutes, the race statistics showed I was by far the slowest in my age group (55-59).

The bike ride is along one channel of the Corniche Road, which was shut off to vehicular traffic. Cool air, occasional gusts of wind, and a warm sun made for excellent biking conditions, with really sweet, encouraging water-boys and girls. 10 k out and back, two loops for the 40km ride that constitutes the Olympic distance. I was slow on my bike, trying to conserve my energy for the run, and took 1:36, with 3 stops. My target was 1:45, but given the excellent surface and traffic-free conditions, I think I could have done it in 1:30. I was also being very careful about the 'Draft Illegal' on the cycle course, so every time someone passed me, I would slow down so they were more than 10 m ahead of me in well under 20 secs - I didn't want to be pulled into a penalty box for something I didn't intend!

The run was 2.5 km out and back, 2 loops for my distance. With the bikes still whizzing up and down the Corniche, the runners were steered onto the broad, tiled sidewalks, our lanes painstakingly marked with traffic cones, with knowledgeable guides at every turn. I had budgeted 1:15 for the 10 k, and 5 m for the transition. I racked my bike and helmet fast, and  turned around in 3, but headed for the wrong exit out the bike paddock, so I had to double back, and ended up taking  5 minutes to get back on the track.. By now it was getting warm, but not hot, so the running was not as enervating as I feared. I was loading electrolytes at every aid station, and the conservative cycling must have helped, because I finished strong, with the 10 k in exactly 1 hr. This is just a couple of minutes slower than my Delhi training runs, so clearly I managed my fatigue levels well, and was adequately trained.

Net-net, I did the course in 3:28, well inside my target of 4 hours. I was not in the least bit dismayed that this placed me 14th out of 14 finishers in my age group - much better that than joining the 3 who didn’t finish. At my current level of training, I could have clipped at least 11 minutes off my timing - 4 by cutting the swim-bike transition to the race average of 5; 5 by being slightly less paranoid about the draft penalty; and 2 by making sure I exited the bike paddock from the right corner. This would have still placed me at the bottom of the charts, as the next slowest man in my age group came in at 3:15. Clearly I need to hugely improve my cycling speed - firstly, this is the largest component of the time on the course; secondly, I was 11/14 on the swim, and 10/14 on the run, so the discipline in which I am a huge laggard is the cycling. Given how much I enjoy cycling, revving it up should be great fun, as I fully intend to do the same course in 2016.

The ethnic make-up of the triathlon community was most interesting - the event was clearly an expat job, with all the organisers being the colonials - the ANZ community especially, and some salty Brits. The ‘coolie’ jobs were almost entirely done by Filipinos, with the odd 'desi'. There were 2000 athletes from all over the globe, but again, largely from the 3 nations above. There were a couple of groups of young entrants from Russia and Italy. Quite a few strong young Arabs - from all over the region, but primarily in the Sprint segment  - that's 500 m swim, 20 k ride and 5 k run. We were a group of 3 Indians, but other than us, and despite the enormous Indian populace in these parts, NOT ONE other South Asian. Weird.

All extremely energising, and I’m really looking forward to  next year, when I will be in the next age category, 60+!!

Taxes will be lowered, but in the meanwhile, here's a hike.

BUDGET 2015

The annual Economic Survey, published a couple of days before budget day, provides the context against which the Finance Minister makes his proposals. This year’s document was uncharacteristically enthusiastic about our situation, “The changing fortunes of India have been nothing short of dramatically positive”, with a decline in inflation, the shrivelling of the current account deficit, and a sharp recovery in economic growth.

This last has most economy-watchers surprised, since it is not supported by corporate results or tax collections; worse, if it is a statistical quirk, emerging out of the new method for calculating the GDP number, it may endanger the revenue estimates on which Mr. Jaitley’s second budget is based. Taxes collected by the government depend on economic growth, and if economic activity is over-estimated by the budget, government revenues will fall short of projections, putting a stress on the fiscal deficit, and demanding greater borrowing.

The Finance Minister has, in any case, disappointed those who believe in fiscal discipline, in pushing out by one year the date by which he will reduce the government’s fiscal deficit to 3%. He also postponed by a year the introduction of two fresh commitments - the implementation of the GST, and a reduction in income tax rates for companies, from 30% to 25%. Meanwhile, he had no hesitation in raising from 12 to 14% the incidence of service tax, a hike required for it to converge with the tax levels on goods.

