Book Section: 'The Search' by John Battelle

Hello friends,

This review was posted by me originally at http://bookreviewsanddiscussions.blogspot.com/2007/04/search.html

After long time I have read any book and that too techno + information. I came across this book when I started my MBA. The book was assigned to one of my batch mates for submitting the review on it. But so were many other books. Now, why I was enticed by this book was because of the name ‘The Search’.

When I was doing my engineering three years ago, we used to hear a lot about ‘The Information Age’. I remember lot of courses was launched by computer coaching institutes on e-commerce. Even I and my friends use to quote a lot about ‘The Information Age’, and the associated jargon, but to impress others. In reality, we didn’t have the idea what is this all about. But today, I can feel it. My second job at ‘Philips Lighting’, I got through e-portal ‘http://www.naukri.com/’. I got admission in MBA College, when I came across its site

'http://simsr.somaiya.edu/simsr/Index.asp ’. The latest laptop purchased by my friend was after negotiating with three vendors in three countries, via internet. Also while doing the job, I found that the people with the habit of hiding the knowledge, were left dumbfounded when I just got the required information via net in a single click. Surely, the times are changing and the new age has begun ‘The Information Age’.

Now, the most important activity we do on internet is ‘The Search’, and that is the book all about. The author is the cofounding editor of ‘Wired’ and the founder of ‘The Industry Standard’. With a very close and keen observation of the organic growth of World Wide Web, the author takes us through the journey of its evolution. He could be approached via his search blog at http://www.batellemedia.com/.

The initial part of the book focuses on ‘The Database of Intentions’. That is how we are ourselves creating the database of intentions, every time we type the word into search engine and telling it what our intentions are. Then it tells us about the initial search engine players prior to giants like Yahoo and Google. It talks about the players like Excite and Archie. Then it explains the mechanism of search i.e. what is going on behind the display. The components like web crawler.Then it talks about the recent players like altavista.com, aol.com, askjeeves.com. And finally about Yahoo and Google.The author talks about how both Yahoo and Google started in Stanford. And both were started out of curiosity, without any intention of making it business, and without any idea about the revolution it would bring in the world.Yahoo was started by Jerry Yang and David Filo, both were pursuing doctorates in electronic design automation at Stanford. The real reason as per the founders to create Yahoo was that they were bored with their PhD’s and they did everything they could to avoid writing their thesis.Google was started by Larry Page and Sergey Brin, while pursuing their computer science degree at Stanford.The difference between Yahoo & Google was the timings. Yahoo was pre-dot com burst company and Google was during the burst.The unique thing about Google is its Page Rank Algorithm, which works behind the search to give most relevant results. The algorithm is basically the software version of peer review methodology being used in Research Papers for years.While most of the search engines compromised their results by the amount the sponsor company pays to them, Google was different. Its mission was to give most relevant result. Then the question rises ‘How Google does make money?’ Exactly this was the question bogging the founders. But soon they found the salvation in Adwords. While searching on Google, on the left side of the screen the best relevant results are shown, while on the right side are the sponsored links. Every time anyone clicks on the adwords, Google gets money from the sponsor. The other revenue generation techniques were to act as database for other companies.The commercialization has just begun. Now every time we insert a word in the search engine, we are giving our psyche away to it. The next time you surf net, via Google or gmail, the sponsored links on the right side are not only the sponsored ones, but they are more relevant to you then the previous time. This is how the search is capturing whole our life. If anybody has read the short stories ‘The Last Answer’ & ‘The Last Question’ by Isaac Asimov, then it will be reminiscent of MULTIVAC, giant computer governing the whole planet. The same concept was shown a bit in ‘The Minority Report’. Now the only difference between search engine and artificial intelligence is that the machine till date can’t understand but only process the data. The moment it is able to understand, we have created ‘SKYNET’ (Terminator Series) ourselves.

Now the competition is not between Google and Yahoo anymore, it’s between Google on one side and Yahoo, Microsoft and IBM on other. With the acquisition of sites like Orkut by Google, the Google is adding almost 1 feature, like Gtalk + Orkut, Gmail Mobile, per day in last week.So friends, the chess board for the ‘Information Wars’ has been already set. Let’s see who wins the game. But irrespective of who wins, the search has long way to go towards perfection and will change our lives forever.

If you want to know how GOOGLE function read thishttp://infolab.stanford.edu/~backrub/google.htmlIf you want a complete REPORT on the book, please leave ur email id on the comment.

Rakesh Jhunjhunwala's Approach of Investing

The future is always uncertain and therefore a prudent investor invest in the "realms of possibilities". He assess what possible outcome is likely in the company's profit performance and what kind of valuation it can produce.
Here, I basically focus on Rakesh Jhunjhunwala's investment approach which has following five elements
-Efficient asset allocation
-correct stock selection
-Exit horizon
-Disciplined leveraging
-consistent review

EFFICIENT ASSET ALLLOCATION
-Analyze what percentage company allocate to which asset class
-It depends on growth prospects, risk profile, valuation of each asset class etc.
-Determine weightage of each class, and deciding on level of leverage

CORRECT STOCK SELECTION
- When we invest in a company we invest in a business model
-All profit arise due to certain prevalent factors which are also dynamic in nature
-In general we can categories these factors into:
EPS related, which include external opportunity, competitive ability, scalability and people
PE related, which includes price value divergence.

EXIT HORIZON
-It is important to exit the investment at a favorable time and price
-For, Rakesh Jhunjhunwala, existing a stock is an independent decision not driven by profit or loss. He would like sell if he judge that he has better competitive opportunities.
-Since price=EPS*PE, he would also sell when the EPS or expectation about the EPS of a company peak, coupled with PE ratios that are unsustainable.

