'Skin in the Game' Reform: A Game Changer in the MF and Wealth Management World to Save the Retail Investor

Indian benchmark indices are at a lifetime high and hundreds of stocks that have been the market darlings are at their yearly and some 2-yearly lows. This fall has been precipitated in a matter of last -mere 5 months.

Obviously most of the fund managers (mutual funds, private wealth, PMS schemes) are finding corners to hide where they can find respite and concoct some solid theories and reasons for wealth destruction last seen only in 2008-2009 – after all these were the very same guys on CNBC, just very recently, who were chuffed at their stellar performance and recommending shares ala Vakrangee Manpasand and PC – forgetting that it’s a unusual proxigean spring tide. And as we have all heard before --  that all s*^@# rises in a high tide.

Some fund managers like Porinju (having faced perhaps the maximum erosion in their recommended portfolios) have been graceful enough to publicly accept the same and have learnt their lessons. I have great respect for people who have a clear intent and are quick to concede defeat when defeated and are quick to self-deprecate and crack a joke on themselves. Hats off Porinju. Your recent confessions hold you in good stead with small yet well informed investors like me.

Some relatively bigger names in money management business who have destroyed a much larger share of the savers wealth are finding ways to repackage some established theories  of legends such as Benjamin Graham (BG) and Buffett (WB) to avoid backlash and scrutiny. Some are repeating BG’s theories of quotational losses and appearing in full page interviews.

The public opinion is rife as to why the regulator of markets (SEBI) has introduced a volley of measures to simplify the mutual fund industry by reclassification of schemes and defining the size of companies on basis of market cap of companies and % of funds invested in a category of companies.

What’s wrong in it. Actually nothing.

Mutual funds and fund managers had created an ocean of incomprehensible financial products where schemes were being launched such as special situations, arbitrage, emerging companies, vultures picks, future stars etc etc. Just the names of the new schemes were being used and repackaged to amass fortunes (read expense ratios and bonuses).

Basically, all of this is a demonstration of the fund manager's alleged belief and necessity at that point of time to launch  new schemes using publicly available information based on specious research.

And the market regulator tried to streamline this so that the gullible investor, reposing trust in the mutual fund – basically the fund manager, sees some method in madness.

Indian markets are most volatile for the following reasons. The size of speculation is 29 times the real market capitalization. For the record some of the most sound and advanced and mature markets such as the USA, Germany and the UK have just 3-5 times the size of derivatives markets in comparison to the  cash market.

So I am in absolute awe of the regulator that all the recent froth in the market was removed judiciously by introducing mechanisms such as ASM and increasing the margin money requirements in the F&O trades. And it surprises me that investors are acting and reacting adversely because SEBI has introduced measures that will allow overheated and irrational markets to cool off and that will reduce the sheer gambling in the garb of investing.

I know of 2 middle class retired uncles who leave home every day with 10k of their pension money, leverage and take positions worth 8-10 times, get wiped out with just a 5-7% volatility in the prices and come hope sheepishly only to restart the next day to recover their losses. Derivatives are definitely weapons of financial destruction as they have no underlying asset/value and are merely an arbitrage between one person’s fear and another’s greed

I am shocked when people ask me questions – do you play markets. PLAY? I ask – is it a sport?

Statistically speaking, If you simply play an odd even on a roulette in a casino you have a better chance of making money than investing in the markets.

So, in this maze of multiple schemes, thousands of options, there is just one reform that SEBI needs to implement that could be a game changer in the interest of a common small investor.

That reform should be called the ‘Skin In The Game’ reform.

I have a 10-point recommendation for the entire MF and PMS industry where creative marketing and false promises disclaimed by reams of fine print are called out.

• No advisor who gives advice on TV or print should be allowed to give a disclaimer.
• Irrespective of the size of the AUM, every fund should have a max cap of expense ratio not as a % of size but as a pure number. Why should a fund with AUM of 2 billion dollars or more charge over 3-3.5% in fees that amounts to close to 60 million dollars. After all incremental effort required to manage a larger or a much larger fund is just the salaries of a few more research analysts.
• Distribution fees offered by the fund houses should be reduced to less that 30-40 basis points and distributors mustn’t be offered perpetual commission on the funds brought in.
• All fund houses must be forced to have a similar fee structure for distribution and fund management fees (expense ratio) to disincentivise mis-selling.
• Why should an investor pay 3% for the first 7% ROI when Indian treasuries or Bank deposits are guaranteeing the same with zero risk. Fund houses and managers should get no or negligible fees and salaries respectively for generating returns up to the yields on Govt Bonds.
• The fund manager should swear under judicial oath that they and their close relatives as defined by the regulator for the purpose of gifting wealth would only invest in the fund managed by self and except for real estate and liquidity as desired by any individual, all investments in financial instruments will only be that fund that’s managed by the family member.