And, though corporate tax will go down, at a date and rate to be notified, for the time being, it will go up. The Minister's speech said ‘rich’ individuals, defined as those with stated incomes over Rs. 1 cr per annum will pay an additional surcharge on income tax. Currently standing at 10%, this got hiked to 12%; what the Finance Minister did not say, but stands in the fine print, is that there is an identical hike for companies, as well. This additional surcharge is estimated to garner Rs. 9,000 crore for the exchequer. The only consolation is that Mr. Jaitley has abandoned the wealth tax, since it has not yielded the desired revenue.

Other initiatives that could be significant were mentioned, but not fleshed out, and would seem to be statements of intent, rather than specific proposals: these include easier bankruptcy laws, and a simplification of income tax rules governing individuals. Vague promises like these belong in an internal discussion or brain-storming, rather than on the floor of the house, and speak of incomplete homework, rather like declaring that yoga will be a charity. Someone will have to explain the budgetary significance of that to me, preferably while doing a headstand!

I don’t want to sound entirely negative about the budget, since there were two proposals in it that I really liked

- the first was that the employee contribution to the ESI (Employee State Insurance) Scheme will henceforth be optional. Anyone who has visited an ESI-run hospital will welcome this move. Mr. Jaitley’s remark about employees being hostage to the scheme was spot on. So are companies, and I wonder when he will make the employer’s contribution optional, too.

- the second was allowing ‘pass-through’ in Alternative Investment Funds* (AIFs), such that gains in these funds are not taxed in the hands of the individual investors, much as for mutual funds. India needs diversified sources of financing for new business ventures, and AIFs are particularly active in private equity and venture capital deals.

On the subject of funding investment, the most startling gap, to my mind, was in the area of funding public sector banks. The Economic Survey had this to say about their performance, “the best public sector banks perform well below private sector banks on average, recognising of course that PSBs may be burdened with greater social obligations that places them at a competitive disadvantage relative to the private banks. The subtler problem with public sector ownership is that exit from debt difficulties is proving very difficult.” Given the fact that PSBs account for over 70% of the banking sector, and their balance sheets are hugely stretched, I anticipated a huge commitment to enhancing their equity base. The number, at just under Rs. 8,000 crore, seems piffling, especially for an economy which is projected to grow at over 8%.

My editor at Outlook asked me how I thought this budget measured upto the expectations of a Big Bang. “0 on 10”, I answered. However, I had no such expectations, so I needed to assess it against  

more muted norms. I find it long on hope, but short on substance, and, I suspect, pinning too much on favourable winds in the larger world, most especially continued global liquidity, and low oil prices.

Fingers crossed.

*here's the reaction of TV Gopal, Chairman of TVS Capital:
http://www.vccircle.com/byinvitation/2015/02/28/budget-2015-break-through-indian-pe-industry

What an aunt means

MASI

A eulogy to my aunt, who passed away on Feb 15th, aged 91

Masi

Ma - si

Like mother. What a lovely word!

Aunts - and if you want to be gracious to the other sex, uncles as well - are like the emotional bonus awarded to us by the cosmos.

“You have your parents’ love”, it says. “Now here is an aunt, or two, or three.”

“You have a home. Oh, take another, and a third.” Places of welcome, of refuge, of bonding; of quiet comfort and cousinly camaraderie.

For several months, when I was 3 or 4, Masi’s home was our home, when my father was away in the UK, and we moved, bag and baggage, to the Air Force station in Kanpur. My most vivid childhood memories date from then - push-starting Rattan Uncle’s car, then falling to the road as the engine caught and revved away; going into town to order a pink frock with lace inserts for Cuckoo’s birthday; and her birthday cake. “What shape do you want your cake to be ?” she asked Cuckoo. “Puss”, Cuckoo said, monosyllabic at best. “Puss!”, exclaimed Masi. “So it shall be - and so I shall call you!” The nickname stuck for several decades, till the shifting tides of politically and socially correct language dictated we jettison that name.

Words reflect the character of the times. “Doughty” is not a word you hear these days. Perhaps because people are not doughty any longer. But doughty was my Masi - Two days ago, we were recalling how Masi sat on a muda on the baked patch of land that was D 68, Defence Colony, and supervised the building of the Suri home, brick by proverbial brick. All the while, knitting us sweaters, stitch by stitch, or knit by purl - again words you hardly hear these days.

On these doughty foundations are our lives built, we who take material ease for granted, who only dimly appreciate a generation that fought the ravages of colonialism, partition, war, and

socialism  - and built our homes, our lives. Through those years, Masi lived with a chuckle and a strong sense of reality.

