Never Swallow your Bubble Gum

Sometimes a picture without its catchy title is incomplete

Thanks to Fahim for forwarding it


PVR: Bad Service

Multiplex are in a very competitive market. The first rule of anybody in the service industry is to provide quality service. However PVR has a lot to learn in this respect.

Even the suppliers (movie producers) are annoyed with multiplexes. I wonder by antagonizing both customers, as well as suppliers what is PVR trying to achieve. No wonder over the past 2 years, PVR had to reduce the ticket prices, yet it is unable to sell all its tickets. Its revenue in the quarter ending June 2009 was less than half of the previous year’s figure. I guess its probably because its security is doing a good job in driving the customers away.

1. No helmet rule: While all over the world governments and other public interest bodies are busy encouraging commuters to use helmets and seat belts. PVR takes a totally opposite stance. It prohibits anybody to either handcarry a helmet inside the theatre or deposit it at their security counter.

2. No Laptop rule: To further drive away the customers, they introduced a no laptop/electronic item rule. What they do not realize is the many of us need to carry laptops to office and it becomes a major nuicense, if we have to part with it. The least they could do is have a tie-up with any shop or enterprise and charge the customers who wish to deposit it.

3. No shopping bag rule: Ladies are allowed to carry their purses (which are often the size of a small haversack) inside, but guys are not allowed to carry a shopping bag inside. Last weekend, my shopping bad contained just a shirt which I had purchased from the same mall. Yet the security refused to either deposit it or allow me to carry it inside. Whats worse they provided me with a unprofessional answer, why don’t you deposit it at the Big Bazzar counter (by faking yourself as a customer)

I appreciate cost cutting, but if it was so important, why have security in the first place?

PVR is situated in malls and each and every mall does a pretty good job in screening customers and eliminating security risk. Repeating the activity 2 times does not make it more perfect.

Secondly PVR usually owns entire floor in a mall so real estate should not be a big problem. If they really want, like any organized retail outlet, they could make room for patrons to deposit their goods.


Shriram Transport Finance Corporation NCD

Today I saw this new bond issue:
the attractive points are:
1. the maximum duration is 5 years so the money will not be blocked for very long
2. The company plans to list its NCD issue. Which means exit would be easy and also there will not be any TDS.
3. The interest rate for this AA rated bond issue is 11+% which is significantly higher than what one earns in Bank Fixed Deposit.
4. The leverage ratio of the company is manageable.

However the reasons why I would not be subscribing to the issue are:
1. Boring Annual report: As Warren Buffet once said for any small company annual report is a wonderful advertising issue. It allows the board and the management to explain its policies, give the vision, mission and road map and set hopes. If the investor believe that the company is going to the right path and believe in it, they are patient with the company. This confidence allows the management to take long term strategic decisions which help in creating shareholder value.
Since I did not enjoy reading the STFC’s annual report, I wonder if it will be worth investing in the company. Please do remember that equity holders always have an easy exit options, while the bond/debenture holder are stuck with the company for 5 years.

2. Vehicle Finance: Several banks had problems in controlling their NPA and some of them have even quit/limited their exposure in vehicle finance. This raises a question why would I live to lend money to someone who is solely concentrated in vehicle finance.

3. Group performance: Shriram does not have a stellar track record. One of its group company Shriram Finance has stopped quoting, and rest are doing moderately ok.

Hence in spite of the fact that I have some free cash (which I intend to move from low interest FD to a bond), I am not subscribing to the issue.

Disclaimer: I am no financial analyst


Sadar Bazaar

Here are some facts:
1. You will find a Sadar Bazaar in almost all North Indian cities which at one time had a British Cantonment office.
2. The word Sadar does not mean anything in Hindi or its variants
3. Sadar Bazaar is always located to the south of the city Center (unless the city center has moved over the decades)

Well a friend of mine has an interesting theory. He says that in Pre British era, the Britishers usually preferred to live to the south of the main city. The market that caters to their needs was called Southern Market. This market because of its elite clientele was the posh market and in many places still is. However the locals could not pronounce the word Southern and ended up calling it Sadar.

