Information – Knowledge +
‘To be successful, you need a compelling vision’
‘To be successful, you need a compelling vision’
March 24, 2008 | 17:30 IST
Shirish Nadkarni has led an interesting life. He studied at some of the world’s most illustrious schools — IIT and Harvard. He was the tenth Indian to join IT behemoth Microsoft back in 1987, contributing to its incredible growth?and played a pivotal role?in the overall online strategy for the MSN portal.
He then went on to set up his own?company TeamOn Systems, which he sold and is now heading portal Livemocha.com, a portal that helps people learn a number of different languages.
In an e-mail interview with rediff.com’s Shifra Menezes, he shares his experiences and lessons young entrepreneurs can learn from them.
Source: rediff.com
Give us a brief sketch of your career in the industry and the agencies you worked with before Livemocha.
I started my career at Microsoft in 1987 in product management. In fact, I was the No 10 Indian to join Microsoft at that time. It was a great time to join Microsoft and was able to contribute to the huge growth that Microsoft enjoyed in the PC software business.
Towards the end of my career at Microsoft, I was responsible for driving the overall online strategy for the MSN portal. In that context, I was responsible for Microsoft’s entry into the two largest application categories on the internet — email and search.
On the e-mail front, I led the acquisition of Hotmail and, on the search front, I led the partnership with Inktomi, a leading search provider. I left Microsoft in 1999 and started my first company, TeamOn Systems.
At TeamOn, we developed a unique wireless e-mail technology for mobile handsets. TeamOn was acquired by RIM (Research in Motion) in 2002 and the technology we had developed became BlackBerry Internet E-mail which now has several million users.
I stayed on at RIM in an executive capacity and helped RIM grow their consumer business. In 2006, I left RIM to start working on my next venture which became Livemocha.
You have studied at some of the illustrious colleges in the world. Tell us a little bit about what it was like at an IIT and Harvard.
It was truly an incredible experience going to both IIT and Harvard. You get to interact with some of the best students and professors in the world and the competition is very tough.
However, the experiences were different in some respects. With IIT, the focus was very much on very rigorous theoretical learning — as you know, the IIT entrance exam is legendary for asking very tough problems.
With Harvard, the focus was much more practical in nature. Instead of just learning theory, it was an all case study based approach with theory being taught in the context of the case studies being taught.
Both approaches have their place in the learning process and one is more effective than the other depending on the discipline that you are in.
How did Livemocha come about? Tell us a bit about what the portal does and its growth.
Livemocha emerged out a personal need to teach my own kids a foreign language. I was disappointed with the existing solutions in the market and felt that the internet provided a perfect platform to connect people so that they could each leverage their native language expertise to help each other.
Livemocha combines in-depth instructional content for six different languages with? a worldwide community of language learners. The site has experienced growth.
We launched the site in Sept 2007 and have already grown to over 300,000 users from 200 different countries in a matter of 5 months. India is one of the biggest source of users on our site.
What kind of assignments did you handle in the early days of your career?
My first assignment at Microsoft was a Product Manager for Microsoft Mail. It was an amazing experience since e-mail (which we take for granted today) was hardly commonplace. It was an opportunity to establish this whole new category of application on the PC platform.
My work schedule was quite hectic in the early days since Microsoft was a fairly small company in those days and one didn’t have access to many resources. It was not uncommon for people to work 60 to 80 hours a week. But we didn’t mind since it was great to be at the forefront of new technology adoption
Tell us a bit about how you went about setting it up TeamOn Systems.
I started TeamOn Systems in 1999. To fund the company, I went to a number of prominent angel investors who I had known. These included people like Sabeer Bhatia, the founder of Hotmail, Pete Higgins, Executive VP at Microsoft, Mike Slade, CEO of Starwave etc.
This was very valuable not just for the funding that they provided but more importantly for the tremendous amount of advice and experience they were able to provide.?
The acquisition by RIM happened in 2002 and was prompted by RIM’s desire to enter the “prosumer” (mobile professional or individual business user) in addition to their traditional enterprise business.
At TeamOn, we had built a unique consumer wireless e-mail technology which was a perfect fit for RIM’s requirements. The acquisition was very successful for RIM — the technology that was built by TeamOn became BlackBerry internet e-mail which is now being used by several million BlackBerry users.
What kind of challenges have you faced in the course of your career, and how have you learned to deal with it?
The biggest challenge I faced was with my first company, TeamOn Systems. We originally started TeamOn Systems with the idea of creating a small business e-mail solution (sort of a super charged Hotmail for business users).
However, the dot com bust happened right after we got venture funding for the company and many of the partners who would distribute our application went out of business. So we had to retrench and look for new opportunities for the technology we had built.