Some advocates of democracy might start jumping and call this preposterous. But how else do we curb counter actions by people acting in concert against the interest of small saver.

Yes, it’s a tough proposal but then if a fund manager wants to earn hefty bonuses, he must figure   this out and have a complete skin in the game.

• Fund managers only get a fractional % of their salaries if they return up to or less than the return offered by Govt treasuries.
• Infinite bonuses make fund managers take risks and positions that neither the gullible and ill-informed investor nor the regulator approves. Every fund manager must have a cap of a maximum performance bonus irrespective of a stellar return or a flash in the pan performance in any particular year.
• Is there any exit load on bank deposits? NO. Why should fund houses charge any exit load. An investor wont exit if the fund is performing and if the fund isn’t, and an investor wants to book losses and exit, why should the fund house be allowed to screw the investor twice over. Exit fees should be scrapped.

And lastly the law around this should be so robust and penalties so humongous that no one can pull off a Houdini on investors.

Rajat Gupta – the poster boy of Indian diaspora was pulled up badly and almost destroyed by the US law for one small mistake of his. The readers of this blog all know in their heart of hearts that almost every promoter and every insider of a listed company in India indulges and misuses the insider info for personal benefits. Would anyone accept that ever anywhere else in developed economies? And would Indian law be robust enough, ever, to instil the fear of God??

Only God knows……...

manu also writes in The Huffington Post

Financial Harakiri Made Easy

My first stock market investment was in year 1992 when my dad gave me some 100 shares of indo gulf fertilizers and I remember it was a bad trade as I traded all my life savings of Rs 17000 in a savings account to the then market price of those 100 shares that was Rs 7600.

But laissez-faire prevailed and I got a share certificate with a green transfer form attached to it. I still felt nice and confident because I saw an opportunity to learn the nuances of stock markets at 17 and make sense of those 2 pieces of paper.

How those 100 shares panned out in life is a matter of another piece at a different point of time but for the record that and all additions of life earnings added to timely systemic investments as on date have returned 17.8% CAGR since 1992.

Someone tried hard to sell me the Portfolio Management Scheme of MotilalOswal 12 months ago claiming that they have consistently returned 38% to their investors since inception. Financial advisors and relationship managers have a unique ability to make muppets out of gullible investors for whom a marginal delta in comparison to the AAA rated securities means the world and 38% is as good as it can get.

More amusing was, that, my research revealed that Warren Buffet’s life to date CAGR has been close to 20% and Motilal and its agents claimed a CAGR of 38%. I closed my eyes and visualised Buffet serving tea to Mr. RaamDeo Agrawal and Mr. Motilal Oswal if they have consistently been able to beat the Buffet hurdle.

Of course I never invested in Motilal or any of its alleged schemes but did keep a track on their presumptions and in July 2016 when they came out with a public research report on a share called manpasand beverages and a follow up report reiterating their stand in May 2017 and eventually in Jan 2018, I bought some shares only to follow and keep track. Look at these reports and you would have wanted to sell your house and invest in their recommendation.

Cut to May 2018, Manpasand Beverages is down  72% from its price, has eroded an ocean of investor wealth and small gullible investors are left holding their MTM losses in the hopeless world of being treated as muppets.

Recently I was invited to join a concall addressed by the same Mr. Raamdeo Agarwal as he was opining on Crude Oil prices. I thought WTF….. How can anyone opine on crude prices when even the King of Saudi Arabia might be clueless on the same. In a VUCA world where a tweet by trump can make DOW rise or fall by 2% or take crude prices thru the roof, where a posturing by Kim where Kim fires a useless missile - roils the world markets – oh by the way I am talking of Kim Jong Un of Korea and not Kim Kardashian, here is an Indian commentator commenting on the crude oil prices.

So when I asked him whats his accountability on Manpasand, because I invested my entire bonus and savings on the basis of his company’s research report, he was flustered and advised me that the concall was on Crude, refused to take ownership of his company’s recommendation and gave me the contact of his head of research Gautam Duggad. (GD)

Pronto – I called Mr. Duggad for some insight as I wanted a word of solace and advice as to the way forward to an investment that eroded approx. 75% of my wealth entirely on his and his company’s recommendation.

GD was flustered and angrily asked me who my relationship manager was. I asked him – ‘how is that relevant. Did your research report mention as a disclaimer that Motilal is answerable to only those people who reveal the names of their relationship managers when the shit hits the roof'.

And Mr. Duggad banged the fone down on me. I became a complete full-circle muppet. Or at least was treated like one.

Whats the point…….