I could not find a credible online link to substantiate this theory, but it seems to be making sense


The elephants…now monkeys

This one is in continuation with ankur’s post on elephants…
A bunch of hungry monkeys were put in a room with a single banana attached to the ceiling and one table underneath.
Every time a monkey tried to climb up the table to reach the banana, the other monkeys slapped it and didn’t let it get to it. They all wanted the banana for themselves, so none ended up reaching it. Soon all the monkeys had given up trying.
Thereafter, half of the group were replaced by new monkeys. The new monkeys tried getting up but the older ones slapped them down. Soon enough, they too stopped trying.
the other half of the original monkeys were also replaced by a new lot and additionally, adequate amount of bananas were attached to the ceiling.
No prizes for guessing – the same routine continued as before. This despite the fact that there were none of the original monkeys and there was plenty of bananas.
Force of habit…



Borrowed it from an email forward:

As I was passing the elephants, I suddenly stopped, confused by the fact that these huge creatures were being held by only a small rope tied to their front leg. No chains, no cages. It was obvious that the elephants could, at anytime, break away from the ropes they were tied to but for some reason, they did not.

I saw a trainer near by and asked why these beautiful, magnificent animals just stood there and made no attempt to get away.

“Well,” he said, “when they are very young and much smaller we use the same size rope to tie them and, at that age, it’s enough to hold them. As they grow up, they are conditioned to believe they cannot break away. They believe the rope can still hold them, so they never try to break free.”

I was amazed. These animals could at any time break free from their bonds but because they believed they couldn’t, they were stuck right where they were.

Like the elephants, how many of us go through life hanging onto a belief that we cannot do something, simply because we failed at it once before?



A lot of people had difficulty in understanding the practical implications of the nut and bolt puzzle I had asked 2 weeks ago. Hence this detailed mail is my attempt to bring some context into the whole issue.

Take the case of Nintendo. Like any merchandise manufacturer the company has to work in tandem with the retail and distribution network to be able to sell and make profits. However the organized retail chains like Walmart would dictate terms, offer ridiculous discounts and do arm twisting of the manufacturers.

Hence Nintendo deliberately created shortage by producing far less number of video games than the demand. (destroying bolts in order to gain bargaining power). Now unless a store stocks the latest of the Nintendo games,
it will not be able to attract the kids to buy other related toys also. Hence instead of pressurizing Nintendo to offer them favourable terms and margins, the stores starting offering Nintendo concessions (in form of in-store advertizements, shelf space, displays etc.)

The hype created by the shortage also helped the company to get attention, generate curiosity and get prime-time PR. The company was also able to push sales of some of the not so popular games and get better prices for their goods.


Face Saving

Continuing the discussion of the various tactics one can use in business/professional dealings to maximize the benefit, today we shall talk about Face Saving.

Many theories, rules and books try for think that human beings are rational creature. In reality not everyone indulges in complicated modelling techniques to calculate the probabilities and do a sensitivity analysis under different scenarios.

Face saving is a long term relationship building exercise. The idea is that if you have won, you don’t necessarily have to rub it on your opponents face. Give the counterparty a chance to formulate the words of the press release, or what ever you share to the public/his superiors in a language that shows him in a better light.

After all, having an upper hand today does not mean you will continue to enjoy the same position tomorrow.


Agency Problem

Ideally the Management and the Board has a fiduciary responsibility of serving the best interest of the stockholders (Stakeholders). The promter and the management gets paid to increase the shareholder wealth. And shareholder reward them in return via salary and profit share. However its often seen that the realationship is far from ideal.

One of the biggest problem faced by today’s companies is not competition, sales, economic downturn… but Agency Problems. Often the shareholders are not proactive enough to demand transparency and question the action and the though behind the management’s decision. Sometimes the reward structure is skewed and complicated. As a result what is best for the company is not necessarily best of the individual.

The 2 most debated topic under this head are:
1. Satyam: Since the promoter holding was single digit, Promoter tried to mmaximize his personal gains at the cost of the company.

2. Stock Options: In the USA bulk of the management compensation is paid via stock options. This encourages a high risk taking behaviour almost equivalent to gambling. After all if the bets work out, the stock price zoom and these executives make a killing. If not, then the downside risk is low.


Power of Commitment

Ever wondered why USA could never pull out of Vietnam War even years after it realized it was a lost cause.
Why India is unable to make the LoC as the official Border even though both sides know they won’t be able to achieve anything more than that.

Its called the power of commitment. Most people hate to see their efforts, time and resources go waste and desperately want to bring a logical conclusion to their pursuits. Many novice traders are known to throw good money after bad by continuing to hold/increase positions rather than cut losses. Infact the common observation is that the more the person has committed/wasted for a cause, the more desperate he/she becomes to win.

If you are a smart person, then you can
1. Prolong the crisis/issue resolution and make the person desperate
2. Then when you realize that the person is all desperate show them a small window of opportunity where they could salvage their pride and get on with their lives.