Given the advent of data applications on mobile handsets, we decided to redirect our technology to the mobile space. It turned out to be a fortuitous move and a successful one at the end through the acquisition of the company by RIM.
Do you believe in the ‘lucky break’ factor, or do you believe that an innovative, new idea is all you need to guarantee career success?
I believe in both innovation and luck. You can be very innovative but sometimes you are ahead of your time.
So it is important to have some luck as well to be at the right place at the right time. But luck by itself is not sufficient — you have to be prepared to take advantage of the “lucky” opportunities that present themselves.
What do you think is the most common mistake newcomers make? What advice do you have to give them in this regard?
The most common mistake that newcomers make is to not focus on what exactly is the value proposition that would get people excited about using your offering. Sometimes you get carried away with some interesting idea or technology but if its not something that really solves a real need, it is not going to be adopted. As most venture capitalists would say “You need to sell Aspirin not vitamins!”
Having come such a long way in your career, what do you think remains to be achieved? Which dreams are yet to be realised career-wise?
Right now my immediate priority is to make Livemocha into a global company that is teaching at least 50 different languages to millions of users all over the world and creating a better understanding between people from different countries.
However, beyond Livemocha, I want to dedicate my time to help upcoming entrepreneurs achieve their dreams as well as make a major contribution in the education field (Livemocha is the first effort in this regard).
My dream is to eventually start a series of volunteer schools that provide free math and science tutoring to kids.
Did you have a mentor, and if so, how did he/she inspire you to steer your career in the right direction?
I have not had a specific mentor but have relied on a number of senior executives for advice and guidance. People who have had big influence on my career are people like Pete Higgins, former Executive VP at Microsoft and Jim Balsillie and Mike Laziridis, co-CEOs of Research in Motion.
Has your career impacted your personal life? Do you feel like you’ve had to sacrifice a few personal pleasures in favour of your job, or are you a workaholic, thriving under pressure?
I have been happily married for the last 20 years. My wife Mona is also Indian. I have 2 kids — Rohit and Priyanka who are both in high school in the US. My career certainly has had an impact on my personal life though my family, especially my wife, has been very supportive.
I do, however, take time to spend with my family and also contribute time to the community.
Currently, I am volunteering my time as the President of the Seattle chapter of TiE. I am also on the Board of Trustees of a new school in the Seattle area.
How do you spend your free time?
I love to play tennis and watch sports. In fact, my dream is one day to watch Roger Federer play at Wimbledon before he retires.
What is the last book you read or are currently reading?
I love reading books?– currently I am reading the Age of Turbulence by Alan Greenspan.
What would you say is compulsory reading for young entrepreneurs?
One of all time favourite?business books is called Positioning: The Battle for the Mind by Al Ries and Jack Trout. It describes in very simple terms how to build a compelling and a unique positioning for the product that you are trying to market. Without clear “positioning” that differentiates one’s product from others, an entrepreneur has no real chance of success.
What tips do you have for today’s youngsters looking to set up their own company? Other than a good idea, what is required from them?
To be successful, you need to have a compelling vision that you are willing to go all out to achieve. It can’t just be a product idea. It has to be a vision about how you are going to change the world with this idea. And you need to complement your vision with an incredible amount of drive because undoubtedly, you will experience many challenges and disappointments.
Without the vision and the drive, it will be very hard to get to the pot of gold at the end of the rainbow.
8 things you should NOT do in a GD
8 things you should NOT do in a GD
Kshipra Singh | March 18, 2008 | 09:46 IST
A group discussion or GD, is a form of many-on-many discussion. It has become an inseparable part of admissions to management institutes and your selection in campus interviews.
A GD is held to identify certain traits that companies and institutes like to see in their employees or students. Let’s take a look at the traits which the evaluators look out for in a candidate during the GD. ?
~ Knowledge: Whatever you do in a GD, your knowledge about the subject can’t be replaced by anything else. You are required to talk in a GD but inputs that don’t contain any substantial value will not help in any way. Be a voracious reader to increase your knowledge on various subjects. Newspapers, TV, magazines, news portals etc are great sources of knowledge.
~ Alertness and presence of mind: In a GD you are required to carefully listen to the other person’s thoughts and keep an argument, example or a supportive statement, fact, example ready to participate in the discussion. Here comes into picture your alertness and ability to think and act immediately. As you participate in a GD, make sure that you sit with an attentive mind and keep taking down the relevant points put forward by others.
~ Communication: You may have a lot of good points to put across but if you can’t communicate them clearly, you won’t stand a chance when it comes to impressing the evaluators. Practice communicating in a clear and effective way with your friends, family or study group.
