LESSONS FOR EVERY ENTREPRENEUR !!!!

19 AUG, 2011, 07.51AM IST, ET BUREAU 

30 lessons from life and career of NR Narayana Murthy

NR Narayana Murthy , who steps down as Infosyschairman on August 20, is a role model for not just what he achieved but also how he did it. Here are 30 lessons from Murthy, one for each year he spent at company. 

Seize Your Gandhi Moment 
Murthy, a self proclaimed socialist in the mid '70s was jailed for 72 hours in Bulgaria. The experience taught him that entrepreneurship and job creation is the way to alleviate poverty. 

You might fail, but get started 
Learn from mistakes and move on. In 1976, Murthy founded Softronics, a company that lasted a year and a half. When he realised that his first venture wasn't taking off, he moved on. 

Think Big. Don't Hesitate to Start Small 
In 1981, a determined Murthy started Infosys with Rs 10,000 he borrowed from his wife. In few years, Infosys went on to become one of the largest wealth creators in the country. 

Cut Yourself a Slice, Not a Large One Always 
When Infosys was set up, Murthy took a pay cut while salaries of other co-founder's were increased by 10 percent. According to Murthy, a leader needs to show his or her sacrifice and commitment. 

Lend a Hand and Throw in a Foot Too 
After Murthy convinced seven of his colleagues, there was a problem. Nandan's future inlaws were not sure about him. Murthy met Nandan's uncle and convinced him. 

Own Up, and Then Clean Up 
In the '80s Infosys developed an application for a German client. Murthy noticed a single character error and informed the client immediately. 

Trust in God, But Verify with Data 
In God we trust, the rest must come with data, is perhaps Murthy's favourite statement. When confronted with difficult decisions, he tends to rely on data. 

Keep the Faith 
Infosys almost wound up in 1990. Murthy did not want to sell the company. He asked co-founders if they wanted out and offered to buy their shares. All of them stuck together. 

Get Involved 
Infosys won a contract from Reebok in the early '90s. Seeing the founders involvement, the software, was nick named 'Dinesh, Murthy and Prahlad.' Infy veterans still recall those days. 

Sharing is Caring 
After the IPO, Infosys decided to share a portion of its equity with employees. This helped them retain talent and gave employees a sense of ownership. Murthy is proud of having given away stocks worth over Rs 50,000 crore to employees. 

Treat your People Good, but Your Best Better 
Murthy always had a thing for good performers. And he rewarded them well. When Infosys decided to give its employees stock options, Murthy insisted that some shares be given to good performers through the 'Chairman's quota.' 

Hire a Good Accountant, Even if he is Argumentative 
A young, argumentative Indian, was asking too many questions at an annual general body meeting of Infosys. More impressed than irritated, he hired Mohandas Pai, who went on to help Infosys list on Nasdaq. 

When in Doubt, Disclose 
Keep your books clean and leave the cooking to the chef. Murthy's philosophy about being open and transparent has given the company a lot of credibility. He often says, "When in doubt, please disclose." 

Leave the Family Out 
Murthy told his wife that only one of them could be with the company. Murthy, along with other founders, said that none of their children would work for Infosys. This left no room for nepotism at Infosys. 

Don't be a Pushover 
In 1994, when General Electric wanted to re-negotiate rates, Murthy said no to selling services any cheaper. This helped Infosys not to be overly dependent on any one client. 

Make hay While the Sun Shines 
In late 90's, India's tech companies made use of the Y2K opportunity to make themselves known in the global market. For Infosys, it was a great opportunity to enter into long-term relationships with their customers. 

Brand-aid First, Get Clinical 
When the sexual harassment case against Infosys' top sales guy Phaneesh Murthy threatened to tarnish the company's brand, Murthy decided to quickly react. He let go of Phaneesh, and settled the case out of court despite Phaneesh wanting to fight it out. 

Mind your Business, you'll See Things Coming 
Murthy carries and updates a mental model of Infosys' business all the time. According to him, every leader must have a model, consisting of six to seven parameters that might affect business. 