DISCIPLINED LEVERAGING
- Most of the large successful equity investors have never taken debt for investing-never leveraged. But Rakesh Jhunjhunwla were never been averse to leveraging
-He believes in magic of emotionless and disciplined leveraging. Leveraging allowed him to magnify his investment and earn meaningful returns.
-He leveraged only to extent of his ability to service interest cost and principal repayment.
-He structured his leveraging in such a way that dividend from his investment was enough to repay interest and establishment costs. Leverage doesn't exceed more than 10% of his portfolio value.
-Liquidity is the key to leveraging. We should hold liquid shares at least five times greater than the amount of leverage so that we can de-leverage ourselves at great ease whenever so desired.


CONSISTENT REVIEW
-Review your investments for the changing circumstances because it could alter your assessment of future
-Don't make your entire investment in one go but does it in various stages as thing pan out.

We must realize that the future may not be what we assessed it to be. The ingredients of successful investing lie in locating gaps between current expectation and future likely performance.

The Indian consumer market

According to McKinsey global research, it is estimated that Indian consumer market will be fifth largest in the world by 2025, provided the economic growth remains steady at the same pace as of now.

Currently the Indian consumer market stands at the 12th rank. Indian incomes will almost triple over the next two decades and India will climb from its position as the 12th-largest consumer market today to become the world's fifth-largest consumer market by 2025. It is believed that the Indian middle class will expand from the current size of 50 million to an approximately ten times larger size of 583 million. 291 million people are expected to move from below poverty line to a comfortable life. Moreover, it is expected that 23 people in India will be among the richest people all over the world.

Conditions:

Indian incomes will almost triple if
· the government forges ahead on a systematic reform program
· promotes competition
· contains the fiscal deficit and inflation
· invests in infrastructure, healthcare and education.

Our work with developing economies shows that such concerted actions are instrumental in boosting productivity, reducing poverty and providing people with more sustainable lifestyles.

The smaller cities will also contribute highly to the Indian growth and Urbanization is the major future happening, which will change the scenario. The spending power will increase considerably resulting in the increased growth. By 2025 food, beverages and tobacco will still be the biggest category, although its share will have dropped from 42 per cent to 25 per cent, and this will be followed by transport and health care. Communications, which account for only two per cent of spending today, will be one of the fastest expanding categories with growth of over 13 per cent a year (on an aggregate basis). Apart from this, transport, personal products and services, health care, and education and recreation will all see over eight per cent annual growth and these categories will evolve into sizeable markets. India's relative share of world markets will rise in virtually every product and service category.

BUSINESS NEWS 19-08-07

• Finally for week ending 4th August, Inflation ended at at 4.05% Vs 4.45%.

• The US markets ended this Friday in Green - a hefty 233 points DJIA & 54 points Nasdaq + US Fed reduced their discount rate which is similar to our Bank Rate by 0.5% to 5.75%. So are we going to see a rise in Indian Markets this Monday ?

• After going through a lot of turmoil on increasing fertilizer subsidies & the increasing shortage of fertilizers felt in our country, GOI off late, now is mulling coming out with a policy for fertilizer sector investments. This sector will give huge potential profitability to the early movers! Entrepreneurs where r you ?

• A report on Steel Industry says that they are going to add 70 million tonnes of capacity in 5 years through an investment of Rs. 2,80,000 crores in India. Are we seeing bullishness in Indian Steel Markets or they are just betting on oversees shortages in capacity & cost constraints or they have to potential to increase per capita indian consumption of steel from approx. 35kgs. per annum now - in future ?

• June infrastructure output up 5.3% Vs 7.7% (YoY): NW18 - though u might have heard about the industrial output reduce this month year on year, a few days back.

• Pharma companies facing a herculian task of revival. They are going through increased new compound research costs & lack of drugs in their product pipeline! Sanofi Aventis SA, GlaxoSmithkline Plc & Wyeth for instance are facing FDA DRUG Rejections - over Side-Effect Concerns in World's Biggest Pharmaceutical Market - The United States! The FDA new Drug Application Rejection has increased after the famous or infamous Viox fiasco & congressional interventions thereafter.

• An Indian company - Taurian Resources Private Limited, a Rs 300 crore company, has won a contract that gives it Exclusive Uranium Exploration & mining rights over 3,000 sq km of the Sahara Desert - in Niger, Africa. This is the first ever such achievement by any indian company abroad and it has happened at a time when India is just about to clinch a deal for Uranium Supplies with Australia!

• RADG - Reliance Anil Dhirubhai Ambani Group - has lost its application for an SEZ in NOIDA, Uttar Pradesh on the grounds of non compliance with central government directives. Now we all must know that UP government is under Ms. Mayavati. Let RADG get some power to tackle such hostility & may they build a repo with this government too.

• Today the EGOM is going to meet on gas pricing - this is happening in the back drop of Left & Right leaders pitching in to the debate of gas pricing formula!

• India Post to trade in forex soon + they are also goinng through a makeover ! Who knows when all these things along with a Banking entity status for India Post become a Reality ?

• In a Forbes survey Tuck School of Business Dartmouth tops as the top B School in US, 2nd comes Stanford & then came Harward !!!

• ICICI gets permission to sell stake in Financial Services unit from Foreign Investment Promotion Board - FIPB finally.

• According To RBI REport - GUJARAT has outpaced other States in Industrialization coming 1st in this years investment committments from corporates. Andhra Pradesh came 2nd in this list. While MAHARASHTRA primarily due to MUMBAI came 3rd which had to share its place with TAMIL NADU.