~ Confidence: Your self confidence adds a lot of value to your candidature. Look at every group member as you speak, avoid too much hand movement and looking at evaluators.
~ Leadership and team skills: Your participation in a GD clearly establishes not only your leadership skills but also your capability to work in a team. To meet the objectives, a good leader has to be a team player.
~ Goal orientation: Since so many people participate in a GD, the chances of the discussion moving away from the subject are high. Your focus on the goal can get you some extra points.
Now, as you are being evaluated for the above discussed traits, you must avoid things that can work to your disadvantage and might cost you the selection. Here are some things that you must avoid doing as a GD participant:
~ Initiating the discussion without proper subject knowledge
Although initiating the discussion helps you get the immediate attention of the evaluators, sharing irrelevant details just for teh sake of talking can work to your disadvantage. Start first only if you know the subject well otherwise wait for others to start and get a feel of the subject before entering into the discussion.
~ Snatching another’s chance to speak
Give your group members a chance to speak. Talking more won’t get you through the GD. In fact it will give the evaluators a feeling that you are not a team player. Making short and relevant contributions of 20-30 seconds 3-4 times in the discussion is enough.
~ Interrupting others
Let the other person finish his comment before you speak. Interrupting someone is counted as a negative trait. Remember, it is a discussion not a debate. Don’t jump at the conclusions. Listen carefully to the other person before putting your point across.??
~ Dialogue
In a GD you are expected to communicate with all the members of the group. Do not keep looking at one person while talking. Establish eye contact with all the members of the group. It is a many-on-many discussion not one-on-one.
~ Shouting or dominating
Keep you emotions in check. Do not try to dominate the others or let your emotions rule you. Sometimes it might happen that a group member might say something that hurts your feelings such as a comment on your race or religion, make sure that you do not get into an argument. Your focus should be to effectively meet the goals of GD topic.
‘I nailed my IIM group discussion & interview!’
~ Showing offYou have to put across your knowledge on the subject during the GD but you have to be very careful about the thin demarcation between showing off and knowledge sharing. For eg, using statistics and facts during the GD is a good thing to do but you must not overdo it enough to nauseate the group members.
~ Low self confidence or insecurities
As we have seen earlier, one of the traits evaluated during a GD is your self confidence. Do not hesitate to speak confidently, even if you might be short of ideas or knowledge on the subject. Listen to others and put across your thoughts in a clear and audible voice. Make sure that you make eye contact with all the group members.
~ Slang and negative gestures
GD is a formal discussion. Avoid informal words and negative gestures. For eg avoid words like gonna, wanna, ya etc. Similarly avoid gestures like pointing fingers, tapping the desk with the pen.
If you ensure that you do not commit these mistakes during the GD, you will not have to worry too much about the negative marks and your chances of getting through it also become much brighter.
Kshipra Singh is a contributor to http://www.CareerRide.com, a website that addresses technical and personal aspects of an IT interview. CareerRide also provides sample CVs and answers to questions asked in a personal and technical interview.
Sociable parents’ kids better at exams
Sociable parents’ kids better at exams
15 Mar 2008, 1150 hrs IST,PTI
LONDON: Here’s another reason to party – a new study has showed that children born to sociable parents are better at exams.
Researchers in Britain have found that parents who are involved in clubs such as political parties, voluntary groups or religious organisations are likely to have kids who succeed at school, The Daily Telegraph reported on Saturday.
According to the University of Sheffield study, children score better in reading, maths and vocabulary tests the more socially active their parents are.
“Children’s scores in reading, mathematics and vocabulary tests are positively associated with the extent of their parents’ formal social interaction. The results suggest lack of social interaction may have adverse intergenerational effects in terms of educational attainment.
“Children of parents who engage in relatively low levels of social interaction attain relatively low scores in reading, maths and vocabulary,” according to the study’s lead author Professor Sarah Brown.
Height of jealousy
Height of jealousy
Press Trust Of India
London, March 13, 2008
Shorter men are more likely to be jealous husbands and boyfriends than their taller counterparts, suggests a fascinating research, which may finally have proof for the controversial ‘Napoleon complex’.
The studies, reported in the New Scientist journal, believes it reflects insecurities among men who are not society’s “ideal” height. The much-talked about ‘short man syndrome’ is a phenomenon where short men compensate for their lack of height by inculcating aggressive tendencies, often associated with Napoleon, Mussolini, Hitler and Attila the Hun.
In the study carried out by the University of Groningen in the Netherlands, researchers asked men and women how jealous they were in their current relationships.