1. Any financial advisor claiming to outperform the Buffet hurdle is making a Charlie out of you.
2. If you are able to beat the returns offered by bonds issued by central banks of your respective countries – without taking a risk – you are doing fine.
3. Keep investing your surplus and believe in the power of compounding rather than relying on specious research reports by companies finding and feeding their army of muppets with erroneous asymmetric information.
4. Invest in the quality of management rather than the sweetness or sexiness of companies like manpasand.
5. Capital protection is far more important that elusive returns on investments.
6. Endeavouring to marginally beat the returns offered by robust central banks will hold you in far better stead than endeavouring to beat the inflation rates of Zimbabwe and Venezuela.
7. Be patient in markets – they can be irrational on either side for prolonged periods of time. If your holding period isn’t forever then you shouldn’t be in markets even for 10 minutes.
8. Don’t follow any stock advisor blindly – Do your research and it takes no rocket science to identify stable well managed companies.
9. A boring company that is debt free, out of market favour, consistently giving dividends and growing at about 10% YOY and definitely not recommended by analysts on CNBC on a daily basis, is likely to give you a far better return than the sexed up companies finding the favour of analysts on TV channels, who are themselves mostly doing the opposite of what they are recommending on the TV.
10. And lastly why should you pay 3-4% as management fees to your fund managers (who don’t even guarantee a prevailing bank rate for fixed deposits and who play the markets on your money) – only to lose your capital and then hear them blame the systemic issues of markets.

Human beings have short memory and people are afraid to acknowledge disastrous consequences of the bias of cognitive dissonance in the face of questionable advice on business channels.

Vakrangee, PC jewellers, Gitanjali Gems and Manpasand (these can be all googled and enough information can be found online about the dubious managements of these companies) have been recommended by some of the well known stalwarts of the market and just these 4 companies have eroded close to 35 billion UD Dollars of shareholders wealth in less than last 90 days.

Try doing exactly opposite to what the commentators recommend on the television. You are likely to make more money than by following their advice.

Someone needs to be eventually hanged for this. Whether it’s the fraudulent promoters or the overzealous self-serving analysts.

The decision entirely rests with the muppets.

Manu also writes for The Huffington Post and can be contacted on mrg45@hotmail.com

The Invaluable role of “Chief Business Obstructers” in the modern corporate world

Darwins theory of evolution in its simplistic form says ‘The fittest survive and they fight to compete, survive and procreate’

Societies have evolved over generations where economic progression, education and character have all moved in a synchronous manner. Some of the most developed economies like the US, UK and France have had their fair share of tribulations such as wars, diseases etc but have demonstrated that they maintained their financial, military and intellectual hegemony from a global perspective.

Societies in the first world countries prided themselves with superiority and there was a race among these nations to establish themselves as a leader in one thing or the other. Inventions (technological, financial and medical) of every form happened in the western world.

So why did India get left behind so miserably, when evolution of homo-sapiens happened almost at the same rate/manner across the globe.

The answer lies in one word “Corrupted Greedy Character”

But this didn’t happen by design – it was the natural evolution of a nation where its large population zealously procreated and grew roughly 4 times from 350 mill to 1.3 billion in just 65 years.

And Darwin’s to blame majorly for the present character of this nation. Or at least his theory explains this at best.

Lets reflect objectively on the causal factors.

India can primarily be divided into 2 kinds of demographics Rural-Agrarian and Urban-Corporate.

The rural-agrarian have relied on limited means, producing and consuming and storing for the proverbial winters/rainy days – Simple.

The urban-corporate are living in small over populated cities with limited resources and infinite greed among themselves to survive, grow, hoard and procreate. Another phenomenon happened in the Indian sub-continent in the last 50 years. Indians were primarily fighting floods, droughts and starvation and suppression in the last 300 years, but the last 50 were marked by rapid economic developments, lesser vagaries of nature, economic development led by rapid and almost alarming shift from agrarian to services based economy and a large part of urban population having marginally more than required.

Yet the starvation gene (let’s call it the gene X) still continued to exist and despite the rapid progression, in last 50 years, on all fronts namely economic, medical, food, transportation and habitation, the gene X that encourages to hoard, be greedy and survive at all costs and mostly at other’s expense, persisted and didn’t mutate at the same fast rate as the economic development of this sub-continent.

That’s why Indians over eat and eat till they are proverbially full (read bursting after a meal). They are generally a dissatisfied lot wanting more than what they deserve or can actually earn.  And that explains why inspite of being a rather superior nation on many fronts, this subcontinent still behaves primitive, back stabs, in-fights on trivialities and sadly the educated in the so called corporate world spend majority of the time pulling the other one and the surrounding ones down because of a misplaced sense of depravation and insecurity that purports corruption, greed and above all ‘obstruction’.