• Reliance Money is in its expansion drive and eying now 10000 outlets in 5000 talukas. The company is promoted by Reliance Capital owned by Reliance Anil Ambani Group.

• Maruti Offers Rs 7000 to 30000 discount on select models Till August 31 for boosting sales

• Talk of Market Segmentation for creating or carving a niche for itself --> Well ZEE DTH service Dish TV - owned by Mr. Subhash Chandra is going to launch its DTH services available in SUV's - yes high end Sports Utility Vehicles! All of Kingfisher Airlines fleet will have Dish TV DTH service installed in them by next year !!!!

• Is it good News for Ranbaxy or it is wait & watch for now striking a first blow ? - Pfizer, yes drug major Pfizer has lost initial bid to reissue patent 2011 for LIPITOR, WORLD'S Blockbuster anti cholesterol Drug. The patent office of US has given a "non final" rejection to Pfizer's application as per the patent office website. Though this is not a final verdict and still a lot will happen!

• TRAI sees cooperation in price among GSM players seeing their raise in prices, although they said that they dont see the possibility of cartelisation out here.

• Dabhol power station owned by Ratnagiri gas company was shut down after Petronet LNG Ltd. the countries supplier of 25% of gas demand stopped supply pending a court order.

• More than Rs. 1,00,000 crores worth of Shares are locked in to DEMAT accounts which are FROZEN because of them not supplying the Mandatory PAN - permanent account number! A union government minister said this.

We thank all the news sources available on this globe for enriching our knowledge and providing insightful information to us.

Thanks for Reading people!

Ye Subprime lending kya hai ??

Recently, We have Observed a melt down in US mortgage Market, due to sub prime mortgage, leading to global concern over slow down of US economy, and corresponding impact on the global stock market. We try to understand what is sub-prime lending and how is it impacted US economy.

What is Sub prime lending ?

• Sub prime lending refers to the practice of making loans to borrowers who do not qualify for normal interest rates because of problems of their credit history


• Sub prime loan is offered at higher rate due to increased risk


• Sub prime lending encompasses of variety of instruments, including sub prime mortgages, sub prime car loans, and sub prime credit cards, among others


• Sub prime mortgages have a much higher rate of default than prime mortgage loans

US Sub prime mortgage crisis

Beginning in 2006, US sub prime mortgage industry entered what many observers have begun to refer as a meltdown. A steep rise in the rate of sub prime mortgage foreclosures has caused more than two dozen sub prime loan mortgage lenders, which includes home lender giants like New Century Financial Corporation, Ameriquest mortgage and HSBC Holding Plc to fail or file for bankruptcy. The failure of these companies has caused stock prices in the $ 6.5 trillion mortgage bundled security market to collapse, threatening broader impacts on the US housing market economy as a whole. The crisis is ongoing and has received considerable attention from the US media in early part of 2007

As housing prices rose from 2000 to 2005, borrowers having difficulty in meeting their payments were still building equity, thus making it easier for them to refinance or sell their homes. But home prices weaken; these strategies have become less available to sub prime borrowers.

Some experts concerns that the sub prime mortgage crisis will impact the housing industry and entire US economy. In such scenario anticipated default on sub prime mortgages and tighter lending standard could combine to drive down home vales, making homeowners feel less wealthy and thus contributing gradual decline in spending that weakens the economy. Other economist doubt home prices will fall dramatically because most owners won’t have to sell, but still predicts home value will remain flat or slightly depressed for three or four years.

As the crisis have unfolded and prediction about it strengthening, some democratic lawmakers suggested that US government should offer funding to troubled borrowers avoid loosing their homes. Some economist criticized the proposed suggestion, saying it could have more defaults or encouraging more risk lending.

The crisis has resulted melting down prices of many home lending companies in US and ultimately affects stock markets all over the world.

Green Economics

• Green economics is a methodology of economics that supports the harmonious interaction between humans and nature.

• It attempts to meet the needs of both simultaneously.

• Green economists perceive nature as being extremely valuable and seek t maintain it.

• Supporters of this branch of economics are concerned with the environme and believe that actions should be taken to protect nature and encourage the positive co-existence of both humans and nature.

• Emphasis is placed on creating value through quality rather than on accumulating material items and money.

• The green economic theories encompass a wide range of ideas dealing with the interconnected relationship between people and environment.

Assumptions:

• Living ecoregions are better valued as service-producing natural capital than as passive natural resources.
• Creative "enterprise" or individual capital must be differentiated from more general ideas or analyses of human capital or human resources, as what characterizes both evolution and intelligence is an unpredictable and creative movement towards greater energy economy, e.g. a tree spans a volume so as to most effectively convert available light to energy using its leaves.
• Local measurements are almost always better than global ones, and scale of measures must match the scale of the commons being managed.

Green v/s global:

This is a common theme among Greens in general, who have a broad critique of dominating culture and monoculture which has flowered in the anti-globalization movement to unite with other critics of global capitalism.

Some, following systems biology, differentiate "between Plant (energy-binding), Animal (space-binding), Human (time-binding) and Truth-binding mechanisms" among which they variously count religion, banking, capitalism and economics itself. Whether greens will ever agree on a single "truth-binding" political economy remains a matter of controversy.

Entering China

Mainly there are 3 ways whereby one can export goods in China:

1. Distribute your goods directly
2. Establish a joint venture
3. Find a qualified agent or distributor with a vast sales network

Companies should be mindful of possible problems in export rights, regulations and intellectual property rights protection. If the company decides to distribute the goods directly, then it will have to be aware of the distribution rights and understand the licensing process in China.

