Tuesday, December 26, 2006

Twelve tips to climb the corporate ladder

Being over-dedicated to your job may actually dim your chances of a promotion

If you talk to any successful entrepreneur, he will tell you that one of the ingredients of his achievements is hard work. But there are situations where hard work is counterproductive. The gadflies and drones of the company actually overtake you.

There are several reasons why this happens. There are people who work hard — much harder than their colleagues — because deep down they suffer from an inferiority complex. Often, they don’t realise it. They sacrifice family life to devote themselves to the corporate cause. You will find a lot of them in foreign banks. They run from meeting to meeting: from power breakfast to deal-making dinner.

Americans are particularly good at creating work for each other. The British have learnt to enjoy themselves behind the facade of hard work. Remember the five investment bankers from Barclays Capital who totted up a bill of £44,000 on one meal. (That’s what the wine cost; the £400 food bill was waived by the astounded restaurant owner.) Incidentally, Barclays was at that time cutting 1,800 jobs.

Away from the executive suites, why are people penalised for working too hard? The inferiority complex encourages some people to make themselves irreplaceable. An executive secretary with a top CEO says that she is the right hand person of her boss. So much so, each time he changed jobs, she moved with him. The money is not an issue; within limitations, she has been taken care of. But she recollects that she joined the job in the secretarial pool along a certain Ramona. The latter didn’t try to reach the big league by latching her wagon to a smart young executive. She was relatively lazy and was sent for training courses. Today, Ramona is sales manager in a rival concern and could even make CEO some day.

It’s not just secretaries who get wedded to their bosses. Some individuals get wedded to their jobs. They make themselves so valuable that they are impossible to move out or replace. If you are ever in such a position, you can bid goodbye to your chances of promotion. The other reason, of course, is that because of your insecurity, you take good care not to groom a successor. Remember the first IT types in companies when computerisation was a new, new thing. They made everything seem so esoteric. One of the few good things Bill Gates has done is reduce them to jargon-mouthing non-essentials.

Hard work also implies a lot of devotion to the immediate job content. The end result is that you don’t have the time to see what others are doing. If you want to rise to the top, you have to be a generalist. This is why industry puts a greater premium on MBAs than engineers.

But engineers and MBAs alike can fall into the hard work trap. And they have some evidence to prove that they are doing the right thing. According to a study by the Gothenburg University in Sweden, people who work hard tend to be happier. But the researchers add that the important point is to have a goal. Unfortunately for some, the work itself becomes an all-consuming goal.

Other researchers have pointed out that working yourself into a dead end happens more to women than to men. Some of the reasons are: overcompensation because of the need to handle multiple priorities; a greater sense of loyalty to the organisation and the individual; and a more responsible attitude to life. It may also be that job opportunities for women are limited even today. However, you won’t find HR people talking about this, as it’s politically incorrect.

The ultimate result of unstinted hard work is that you get taken for granted. The worker who expects to get rewarded for devotion ends up as the dogsbody around the office.

Pushing for promotion

Twelve tips to climb the corporate ladder

• Master your current job.

• Volunteer to take on (valuable) extra tasks.

• Make your boss look good.

• Stay in close contact with the HR department.

• Maintain positive relationships with the staff.

• Let your leadership skills shine.

• Groom a successor.

• Get a mentor.

• Take additional training.

• Look presentable at all times.

• Perfect your elevator pitch.

• Watch your timing.

Source: The Telegraph

Wednesday, December 13, 2006

Good advice often comes like gentle drops of fine rain

Now days I'm reading articles of Mr R Gopalakrishnan who is the executive Director of TATA Sons , so here is another one-

All endings are also beginnings. It is just that we don't know it at that time. In a delightful book, 'The Five People You Meet In Heaven', Mitch Albom narrates the story of an 83 year old war veteran, who discovers people who affected his life without anyone knowing about it.

This is true for managers also. Views from casual acquaintances who are not formally assigned the role of being a well-wisher can be extremely valuable. Their ideas come like gentle drops of rain that fall around you without making their presence felt too strongly, nor being intrusive.