And that catalyses the breeding of ‘Chief Obstruction Officers” in the corporate world too. Fair warning pls – no COO should feel attacked – we could even call these assets - Chief Business Obstructers or Chief Financial Obstructers. They are all the same. For brevity lets just stick to CBO’s

C N Parkinson wrote a powerful essay in 1955 that pretty much defined the expansion of bureaucracies in an organisation and how work aligns and expands itself according to people available for its completion and organisations are perpetually insecure. Every insecure company necessarily wants to have infinite multiple layers of inefficient CBOs to keep an alleged check and balance.

But lets talk of the role that these CBOs play in the fate of organisations.

These people have never actually handled a business in its true sense. (the corner shop paanwalas are better businessmen because they invest their own money and have a skin in the game). CBOs pretend to be confident, very knowledgeable, stretched on the chair as if on a hammock (during an official meetings – but that’s a body language that hides inferiority in the garb of stretched posture), their condescendence and pretentiousness would put thought leaders such as Kotler and Prahlad to shame

Nothing amuses me more than seeing people from disparate backgrounds, accidentally landing themselves in position of authority, pretending to be Prahalad’s reincarnation, aspiring to make a mark without an iota of responsibility, assuming authority because no one questions, pretending to have a connection with GOD (when God least cares), and then start preaching on topics and industries – of which they have no knowledge.

We call them “Chief Business Obstructers”

 

A friend was sharing his personal experience when he used to run a business that grew 5-6 times in 4-5 years. Customers were happy, colleagues were thrilled, profits were good. So much so – the growth rates encouraged his company to start thinking IPO. Nothing gives an executive more joy when peers in the industry start talking about small businesses that become a formidable force and everyone starts talking of these small businesses as the next big thing.

 

Enter – “The Chief Business Obstructor”

Corporate world is funny – everyone pretends to abide by Thomas Bertman’s adage “don’t fix it – if it ain’t broken” yet no one practices it indeed. On the contrary system gives authority to incompetent people who know nothing about a business and these wise men try and fix every single thing that’s not broken - till the business is on its  knees, is on ventilator support and eventually breaks down.

Corporate world is replete with examples of excellent businesses that tried to do a lot when nothing was required to be done and businesses and leaders who did nothing when a surgical intervention and action was required.

But there are clear and distinct signs that leave a trail of evidence, sometimes discovered much later (similar to the tail effect of a comet) when its too late, that sow the seeds of demise of well run, well managed, perfectly fine companies irrespective of their size.

I spoke to about 9 different C and D level executives and have endeavoured to summarise below the signs we must look out for – if we care for the longevity of the companies.

1. When setting up businesses do not allow the old loyalists from other divisions (who have no freaking clue of the new businesses) to opine.
2. Keep things simple – Product , Market, Marketing, Sale, Customer, Customer Service. This is all that matters. Anything beyond that is all farce.
3. Always almost make your projections keeping a buffer for difficult and unexpected times. Microsoft excel is a wh@#e – you can titillate it to whatever extent. It almost always fakes in real life.
4. Every executive who leverages the company, must be locked in (by hook or crook) into company’s employment for the length of the debt. Else the promoter will be left with the hot potato at the end while the executive would have taken his/her hefty bonuses and digested. Does this sound like Fuld?
5. Executives who fix up meetings 4 times a week on disparately different subjects – Weekly updates, strategy for the week, strategy for the month, long term strategy probably need to be fired immediately because they have nothing better to do and are only trying to establish their relevance at the cost of some other business and someone else’s time.
6. There is a trend to ask for weekly monthly and yearly cash flows week after week after week as if the flow of cash is the living account of the flow of bile of the Chief Business Obstructer.
7. To establish their own importance, some CBOs suffocate the businesses of cash to an extent that their artificial importance gets established as if they are The Fed and 90% of the time of the business is spent in making excel sheets or symbolically accounting for the CBO s bile.
8. When reviewers start commenting on everything that they don’t have info about and keep showing the business and its CEO in questionable light just to justify ones’s 8 figure salary and pretend to be custodians of the business – pls definitely get wary.
9. CBOs ensure that the business doesn’t have enough money to even pay its salaries while they are happily gloating in the warmth of their annual bonuses and planning trips across the globe.
10. CBOs unleash a volley of 20 something’s analysts, seeking data from companies with the sole purpose of making themselves and CBO’s look like saviors but in reality setting a rot of mission fatigue within the organisation.
11. Pretend to be owning the business at someone else’s expense, without investing a penny and feigning ignorance when shit hits the roof and finding someone else to blame.