Distributing your goods directly may be a complicated and time-consuming process as one may not be familiar with China’s business practices and government regulations. Application for distribution rights and establishment of own distribution channels will be difficult. Chances of failure will be higher as a result. Establishing a joint venture will thus be a better option. Establishing cooperation with a local partner can allow you to have faster access into China’s market and with the local partner’s knowledge and experiences of China’s market, your success rate will be higher and goods can be better distributed. Acquiring help from a local partner does give you many advantages in penetrating the China’s market. A side issue to note will be that joint venture usually requires large amount of capital and China’s government may have capital control towards outflow of funds should one transfer his/her funds back to his/her home country. The government will also need to assess the potential economic benefits that it can bring to China, e.g. does it create job opportunities for the local population before approving it.

For small and medium sized companies, the best way to enter the China market is through a reputable or well-known agent or distributor. These companies are located regionally and typically have large sales network. Thus they will be able to have a better understanding of the China’s market and can provide assistance in developing distribution strategies in China and the region. In this way, new products can be launched easier into the market and distribution network can be set up rapidly without any problems dealing with distribution rights and licensing.
Besides all these, the most important step that one must take before exporting his/her products into China will be have a thorough understanding China’s customs, regulations and controls towards imported goods. A sound market entry strategy is also necessary in order to penetrate the China’s market. An assessment of your goods’ strengths, weakness, opportunities and threats can allow you to promote and distribute your products better. Understanding the profitability and marketability of your products in the China’s market is thus vital before exporting your products into China.

Posted by Nimit Soni

Rains will no more tatter your currency notes

For, you escaping from rain to save your currency notes might be problem. Similarly, even big problem for RBI is how to curb production of counterfeit currency notes. Now, Indian Centre for Plastics and Environment has come with solution. IT has urged the Reserve Bank of India (RBI) to consider the option of switching over from paper to plastic currency notes as has been successfully done by Australia. Several other countries are also following Australia's example with the United States being the latest to join the bandwagon.

Plastic currency notes have several advantages over paper notes.

• As paper notes are cellulosic in nature they develop microbes when they get soiled and thus can be a cause of diseases. Moreover, they get mutilated with time and have to be destroyed.
• On the other hand, are non-cellulosic in nature and thus cannot lead to the growth of microbes. If they become dirty they can simply be wiped or washed.
• Plastic notes are more durable than paper ones and do not get mutilated easily. The RBI will thus not face the problem of replacing the notes at regular intervals.
• It is very difficult to produce counterfeit plastic notes.
• India has both material and film technology for the production of plastic notes. The RBI will only have to import printing technology for the purpose

Australia was the first country to go in for plastic notes way back in 1988. According to reports, the country finished converting all its currency notes into plastic in 1996. Other countries that have followed Australia's example and have introduced plastic currency notes include Brazil, Sri Lanka, Romania, New Zealand, and Northern Ireland.

The Reserve Bank of India's fake currency unit, along with a finance ministry committee, has concluded that only the new plastic notes can solve the fake currency problem that has acquired unmanageable proportions in the recent months. Fake notes, sources say, have flooded the market and, apparently, even banks are not able to detect them.

For starters, Rs 500 denomination currency notes will be printed on PVC, to lend longevity to them and to fight the menace of counterfeit notes.

Now, Days are not away when you find people washing their currency notes!!

Anil Agarwal of Vedanta Resources, Dr. Narendra Desai of Apar Industries and Hrishikesh Mafatlal of Maftlal Group Visit SIMSR - Management Institute

Today

K. J. Somaiya Institute Of Management Studies & Research saw a special Guest Lecture Series organised at its doors.

The occassion was the inaguration or introduction of a New Course on

Corporate Governance

called the 'The Corporate GRAND PRIX - Gearing for Success' for the SIMSR students.

And who will be the faculty for the new course :- the people named in bold were present for the inaugural session.

1. Mr. Narendra D. Desai, Chairman, Apar Industries


2. Mr. Anil Agarwal, Executive Chairman, Vedanta Resources, Sterlite Industries, Balco, Hindustan Zinc etc.


3. Mr. Hrishikesh Mafatlal, V. Chairman & MD, Mafatlal Industries Ltd.


4. Mr. Ajay Piramal, Piramal Industries


5. Dr. Avinash Deolekar, Vice-President-HRD Capability, WMU, PEPSICO.


6. Mr. Deepak Bharwani


7. Mr. Rajesh Talwar


8. Mr. Shashi Rao


9. Mr. Ujwal Jajoo


10. Mr. Sandeep Singh

Also presiding the occasion was our Director General Prof. P. V. Narasimham & Director Prof. S. C. Ghai

Chief Speaker Mr. Narendra Desai, gave a keynote address on - Ethics & Corporate Governance. Also during his speech there was a surprise appearence of Mr. Anil Agarwal of Vedanta Resources (coming straight from London to interact with students) (he then interacted with the students for atleast an hour)

He started by defining Ethics & Morals from the oxford dictionary a standard accepted by even the Supreme Court of India. Then he asserted the fact that ethics are governed by 3 basic aspects for humans. They are

1. Local Customs & Historical Basis of authority


2. Time changes & does the ethics change with time? was the question


3. Supreme or Eternal presence of ethics.

He said that in business or personal life the sanskrit principal of "Vivek" should prevail and Read your Atma or soul and follow it.

We have a right to live & constitution is there for our defence.

