Micro Economics : Bangalore Land price in 2000 and Bangalore Land price in 2005

We all heard, Mr:X braught a 20X30 site 6 years ago in a cheap rate at 20 Lakh in Jayanagar and now the price has doubled! ie : at 40 Lakhs.People say he made 20 Lakh Profit!!!Is that so ?

Let's have some real analysis.

We know due to inflation/deflation,draught,terrorism,whatever the ruppe value fluctuates.
CPI (consumer price index) is a term used to capture the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. Here in 2000->2005 CPI rose from 371 to 456.(Due to inflation,political unstability,world economy...)

I have collected the CPI of India for the years 2000-2006
In 2000 the CPI was 371 for a Salaried person (considering the Base year as 1984 @ 100)
Lets see the value of 40Lakh in 2006 in 2000 Rs terms
ie : The nominal value of 40 Lakh in 2006 can be corrected as a real price in '2000 Rs' terms
Real value of 40 Lakh in 2006
= Nominal value of 2006* (CPI 2000/CPI 2006)
= 40 L * (371/456)
= 40L * .82
= 32.5 Lakhs

When we say a profit of 20 Lakhs( 40 -20) ,the real fact is Profit is reduced by 7.5 Lakhs to 12.5 Lakhs (32.5-20) ! Appadi?

Let me end this with a wise quote :

"Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.” - by Sam Ewing

Balance Sheet of "Bobby's Sweet Shop" as of June 31 2004

Desc	Assets		Liabilities	Equity	Expenses	Desc
Cash	25000			25000		Step1
Donation Asset	300			300		Donation is anyway addition to equity-even though its free it must be recorded with its “fair value”
Cash	-2000		-2000			Wage for the empolyee
Cash	500			200	300	With 300 total expense I was able to sell item for 500
Cash	-1500		-1500			Put back (paid) loan of 1500/-
Cash	-700					Rent Advance+2 month rent
Advance Asset	700
AdvAsset cash	-600					Rend paid for 6 months
Cash	600
Inventory	1000					Worth 1000 invenotry purchase
Cash	-1000
Furniture	200					Furniture worth 200
Cash	-200
Cash	20000		20000			A SBI Loan of 20000
Inventory	1000		1000			Lease stuffs from friends for 1 year

Assets TOTAL (43,300) = Liabalities+Equities (43,300)

Note that all transactions can be matched either ROW wise or COLUMN wise

The serious case of "Accounting"

Accounting - the language of business - is something which I am not comfortable with.I thought this as a boring subject,never be to digest fully.But the first 2-3 session at IIMB changed my posture.My hostile state of mind started tuning towards P&L,Balance sheet,Income sheet etc.

As Prof M S Narasimhan put this - Accounting deals with communicating,measuring and recording business data,in other words accounting just record "MONETARY" transaction.Anything that is not MONETARY is of no importance to accountants.

Lets see the main "equation" in accounting:

Asset = Liabalities + Equity(Capital)

What does this mean?

Consider you want to start a business of say : Bobby's Sweet Shop.

What you need? You need

1. You need Cash of say 25000.


2. A shop which you need to pay rent (advane of 700/- and 2 months rent 600)


3. You need some inventories like chair,table etc (say about 1000 )


4. You need furnitures and fixtures (200/-)


5. You may need some loan from SBI (20000 Loan )


6. May be you can hire/lease some stuff from your friends (inventory of 1000)


7. May be you can get some on "DONATION". P.S: No item in accounting goes without getting recorded (worth 300/-)


8. Of course you need to pay salaries (of 2000)


9. Once shop opened,you will get orders and sell some sweets (income of 500/- expense 300)
   
10. You may take some profit(earnings,income) from this (Retained earning :200)


11. You need to pay back the money you are liable to SBI bank (you repay 1500/- of it)

All these you need to record.Why?

• Becuase you need to know how the things going?