The few reasons why a handful of businesses have survived over ages are – when..

1. Owners and CEOs have trusted a handful of performing executives over long periods of time.
2. Businesses aren’t judged week on week but are judged year on year and brand-on-brand and reputation-on-reputation and happiness-on-happiness (teams and customers)
3. Owners don’t allow fraudulent people with all authority and no responsibility to exist in the system without any measurable accountability.
4. Owners call-out the fakery by converting the hefty bonuses into equity and making these well-wishers participate in the success/failure of the company.
5. The fundamentals of running a business are kept simple where cash is king and debt is death.
6. Businesses aren’t enamored by the western style of cash flow discounting and valuing the future elusive cash into present ongoing party.
7. HBR in a series of popular blogs have lauded the Indian baniya style of doing business and has given an infinite importance to collaborative culture and care for all.
8. Businesses are managed with lean teams that are empowered and productive and not meeting 10 times a week to discuss strategy when none really exists. Take for instance Berkshire Hathway's office in Omaha that manages 510 Billion in marcap of businesses with a handful of 25 employees.
9. And lastly….
10. Rather than reinventing the wheel of management styles – unconditionally back the performers, remove the flab and rapidly weed out the fakers.

Manu also writes for HuffPost

Hopelessness in 'God's Own Country'

Being attacked by a arms wielding mob of 150 and running for cover just to stay alive, isn’t something one imagines in ones wildest dreams, least of all see in reality. But the events of 23^rd Nov 17, have shaken me and my belief on the future of this nation.

The company that I work for is known to build and operate some of the finest wellness retreats in the country. A relatively young brand, we have won some rather prestigious awards for our art of delivering hospitality and for our wellness programs. We were smug at having created our third fine hotel, just 27 rooms, spread over 8-9 acres, kissing the Vembanad lake and were getting ready to welcome our first guest on the 5^th Dec.

75 odd crores (approx USD12 million) of spend over 5 years made it a rather well appointed upmarket hotel of global standards. We have always been proud of our business practices such as highest paymasters by industry standards, highest no of training hours imparted per employee and treating our guests as if we would treat our families and parents. We thought we are formidable force if we generate employment for approx 500 people.

We heard that a few local bodies alleged an encroachment by our hotel to the extent of .0044 and .0050 sq mts at 2 spots (a notice to this effect is with us now) and to protest this encroachment a march is being carried out by the local DYFI arm. I quickly relied upon my calculator to convert this astronomically large number into sq feet and discovered that we had allegedly encroached 0.053 sq ft and 0.047 sq ft of land at 2 places. For the readers of this blog, and to put things in perspective this area is just a tad bit larger than the area a shirt button would occupy.  And without giving us a chance to explain or to respond the militant arm chose to punish us by vandalising our hotel and setting us back by 6 months and destroying property worth 10 Crores.

Properties can be rebuilt, Monies can be recovered but the soul of an entrepreneur, confidence of employees and confidence in the state once broken can never be recovered.

A state/nation where you can get away with anything (as I mentioned in another blog), have negligible chance to be punished for a crime, and where on a working day, hundreds of young people can be mobilized and dangerously motivated to destroy and plunder an asset that contributes to taxes, employment and brand of a state that alleges to be God’s own country – that country and state has no/little future.

Our dependence on services contributing approx. 60% of our GDP up from 30% in 1950 and agriculture at 17% - down from 55% in 1950 might sound great from an empirical perspective, but is an utterly dangerous statistic. Just 30% of our population is contributing to 60 percent of GDP. This implies that the balance 980 million or say a billion people are contributing to a mere 30% of GDP (approx. USD 736 billion).

Do you get what I am getting to…

A billion people are contributing to just 736 billion USD of GDP or exactly 2 USD per day. A slightly deeper analysis (pls don’t curse me for confusing you with numbers) reveals that if amongst these billion, approx. 200 million are still making their 2 ends meet somehow by contributing approx. USD 2000 per year, the last 800 million Indians are merely contributing 336 billion USD in GDP (420 USD per person per year)

Doesn’t that explain why our hotel was so brutally plundered and destroyed for allegedly encroaching a piece of land literally measuring the size of a shirt button? Without even giving us a chance to show the legal land records and valid permissions in our possession.

This is God’s own country.

Artificial intelligence is scary and may it be damned – for it is threatening to put more and more people out of jobs. If the world has to be saved, more people need to get into farms and more factories need to start bellowing smoke. A greater percentage of the global population needs to contribute significantly to the global GDP’s rather than it getting concentrated just within the services sector.

Or else be warned that ours wasn’t the last hotel or business that got temporarily destroyed by the zealots pretending to be GOD. This epidemic where mobs can be mobilized to cause plunder and destruction at the drop of a hat could be a national/global problem in a few years.