• He took a case study on ENRON and quoted his personal experience of constructing a part of the Dabhol plant & fuel pipeline project. To which he said that there was a total lack of trust in the Enron People. Before establishing a business they were talking of exiting it.


• At the end of the discussion he pointed out that corporate governance and ethics come from an Ethics Based institution Of EXPERIENCE !


• He also spoke of the importance of Negotiations in Business and The Institution of International Negotiations.

Taking the recent case of a Patent Dispute he asserted that

• Check what are the ethics of the other person


• You must have guts to say "NO"

--------------------------

The other Dignitory Mr. Hrishikesh Mafatlal then spoke on "human aspects of Business"

He said leadership means taking responsibility.

• He took the cases on GE, Jack Welch & others and said that managers make mistakes but they have to learn from those mistakes.


• He said managers must exhibit flexibility, Adating attitude & be ready for Embrassing Change


• He said you need enthusiasm for the job you do.


• He said work with those who share the same vision & are trust worthy, trust is indespensible.


• He said Prepare relentlesly for your work and exhibit a degree of fairness in your interactions with others.


• He stressed on the importance of Value based & personality based decision Making.

CEO's Reccommendations: A book called APPLE'S are Square

he said this book explores 6 dimensions of leadership

Humility

Transparency

Compassion

Collaborativeness

Value based Accession or decision making

and 1 more which i dont remember

He asserted that in all this corporate world there is one common binding thread which is called "the Element of Spirituality" - which makes us humble & this is the force behind the success of these successful businessman.

He said that this enables us to believe that we can learn from others & Accept that there is something higher above us.

----------------

The Next Dignitory was then Mr. Avinash Deolekar, VP HR PEPSICO India

He spoke on a case on Situational Leadership & then the PEPSICO corporate philosophy & vision, Mission

Their Model is called "Winning Minds & Hearts"

He then gave the three parameters or principle deliverables at Pepsico.

Sustained Growth

Empowered People

Acting with Responsibility & Trust

He then highlighted the assence of spiritual quotient required in managers.

---------

Then the GM, HR, US Vitamins Ltd. Mr. Sanjeev Singh spoke on

maintaining the Locus of Control Internally foccused

And Stressed on keeping yourself Balanced in life.

---------

Then In the Vote of Thanks, Our Director General Prof. Narasimham said thanking

all the dignitories that - the common quotient of all the speakers is the spirituality & success that all the eminent people came on the same dias to pass the secrets to the students. He also said that

Corporate Governance & Ethics say that 'clean your stables'.

He said that in today's world Value systems & Intellectual Conciousness are extremely necessary.

He said be truthful to yourself & fundamental values are ETernal.

He gave the Analogy of Men & a SteeL Blade.

He said that people in business should not loose Temper, which is the biggest evil for them while the temper in case of a steel blade was its sharpness.

If people loose their temper they are of no use in the same way if the steel blade looses its sharpness it is of no use.

------------

This is our Account of the Wholesome Evening we had at SIMSR Auditorium.

(Photographer RKK)

On behalf of Analytics News Wire 99 Team.

RKK

BANKING IS CHILD'S PLAY

Yes, it’s true, not joking, child labors in Delhi are running a Bank called “Children’s Development Bank”, facilitated by Delhi based NGO Butterflies. Even depositors, customers and employees are children.

The Bank opens in the evening because that’s the time when children get time after finishing their chores. Bank operates both saving and current accounts. Country coordinator of CDB believes such initiative makes the children feel confident as it inculcates the habit of saving in them. Moreover as the bank is managed and control by children, it becomes a tool for skill education.

The CDB also disburses advances to the children. The age for procuring an advance is between 15 and 18. The children use advances for setting up small businesses. However one has to undergo strict procedure before procuring advances from the bank.

The all India disbursal of CDB between 2004 and 2007 was around Rs. 400000. Of this bank recovered Rs. 225000 till date.

Foreign Banks in Rural Areas…

• Many foreign banks including HSBC & STANDARD CHARTERED planning to enter in semi urban and rural areas.
• China-Banking giant HSBC plans to open a bank in rural community in cental china.
• It is the first foreign financial institution doing this job.
• This is because Chinese government pushes to develop the financial industry in its agricultural hinterland.

• BARCLAYS BANK is trying to put ground its feet in Indian banking system so it needs full rural push also for greater success & to unlock value.
• Indian government is also working on development of banking sector in rural areas.
• But then also there is potential market in rural areas for foreign banks.

The following points are to be considered by a foreign banks entering in Indian rural markets…

1. Understanding the psychology of the people of rural India.
2. Studying the needs of Indian rural population.
3. Use of local language and not English.
4. Setting up branches not based on population but on possible transactions.
5. Competitive schemes to beat unorganized financial system. ( Shrofs, Lalas, Zamindars etc. )
6. The documentation should be easy.
7. Online commodity services should be provided.
8. Microfinance facility must be available.
9. They should give positive empowerment and support to rural ecosystem.
10. They should play an active role in rural economy.
11. Making tie ups with initiatives like ITC e choupal.
12. Also in an earlier Article called FAR-OUT FINANCE our friend Rishi has put light on one good principle in rural financing, i assert that such principles should be applied to help the rural populace as they will curb the menace of shroffs etc. and give more business to banks!

These steps will enable foreign banks not only to get success but also to reduce NPA.

News 09-08-07

09-08-2007

1. Infosys plans to open BPO unit in Mexico.

• IT major Infosys Technologies going to open a 200 seater BPO facility in Mexico, its first in Latin America
• Infosys is going to write new chapter in BPO industry as it is looking at other countries to start such units.