Keep it Simple, Not Silly 
Keep your life simple and straight. That way, you get to work more and worry less. Murthy is known to be frugal with money. Despite being one of the richest Indians, he leads a simple life. However, he does not cut corners on buying books or brushing up on literature. 

Founders Keepers, but Not Forever 
Murthy's decision to not allow founders to continue with the company after the age of 65 set another standard for the company. This way, younger leaders at Infosys had a greater chance at the top positions. 

Talent Spotting and Division of Labour 
Murthy is known to have an eye for talent and a talent for dividing labour. Nandan was given sales responsibilities while Kris and Shibu did the tech stuff. N S Raghavan was asked to handle people and Dinesh was assigned quality. 

Hold on to Your People but don't Cling 
Letting go is never easy but its not good to cling on to your colleagues either. Amongst the founders, Ashok Arora, Nandan Nilekani and K Dinesh have quit Infosys. Infy veteran Mohandas Pai has also left Infosys. 

Give, it only gets you more 
In 2010, the Murthy's donated $ 5.2 million USD to Harvard University Press for a project that aims to make India's classical heritage available for generations to come. He is also supporter of the Akshaya Patra Foundation. 

Do it First and Do it Right 
Infosys did many things first. And most things right. For example, it was the first Indian company to list on Nasdaq. It was the first Indian company to make it to the Nasdaq 100 list and it was the first Indian company to attain the highest level of quality certification. 

Perils of Being a Poster Child 
Being the poster child of Indian IT industry, Infosys and Murthy have been at the receiving end of many criticisms. The company has been accused of taking away American jobs and been called a "chop shop." 

Get Rich. Honestly 
Rich businesses were considered to be dirty in the days when the country had a socialist bent. Infy was a company which got rid of this sentiment. Murthy, with his 'no compromise' policy on greasing palms and doing ethical business, set the standards. 

Do Not be Afraid to Court Controversy 
Ever since Infosys became a success, Murthy was under constant public glare. This did not deter the straight talking Murthy from courting controversy or voicing his opinions openly. 

Invest in Learning 
With big investments in training, development and building facilities, India's IT bell-weather has always been keen on grooming the younger generation. Murthy drove the culture of learning in the company in its early days. 

Never Lose the Common Touch 
The big man of Indian IT kept his personal life simple. He lives in a simple, middle class house and flies economy till date. Murthy has always been accessible to people around him. 

Do Good, Look Good 
Murthy knew the importance of creating an image for Infosys. He invested in creating a sprawling, world class campuses early on, bigger than any other company's headquarters in the country, that would make his global customers feel like they were in a global office.

THANKS TO ET.

PREPARE FOR THE WORST?????

In an interview with ET Now, Shankar Sharma, Global Trading Strategist, First Global, gives his views on the current market scenario. Excerpts: 

Three months ago you had predicted this decline. Are you feeling very happy about your call? 

Not feeling happy or sad in the stock market or for that matter in cricket because you will win some you will lose some. Hopefully over a period of time you should win more than you lose, but you will lose a few as well. So the one thing that sports and markets both teach you is that always remain humble and remain rooted to the ground. So I am not very happy at the way it has worked out, particularly for our local markets. Globally it was anyway looking very-very shaky, but be that as it may, anybody who was careful and conservative three months back is probably a lot happier than somebody who was more aggressive. 

So are we approaching a panic bottom or this is just the beginning? 

I do not think we are done at all with the fall globally and within that context I do not think we are done with the fall in India. When we spoke last time three months back, my view was that I think we were at about 18,000 or 18,500 or so on the Sensex back then thereabouts give or take 500 points. My view was that we would see 16,000 at the bottom and in markets you do not think that far out when you will make your view as newer levels come. We have kind of very effortlessly reached the levels of 16,000 and that zone a lot more effortlessly than probably I also envisaged and visualized, but that having been reached I do not see where is the redemption. 