We have failed the dream of Nobel Laureate Rabindranath Tagore for his vision of this country penned in 1910 in the epic poem…

Where the mind is without fear and the head is held high

Where knowledge is free

Where the world has not been broken up into fragments

By narrow domestic walls

Where words come out from the depth of truth

Where tireless striving stretches its arms towards perfection

Where the clear stream of reason has not lost its way

Into the dreary desert sand of dead habit

Where the mind is led forward by thee

Into ever-widening thought and action

Into that heaven of freedom, my Father, let my country awake.

Niraamaya Kumarakom will rise like a phoenix soon and we will welcome our guests in a few weeks, but lets not allow the nation and the democracy to fail.

Manu also writes in Huffington Post

Recipe of being a First World Country! Fix these, Fix India!

1.

In the silicon valley of the east – Bangalore, I have been to Manipal Hospital atleast 5 times in September to visit my close friends or their family members suffering from dengue. It is surprising and rather interesting that everyone I know between Delhi and Bangalore, knows atleast 2 other people down with dengue. I didn’t know whether to feel amused or sorry when parents of my

cousin, suffering from dengue, visiting Bangalore to tend to him caught dengue themselves and they laughed it off saying the entire family had a 7 day holiday at the hospital.

But what a shame.

Shame on the nation and its citizens (who are an equal party in keeping their country dirty) that while we cannot stop the chest thumping in self-praise on our intellectual, economic and scientific advancements, a significant population is just figuring out their dengue and malaria.

Simple math throws some startling numbers. Every dengue patient ends up spending USD1500 for a treatment in addition to a loss of productivity of about 10 days. Readers of this piece who are good in math would be appalled by the broad numbers if they choose to calculate the national and the notional loss.

2.

I spend an hour each day each way to work and this 2 hr commute gets reduced to a mere 40 mins on a Saturday or Sunday (if I ever have to visit office) 8% of my life and 30% extra fuel (because of traffic inefficiency) gets wasted in negotiating issues of traffic. Imagine 8% of your precious time that could be spent on filial bliss is taken away by traffic jams.

Approximates figures according to data available online pegs India’s daily fuel consumption at 4.4 million barrels per day. If traffic makes it 30% inefficient (wasteful burn) , we waste approx. 1.3 mbpd or 206.68 million litres per day. Staggering number translating to approx. USD190 million per day. Or 69.35 billion USD per year.

Let me remind you that’s just the wastage due to inefficiency, bad roads and traffic jams.

India imports a major part of its fuel using precious foreign reserves and it’s a pity that 70 billion USD gets wasted due to poor infrastructure and quality of roads and bad traffic jams.

3.

In India you can almost get away with anything. Whether its Mallya who is basking in the sprawling mansion of Hertfordshire, or JP associates who have duped 32000 home buyers of their life savings or top 50 defaulters of Indian Banking system who collectively owe close to 80 billion USD to the banks. All this is really just the tip of the iceberg. The collective loot by top 500 politicians, businessmen and officials could be upwards of 500 billion USD. The result is that markets are short of cash. Genuine businessmen don’t get affordable loans. Existing businesses cant expand and if at all - they get sicker by taking on un-affordable debt. I hear that some businesses in India are paying upto 10% in processing fees of commercial debt (even for fully collateralised loans) to financial institutions. One would wonder whether there is another major scam brewing in the banking sector or banks are funding sub-prime loans for superior upfront processing fees.

And irony – with 8-12% of stressed loan book, the outgoing chairman of SBI is still being hailed as a having left a legacy. Whereas I clearly remember that in her incoming quarter (As Chairperson) the profits dropped by some staggering 80% and the banking fraternity hailed her as cleaner of skeletons left behind by the previous leadership.

An this is just one bank!!

Hypothesis:

The Acchhe Din rhetoric resonated far and wide in every citizen’s imagination. The demonetisation and GST decisions required balls of steel and a pristine intent. The jury and naysayers are still criticising PM Modi (rightly or wrongly – I wont opine here) but no Prime Minister has stirred the imagination of a nation as much as Modi has. But the bedrock of any nation lies in the health of its citizens, the quality of life that a country offers and the corruption that rots the country like a rogue virus that has no cure.

Bharat wont become swachh by AmitabhBachhan talking about it on prime time or politicians grabbing every photo-op a few times in a year by holding brooms in a localised area. Bharat will become swachh by putting the 70 billion dollars wasted each year – just due to poor roads and infrastructure and traffic jams - to good use.

Infrastructure requires cement and steel and our nation can produce all of it indigenously and thereby easily improving the quality of life of its citizens in every respect and also generating millions of jobs - dramatically.

