Free prostitution

What I don’t mean is “Yippie!!! Make prostitution free, who likes to pay for it anyways”
The issue of prostitution cannot be answered without taking into account the issue of human trafficking, pedophiles, exploitation by pimps/underworld/law enforcement authorities, drugs, AIDS/STD, religion and scores of other vices that exist in the society. Most countries find the issue so complicated, esp. if one adds the political, societal and moral dimensions to it that they prefer to ban the entire profession all together.
However in this ostrich like approach of governments looking the other way and praying that the problem will disappear, they make things worse. Prostitution is one of the oldest profession and answers to one of basic needs of the society. Almost in all societies there are a few ancient texts that highlight the importance of prostitutes in maintaining the morale of the army and law and order in the city. Yet for all their important roles, the prostitutes/mistresses were always outcasts and looked down upon.
However this post is not to glorify the profession or convince people to visit one. All I am saying is whether the governments like it or not, this profession exists in some shady alley of the city or another. The cities which allow it legally are better off. Firstly it makes it easier for the law enforcement authorities to regulate the trade. Ensure proper rights and safety for the sex workers and control the vices which are often seen in the unregulated trade.
However the moment the government bans the trade, everything becomes illegal and the distinction between the good and the evil disappears. Instead of drug and disease free women practicing out of their free will, the society ends up with underage girls being pimped away and treated like slaves. A situation which is neither good for the society nor for the girls trapped inside this trade.
Reposting my 2009 article


M&A deal structuring: All cash or stock or seller financing

Recently my colleague and I were discussing the impact of the deal structuring on the valuation of the target company (from the eyes of the acquirer and its shareholders). Few of the points discussed here are as follows:
1. Any investment (Greenfield/brown-field/acquisition) should be aimed towards creating the highest NPV for the company. Also if the deal is profitable, then rarely do firms have issues in tapping the capital market. Hence structuring has only a marginal impact.
2. A company which is not excessively levered (manufacturing firms with huge debts) or is a bank with minimum capital requirements should always go for all cash deal rather than a stock deal. This is because of following reasons:
a. If the company has huge stockpiles of cash/cash equivalents, then most likely this money is earning a miniscule LIBOR rate and any wise business investments should beat this return by a huge margin. (low opportunity cost)
b. If the company does not have too much capital, then cash deal will force them to borrow and debt servicing often improves the financial prudence of the target.
c. I believe a bird in hand is better than 2 in the bush. A company should either return the surplus to the shareholders as dividends or it should invest. Otherwise management forgets its fiduciary duties and tends to squander away the money through pvt. Jets.
d. Also it puts a cap on the size of acquisitions and its frequency. Thereby minimizing the risk taken by share holders.
3. Seller financing is very common when a PE or financial firm is selling the asset. This involves the seller to fund the acquisition by loaning part of the proceeds (sometimes working capital/corporate debt to run the firm too). The only question one needs to ask themselves why was the seller in such a hurry to offload the asset that it did not even stop to collect the cheque? Any FCFE computation would look very rosy because of the reduced capital requirements, but one should not under estimate the risks.
4. Unless there is a severe liquidity crunch, share dilution rarely works in the benefit for the existing share holders. Lesser the mouths to feed, the more for me.
5. Not to mention that stock deal means 100% financing through equity. Since equity is more expensive then debt/free cash, unless the stock is over-priced it rarely makes a good business case.
6. Also because of the exit restrictions stock deal don’t have an earnout components (or have smaller mgmt retention bonus). Hence acquirer takes in more risks than the conventional deals.
7. EPS bump: A lot of firms trading at very high PE ratio believe that by acquiring another company trading at a much lower PE ratio, they increase the EPS of their company and hence create share holder wealth. But the challenge remains in convincing the investors that the bigger elephant will continue to grow at the same rate.