In another similar study, involving 119 male and 230 female students, the participants were quizzed on their reaction if they saw their girlfriend, or boyfriend, flirting with a stranger. The findings suggested that shorter men were far more likely to say they were jealous than taller ones.
“Taller men tended to be less jealous, and the tallest men were the least jealous,” the Daily Mail of Britain quoted the researchers, led by Dr Abraham Buunk, as saying. Among the women, average sized females were the least jealous- while tall and short women were the most.
Repeated studies have shown that women rate taller men as more attractive and powerful than shorter ones, while men prefer “average” women, usually who are a couple of inches shorter than them in height.
Ant world is rife with royal corruption
Ant world is rife with royal corruption
12 Mar 2008, 1325 hrs IST,ANI
WASHINGTON: They may be held-up as the ideals of social co-operation but ants can be as sneaky as humans and their colonies are rife with cheating and corruption–with the royal line being the worst offenders, say scientists from the Universities of Leeds and Copenhagen.
Ants have always been thought to work together for the benefit of the colony rather than for individual gain, but Dr Bill Hughes from Leeds’ Faculty of Biological Sciences has found evidence to shatter this illusion.
With Professor Jacobus Boomsma from the University of Copenhagen, Hughes discovered that certain ants are able to cheat the system, ensuring their offspring become reproductive queens rather than sterile workers.
“The accepted theory was that queens were produced solely by nurture: certain larvae were fed certain foods to prompt their development into queens and all larvae could have that opportunity,” said Hughes.
“But we carried out DNA fingerprinting on five colonies of leaf-cutting ants and discovered that the offspring of some fathers are more likely to become queens than others. These ants have a ‘royal’ gene or genes, giving them an unfair advantage and enabling them to cheat many of their altruistic sisters out of their chance to become a queen themselves,” he added.
But what intrigued the scientists was that these ‘royal’ genetic lines were always rare in each colony.
Hughes said: “The most likely explanation has to be that the ants are deliberately taking steps to avoid detection. If there were too many of one genetic line developing into queens in a single colony, the other ants would notice and might take action against them. So we think the males with these royal genes have evolved to somehow spread their offspring around more colonies and so escape detection. The rarity of the royal lines is actually an evolutionary strategy by the cheats to escape suppression by the altruistic masses that they exploit.”
However, the scientists’ discovery does prove that, although social insect colonies are often cited as proof that societies can be based on egalitarianism and cooperation, they are not quite as utopian as they appear.
“When studying social insects like ants and bees, it’s often the cooperative aspect of their society that first stands out,” said Hughes.
“However, when you look more deeply, you can see there is conflict and cheating – and obviously human society is also a prime example of this. It was thought that ants were an exception, but our genetic analysis has shown that their society is also rife with corruption – and royal corruption at that!” added Hughes.
The study is published in the Proceedings of the National Academy of Sciences of the USA
Here’s how you can live a happy retired life with pension plans
Here’s how you can live a happy retired life with pension plans
Vidyalaxmi, TNN
A chief executive officer of a leading insurance company had an interesting thing to say on pension plans: “The pension plan of Indians until two years ago was to give birth to a maximum number of sons. The hope was at least one would take care of the aged parents in their golden years.” This school of thought has been challenged with the breakdown of the joint family system.
Indians rarely think they need to bear their retirement costs, nor do they expect the government to play a role. Most Indians feel that their children will bear their retirement costs. But falling fertility rates are resulting in smaller families. The growing stress of mobility in work force is impacting the joint family system and informal support systems are crumbling,” says Aviva India managing director Bert Paterson.
According to an all-India survey done by the Invest India Economic Foundation, less than a sixth of those about to retire, around 113 million by 2016, are covered by some form of pension. Pension plans are one such investment-cum-saving option offered by most insurers for your golden years. In such plans, you pay a fixed premium over a certain tenure, which is the term of the policy. Then the net premium, after all the deductions, is invested by the insurer in various instruments, depending on the type of plan.
Pension plans available
There are two kinds of plans — endowment and unit-linked. Endowment plans invest your money in fixed income products. So you may find the returns low, although safe, after discounting the inflation. The other variant is ULIPs, which invests the corpus in stock markets, balanced funds, etc. Then comes the ‘with cover’ and ‘without cover’ plans. The ‘with cover’ pension plans, as the name suggests, comes with a life cover that takes care of any untimely demise. The most commonly available plan today is the ‘deferred annuity’ plans.
In these plans, the pension does not begin immediately. You can defer it up to a period of your choice. Let us assume you buy a pension plan with a tenure of 25 years. Then your annuity/pension will begin after 25 years from the effective date of your policy. Apart from that, you also have the option of deferring your vesting age. Suppose you have opted for a pension plan, in which the annuity would start from the time you turn 45. But if you plan to work for another five years, then you can defer your vesting age to 50, says Pranav Mishra, senior vice-president & head of products, ICICI Prudential Life Insurance.