When I grew up in Calcutta, it was a premier mercantile city, still maintaining the famous boxwallah tradition. Any young person walking around the office areas like Fairlie Place and Brabourne Road would yearn for a management trainee job in those business firms-Andrew Yule, Balmer Lawrie, Bird and Company, and Martin Burn, names that have now virtually vanished.

I was completing my final year BSc course, resident at the college hostel. Father de Bonhome, the principal of St Xavier's College, asked me whether I would like to be recommended for a trainee's job at McKinnon McKenzie. It was a fine firm, he could suggest only two from the whole college, and the salary would be Rs 450 per month. I calmly said that I was honoured to be recommended; in reality, I was thrilled. I did not consult my father, who had by then moved to Bombay.

With a borrowed suit and soaring dreams, I interviewed at the McKinnon office. After being seen by two managers, I saw one Mohi Das, the managing director. He asked me several thoughtful questions. As I was getting convinced that I had done well and might actually get the job, he drew up close to me and asked, "Son, may I call you that way? Don't get me wrong, but you are just past eighteen. You can have the job; we can train you quite well. But, tell me, do you need the job? How is the family situation?"

I was a bit offended, what did my family situation have to do with the job? He clarified, "Well, I have spent my career in one set of circumstances, but you will spend your career in an entirely different set of circumstances. I feel you should get a professional degree. You can always get this kind of job, son-unless the family situation requires you to get a job right now".

How could he dangle one of the most prized jobs in front of me and then say what he did? I just did not want to listen to him. And I was quite clear about my future (or so I thought) without asking too many people!

Reluctantly, I decided after some further thought that I should mention to my father that I wish to accept the job. He was furious that I could even think of taking a job. My dream job ended like a collapsed balloon. I went on to study further and joined Hindustan Lever subsequently.

I never met Mohi Das after that encounter. He retired in due course. A few years ago, I learned that he had died in Coonoor. He would not recognize this story even if I had the chance to remind him. He influenced and counseled me about my career in a valuable way, but unknowingly.

Like gentle drops of fine rain that touch you but do not interfere with you, casual advice comes your way. You need to listen to and reflect on them. Then take your own decision. Particularly for a generation that is as blessed as young people are in today's India, this would be wise.
- Mr R Gopalakrishnan

Monday, December 04, 2006

Success is about direction more than distance

Many managers spend a lot of their working time, thinking about how to accelerate their promotions, how to impress the boss more than their colleagues, and how to earn money faster. The management world is indeed very competitive. So you feel that time must be spent thinking through such matters and taking appropriate actions--quite correct, but only in part.

The question to ask is whether it is the aim of a career to go far or in the right direction. Ideally, of course, you should achieve both, but that is not easy.

If you watch club level golfers, you will see the point. Some stand on the tee box with the longest club, and whack the ball with the might of an ox. They are the ones who want to see the ball soar away with an accelerating speed. A few seconds later, when they observe where the ball has landed, they curse and crib. The ball has perhaps been lost or has landed in a difficult spot from which it would be difficult to play the next shot. Other golfers take a measured approach of landing the ball on the fairway at a spot where they want to land. For them, the next stroke is as important as this first tee shot. Both are valid ways to play the game. If you are very talented, you may learn to do both i.e. go far as well as land where you want. Many club level golfers never achieve this.

The purpose of a career is to utilize your potential fully because that alone can give you satisfaction and a sense of self-esteem. This is so whether you are a chairman or an assistant. It becomes possible to achieve such satisfaction when you are surrounded by friendship and trust, which are essential for accomplishment in managerial tasks. Nobody can do a management job all by himself, this is a well accepted fact. It is the web of relationships and friendship that enables a manager to navigate the choppy waters that the ship of his career will constantly encounter.

There was a fine movie made by Frank Capra which I recall seeing when I was young. It starred James Stewart and Donna Reed and was named It's a wonderful life. The story is about a man, who thinks he is a failure. So he prepares to commit suicide.