I do not see what will change so dramatically even whilst I was away from the market I did glance at the headlines and I did glance at the earnings numbers etc. and they did not seem at all enthusing. So without that and then you have obviously the big global factor, the big overhang of those factors and then you have our middle class going totally bananas over a movement which has absolutely complete disaster written all over it for the future of this nation. All things put together I am very-very sobered by all that I am seeing around me. 

THANKS TO ET for this , 

I completely agree with Shankarji as the dependency with world markets ai not totally ruled out  and the markets in WEST and US washed out for all practical reasons. Any comeback is aonly a short covering and the buyers/investors will sell now. The depth of the market in the west is higher than ours but the volatility is extremely high. The Indian markets will face the real heat once the FIIs starts pull out some of the profits from our shallow markets will create a catastrophic effect in the next few months. The technical supports and resistance will get violated by wide range is the biggest problem with these kinds of situations.

SAVE THE PORTIFOLIO

THE VOLATILITY IN MARKET IS UNAVOIDABLE BUT IT CAN BE MANAGED ......

Use beta method to control your portfolio's volatility

Abhay Rao / Mumbai August 18, 2011, 0:45 IST

In volatile market conditions, one needs to be aware of the risk one's portfolio is facing. The simplest way is by calculating the beta of your portfolio.

In financial terms, beta is the measure of your portfolio's volatility. A beta of one would indicate your portfolio is not more volatile, nor less than the market as a whole. If your portfolio beta is more than one, then it means your portfolio is more volatile than the market, while less than one indicates it is less volatile.

Raamdeo Agarwal, joint MD and CEO, Motilal Oswal Services Ltd, says, "In these days, a lot of portfolios show losses. This causes investor panic, leading to hasty or sentimental decisions. However, if you believe in stocks, absorb the paper/notional losses without panicking and make your decisions based on hard facts.
 

HOW TO CALCULATE YOUR PORTFOLIO BETA

Total corpus in equities: Rs 10 lakh Number of scrips = 5 scrips (ITC: Rs 1 lakh, DLF: Rs 3 lakh, ICICI Bank: Rs 3 lakh, HUL: Rs 2 lakh and Maruti: Rs 1 lakh) Weight of stocks in portfolio: ITC and Maruti (10 per cent or 0.1), DLF and ICICI (0.3) and HUL (0.2) Beta of stocks: ITC (0.74), DLF (1.4), ICICI (1.38), HUL (0.57) and Maruti (0.82) (Data from BSE website) Multiply beta weight of stocks:(0.074+0.42+0.414+0.114+0.082)= 1.104A A portfolio beta of 1.104 indicates that your portfolio is a little more volatile and risky than Sensex. It also means, if Sensex were to rise or fall 10%, your portfolio would gain/lose 11.04%

One calculates portfolio beta by the weighted average of each individual stock's beta in your portfolio. "Portfolio beta is a very important part of making a portfolio, as it takes past records into consideration. It also helps us know how the portfolio would react in relation to a particular benchmark, and if it fits within the client's requirement," says Zankhana Shah, CFP and founder, Money Care Financial Planning.

Generally, during bullish times, a high beta is preferred, and one could choose funds or stocks with a higher beta (more than one). While during volatile and uncertain times, or when the markets are bad, a lower beta is better.

While a beta is not the foremost decision on which an investment is made, it is essential. It helps determine how much risk a particular investment carries and how it affects your overall portfolio.

"If a client is bullish on a particular stock, sector or asset class, based on the data available, one can calculate how much more exposure the client can take in that investment. Beta allows us to determine how much will a particular investment will affect the overall portfolio beta, and based on how much more risk one is willing to take, we can accordingly allocate the funds," adds Shah.

When one is being swayed more by sentimental market movements, pressure and other hearsay, calculating the beta would help understand the risk one is taking. Company fundamentals and macro and micro economic factors are useful, but portfolio beta is a more personal tool to check how the portfolio is looking vis-à-vis the market as a whole, and base decisions on how comfortable you are with your current portfolio beta.