Start Early
It is also advisable to start investing early. That will help you save a significant corpus for future. There is certain cost attached to your postponement of investment.
If one delays buying a life insurance policy even by five years, the premium goes up.
Flex it
Another point check is to ensure that the plan offers flexibility so that it fits the customer’s needs as they change. The trend is to opt for a ULIP pension plan with a fixed allocation strategy.
Know the charges
Every pension policy comes at a cost. Briefly, you have a fund management charge, policy administration charge, premium allocation charge and switching charge. A switching charge, however, is applicable only after you cross the switching limit available in every policy. According to industry estimates, the policy administration charge is anywhere between 0.20% and 0.50% of the premium. It depends upon the frequency of the premium and the premium amount.
Premium can be paid annually, semi-annually, quarterly or every month. Fund management charge falls anywhere between 0.75% and 2.5% per annum and the switching charge, if any, is usually Rs 100.
Death of the policyholder
This clause may vary from policy to policy. If the policy holder dies during the tenure of the plan, then the nominee gets the sum assured or fund value, whichever is higher in case of sum assured plans. If the nominee is the policyholder’s spouse, then he/she has an option of either an annuity or a lump sum amount. In case of zero sum assured policy, the beneficiaries get the fund value.
Other options
Should you lock yourself into an annuity plan? Most neutral financial advisors say no. One reason is the annuities are taxable. Secondly the returns are also low.
You earn anywhere around 6-7% on your annuities. Today, a five-year bank deposit, which also offers a tax break on investment under Section 80C offers 8.5-10%. Other monthly income options are the Senior Citizens’ Savings Scheme (SCSS), which offer 9% and the post office monthly income scheme (POMIS) that offers 8%. But again the tenure for these instruments is six years and eight years, respectively.
“I like the concept of annuity. It covers the life risk as an investor gets payouts till his/her life ends. But the rates are even lower than bank FDs. You get around 8-9.5% interest rate on your FDs. Similarly you park your money with the insurer but you earn only 6-7%,” says Swapnil Pawar, a certified financial planner with Park Financial Advisors.
If you have saved a higher corpus for retirement, then you can look at fixed maturity plans or even debt funds as they are more tax efficient than FDs.
Rishi Nathany, another certified financial planner, says annuities are low worldwide. At least in the US, social security benefits are available for senior citizens. But in India, the senior citizens have no such option.
The fact is that annuities ensure regular cash flow in retirement years. In other cases you have to customise your plan, be it a FD or FMP for a regular stream of income.
Stock splits make stock more affordable and liquid for retail investors
Stock splits make stock more affordable and liquid for retail investors
Prerna Katiyar, TNN
Monday morning, when Mr Gupta opened his demat account to check his stocks, he was taken aback. “What has happened to my shares? How can it fall to this level? I bought the share at Rs 1,000 and it is now trading at Rs 240! Has the whole market crashed today or is it just my stock?” he wondered.
This had happened because the company has announced a 4-for-1 stock split and extra shares were still to be delivered in his account. Poor Mr Gupta, who had missed the company announcement, kept thinking he had incurred heavy losses. So let’s make the case easier for him and find the devil in the detail.
What is a stock split?
Stock split is the process of splitting shares with high face value into shares of a lower face value. It is like getting Rs 100 note changed for two Rs 50 notes. Does it change the value of your money? Not really. But now, you also have two smaller denomination notes which would be easily accepted by small vendors. A stock split increases the number of shares in a public company. The price is so adjusted such that the market capitalisation of the company almost remains the same.
Why split stocks?
Companies usually split their stock when they think the price of their stock exceeds the amount smaller investors would be willing to pay. “It is aimed at making the stock more affordable and liquid from retail investors’ point of view,” said Indiabulls CEO Gagan Banga. Generally, there are more buyers and sellers of shares trading at Rs 100 than say, Rs 400 as retail shareholders may find low-price stocks to be better bargains. Stock splits are usually initiated after a huge run-up in the share. This run-up may be linked to the performance of the stock.
All that brouhaha about bonus
All that brouhaha about bonus
Prerna Katiyar, TNN
The Reliance Power bonus issue is finally out. The company declared a 3:5 ratio on Sunday giving three extra shares for every five shares held by a shareholder. These shares were issued to only non-promoter shareholders. The record date for the issue is still to be declared by the stock exchange.
What is a bonus issue?