Dentist and Ice-Cream Parlor

As a child, I actually used to wait for my 6monthly visit to the dentist. Reason: A trip to the ice-cream parlor immediately afterwards was the deal I had made with my parents. Even my dentist used to recommend it, because it was cold which soothes the swollen gums after the treatment and also is loaded with calories so it’s the best substitute for the liquid diet that is recommended after any dental procedure.
20 years ago there were not many ice-cream corporate chains, but still the owners were wise enough to know that it makes sense to open a store right next to the dental clinic. However in Bangalore that’s not the case anymore, I even don’t see any billboard/pamphlet directing me in the right direction. I wonder why? Is it a connection that is unique for me and does not work for the masses or the big marketing analytics team have overlooked the aspect.
I always believe that parents secretly feel guilty for forcing their kids to visit a doctor/dentist. Hence after the visit they are ready to reward the kids with anything!!



Guest post by T.R.Ramaswami
Apropos several loose cannons on the so-called coup in January 2012, there is a precedent going back to 1964. Field Marshal Maneckshaw, who was then the Western Army Commander was given instructions by Gen. Chaudhuri, the then chief, to move with troops into Delhi, in case Nehru died, which he did under protest. Chaudhuri did not back Maneckshaw and Maneckshaw was then shifted to Eastern Command. The explanations were given later. This and the so-called “coup scoop” supposed to have taken place in January 2012 have created enough debate.
Many believe that a coup is impossible in India because you need all the army, navy, air-force and the strategic forces commanders. This is amateurish – the more the accomplices, the greater the chances of leaks. All you need is a brigade (50 companies of 100) armed to the teeth. In an urban jungle planes and tanks and even jeeps are useless against foot soldiers as three top Mumbai policemen realised too late against the terrorists. First, electronically and physically isolate Delhi – telecommunications, TV, radio stations, internet gateway, media offices, airports/ road/railway routes. Coup timed when Parliament has full attendance – forthcoming Presidential elections. Just one company can take all MPs. Recall what five men did in Delhi in 2001 and ten did in Mumbai in 2008.
The remaining seal Rashtrapathi Bhavan, North & South Blocks, Supreme Court, IB & RAW HQs, Delhi Police, BSF/CRPF HQs, foreign diplomats and top corporate honchos. With MPs, babus, IB, etc in custody, all other commanders, police and para-military will be only too happy to join the coup. Initial tipping-point success within 24 hours is essential to bring all on board. Since no Lieutenant-General / Major-General or their equivalents need be initially involved things will look normal. Assuming this plan does not work and the other forces mount a counter attack on Delhi – all VVIP hostages will be shot dead by the coup group before they too perish. Delhi will be rubble. As far as the people are concerned, either way it does not matter! Right? Anyone want to be my 2i/c?