• SBI need to know (can they do future business)


• Friends need to know (they have a stake)


• Govt need to know (Taxation)

Now lets talk about a "sheet" where you capture all these...

It is none other than the BALANCE SHEET.

It has one issue - it will not be aailable in monthly/weekly basis - it will be "GENERALLY" prepared on a annual basis.

C'mon,Lets prepare a balance sheet for "Bobby's Sweet Shop"

Best Business Jargons (PART 1)

Here flows some business jargons you may find useful:

1.click and mortar
This means you are doing online as well as traditional ways of business.In other words you being traditional also explore the latest oppertunities be it in IT etc...
2.All eggs in one basket
This means you must not put all your strategic ideas in one direction.for example all your money put into a stock (ex: Satyam (SAY) :-)) will make you a beggar in a single day
Literally this means you must divide your eggs into different basket so that even if one falls you have some left to survive.
3.Hot seat
Earlier used to discrive "electric chair" used in US prisons for execution
This mean one in a "Hot seat" is in a dangerours stage/position.
4.Don’t bring a knife to a gun fight
This can be used as a caution message.For Negotitaions,planning etc... you must be planned well,understand the opponent,have the skills and resources to match him.Going to grab a deal without homework may kill the deal.
5.Test the Waters
Take a test before launching it.Make a BETA before ORIGINAL VERSION and see the response.
6.Think outside the box
This means to think above and explore - imagine and invent
7.Low hanging fruit
Lets focus on the easy part first than attacking the ones.Low hanging fruits are easy to pluck.
8.Magic Bullet/wand
Best solution.Magic solution for your problems
9.Rainmaker
Pragmatic guy who makes stuff work,make things happen
10.Shotgun approach
Scattered approach.Things not being clear take a wide view
11. Helicopter view
A summary of an issue.
12.Zero sum game
Someone wins but some one loose too and finally there it is a DUECE.Zero net profit.Waste of time.
13.Arrows to fire
No more questions? If one finished with all his "need to know" stuff - can ask any more arrows left?
14.Rolling the tortoise
Tortoise moves slowly.Adding more resources to make it move/roll .
15.Run it up the flagpole and see who salutes
Create an opperunity and see who "sees" it.If you can see the flag - then you will salute it.

Happy to be a bachelor boy ....

"Bachelor boy "

When I was young my father said

Son I have something to say

And what he told me I’ll never forget Until my dyin’ day.

He said son you are a bachelor boy

And that’s the way to stay.

Son, you be a bachelor boy until your dyin’ day

When I was sixteen I fell in love

With a girl as sweet as could be.

But I remember’d just in time,

What my daddy said to me.

He said son you are a bachelor boy

And that’s the way to stay.

Son, you be a bachelor boy until your dyin’ day

As time goes by I propably will

Meet a girl and fall in love

Then I’ll get married have a wife and a child

And they’ll be my turtle doves.

But until then I’ll be a bachelor boy and that’s the way I’ll stay,

Happy to be a bachelor boy,Until my dyin’ day.

But until then I’ll be a bachelor boy and that’s the way I’ll stay,

Happy to be a bachelor boy,Until my dyin’ day.

Sir Cliff Richard was considered as UK's answer to Beatles

Born in Dehradun, India at 1940, and later moved to UK after Indian Independence, this amazing guy scripted some of the marvelous song like "Bachelor Boy" which became a number one single in Britain selling about 260 million records He has shown his caliber in Business - A successful entrepreneur, he is into Wine,Hotel and Tourism business. Arora Hotel chain belongs to him. (http://www.arorainternational.com/)

Market Vocab - Stock Analyst View (PART 1)

I thought of penning down some "strange" terms stock experts use during their interviews

