Middle Class Crisis

A lengthy but insightful Financial times article on the middle class crisis in America
[Hat tip - Badri]

Swingers Dance School

Long long ago..so long ago..I had attended few dance classes in Swingers Dance school in velachery. Every time they start a new batch, I dutifully get a call from the people at swingers. They politely inform me about the new class and ask me if I want to join. I'm amazed at how strong their contact - knowledge base is and how effectively the system functions. A good point to note for all marketeers.

Butterfly effect - Swiss Knives, 9/11

9/11 had many repercussions. Not even in their wildest dreams, the makers of The Swiss Army knives would have thought their business would see a fall because of a terrorist attack. Post 9/11, all sharp instruments were banned from being taken into airflight. That included the famous Swiss Knife too. CEO of Swiss Knife maker - Victorinox, Carl Elsener Jr says "September 11 was our worst moment because practically from one day to the next our output dropped 30 percent."
Caught this fascinating piece from Ergo.

'No' Satyam

Absolute Fiasco at Satyam Computers.

Trying to acquire family company can be an error in judgment, but systematically manipulating the profit numbers is criminal activity.
Rediff:

Giving details of the financial irregularities, Raju said the company's balance sheet as of September 30 carries "inflated (non-existent) cash and bank balances of Rs 5,040 crore (as against Rs 5,361 crore reflected in the books."

The balance sheet also carries "an accrued interest of Rs 376 crore which is non-existent, an understated liability of Rs 1230 crore on account of funds arranged by me (Raju), an overstated debtors position of Rs 490 crore (as against Rs 2651 crore reflected in the books," Raju said. He further said that Satyam reported a revenue of Rs 2700 crore (Rs 27 billion) for the September quarter and an operating margin of Rs 649 crore (24 per cent of revenue) as against the actual revenue of Rs 2112 crore (Rs 21.12 billion) and an actual operating margin of Rs 61 crore (3 per cent of revenue).

"This has resulted in artificial cash and bank balances going up Rs 588 crore in Q2 alone," Raju said. "The gap in the Balance Sheet has arisen purely on account of inflated profits over a period of last several years (limited only to Satyam standalone, books of subsidiaries reflecting true performance)."What started as a marginal gap between actual operating profit and the one reflected in the books of accounts continued to grow over the years," Raju further said.

"It has attained unmanageable proportions as the size of the company operations grew significantly... The differential in the real profits and the one reflected in the books was further accentuated by the fact that the company had to carry additional resources and assets to justify higher level of operations thereby significantly increasing the costs," he said.

"The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones. Maytas' investors were convinced that this is a good divestment opportunity and a strategic fit. Once Satyam's problem was solved, it was hoped that Maytas' payments can be delayed. But that was not to be," he said.

Should wait and see as to what will happen next. Another thing, if manipulation of this magnitude can happen in Satyam, it is time we have a look at corporate governance of other companies too.

p.s: I actually liked the way the disaster was put in words .."It was like riding a tiger, not knowing how to get off without being eaten,"

Subhiksha..not so subhiksham

Went to Subhiksha store on TTK road, within seconds, I was outside. The store was full of empty racks with two or three sober looking staff. Subhiksha grew very rapidly and what a fall it had to face. The shopping experience was never great but their discounts were of high value. They made quite an impact in mobile selling also. Alas, they couldn't sustain the growth.
A good business opportunity gone bust!

Mafia - Biggest Business

Organised crime is Italy's biggest "business". Extortion, loan-sharking, drugs and prostitution have a total annual turnover of $140 billion , a report reveals. This is seven per cent of the country's economy and makes it almost twice the size of Italy's corporate giant Fiat.

More from Herald Sun

Sensex Soars

Its deepavali damaka at the markets. Today, it has crossed the 19K levels - a record highest. Majors boosters are Reliance Energy, ONGC, Tata Steel. With just 4 trading sessions, the sensex has zoomed from 18k to 19k. (fastest 1000 points!). FIIs have clearly pumped in massive amounts of money. But a sense of caution is advised for retail investors - the heights are quite dizzy. To join the game, just have to wait for the next big fall to buy fundamentally strong stocks or take the MF route.

20(2)0

That was one hell of a match yesterday! A treat to cricket lovers..

BTW, ESPN has just added a cool 200 crore to its kitty. The Ad spots for India-Pakistan final Twenty20 match was at an all-time high of Rs 7.5-10 lakh per 10 seconds - a record highest for Indian TV. They will sure try to maximise their profit, afterall they had bidded $1.1-billion and won the ICC rights for the next eight years. Big Business!!

EconomicTimes reports the numbers.

America's Fallen Homes

Much has been written about the American Real Estate crisis. But this one - Insider Trading at American Home? - Business Week brings out another prespective.