By T.R.Ramaswami
Whatever the controversies during his tenure, the General has taught us a few things that we would
need to remember
‘Thank God he has retired’ echoed from several quarters, including our media, some of whom speculated
whether he would hand over charge! Look at the General’s service record – in 42 years of service, before
becoming Chief, he was in Army HQ for just one posting and that too as a Major. In AHQ you don’t count for
much unless you are at least a Major-General. His successor has had about half a dozen AHQ assignments and
three UN postings. It would be interesting to know how many such postings other chiefs have had. Everyone
knows that HQ tenures help build connections and relationships, even beyond the army, that prove useful later
on. Frequent postings in HQ are also associated with a more “political nature” and “flexibility” of the officer.
Has the government or the Supreme Court established that 1951 is NOT the birth date? All vacillated, beating
around the bush, resorting to semantics like “threshold documents” – the application form and two letters. All
the promotion letters, issued by the same Military Secretary’s Branch right up to the rank of Major-General,
which showed 1951 as the birth date, were conveniently ignored. Were these also not “threshold documents”?
Every third party document – authorized by law as proof of birth – hospital records and the school certificate
– showed 1951. If these are superseded hen why ask anyone for proof of birth? What if the application form
stated 1951 but the school certificate said 1950? Which one would then have been treated as correct?
Ever since he filed the suit in the Supreme Court, the Government would have engaged the IB, CBI and even
the ED, just as in the case of Jagan Reddy – to try and find some hole in his career to nail him. They evidently
failed miserably. You may ask – is there any proof that the Government did this? Answer – is there proof they
did not? Who leaked the letter to the PM? A letter can be leaked only by the author and the recipient. Had the
author been the source of the leak the Government would have trumpeted this from the ramparts of Red Fort.
Silence reveals a truth that is inconvenient. Recall what Sherlock Holmes said – when you have eliminated all
possibilities through fact and logic, whatever remains is the truth.
Why are the contents of the letter secret? Only strategic macro numbers are to be kept secret. But the larger
picture of arms shortages etc. are of vital knowledge to the people whose money is taken to fund the defence
budget. We have the right to know whether that money has gone. In any case there is nothing so secret about
all this – every foreign intelligence agency and arms suppliers, who are also mostly foreign, know the exact
picture of our armed forces, probably better than the babus and netas.
The “scoop” of the “coup” was nothing more than media “poop”. Are we to believe that the government
continued with a chief for 5 months after an attempted coup? What rubbish. Either Gen. Singh would have
become the Chief Martial Law Administrator or gone to jail or even shot for treason. Look at the nadir media
reporting has fallen.
What the General has achieved, for the benefit of the army and succeeding chiefs, given the flurry of
acquisitions, enhancement of financial powers etc, all within six months, is to establish an old Hindi proverb
– lathon ke dev (or is it bhooth?) bathon se nahin mantey. Snuggly cocooned in South Block, the babus have
been taking the netas for a ride. Recall how they managed to scotch the proposal of a former Defence Minister
to send them to Siachen and other hard postings to see for themselves. ‘Ignorance is bliss’ is the credo of the
babulog as it helps in fluffing off responsibility.
We are told that the new chief has a daunting task ahead to set right the civil-military relationships. But is it
his sole responsibility? What about the Defence Minister? Can he make a clear statement that he is the civil
authority to whom the chiefs are answerable and not the babus? Will he have at least that much courage?
Next, can he back up his statement with empirical and visible action? Can he ensure that files from the armed
forces take the route – PSO – Defence Secretary – Chief – Defence Minister? After all the Chiefs are above the
Secretary in the warrant of precedence and should have the last word before matters go to the Minister. This is
true civilian authority.
Further, why should the babus have any role in armed forces promotions? For fairness? Then who ensures
that promotions in the IAS cadre are fair? Why not let the IPS do that role? And let IPS promotions go to the
army to ensure “fairness” all round! If we cannot trust each of the cadre bosses to be fair, then how the hell
did they get appointed in the first place? And what is the “integrity” of the IAS cadre? It was this cadre that
gleefully processed the emergency proclamation. The then Home Secretary, N.K.Mukharji, ICS (later Cabinet
Secretary and the last ICS officer to retire) refused to toe the line. S.L. Khurana, IAS (!) then Chief Secretary
of Rajasthan proved malleable enough and was brought in as Home Secretary. Of course he was later rewarded
with Governorships. The blackest hour in India’s democratic history was initiated by the IAS cadre. And their
willingness to bend or even crawl to the wishes of their political masters, who conveniently choose to remain
ignorant on several aspects of statecraft, ensured rewards. If we have democracy after 1975 it is because of the
armed forces. It is time the Army and other Chiefs start pulling their weight and get meddlesome babus out of
their hair.
Evidently the problems are on account of the sheer lack of knowledge and incompetence of the political class.
And hence they have placed the bureaucracy as armour in front, and this cadre plays its own little games.
Will you trust the Defence Minister to go for a one-on-one talk on border issues with the Chinese Defence
Minister? He will be eaten raw with soya and chilli sauce.
Want civil-military relationship to be put on an even keel? Let the netas learn what it all about. Even though it
will not win elections. Better late than never.