1.Markets are tiring out a bit and need to rest
This means market seems to have seen the peak and it will gradually stabilise soon
2.Market is quiet
This means market is not showing any Zig-Zag moves and somewhat stabilised on a range
3.Expectations have played-out too much
This means market "gossips" and general trends give a "super duper" tag to certain stocks without looking into its fundamentals
4.euphoria in the market
The general somewhat sure "bull trend".Euphoria means a feeling of happiness.In Trading this means the traders are of a view that this market is the best time to make profit due to the micro facts than the macro prevailing.
5.Markets may continue to hold range
There will be "Red"s and "Green"s.The market will fluctuate in a certain range and settle
6.markets are in consolidation mode
Same as Point 5
7.will not make too much headway
No more Up's
8.Good headline numbers
Equities reaching an expected and sound value after a long lull
9.interesting moves
Can be Up or Down.Moving as per the expectations or on by a surprise
10.spend some time in a bit of a zone before make a decisive move
Will hang around in a certain range and then go Up/Down depending on the macro/micro factors
11.the market has stalled a bit
Same as settling at a certain point while on a bull run.
12.the air is of consolidation
Read point 5
13. liquidity is just running a bit thin
Means money from FIIs or investors were not pumped into the market as expected.Also there is not enough Cash to buy, though some money is rolling into the market
14.the lack of momentum
No much forward/downward motion.Generally more positive term used in a bull run.
15.most active shares on the bourses
Most actively sold shares

What is Organic/Inorganic Growth

A business can have organic or inorganic growth.Let us see what these terms mean.

Organic Growth: Growth by use of EXISTING resources
A industry leader who have market monopoly and is in the process of optimisation and improvement of its business as well as resources is said to be in "Organic" growth.
These companies has a huge customer list,great skillsets,enjoys brand name by building using the "existing" resources. They may be in an weak economy where what matters the only way to grow is by effective resource utilisation

Inorganic Growth: Growth by acquisitions/merger
This is the strategy cash rich companies follow for taking attractive business ventures through a penny deal.Needless to say these industries may create mess within the organisation,the company board must have a feel that in the long run it may give huge benefits
For ex: Tata takeover of JLR& Corus etc at the short term seems to be an unwise judgement.
But the risk they may have now may wane in the coming years and with the powerful automobile infrastructure TATA has along with the huge customer base they enjoy- these businesses can later become the flagship industries in TATA family.

IIM B - Orientation

Orientation program was organised by the seniors as per the tradition followed

It was a wonderful event organised within a span of 3 days starting form May 29
They organised so well that starting from getting to the hostel till the end of the program there were no hassles , no complaints and not any issues

Day -1 : Getting used to the Campus - Got a apartment to stay temporarily
This is the block which were given to Buerocrats for their PGPPM (policy mgmt & planing) training.Ofcourse a well furnished apartment with amble car parking space
After checking in at this apt , some events on MBA Vs Exe-MBA at the Auditorium,Games followed by superb Dinner.

Day -2 was quick
Had lots of speeched lined up.Played "Riti's" Murder games (Boring!),some more games and finally settled down at 11:20 PM

Day -3
More towards sports etc.Didnot wait till the stuffs to finish (need to drive 1 Hour - so being late need to avoid considering drive @ night).

Books were provided,the huge content of the books itself make me worry about the course lined up
But as usual I am sure, Manjanikkara Bava is there to help me!

My Everything - Manjanikkara Bava

The Light of Manjanikkara Bava surrounds me.

The Love of Manjanikkara Bava enfolds me.
The Power of Manjanikkara Bava protects me. The Presence of Manjanikkara Bava watches over me. Wherever I am, Manjanikkara Bava is and all is well.

And so it is.

lll

Thank You Bava!

അമ്മയെ ഞങ്ങള്‍ മറന്നാലും ആന്തിയോഖ്യയെ മറക്കില്ല, we have syrian blood and patrirachal faith in our body .We are Jacobites ! And remain us Jacobites till our death!

http://www.viswasasamrakshakan.org/

http://www.syrianchurch.org/

http://www.jacobitesyrianchurch.org/