Any company, which has excess reserves that it may have build by retaining part of its profit over the years, may decide to convert some amount into its share capital by issuing bonus shares. This doesn’t change the market value of the company. “It is one of the ways, in which reserves of the company get capitalised,” said PN Vijay Financial Services managing director PN Vijay. In case of Reliance Power, the company is converting its share premium reserves into bonus.
What is bonus ratio?
New shares are issued in the proportion of their holdings. If the bonus ratio is 1:2, for every two shares held by the shareholder, he will get one extra share. This means, if someone was holding 100 shares of a company, he will get 50 free shares making total holding of shares in that company to 150 instead of 100. Rajesh Exports was another company to issue bonus. The ratio declared by the company was 2:1, which means every shareholder got two extra shares for each share held.
Why a bonus issue?
It is one of the ways for companies to capitalise their excess reserves and reward its shareholders. “Rajesh Exports has reserves in excess of Rs 500 crore and so the company decided to pass on the benefit to the shareholders in the form of bonus issue,” said Rajesh Mehta, the chairman of the Bangalore-based jewellery maker Rajesh Exports. Also, a bonus issue is seen as a sign of a company’s good health.
How do shareholders benefit?
The shareholders get the bonus shares for free, thus bringing down the cost of owning the shares and the company’s profit too remain intact. “It’s a win-win situation for both the issuing company and shareholders. While the company doesn’t need to generate free cash and issues the bonus shares from its accumulated reserves, the shareholders get free shares,” said JP Morgan Asset Management India chief executive Krishnamurthy Vijayan.
How does the company benefit?
Corporate actions like dividend payouts and bonus issues are ways of rewarding shareholders. While dividends are paid from profit after tax (PAT), bonus shares are issued from excess reserves the company may have. This means in case of the latter, the company is able to reward the shareholders without touching its profits.
Also, from the company’s point of view, it is more of an accounting entry that moves money from one accounting head to another. “Except for the sentiment among shareholders, there is no change in the company’s valuations after the bonus issue,” said Birla Sunlife Mutual Fund CIO A Bala Balasubramaniam.
Record date & ex-bonus
Record date is the date set by the company for determining the holders entitled to receive bonus shares. For Rajesh Exports, it was February 5, which means that anyone who had shares of the company till this date were entitled for free bonus shares. For Reliance Power, the date is yet to be declared. After record date, shares of the company become ex-bonus.
What about Reliance Power?
Anil Ambani holds 45% stake in Reliance Power and another 45% is held by Reliance Energy. Mr Ambani said he will be transferring his own 2.6% stake in Reliance Power to REL so that REL’s holding in Reliance Power remains intact.
For all those who are still wondering how the cost of acquisition for retail shareholders came to Rs 269, here’s the math: Suppose you were allotted 17 shares, making the total amount you invested to 430*17 or Rs 7,310. After the 3:5 bonus issue, most likely you will get 10 ‘free’ bonus shares, which means you now have 27 shares still keeping the invested amount at Rs 7,310. Now divide 7,310 by the new total number of shares you own (27) and you will get the answer.
Rights issues are a safe bet in bear market situations
Rights issues are a safe bet in bear market situations
Prerna Katiyar, TNN
MUMBAI: Companies like SBI, Exide Industries and Gujarat NRE Coke recently announced rights issues. While their share prices have reduced considerably in the recent meltdown, they’re still trading above the rights price.
The equity market has seen a sharp correction in the past week. Just a couple of weeks ago, companies like SBI, Gujarat NRE Coke announced issuance of rights shares. SBI, for instance, announced a 1:5 rights issue at a price of Rs 1,590 per share.
While the share prices have seen correction (it was at the Rs 2,400-level some days back) to Rs 2,159, the rights price is still at a 25% discount to the latest market price. After adjusting for equity dilution, it’s still available at an 11% discount. The discount factor has reduced, but long-term investors could still consider rights issues like that of SBI, Exide Industries, Gujarat NRE Coke, Dhanalakshmi Bank, Centurion Extrusion if they are upbeat about business prospects.
What is a rights issue?
Rights issues are shares issued by a company only to its existing shareholders. In fact, rights issue is a method of raising further capital from the existing shareholders/debenture holders by offering additional shares on a pre-emptive basis, usually at a discounted price. The number of shares offered depends on the number of shares already held and other terms made in the offer. For example, if you hold 200 shares in XYZ and it makes an offer of one-for-two, you can buy up to 100 shares at the price stated.
Why the discount?
The main idea behind this is to make the issue attractive for its shareholders. Also, as the shares of the company usually fall post-issue due to equity dilution, it makes sense for the company to offer the shares at a discount.
Why does the company offer a discount and not go in for a further public offering (FPO)?