A quarter century ago, I took Masi a few balls of wool in a deep sea-green. “It may be the last sweater I ever knit”, she said without self-pity -  knowing her fingers were beginning to stiffen with age and arthritis.”You had better look after it”. I don’t know about looking after it, but I wore it on mountain treks and on jeep rides in deserts, in front of fireplaces and electric heaters - wore it till the threads unravelled. Sadly, the wool was not as strong as the hands that knit it.

Last week, I again encountered Masi’s acute sense of reality. Her surgery had gone well, her wounds had healed; Aarti and Kucchy had set up all the systems to look after her convalescence and physical rehabilitation. But in her eyes I saw a strong warning, an intimation that her flesh and spirit didn’t have the strength to survive. Messages are lost in translation, and in our lack of courage to accept  them, but I did share with Kucchy and Aarti

that now the only thing to do was to love her, like we would a child.

Sadly, we never love our aunts the way they loved us.

Maybe that’s the way of nature, and we are designed more to love in turn. To pass on the love and the tradition, and the sense of the past, to each succeeding generation.

In my Masi’s passing, I would like to dedicate myself to doughtiness, to reality, to family, and to our children.

And it’s such a pity, I’ll never be a loving Aunt! Better luck next time, Pia.

For my son

I wrote this to my son on his 13th birthday. Cleaning out my files, I found it today. I think I could as well have written it for him on his 16th, a few months ago.

As you grow, remember:

The World Owes You Nothing. 
You were born with enormous blessings – a healthy body, a fine mind, a family which is happy, wealthy and wise; and above all, with love. From the day you were born, you have been showered with love. Count your blessings every day of your life. Whenever you feel sorry yourself, just look outside your own little world, and remember how much you have to be grateful for.

You Can Be What You Want

Religious people say God made us in his own image. I don’t know, because I don’t know much about God and his image. But, what I do know is that we are blessed with the ability to shape our own lives. 
Want to be a dancer? 
Then dance - today, tomorrow, and the next 1000 days, and I promise you will be a good dancer. 
Put your all into it, and you will be a great dancer.
Want to be a Physicist?
Study physics - every day, for the next 2500 days, and you will know, really know physics.
Your Dadi had only one ambition – to have a happy family. She worked hard at it, and you know how that felt!
Above all, don’t look for excuses outside yourself.

Find Yourself

In your adolescence, you will want to ‘belong’ to groups or gangs. This is normal.
You will look for love and attention outside the family. This is hormonal. 
If the groups or people from which you seek attention don’t give it to you, you may go through periods of feeling low. You may, in turn, feel like rejecting the family. This, too, is normal.

But it is a mistake. 
Family ties give us an amazing amount of stability in our lives, and they are the ones that strongly abide. Home means “the place where, when you knock on the door, they have to let you in”. Whether we live in Delhi or Satoli, Bangalore, or Bangor, Maine, your parents’ door, and heart, will always be open to you, to your thoughts, and to your concerns. 
But the most amazing tie you have is to yourself. It is the one tie you carry wherever you go. Find joy in your own being, in the wonder of your own creation, in the inner workings of your own mind. Find satisfaction in your life, and you will never be lonely or depressed.

I am not suggesting you become a hermit. But remember, the most attractive people are those who cherish themselves. The most loved people are those who have found a way of living comfortably within themselves.

Find Good Friends

One of the great joys of growing up is the exploration of friendship and intimacy outside the family. Be free with the first, more discriminating with the latter. 

Cultivate discrimination. The Sanskrit word is ‘viveka’. It is one of the most valuable concepts I know. If we have viveka, we learn to tell good friends from hangers-on; true value from surface sheen, and the abiding from the temporary.

Good friends are an amazing strength – they are powerful mirrors into our life. They tell us what is best about us, and kick our ass when we are screwing up. Like every aspect of our lives, they need to be cultivated, nurtured, and valued.

But, when something excites you, truly grabs you, don’t feel scared to go it alone. Each of us is unique, which means that we will often have to walk alone.

ENJOY YOURSELF

Life offers amazing opportunities for discovery, enjoyment and abandon. Seize those chances, and grab the day.

Carpe diem

A Hit-and-Nearly Run - in 5 tweets

Hit-and-nearly-run at India Gate this morning. Rajan Yadav rams his white Figo into the rear of a labourer's cycle and backs to scoot.

A crowd gathers and I whip out my camera, so he stops. "The cycle emerged from nowhere". On the broadest road in Delhi!

"While you were looking at your phone", I guess. "No. It had fallen down, so I was looking FOR it, not AT it". Helps the labourer?