THANKS TO BS

OUT PERFORMANCE

MANY REASONS TO OUT PERFORMANCE……LOOK AT THIS….

Equity of firms with low promoter stake rises

N Sundaresha Subramanian & Sameer Mulgaonkar / Mumbai August 15, 2011, 0:47 IST

Companies with low promoter holding, especially those where the promoters have between 20 and 25 per cent stake, have seen their share prices spurt despite a falling market.
A significant number of these companies have given positive returns between July 28, when the Securities and Exchange Board of India (Sebi) announced the new takeover trigger of 25 per cent, and August 12. Many others have performed better than the broader market, which has fallen around seven per cent during this period, largely due to global uncertainties. The BSE Sensex fell 7.5 per cent during this period and the broader market, represented by the BSE 500 index, shed 7.2 per cent.

Experts feel while some of this rally could be due to promoter action, others must be moving on expectations of such action. Business Standard had reported last week how a number of promoters holding over 20 per cent in their companies but short of the new trigger of 25 per cent announced by Sebi, are looking to increase their shareholding to the new trigger limit. This is a crucial safeguard against hostile takeovers and a key enabler for further consolidation.
 

SOARING EXPECTATIONS
	Promotor  stake in %#	% Chg*
Shreeyash Industries	24.44	36.49
Intens Air Systems	20.51	23.93
Arcee Industries	23.74	12.67
Trijal Industries	22.12	10.54
Himachal Fibres	24.14	9.57
Odyssey Tech	20.67	6.41
Sikozy Realtors	21.08	5.52
Vora Constructions	24.48	4.98
M&M	24.86	3.52
Rajasthan Tube Mfg	20.71	1.83
Sensex		-7.52
BSE 500		-7.25
# as on Jun 2011    *Price % change: 12 Aug over  28 Jul Compiled by BS Research Bureau

A study by the BS Research Bureau shows at least 17 of 88 such companies which were actively traded during this period gave positive returns since the board meet. Mahindra and Mahindra, where promoters held 24.86 per cent, gained 3.5 per cent. In the past week alone, between August 5 and 12, the stock gained 13 per cent. Sical Logistics has gained one per cent since the Sebi board meet. A number of smaller companies have gained even more. Shreeyash Industries, where promoters held 24.4 per cent, was the biggest gainer at 36.5 per cent (see table).
The BSRB study further showed that another 15 companies outperformed the broader market by falling less than the respective benchmark indices, though they have shown negative returns. HDFC Bank, where the promoters hold 23.28 per cent fell just under four per cent, against the Sensex loss of 7.5 per cent. Gujarat Natural Resources fell 2.82 per cent.
Promoters of these companies still have a small window before the notification is out to get past the 25 per cent line, if they have not got there already, takeover law experts say.
Takeover Code 1997, in force at present, allows promoters who have at least 15 per cent stake to increase their holdings by five per cent every financial year without making any open offer, under the creeping acquisition route. Promoters who hold 20 per cent or more can use this facility to get past the 25 per cent mark before the new rules come into force, say bankers.
Under the new norms, which will take effect once the gazette notification is issued, creeping acquisition will be available for promoters only if they hold 25 per cent or more, the new trigger limit. Creeping acquisition is an important weapon for promoters to consolidate holdings without the burden of open offers and to discourage hostile takeover attempts. Further, the new code also provides for a voluntary open offer by promoters to consolidate their holdings. Even this offer, which can be for a minimum of 10 per cent stake, can be made by promoters only if they have a minimum holding of 25 per cent, according to the takeover panel recommendations, making the number all the more important for promoters.

THANKS TO BS FOR THE NEWS….

DOW, NASDAQ, S&P...TWISTER.....RUINS

THE MARKETS ARE IN WHIRL WIND ....THE WEALTHIEST NATION 'S FOUL CRY AND WEEPING FOR SUSTAINABLE GROWTH LED FUTURE MADE THE WORLD TO LET THE TEARS.