Any road that erodes within 5 years of being metalled – its responsible PWD engineer, its contractor, and the sanctioning officer should be subject to harshest punishment – perhaps capital. Vietnam recently executed an officer on charges of corruption. I smiled when I read this news. With a law like this India’s population would be reduced to half.

Similarly the bankruptcy laws are being seen as a parachute to the defaulters who have siphoned and stashed hundreds of billions of dollars. And now are declaring bankruptcy and will still continue to live lavish lifestyles beyond what a commoner can fathom. Why are all the sanctioning officers from all banks under whose signatures the defaulting loans were sanctioned not being pulled up in retrospect. How are we different in our approach towards our bankers compared to Fuld of Lehman who retained his bonuses and was still giving lectures to the wall street elite 5 years after the demise of Lehman.

India has dramatic beauty and locations better than some of the best visited places in the world – but foreign tourist arrivals hasn’t grown beyond 9 million per annum in a country as vast as India in last 70 years. Just the city of Istanbul gets more foreign tourists annually, than all of India. Its all because of a dirty nation – both to the eyes and in its soul.

Much is left to be desired in the 70^th year of our independence where on one hand we pride in having sent the cheapest rocket in first attempt to Mars and on the other we are just fighting a losing battle with the mosquitoes and spending a significant part of our lives in traffic jams and in ever increasing polluted and corrupt environment. And where most of the recent actions by the present leadership failed to demonstrate the intended results.

Manu also writes on huffpost
Twitter @manurishiguptha

Infosys Saga - Who is Omkar Goswami by the way!!

Mr. N R Narayana Murthy has been under some criticism for a while for having raised some questions that remain unanswered by the erstwhile CEO Vishal Sikka or the present Infosys Board, ‘Founders Go Away – leave the company alone’ has been a rhetoric that’s been echoing in the present board rooms of Infosys.

So when I read a scathing attack by Omkar Goswami in an open letter to Mr. Murthy – I wondered , By jove He must be one hell of a fellow to make such an advice and would have founded bigger better companies than Mr. Murthy. Well yes he has been on the board of many of them but I don’t think Omkar Goswami has to his credit an iota of what Mr. Murthy has achieved in his lifetime.

When I wrote about Sikka on 10^th Jan 2017 in Huff post, I thought I had crossed a bit of a line in making some assumptions. But it’s a great feeling to be proved right, now and then, and that too in public domain.

Now back to Omkar Goswami

Google search threw up a Wikipediapage on Omkar Goswami and yes he is an economist by education, he might be a carrying a chip on his shoulder for being from Oxford, Masters in Economics, and of course a doctorate in philosophy by writing a dissertation on Jute economics which in today’s parlance is seemingly irrelevant on the face of it.

I dug deeper and the sum total of his life resume can be written as follows….

…A well educated economist, academician, and a columnist of repute with a doctorate on a defunct topic in today’s world.

Well I hadn’t ever heard of Omkar Goswami till 2 days ago but let me ask him a few questions since the season of open letters and editorials… (a’la Infosys) is in full spring.

Dear Omkar Goswami…….

1. Have You managed a P&L ‘ever’ in Your life
2. Have You ever founded a company
3. Have you ever been regarded a father of any industry
4. Have You ever held a responsibility where an ocean of investors have remained vested on your credibility
5. Have you ever taken a decision that has created immense value for yourself or for any company and its shareholders
6. Have You set a precedent of transparency and compliance, such as, quarterly reporting and guidance, far before it became a statutory norm for listed companies.
7. Do you have any claim to fame of being beyond a consultant? (a consultant is popularly an analyst/advisor who has all the opinion and authority in the world without any direct responsibility)
8. Does anyone know you or has respected you as an epitome of corporate governance in any circle whatsoever.   And Lastly.....
9. Have You been listed as one of the 12 greatest in anything by anyone?

Mr. Omkar Goswami – if the answer to any of the above was Yes – I would have heard of you for sure.

And if the same questions were to be put to Mr. Murthy, the answer to each one would be a resounding Yes.

It surprises me that people who have the skin in the game and have founded companies and nurtured these for a major part of their life and have earned and commanded (through their deeds, hard work and thought leadership) respect and adulation are being questioned by people who have no skin in the game. Most of the present board members of Infosys are retired professionals / executives who are now playing an extended innings (I am sure) for some remuneration.

If the companies are to survive beyond a global average of 33-35 years, decision makers and opinionists must have a skin in the game. Else it takes just a few quarters of bad decision-making to bring down companies and takes decades to build back the same.

Mr. Murthy-, the world (India and beyond) has looked upto your values and have endeavoured to imbibe within itself, what you have preached and practiced all your life.