The shares of one of the biggest mortgage lenders in US -American Home Mortgage Investment had slipped from a high of $36.40 last December to $10.47 by late July as the housing crisis deepened. On July 31, things got decidedly worse. After the Melville (N.Y.) company announced that it would delay its dividend amid growing cash woes, panicked investors fled, sending the shares tumbling $1.04 by the end of the day. Six days later, American Home Mortgage filed for bankruptcy.
..
On Aug. 1, with the stock trading at $1.17, CEO Michael Strauss sold 2.97 million shares worth $3.5 million, according to filings with the Securities & Exchange Commission.

Another Enron in the making?

Lladró

Would quite often criss cross TTK Road, Alwarpet. off late.. I was inquisitive about a good-looking store that had opened its doors next to Sankara Hall (near Naradha Gana Sabha). The Lladró store had a certain elite-ness to it, they offer some amazing Doll stuff (the ones on the display were simply breathtaking!). Was wondering how they manage to run a doll shop in a prime locality..

Landed on their website only to be floored by it's surprises. Lladró makes Porcelain sculptures. Very Simple. Today it sells its exquisite, handcrafted porcelain figurines in over 120 countries, and has become an internationally recognized luxury brand.

Brief look @ their origins

"In 1953 Juan, José and Vicente Lladró make their first creations inspired by an experimental vocation in a Moorish furnace built in their own home in Almàssera (Valencia), Spain. The brothers introduce innovations not only in the design and style of the figurines but also in the firing techniques, reducing the three-layer firing to a one-layer process. One-firing is an innovative method which creates the crystalline finish and the pastel tonalities typical of Lladró works. In 1967 work begins on building the City of Porcelain, an area which combines factory and office buildings with leisure and sport facilities for the workers. This innovative complex is opened on October 13, 1969. "

Their growth is simply amazing. The way they have traced their history in their website is also nice - www.lladro.com

A 2003 article in Business Line says
"Prices in India start at Rs 3,000 and go on to Rs 16.5 lakh, but the items in the Rs 6,000-10,000 bracket are slowly replacing the traditional silver gifts. Pointing to a porcelain Ganesh encased at the entrance, O'Brien says that is an investor's item. One of the limited editions it put out a few years ago, it cost Rs 69,000 then, but now it's been sold back to Lladro as its price has appreciated to Rs 3 lakh. Lladro buys back limited edition pieces as they have the potential to appreciate and be sold over and over"

A 2005 article says
"The expected turnover in 2005 is expected to be driven by sales of the recently-introduced, India special limited edition of Radha & Krishna and the open edition of Kanhaiya and cow. The limited edition of Radha & Krishna has been priced at Rs 2,35,000 per piece.

Breathe Easy;-))

Mallya gulps Air Deccan?

Economic Times always gets a thumbs up for headlines..

'Spirited' Mallya luring Gopi into ras leela - Mallya inches towards gulping Air Deccan.

Well..all this noise is about the impending Vijay Mallya's KingFisher deal with AirDeccan.

May be..Moon was up for sale indeed..

LG Customer Care Sucks

Bought an LG Oven from Abirami Appliances, TTK Road, Alwarpet. I had logged in a request for demo on April 13th. Till date (almost one and half months now) no one has turned up. I keep calling up Abirami & they put me on to a conference call with the LG Customer Care (?) cell. Over the last one month I have spoken with almost everybody in the customer care. They promise me to send the demo person on the same day itself. Now, it has almost become a game.

I really want to see the end of the saga. Let me wait for the D Day. LG Customer Care sucks big time.

Fished out Quote

"He may want to buy the moon but the moon may not be available for sale," Air Deccan chief G R Gopinath replies to Vijay Mallya's (KingFisher Airlines) offer to buy Air Deccan.

Toyota races ahead of GM

Business Week has an interesting interview with Yuki Funo, chairman & CEO of Toyota Motor Sales USA. Toyota surpassed General Motors in worldwide sales globally in the first quarter.

You would think that GM and Ford execs, given the fact they all grew up here, should have a better idea of how to design and package a family sedan and minivan, yet these are two product segments where you and Honda (HMC) have done especially well against the Big Three.

[Yuki Funo] Increasingly, we're doing the development of our vehicles in the States. The Camry chief engineer is a Japanese man. Why the heck does he develop the most favorite car in the U.S.? That Camry car doesn't sell in the Japan. It's a failure. Why? He applies himself to understanding what the customer wants. He visits here and learns things. If we talk about the level playing field, what is it? He had to overcome such a big handicap being Japanese to create a car that's the top seller in America. It's very difficult to talk about what the level playing field is.

Mutual Funds - Sell / Hold

When the market is at its bullish best, there is a timely article in Economic Times on How to make the most of your MF portfolio.

The below statement hit the nail on the head...made me really ponder

"Most people have a strategy for investing . But they don't have a strategy for selling," says Hemant Rustagi, CEO, Wiseinvest Advisors.