THE SHALLOW MARKET DEPTH THIRD WORD COUNTIES ARE SUFFERING DUE TO AN UNPLANNED UNFOLDING EVENTS IN THE MARKETS.

WE HAVE TO ACCEPT THE FACT OF LIFE INBUILT IN THE SYSTEM AND WAIT FOR THE TIDE TO TURN UP.

8 AUG, 2011, 05.14AM IST, PARTHA SINHA,TNN 

Deven Sharma - The Jharkhand boy who downgraded US

MUMBAI: About four months after MS Dhoni's boys won the Cricket World Cup for India, another man from Jharkhand has now shook up the world. On August 5, Standard & Poor's, led by Jharkhand-born Deven Sharma, struck off the 'AAA' rating of the US, considered the Gold standard in the world of finance, for the first time since 1914. 

On that Friday afternoon, S&P officials told Barak Obama's treasury department that the ratings major's analysts have come to a decision that the US no longer deserves to be among the best rated countries in the world. After six hours and a flurry of emails, phone calls and conferences between top officials in the Obama administration and Sharma's team of number-crunchers, the world got to know of the unprecedented move - something that was in the air for a few months but which appeared more like a distant possibility: The US' country rating was downgraded one notch to 'AA-plus'. And suddenly the 57-year old Sharma was in the spotlight, hailed by a select few, but criticized by several in the financial world. 

Born in 1955, Sharma was educated in Jamshedpur and Ranchi, and then moved to the US for his masters degree at Wisconsin and his doctoral degree in management from Ohio in 1987. During his initial years, he was in the manufacturing sector, working with Dresser Industries and Anderson Strathclyde. In 1988, he joined Booz, Allen & Hamilton, a global management consulting firm, where he spent 14 years. In 2002, he joined The McGraw-Hill Cos, the parent of S&P. 

Sharma took over as the president of S&P in August 2007, just when the sub-prime crisis in the US housing sector was getting out of hand, and credit rating agencies were picked as one of the perpetrators of the meltdown for their flawed ratings models of housing loans. Over the last four years as the head of one of the foremost rating agencies in the world, Sharma has faced several US Congressional grillings, but has negotiated most of those with much elan, people who have followed him closely say. In a recent interview, Sharma admitted that over the last four years, comments made by US lawmakers have changed to appreciation from strong criticism. 

No wonder the veteran of several testimonies in the US congress has been able to stand up to the global criticism from all quarters for their critical decision. Since Friday evening, Sharma, along with David Beers, his top lieutenant on the ratings side, have stood firm alongside S&P's analysts and defended the controversial and unprecedented decision saying that such a step was necessary and it was done for the benefit of investors. 

People who followed Sharma's recent messages to the world said that there was enough evidence that a rating downgrade was more of a probability than not. Late last month, in a Congressional hearing during the height of uncertainty about raising US debt limit, Sharma was non-committal about what ratings decision his company would take. A Bloomberg report said that he told US lawmakers that S&P was waiting to see what the final proposal would be before deciding whether to keep US debt at the firm's highest ratings level. 

While the world criticized S&P for their historic decision, some even questioning the data the analysts used but back home there are some who think Sharma and his men have done a great job. The controversial head of a top brokerage house with strong presence in the US told TOI, that the ratings downgrade had to happen as it was due for years. 

DEVAN SHARMA: Analysing Global Risk 

EDUCATION 

Born in 1955, Deven Sharma did his schooling from Jamshedpur and graduation from BIT, Ranchi; masters degree from University of Wisconsin and doctoral degree in management from Ohio State University in 1987 

CAREER 

1988-present: After working with Dresser Industries and Anderson Strathclyde, he joined Booz, Allen & Hamilton, in 1988; moved to The McGraw-Hill Cos in 2002, the parent of S&P ; was executive VP at S&P from 2006-07 and became president in 2007; is also Crisil chairman

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THANKS TO ET

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The disaster came, the disaster wiped out the investor wealth 

FIIs offloaded shares worth Rs 3,000 cr in 2011

Press Trust of India / New Delhi June 28, 2011, 13:13 IST

Foreign institutional investors have offloaded shares worth nearly Rs 3,000 crore in 23 Indian companies, such as mortgage lender HDFC and Bombay Dyeing, among others, so far in 2011.