Maturity is the ability to control anger and settle differences without violence or destruction.
Maturity is to have patience.
Maturity is the willingness to pass up immediate pleasure in favor of the long-term gain.
Maturity is perseverance, the ability to sweat out a project or a situation in spite of heavy opposition and discouraging set-backs.
Maturity is the capacity to face unpleasantness and frustration, discomfort and defeat, without complaint or collapse.
Maturity is humility. It is being big enough to say, “I was wrong.” And, when right, the mature person need not experience the satisfaction of saying, “I told you so.”
Maturity is the ability to make a decision and stand by it. The immature spend their lives exploring endless possibilities; then they do nothing.
Maturity is the art of living in peace with that which we cannot change, the courage to change that which should be changed — and the wisdom to know the difference


ride vs drive

why is it that you drive a car but ride the bike?
you ride in a train, on the horse… but drive me crazy.
wonder what is the rule for selecting drive and ride



Guest post by T R Ramaswami
What exactly is the reason for the hullabaloo raised over the cartoon? It is nothing but symbolic hypocrisy like the one on the auction of Gandhi’s possessions. The more important question that no one has the courage to ask is this – If Ambedkar is the so-called “Father” and “Architect” of the Indian Constitution as many would want it to be claimed, did he do a good job? Then let them explain why he was such a poor visionary. We have had 100 amendments in less than 65 years. That‘s a far better strike rate than that of Gayle, Afridi or Sehwag. Contrast this with the less than 30 amendments in 230 years in the US Constitution. It is evident that Ambedkar’s name has been used as a vote gathering technique while his Constitution has been mauled and raped. The question is – when will the Dalits realize that they have been taken for a ride and that their poverty and consequent illiteracy has enabled this? The sucking up to vote bank politics of the Congress compelled that he be given the title of “Father of the Constitution” with a more than deserved share of the credit. If however the contrary is true, then is it not correct that the Congress governments, under whom most of the amendments were enacted, did so only for narrow political gains, thus destroying Ambedkar’s seminal work? It would be interesting to hear the responses of the Congress and the supporters of Dr. Ambedkar. If Ambedkar’s reputation has to be restored then let the Constitution be restored to its 1950 glory and let us run the country on that basis.
Since we have been correcting history/political science text books to suit various ethnic, social and political needs, there is one correction that needs to be made. History books tell us that Nehru, a leader of the Congress “fought” for independence. But there is no information on what dates and which places he did so – and what “fighting” he really did. Making provocative speeches (which every two-bit neta does today) and sending long memorandums to the Viceroy do not count. Could the text books please carry this information? Also if he was such a great freedom fighter, then why was he not sent to the Andamans where the real freedom fighters were sent? Why was he sent to jails with all comforts where he could letters that became books and on which royalty was earned later? I am told that the only fighting that Nehru only indulged in hand-to-hand ‘combat’ – with the Viceroy’s wife on the lawns of the present Rashtrapathi Bhavan. History books also tell us of the great crime Nathuram Godse committed in assassinating Mahatma Gandhi. But they do not tell us that he committed an even greater crime – he shot the wrong man. Who should he have shot – the Great Freedom “Fighter”. History books should also tell us why the Congress that claims to be a Gandhian party did not dissolve itself as desired by the Mahatma. Will the HRD Minister answer all these questions so that our censored knowledge of history is complete? Perhaps the above is the reason why many say ‘istri’ for history. They know that inconvenient facts have been istrified.


Income tax on Bonus vs. fixed salary

Note: This pertains only to Indian personal income tax laws.
Do you know that your bonus payout is taxed at a different rate than your fixed (monthly salary)?
Here is how:
Your bonus is always taxed at your highest tax bracket, while there are various exemptions available which are tax exempt.

  1. Your HRA would be 40-50% of your basic. This is tax exempt if you have the proper rental receipts.
  2. Employer’s contribution would be 12% of your basic which does not even show up in your IT records.
  3. Based on company policy your LTA would be a % of your basic which is also tax exempt. (Say 2%)
  4. There are telephone reimbursements, fuel, company car lease and other mechanism that are tied to your basic pay on which you can save taxes.