It’s money and nothing else. The company makes the offer to raise capital. This is done either to expand its existing business, set up a new plant, or even pay back loans. “It is largely because the company want to pass on the benefit to its existing shareholders that it makes the rights issue rather than going in for an FPO,” says SBI MF manager Jayesh Shroff. Also, the transaction cost for a rights issue works out to be lower than going in for an FPO.
I’m not a shareholder, can I still benefit from rights issue?
Yes, provided you become a shareholder of the company before the record date. While declaring a rights issue, a company also declares the record date or the date on which a shareholder must officially own shares in order to be entitled for the issue. For SBI, it is February 4, 2008.
One thing to be kept in mind is that you will not be entitled for rights issue if you buy the share on this date. You need to buy the stock two days before the record date for becoming a shareholder. Another important date to keep in mind is the closing date.
What options do you have?
Rights issue is offered to all its existing shareholders individually and you have the choice to reject it (which means, not to subscribe for any shares), accept it in full (subscribe for all the shares offered) or accept it in part. So you do have a right to say no to it.
Can I go in for more shares than offered?
Usually, shareholders are given a chance to subscribe for more shares than offered. Although, there is no guarantee that those number of shares will be allotted.
Is rights issue transferable?
Yes. You can sell them in the open market or transfer it.
Should one always go for it?
“Provided the investor is confident of the company’s management and the business model, one can go for the issue for the simple reason that he is getting the stock at a discount than the present market price,” adds Mr Shroff. Although, in a falling market, the lucrativeness of the offer is falling day by day, one may consider these issues as one is aware of the trading history and performance of the stock.
Change your signature, change your life
Change your signature, change your life
Ever wonder how much your handwriting says about you? Sure, you’ve heard about handwriting analysis and how the way you write a particular alphabet or sign your name can say a lot about your personality, but did you know that changing the way you write can improve your career or help you get over your inhibitions?
Sounds improbable but Chandraprabha Pupala helps people do exactly that. A trained graphologist and graphotherapist, Chandraprabha has been training people to improve themselves by improving their handwriting for the last five years.
In a telephone interview with rediff.com’s Shifra Menezes, she talks about the relatively unknown field of handwriting analysis and how she stumbled on to this unusual career choice.
Graphology is an unusual choice for a career. What initially got you interested in it?
Honestly, as a child I was very curious about why people behave the way they do. So I would observe them and study them but I never found any interesting way to know more about what made them tick. That’s why I decided to become a psychiatrist.
So I took the medical entrance exams, and got into homeopathy. There was no scope to get into an MBBS course as per my score. I finally got tired of the whole process and took a one-year break.
It was then that I came across this book on graphology. As I learnt more about it, it was so interesting. In fact, my handwriting indicated that I would not have made that great a doctor.
It can be that specific?
I can be. The specific traits required by a doctor, say memory association needs to be stronger while creative association is much less compared to say an architect.
So I dropped the idea of becoming a doctor and decided to do a degree in management and I studied for the international certificate in handwriting analysis from the US, which I completed in 2003.
How did you get started professionally?
By the time I completed my course I had started reading quite a bit about it. There were people on whom I practiced my skills and I kept experimenting. A college friend of mine, Hitesh Jirawla (he is now my business partner), kept pushing me to try it professionally. At that I point I wasn’t very confident about the acceptance of the whole concept.
I remember the first time — we decided to approach one of the country’s leading coffee shops. So we went and met people there but the response was very disappointing. They were pretty resistant to the idea and said that if at all we wanted to do it, we couldn’t charge anything.
So that was disappointing, there was no real acceptance for this kind of work.
After that we did some more research how to approach people with our idea and I gathered the courage to approach Cafe Coffee Day. There we got a nice response. They introduced this process in their HR procedures, for recruiting area managers and higher-level personnel.
After some time, I started working with the outlets as part of their marketing activities where I would sit at various outlets across Mumbai and analyse the handwriting of their customers where they could get a coffee for free.
Tell us a bit about graphology and what you do.
I have noticed that many people do know quite a bit about handwriting analysis, but that’s not all there is to it. You also need to understand behavioural patterns, how a person reacts, what are their defence mechanisms.
When we label a particular trait, saying the handwriting indicated it, most of the time people refuse to accept it — they get offended, or they have their inhibitions about revealing their weaknesses. So the process has to be handled as a counselor, which is the most important thing.
We are working on spreading awareness and we want people to get into this particular stream.
We also follow up on the people we work with, to measure efficacy and also, this kind of business will not survive without case studies and actual proof that it works.
We say your public image is your signature. In the corporate world, the biggest challenge people face is portraying one’s talent. The biggest gap is between what you are and what you want to project to the world.