According to an analysis, ten foreign fund houses, such as Citigroup, Morgan Stanley, Merrill Lynch, Deutsche Securities and JP Morgan, sold shares of Indian companies worth Rs 2,939 crore through open market transactions on the Bombay Stock Exchange in 2011.

At the same time, eight overseas investors bought shares of 10 other firms, including Cairn India, for Rs 1,811 crore during the same period.

Analysts said this is just a normal stock market purchase and sale done by an institutional investor and is more of basket selling by some big client.

"It seems that one of the big clients has offloaded its holdings in the open market, while another one has bought it. It may also be that the client has changed its fund house," Religare Securities executive vice president and head (retail research) Rajesh Jain said.

Overseas clients invest in shares of Indian companies through participatory notes issued by fund houses.

Morgan Stanley Mauritius Company sold its holdings to the tune of Rs 1,368 crore in 12 firms, including Bajaj Finserv, Bombay Dyeing, VIP Industries, United Breweries Holdings, Garware Wall, Prime Focus and Subex, among others.

Similarly, Citigroup sold shares worth Rs 1,249 crore in five companies, namely HDFC, Mahindra & Mahindra Financial Services, Zenith Computers, JBF Industries and Marg, through the bulk deal window.

Further, Deutsche Securities Mauritius sold 2.5 lakh shares of Eicher Motors for Rs 25.50 crore.

In addition, UBS Securities sold its stake in Consolidated Construction, JPMorgan Special Situations (Mauritius) offloaded its holding in Cable Corp and HSBC Global Investment Funds sold its shares in NCC.

What more, T Rowe Price International Funds, Master Trust BK of Japan, Merrill Lynch Capital Markets Espana and BankAmerica International Financial Corp offloaded stake in Allied Digital, Indoco Remedies, Marg and Zuari Industries, respectively.

The biggest share purchase deal was done in Cairn India's counter as Broad Peak Mauritius and Merrill Lynch Capital Markets Espana together bought shares valued at Rs 1,706 crore.

Besides, DSP BlackRock Mutual Fund, ITF Mauritius, Credit Suisse (Singapore), Goldman Sachs Investments Mauritius, Deutsche Securities Mauritius and Citigroup Global Market Mauritius took stakes in Indian firms during 2011.


THANKS TO BS


The FII influence is indispensable as the gyrations of Market movement are collateral to their investment.

The policy decisions unfolding……….

The Central Govt is doing its part on the policy decisions after the May elections. There is a period of more than 6 months where the activity was stalled for want to people mandate as acid test to the rule at the centre.

Now the Govt working economic reforms on phased manner. The petrol hike to curtain the burden is step forward in such initiatives, now the gates were open. A few days back, on Friday evening, announced the increase of diesel price, LPG and Kerosene prices by Rs. 3, 50, 2 respectively.

The RBI has taken a stringent call to curtain the spiraling inflation by rate hike with out effecting the money circulation. Now RBI has left with little choice but to accept the high growth high inflation concept, especially dedicated to emerging countries like India. The current news on stands is allowing FIIs to invest in MF with an upper limit of $10 billion. The green signal in proprietary trading for FDI, is another good sign we are talking about.

The culmination of the effects made buoyancy effect in the stock-markets as the prices are ticking green to touch new highs. The much wanted policy decisions were published to negate pessimism note floating in the markets. The clear sign of relief is good for bulls until and unless the global slide make a catastrophe. The Nifty is good as mentioned in my previous posting…. THE HOPE GENERATED>>>??????  The bulls took charge of the last two days of the week. The FO closing gave good support to push the Nifty to higher levels. The Nifty levels above 5450 level is neutral but the challenge lies a head above 5520 level. The previous support 5460 which has become a platform for bulls now became a line of battle……..