2. BHEL bags order from Aravali power.

• BHEL bags 2,900contract for supply of boiler and turbine generator package for the Jhajjar Super Thermal Power Project.
• This is the highest value boiler and turbine generator package contract for a single project ever received by BHEL.

3. Apollo hospital entering in UK, US

• Healthcare chain Apollo Hospital is in advance talks with two US firms for a possible takeover.
• Apollo also tied up with a German company to set up an insurance firm at a cost of Rs108 crore.
• It can be said that Apollo hospital is going for medical BPO.

News Bytes - Speed News

Hey friends

Welcome to this new section giving a birds'eye view or a brief discription of Latest news items.

If they interest you then please go and dig deep. Thanks

• Amidst US subprime credit woes - Blackstone (private equity firm) has successfully raised & closed the world's largest private equity fund @$21.7 Billion setting a benchmark in the global buyout (LBO) industry.

• Nokia is going to outsource manufacturing of mobile phone chips enabling it to focus on R and D

• Reliance MahaMumbai SEZ size to be cut to half at 5000 hectares

• Government of India is going to issue Rs. 6000 crores worth of bonds to fertilizer companies due to rising subsidy bill for meeting its committments!

• Reliance communications completes 5% equity placement in Tower Business. George Soros & HSBC invest in that. The company is also booking capital gain of Rs. 1200 crores!

• Infosys gets nod for 2 SEZs In Andhra Pradesh

• Lehman Bros. say that they assume FY08 Indian GDP growth at about 10% !

• TTML, Bharti Airtel & Rel Communications are competing for 51% stake in Telkom Kenya

• Dow Jones Industrial Average finally Closes Up 153 Points After a Volatile Session.

• Vodafone decides not to sell its verizon communications state worth about $10 Billion right now.

• SAT (Securities & Appelete Tribunal) stays SEBI order on Karvy DP with respect to opening new demat A/c

• StanChart is in advance talks to buy stake In UTI Sec.

Vinod Khosla’s New Ghosla-Energy sector

Vinod Khosla has been called the best venture capitalist in the world by both Forbes and Red Herring. He has been a partner at blue-blooded venture capital firm Kleiner Perkins Caufield and buyers.

His success has been phenomenal while he failed less spectacularly compared to his peers.



In 2004, he founded Khosla Ventures, which advices entrepreneurs and invest in his latest area of interest: the clean energy technologies that might replace the burning of coal and oil.

• He finds tough & important problems that are still manageable


• He feels that till now new energy technologies was done by governments & Big corporations.
  
• He feels venture capitalists have SOME opportunity left for Funding projects though funding rest will not be viable


• Vinod Khosla on solar energy:

He is very optimistic about it.

According to him, rather than concentrating on clean coal based energy, concentrating solar power is also a real option for large-scale, high-capacity, dispatchable power. Thermal underground storage of heat can be used for utility-grade power generation, too. If large-scale compressed –air energy storage works, then wind power will become scalable. So there will be a horse race between clean coal with carbon sequestration, wind with compressed–air energy storage, and solar thermal power generation with storage.

Efficiency of solar cells is worry for new entrants, Khosla believes that

• Leveraging the large investment in stem based power generation, can get 35 % efficiency at $ 500 per kilowatt

• But World needs multijunction thin film solar cells produced with cheap mass production technologies, and efficiencies above 30 %
  

About Bio Fuel

He says,

• It is nonscalable unless it can be made from biomass instead of seed product.

• He would not be surprised to see biogasoline either, initially made from corn and later from biomass.
  

Energy V/S Energy

• Building wind turbines using coal power can vitiate their value as an alternative energy

• But Now venture capitalists invest more on advance technology based projects,Payback period is also decreasing.

• Technology is not static, and all newer technologies will improve, and the payback period will get faster and faster

Vinod Khosla-on Nuclear Energy

• Nuclear could have future. however he suspects about its dominance in future because of the political and regulatory risks and long time line to build plants.
  
  
• He says the need of the hour is to build a big, high voltage DC grid, and let nuclear, wind, solar photovoltaics, concentrating solar power, electricity from biomass and waste, and anything else innovators can think of get on grid . We need to kick-start the alternatives and let the competitive ones prosper.

On possibility of Hydrogen Economy:

• Hydrogen doesn't make any sense to vinod khosla.

• Because any technology that is far enough away, don’t make any real changes.

He is Interested to investing in microfinance

• He wants to connect microfinance to energy sector. If entrepreneurs use microfinance to make biomass.

• This will help to do more on poverty and biomass can be used to produce fuels, electricity, plastic and much more.

So friends, what do u say about this sector ???

The article tries to through some light on his recent press interviews & bring to notice his fiews & futuristic vision to help students & entrepreneurs.

Interview source : SPAN magazine (Published by US Embassay, New Delhi)

A Cloud-Burst of Cash in Mutual Fund Market

• It is something the people in the industry are not talking about.

• Every where in the market there is cash overflow & liquidity, even MF industry is no stranger to it now.

• Falling returns in the short term money market have forced investors to seek a better outlet in mutual fund schemes. The result is that mutual funds are now flush with funds.

• They have amassed an Assets Under Management (AUM) of Rs. 487000 Crores during & at the end of July.

• This figure is as per the figures declared by AMFI and Reliance Mutual Fund, ICICI Prudential Mutual Fund and UTI Mutual Fund continue to lead India's 32 mutual fund houses in terms of assets under management.

• This is a record in itself, though Industry is not talking or boasting about it.

• Their assets are up by a whopping Rs. 86000 Crores.