"I'll give him Rs. 250." 1 thousand, I say. "500.I only have 500". "Call a friend, or I call the cops." I call 100. He finds 1 k.

I hand the 1 k to the labourer, who isn't badly hurt. Wait for the police to arrive. Rajan, you are a callous, careless youth.

Those 5 tweets, with punctuation rectified, were my story of this Sunday morning. A Tourist Patrol vehicle of the Delhi Police arrived in a few minutes, noted my name and address, and had a brief chat with the labourer, who was loading his damaged cycle into an auto-rickshaw.

I cycled on; half an hour later, I saw a flurry of missed calls. Turned out they were from an ASI* at the Tilak Marg Police station, which had sent a van to the location, to follow up my complaint, and found no one at the spot. I told the ASI about the Tourist Patrol vehicle, and he said he had subsequently heard about their intervention.

The Delhi Police were - both in person, and on the phone - most civil and efficient.

Retail Investors are getting shut out of new ventures

Since investing is for the future, I decided to consult my 16-year old son about companies and sectors he saw as holding promise.  “Technology,” he said. “Phones, and computers.” Like Apple, I thought. That’s a US company. Samsung? Korean. There is, of course, Micromax, but that’s not yet listed. “Can’t really invest in those.” I told him. “Other gadgets?”, he offered “Like TVs, fridges, air-conditioners?” “The Koreans practically own the space”, I explained. “And none of them have listed in India” “If I was a little younger, I would have said, candy”. “Chocolates dominate candy markets around the world. And I would love to own shares in Cadbury. But that’s now owned by Mondelez, and they delisted Cadbury India a long time ago” “Amul?” he asked. That’s a cooperative federation, and its shares are not openly traded. The soft drink space is dominated by the global rivals, Pepsi and Coke, and neither of them have Indian listing. Through its Frito-Lay division, Pepsi also dominates the Indian snack food market, with Kurkure and Lay’s potato chips. The number two snack-food player, with the Bingo range, is ITC. One could buy ITC shares, but you’d be buying into a conglomerate which purveys everything from cigarettes to agarbatti, and exercise books to hotel rooms. The largest player in aviation, Indigo, is also unlisted. Times of India, the largest print media brand, is owned by Bennett Coleman, a privately held company. Among television channels, two market leaders, Sony and Star, are owned by foreign companies. The digital space is completely dominated by US brands, whether Google, Twitter, Facebook or Instagram. The battle for Indian e-tail is likely to be an intense and keenly fought one, with Flipkart and Amazon India both drawing up investment budgets that top a billion dollars, but not a paisa of that is coming from the Indian retail investor.  You get the drift - as an ordinary investor in listed Indian companies, vast swathes of business are not looking for my money. This makes me feel deprived. The figures are eloquent - in all of 2014, Indian markets have had 5 IPOs*, with an aggregate issue size of Rs. 1355 cr. To put that in context, the market cap of Indian stocks is close to 1.8 trillion US dollars, or 100,000 crores. That’s a lot of zeros, but if I got my math right, the Indian IPO market in this year of boom and optimism is .001% of the market cap. The investor is secondary to the process of raising capital! The stock market trades only in second-hand goods. The factory-fresh merchandise is ear-marked for financial intermediaries of all manner - VCs, PE funds, pension funds, investmant banks, sovereign wealth funds. I’m not writing this piece to plead for my right to invest. My intent was to explore three thoughts: • how constrained my opportunities are, which I have done above • whether regulation or other structural issues have moved the market in this direction • how an individual might expand his pallette of opportunities. *IPOs in 2014:  Shemaroo: 120 cr., Sharda 352 cr, Snowman 197 cr, Wonderla 181 cr. , Engineers India 505 cr.

The Falling IPO Market The IPO market has been falling, both in numbers and money collected, since 2007. Last year saw a late issue by Powergrid that bumped up the number (it was a 7,000 cr. IPO). But thats still tiny compared to the 34,000 cr.+ issues in 2007 and 2010, both great bull market years. This year is a bull market, by any standard, except the enthusiasm to list companies through an IPO.

In context, Zomato, Snapdeal, Ola cabs and Housing are Indian businesses that raised money from private markets (venture capital). Snapdeal alone raised 3,700 cr. - more than all the public market IPOs in 2014 put together and multipled by 2.  In the next part, we'll speak of regulatory hassles companies face when they go public, and how we can look forward to participating in a growth story that is almost exclusively restricted to non-retail investors today.