So what if you asked a few pertinent questions or a few documents of a deal to be made public or raised a doubt on the remuneration of someone who has little evidence of achievement in Your opinion.

You founded Infosys, It’s is in your right to do so and I am sure millions along-with me stand with you in your ideology and in spirit.

Manu also writes on Huffpost

7 pounds at birth to 7 pounds at death - lessons in my Granny's death

Just recently as I was sifting thru the ashes of my grandmother trying to find the last few solid pieces of the bone (to be taken to Haridwar to be immersed in the Ganges – a hindu tradition), I reflected on the purpose of life, on the way human beings are judged and how life is really so short. When we are born we are about 7 pounds and the lifeless pieces of bone that get left behind in a small sac are also about 7 pounds.

Some gut feel encouraged me to visit her during the last week of her life and I spent a few precious hours with Biji (as we fondly addressed her). Her rhetoric hadn’t changed in years. Worrying about the unmarried, the unwell and the childless in the family. At 88 She had an elephants memory and a sharp mind. The welfare of her 6 brothers, 4 daughters, their kids, and about 100 souls on her direct radar seemed to be her sole responsibility that she felt God had bestowed on her.

The futility of her worries almost always irked all her grandchildren till we laughed and made fun and she would get annoyed. But what a towering personality she had. Everyone was scared of her out of respect and then one day she didn’t wake up. Passed away peacefully. And emotionally orphaned so many of us.

At the funeral I was overwhelmed to see over 350 people who travelled from significant distances for this 88 year old woman and that’s when I got a rather significant lesson of life.

In this short and insignificant life (on which I wrote a piece in my earlier blog) and on your last day on earth, no one will judge you for the car you have driven, or the size of the house you had built or the money you made in your life. For ‘some small time’ people will remember you for the love and affection that you left behind and the respect you garnered through your deeds.

Lesson

We fretter way too much about updating our career resumes and LinkedIn profiles. All of this is important as a small means to an end and in the 80 year runway that a human being has, - Yes do give importance to the career resume. But don’t leave the sight for a second of Your life resume.

The only thing that matters (as David Brook says) is the obituary/eulogy resume.

This 88 year old partially educated woman who had weathered the partition of India – lost her husband at 44, a son when he was 38, and always had a bare hand to mouth existence had an almost perfect eulogy resume – and that I figured out when I saw the moist eyes of some 350 odd people.

Does anyone remember Babur in 1526 and how the Mughal Empire was established. In years between 1526 and 1857 (merely 331 years) art, architecture, language, textile, shipbuilding and steel-making was so evolved that by 1750, India produced 25% of the world’s industrial output. No mean feat by any stretch of imagination. No one on this planet has been able to replicate Shahjahan’s Taj Mahal built in 1632 despite all the architectural advancements. Pertinent to note that Shahjahan died a prisoner – not able to fully appreciate his creation.

Bahadur Shah Zafar  the last Mughal died in 1862, a despondent, in Exile, a prisoner and with no control over the legacy of 4 centuries marking the end of one of the greatest Empires.

Lesson

You will be remembered if you create a Taj Mahal (symbolic). Else you are just wiling away time in a futile hope to leave a mark. Bill and Melinda Gates will be remembered for having eradicated so many diseases on a major part of this planet but God-No – not as much for Microsoft. Anyone who judges you on a so called QOQ or YOY and anyone who feels pressured by the same is a just an inconsequential organism in the spectrum of humanity and evolution.

Would anyone remember the stock price of Amazon or Apple, 50 years from now. The infinite powers of evolution would have made present innovations and technologies obsolete in less than 50 years and most of the companies and human beings alive today - would be dead.

It amuses me when I hear of jargon such as ‘wealth creation’ ‘competitive advantage’ ‘barriers to entry’ ‘sustainability’ etc etc. It’s all so shallow and meaningless.

Endeavor to do something remarkable that will last beyond a quarter or a year or 10 years. When collectively each one on this planet endeavours to create a symbolic Taj Mahal, many Taj Mahals will eventually come up.

Grandmother operated her life in a binary manner. Pass/Fail, Good/Bad, Right/Wrong. It surprises me that everything in the present world is grey nowadays. He is good – but, he is right – but, we should do this – but, I agree with you but letme come back to you …….

Lesson

In this short life have the courage to stand by your values and convictions. Love and befriend humans and do it with all heart and unconditionally. Hate – and do it with grace and enough vengeance that only the fittest survive in the interest of humanity. People who compromise on principles and values die every single day in an already short life.

I will miss you Biji – you led a simple and graceful life and your death taught me the life resume I would want to build.

Manu also writes on Huffington Post

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