• Out of these Rs. 75000 crores came as investments in Liquid and Liquid plus funds.

• One third of these or about Rs. 25000 crores has come as investment from banks.

• Now it’s easy to imagine why the Call Rates have gone down and are almost touching zero

• Thus due to surplus the banks may have moved to mutual funds but with the stock valuations at high & with little or almost non existent investment opportunities the fund managers will again park this money with banks only!

• One Key concept in this story is AUM – Assets Under Management of Mutual Fund Houses.

• The monthly average AUM is calculated by adding the total assets under management at the close of each day of a month and then dividing it by the number of days in that particular month.

• Funds started declaring their average monthly assets under management (AUM) instead of the value of assets as on the last day of the month since August 2003.

• This has ensured that investors get a more realistic picture of the quantum of funds managed by the mutual funds.

• This has stopped the previous practices of MF’s to jack up their AUM unduly on the last day of month under the previous regime. A curb on Other such practices has also been put by this system of declaring Average Monthly AUM.

I sincerly hope this article will give you fodder to do some future research on the industry and the relevant sectors touched upon in the article.

Business ExTras

• Can We believe that the world's number 1 billionaire is not Bill Gates & one from developing world. Yes thats true currently the market valuation of Earstwhile World's No. 3 Mr. Carlos Slim of Mexico is more than Mr. Gates by around $ 5Bn.

• Mr. Carlos Slim alias Mr. Monopoly has wealth of $60 Bn US. Which currently makes him the wealthiest businessman of the globe!

• Also Have you heard of A Company being in FORTUNE 500 GLOBAL LIST and Still Making Losses! ??

• We might wonder how can they survive even while making losses. But the truth is even for survival during losses you need size & cash flows visible in Revenue to survive those tough times !

• Yes there are such companies and not a single company in Fortune 500 Global list declared for year 2007 which made losses in year 2006. There are 17 of them in total who made losses! yes losses!

Ranks & figures as on 2007 List

1. The first being Ford Motor Company - Rank 12 ; Year 2006 loss - $12.6 Billion
2. Vodafone (World No. 2 by Subscriber numbers) - Rank 95 ; Year 2006 loss - $10.3 Billion
3. Delta Airlines (US no. 3) - Rank 429 ; Loss - $6.2 Billion
4. Delphi (GM auto part supplier) - Rank 253 ; Loss - $5.5 Billion
5. General Motors - Rank 5 ; Loss - $2 Billion
6. Coca-cola Enterprises (producer & Distributor of coca cola products) - Rank 354 ; Loss - $1.1 Billion
7. TUI Group (German Conglomerate + Europe's Largest Travel Company) - Rank 256 ; Loss - $1.1 Billion
8. Lear Corporation - Rank 407 ; Loss - $708 Million
9. CPC (Taiwan's biggest company + oil company) - Rank - 327 ; Loss - $429 million
10. Sanyo Electric (Japan) - Rank - 356 ; Loss - $388 million
11. Goodyear Tyre & Rubber - Rank - 348 ; Loss - $330 Million
12. Centrica (UK based electric utility based on Natural gas) - Rank - 218 ; Loss - $285 million
13. Hitachi Corporation (Japan) - Rank - 48 ; Loss - $280 million
14. Alcatel -Lucent (Telecom Equipment giant) - Rank - 410 ; Loss - $221 million
15. Tyson Foods of US - Rank - 264 ; Loss - $196 million
16. JAL or Japan Air Lines (National Carrier of Japan) - Rank - 358 ; Loss - $139 million
17. Tech Data (IT products & Software REseller - world no. 2 here) - Rank - 331 ; Loss - $97 million

So friends this is it for extrass this time. See you next time soon

As a food for thought you can go and study more on Mr. Slim or these companies as what is leading them to go on and on !!!!!!! And yes it is easy to research about them we just gave you a starting point much is yet to be done!

we really thank the news sources for giving such beautiful insights to business

Business News : 05-08-07

PUNJ LLOYD:

• Order book at almost Rs 16000Cr, executable over 24 Mths
• They bag new order worth Rs. 666 Crores.
• This is just a small indication of infrastructure boom in India! Businessmen should embark on the journey to finance India's infrastructure.
• People should now know that the projects are financed on the future projected cash flows & not securities promoters offer, so transition from old system is the cause for the effect called buoyancy in Infrastructure markets

P & G in skincare business

• US- based FMCG firm Proctor and Gamble (P&G) is going to enter in indian skin care market which is growing at 16% annually and is currently valued at Rs 2100.
• Are they planning to go Kaya Way or Marico Way ???

SBI to increase no of ATMs by about 3.5 times

• India’s largest lender SBI plans to increase ATMs from existing 7200 to 25000.
• Are they trying to reduce repititive small value transactions at branches or they trying to find ways to earn more profit by imposing more charges on clients ?

Government clears 17 FDI proposals

• With this step there would be inflow of 575.83 crores of rupees in Indian economy
• Also It will result into both short term and long term benefit to financial markets …

Apollo expansion

• Apollo hospitals, health care services Bellwether in India - has 710 crore expansion plan to set up hospitals in Mumbai.
• This expansion plan will facilitate health tourism of india. They are banking on high value growth & also want to garner a much sought after resource - the availability of Highly Qualified & Famous doctors in Mumbai. Are we going to see a churn among various rank & file of current hospitals ?

Markets on Monday

Hii all

• Monday ..Expect a gap down opening of 300-400 points on Sensex
  as our markets have tendency to fall sharp and over react to global clues ..
  we may see 14600-14500 range on sensex,

• Nifty has strong support @ 4250 but most probably it will b broken on monday
  Nifty can find next support @ 4180Friday data ..
  