So 50-64% of your basic salary is tax free. Assuming your basic compensation is 50% of your gross compensation (may vary based on company policy) this translates into 27-32% of your fixed salary being tax exempt.
This means that rather than a popular myth of income tax being 30%+ surcharge, your effective income tax on any increments (in your fixed salary) would be mere 20-22%
IT department is not so kind with bonus: So 1L of bonus taxed at 30% leaves you with 70K, while 1L of additional fixed salary would leave you with 80K extra take home. (~15% higher)
Other merits of having high fixed salary (rather than bonus):

  1. Since fixed salary is paid out monthly (rather than yearly/periodically), it eases your liquidity and ability to meet your regular expenses esp. home loan EMI.
  2. Some cheap companies show bonus as Maximum pay-out to employee rather than the normal. Which means that 15-25% of your bonus never reaches you.
  3. If you quit your job in the mid-year, no private company pays you your due share of the bonus. Hence it’s always beneficial to minimize the receivables.
  4. Gratuity/severance payouts are on the basis of your fixed
  5. Your bank loan eligibility limit is determined on your monthly take home. So high fixed component makes it easier to buy that bigger car/home that you always dreamed of.
  6. Also its beneficial to prepay the loan with a higher EMI, rather than using Bonus to pre-pay (as there are pre-payment penalties etc which you can avoid)
  7. At 9% interest rate, and assuming that the bonus is paid annually at the end of the year, you would lose about 4.5% as interest/time value of money alone. Again some cheap companies will wait for a full quarter before the bonus is paid our. (i.e. the Bonus is evaluated on your performance Jan 2015-Dec 2015 but paid on 1st April 2016.)

Bonus payouts are also not without merits:
1 Since bonus is often tied to the performance levels (personal + team + corporate), there is usually a very high chance to achieve higher bonus.
2 Being paid as a lump sum amount, it is a great morale boaster. It really helps you make the purchase/investment that you always wanted to.
3 Many companies use bonus as a retention tool, as employees usually wait till the Bonus payouts before expressing their desire to quit. Hence lesser value of the bonus, the more control you would have over the timing of the exit.
Hence don’t fall into the CTC (cost to company) trap; always calculate your salary on the basis of BTE (Benefit to employee) basis. A 119% bonus payout at the end of the year is financially equivalent to the same amount being added to your fixed salary. (15% +4.5%)


flipkart ad: "Aapko bhi to photo dekhkar pasand kiya tha"

I was watching the latest series of Flipkart tv ads and I could see a remarkable difference in the product positioning by this market leader and pioneer in India’s E-Commerce space.
1. Unless the rest of the folks, the ads don’t talk about discounts. Everybody (esp. Indians) love discounts, buts its never good for business and till 2011 had created a situation where almost all the online retailers were booking losses and burning cash (rather than generating it)
2. Returns/reverse logistics: Flipkart has one of the best infrastructure and policy for the dissatisfied customer to return the products. However still the current series of ads don’t talk about it. Maybe its like one of those features (like credit card payment, Cash on delivery) that almost all the online shoppers expect the website to offer. Hence they have realized that its no point wasting precious media time talking about it.
3. “Aapko bhi to photo dekhkar pasand kiya tha”
I loved this line as it will strike a familiar chord amongst the entire country where arranged marriages are prevalent. Here the wife effectively convinces her husband that there is nothing new is selecting goods (or even your spouse) by just a photograph.
4. Use of kids: I am not sure why they use it, but kids create a natural curiosity and grabs our attention. Also it helps to communicate that the website is so easy to use that even toddlers can shop.
The shift from discounts, cash on delivery, return policies to the fact that its not too risky to shop online is a wonderful change. It addresses the core issue which keeps most shoppers away from websites, while ensuring that e-commerce not mere discount stores.