We don’t realise that we might just be portraying a negative aspect or an unhealthy aspect of ourselves. This then becomes a habit. Most people reflect different personalities with different groups of people, this is because somewhere along the line one is projecting oneself on a wrong frequency. By changing the signature or designing one’s signature we attempt to align what you are and what you want to project to the rest of the world.
There are a lot of people who use standardised signatures, which I find a little funny. Everybody has their own ambition or life patterns and what works of one person will not work for another.
What people must understand is that it is not about having a simpler life but about helping you achieve your true potential. The compatibility between what you are and what you want to be is the most important, which very few people actually get.
How accurate is graphotherapy in addressing a person’s fears etc?
I believe the accuracy in ascertaining an individual’s personality from their handwriting has an accuracy of 90-95 per cent.
Tell us about your company.
Chandraprabha wasn’t a formal company until two years back. Up until then we were just freelancing, and the tie-up with Cafe Coffee Day was on for about a year or so. At that point we hadn’t even thought of making a company out of it because there was a lot of resistance and questions about the whole thing.
After we completed the course, Hitesh and I decided that we would take up working on the therapy aspect of graphology. At that point there was nobody in India who addressed this aspect professionally. The concept was usually confused with other concepts. People usually undertake teaching and training at times but those are not that specific.
The application on graphology and graphotherapy has huge scope, so we decided to explore this route.
What were the challenges you faced?
Firstly, people were not really aware of how graphology works and didn’t really believe that it was effective. There was a lot of energy that we had to put in to convince them that it works. That was the biggest challenge.
Right now we don’t have any competitors as such, but taking this up as a full-time career has its own risks. When we take the idea to a company, we first have to begin with making them aware of the particular science, then that it does, in fact, work.
Once they are convinced it works, they begin accepting it and the business aspect comes in. This is a long process for anybody.
Do you train people in graphology?
We do train people, but that is a very select work. It’s mostly done in the HR projects.
Most of the work happens when people want to transform themselves and their lives. So that includes handwriting analysis and signature design, which means changing handwriting and changing personality which is graphotherapy.
Tell us about your clientele.
There are a lot of people in senior management positions with whom we work — CEOs and MDs. We also work with individuals who want to transform their lives and there are a number of celebrities as well.
We have worked with Devita Saraf who is director of Zenith Computers and CEO, VU Technologies, Ruchir Mody, managing director, Torrent Pharma, Sabira Merchant had got her handwriting analysed a while back.
Over the last five years, we have analysed over 10,000 individuals. However, we still rely highly on word of mouth promotion.
How many people do you have on the team?
I’m the only graphologist on the team. The rest of the team is on the admin side of things. There is a whole module clients need to follow for the therapy to be effective.
It is not a future predictive science at all. Handwriting works on a simple principle, where your brain gives instructions to your hand to write; what we are doing is using your hand to give instructions to your brain.
When you are thinking there is a chemical process happening in your brain, a chemical pathway is formed called a neuropathway. Now every time you write, a neuropathway is created. When you make a change in your handwriting you are actually altering your neuropathway.
The therapy works on exercising your handwriting. We develop a stroke looking at your requirements. It’s not that your handwriting will look beautiful after the programme, but it works on addressing a particular fear or weakness.
So, we work on a particular letter or stroke for a minimum of 45 days, and then the hand gives instructions to your brain. That’s when it begins to work in a mechanism.
How does one go about establishing a career in this field?
At this point in time in India, firstly one would require all the skills of an entrepreneur to take it up full-time — a lot of determination, a lot of courage. You have got to be persistent, and push through no matter how tough the going gets.
Another thing that people must understand is that it is not a future predictive science. Once people actually understand that, their interest level tends to just drop. It’s more like a psycho-analysis of an individual’s personality.
It is a big responsibility, because you are trying to help people improve themselves. So whether you are reading a book or getting trained by someone, you need to be aware of that responsibility.
Five years down the line, is it still a challenge to convince people?
There is still a lot of resistance to the idea, people still do have reservations. However, I have done a few media events with news channels and radio stations. That has opened people up quite a bit, but there’s still a long way to go.
Is there money to be made in such a profession?
The cost of our services ranges anywhere from Rs 5,000 for an individual to Rs 60,000 for corporates. When we started out it was Rs 50 to Rs 100.
Are there courses in graphology in India?
There are many people who claim to offer courses in the subject, but after looking at what they offer and the work they do, I would say that they were nowhere near what a training programme should be.
What are your plans for the future?
We are developing a training course, but right now the main limitation is time. We are focused on the clients and the application side for now. We are doing some training for corporates, but we will come up will a certification programme soon.
Source: rediff.com
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