• This Friday Data:

• Dow Jones down by 281 points to 13181.
  

• Nasdaq down by 64 points to 2511.
  

• Reason for such sharp movement on US bourses:
  

• US Non-Farm Payroll data was released on Friday it came in at 95,000 Vs market expectation of 125,000
  

• This has raised fears of subprime lendings
  

• In Indian context
  Currently Sensex has earnings of 850x (approx)
  Expected Sensex earning for next year is 1000x (approx)

• it is not surprising to have P/E of 18 to 20 for emerging marketswe had seen P/E up to 22 on sensex in past in medium term say 12-15 month horizon this directly translates to sensex level of 20,000 (approx)
  

• In addition Interest rates are expected to soften in the coming months
  

• One can take this as buying opportunity its extremely difficult to find the exact bottom, but buying on dips can be done

Significance of Iran-India-Pakistan pipeline

The pipeline is of huge significance to the involved countries. The countries reached an agreement last week only. It is a major regional economic cooperation agreement among the countries in this part of the world.

The backdrop of this article is in the fact that the oil prices are skyrocketing again & there is a serious fear among traders all over the world of them touching a high of $100 a barrel !!!!

• The countries involved are ones bearing hostility among them to a great extent.
  

• It creates a huge mutual interdependence among the countries and demands a high level of trust from all the partners.

• It also helps in energy conservation and ecological concerns. As we know that petroleum is going to be a rare fuel in some years, it is necessary to find our alternatives which are sustainable over time. We have to cut down our dependence on one country for fuel. This is a major step towards that goal.

• It will also increase our (India's) energy efficiency & help reduce the 140Bn $ import bill largely driven by Oil Imports.
  

• This deal will have the potential to score points over US by all these countries. US is pushing India & Pak to stop co-operation with Iran, Giving Nuclear supplies to India & Remaining silent on Pak based terrorism. While all this Iran is showing both these countries a lolly pop which they can never afford to say no to. So everyone is pushing its ends & making a mockery of US.
  

• Oil is the fodder both India & Pakistan need thus this deal is the best example of seeing them act selfish forgetting their enimosity & giving in for a deal on oil.
  

• Also the angle of oil pipeline blockage, sabotage & related blackmail by terrorists & other such elements in Pakistan needs to be looked at very seriously for India's long term security.

Strategic News Updates 03-08-07

S and P Shariah Islamic Index & Indian Companies:

• The Islamic Investment and Banking markets, whether in Europe or in Middle Eastern countries, is one of the fastest growing areas in Financial Services.


• It is a very attractive niche market which needs a tailored approach and customised documentation and products.
  


• Recently eleven Indian companies have made it to Standard AND Poor’s new Islamic index covering stocks drawn from Asian country indices in its S and P Citigroup Global Index Series.


• These are:

1. Tata Consultancy Services
2. Infosys Technologies
3. Wipro Corporation
4. Bharat Heavy Electricals (BHEL)
5. Oil and Natural Gas Corp.
6. Bharti Televentures
7. Hindustan UniLever
8. National Thermal Power Corp.
9. Reliance Industries
10. Reliance Communication &
11. Satyam Corp.

• Considering more than 300 Bn $ is lying in islamic countries without the option of appropriate investment options which are shariah complient it is not possible to find investment from there.


• Thus Entry of Indian companies in S and P shariah index is a important news for investors in these stocks.

FAR-OUT FINANCE 03-08-2007 (OFFBEAT STUFF)

A Hindu Credit Institution OF DAMDUPAT:

• What's this?

This is a traditional rule relating to finance on credit or moneylending targeting the behaviour of lenders.

This limits loan recovery by the Lender to a Maximum of Twice (2 times) the outstanding Principal, Irrespective of the Amount of Interest Accumulation.

• How old are its' Roots ?

Experts say they can be traced back to the "smrti" , texts that are said to be as much as 2000 years old, which exposit the "Dharmasastra" or "science of righteousness".

• Where is it still prevelant?

At least the money lending legislations of five states viz. Gujarat, Maharashtra, Punjab, West Bengal & 1 more i dont remember.

• What does this Rule do there in through legislation?

Restricts the maximum amount of interest chargeable by the lender to the principal amount.

This rule also discourages excessive interest on loans and limits the scope for compounding of interest and for penalising premature repayments in excess of twice the amount of the loan.

• What is the background of this story?

It is a prime need to tame Loan Sharks

The suicides of farmers in Andhra pradesh, Vidarbha (Maharashtra), TamilNadu, Karnataka etc.

The excessive interest rates charged ranging from 12% to 150% on loans by these middleman or sahukars

Out of every Rs 1,000 debt taken on by farmer households in the country, Rs 257 is sourced from moneylenders

According to IIMS database & Invest India Economic Foundation - the share of moneylenders in the total debt of households in the past 2 years is estimated at about 31 %

• What's Current Perspective and RBI committee Recomendations ?

The Technical Group to review the legislation on Money lending that was set up by the RBI has recommended that the rule of DAMDUPAT should be incorporated in the legislation by all the states, therby restricting max. amount of interest chargeable on the principal amount by the lender.

The Group also says that there should be a Provision Requiring the Money lender to Refund to the borrower any Excess Money paid.

They also advocate a simple and easy greivance redressal and dispute settlement system too.

Thus we earnestly hope the money lenders some day find it difficult to ditch innocent borrowers.

please see the disclaimer (plus courtesy ET, The Telegraph, The RBI)