An angel is sent to prevent his act and to rescue him. The angel finds that the man lacks self esteem and hence he thinks that his friends and relations do not much care for him. The angel takes him in an invisible form to overhear what his friends and relations think of him in reality. He is surprised that he seemed to be loved by them all and that he mattered to them. His own perception of his failures in his career and his business activities bothered them little, and their love for him was overwhelming. He feels blessed.

The moral of the film is that no man is a failure who has friends.

Well, it is the same with your career. You take your own successes too seriously, and your failures in the same way. Other people do not think about either with the same intensity, they have better things to do!

Philosophers say that a good question to ponder about is when you die, who will come to your funeral? When a loved man dies, lots of people come for his funeral out of choice. When a rich or powerful man dies, lots of people may come, but for the reason that they want to be seen to have been there.

If you aim in the right direction, the best possible distance will come automatically. That is a simple truth.

- Mr R Gopalakrishnan

Saturday, November 18, 2006


Lamenting the lack of a work ethic
Meenakshi Radhakrishnan-Swami

You can learn about management from an MBA course, but it can’t teach what kind of manager you should be.

You need to discover your leadership style on your own: Are you a delegator or a hands-on manager? Should you lean more towards vision or action? Do you need to be task-driven or would it be better to build relationships? These are concepts you learn through 360-degree feedback and real-life interaction, not in B-school.

A B-school can never teach you people skills. Managing teams is often about building emotional bank accounts with them; that’s something you can’t learn in an institution. Nor can an MBA course teach you to identify and recruit senior leaders for your organisation.

Also, there isn’t enough emphasis on execution. Regular process reviews to ensure strategic initiatives get converted to day-to-day operations is a critical part of running a business, but B-schools tend to overlook its importance.

Management education in India comes up short in dealing with global businesses. Not much attention is paid to the intricacies of dealing with international customers and colleagues.

But perhaps this is an area where practical experience counts more: Real life makes you better global citizens than any course in an insulated institution can ever hope to. Another area where B-schools can never hope to replicate real-life experience relates to the strategic insights and discoveries around new market developments.

The ability to recognise underserved or unserved markets, and act upon that information, comes only when you are fully engaged in the real world. New business ideas usually spring from your operating environment, not from reading about business strategy.

Finally, B-schools don’t build in their students an ability to move out of their comfort zones, whether it is behavioural (the discipline point made above), or about switching jobs or businesses.

Of course, I don’t know how much of this is a trainable attribute, but it is a big part of big successes and needs to be recognised as such.
-Sanjeev Aggarwal

Sanjeev Aggarwal is managing director, Helion Venture Partners. He graduated from Punjab University in 1984.

Wednesday, November 15, 2006

Wanted leaders with vision

Contrary to popular opinion, the collapse of the Soviet Union and the end of the Cold War with the signing of the Paris Agreement on November 19, 1990, did not transform the world from a bipolar to a unipolar system. As was argued by Dr Henry Kissinger in his book Diplomacy that unprecedented event led to the emergence of a polycentric world with the US, a Germany-dominated European Union, China, Japan and Russia as players in a balance of power system. He speculated at that stage whether India could become a probable sixth centre of power.

Today there is no doubt that India is one of the six members in the global balance of power. This came about with the nuclear and missile tests in 1998, rising foreign exchange reserves, increasing foreign trade and economic growth and the global perception of the political stability of the world’s largest democracy.

The demonstrated capabilities of Indians in the field of information technology and the achievements of the non-resident Indians in the US and elsewhere also helped to project to the world the potential of India as a knowledge power. These led to India, along with China, being identified as a rising power.

Growth potential

International recognition of India’s potential was underscored in March 2005 when the US publicly announced that it will be helping India in its efforts to move towards the status of a global power in the 21st century. Prime Minister Manmohan Singh acknowledged that never before has the external world been as supportive of India’s development as it is now.

In his speech from the ramparts of the Red Fort on August 15, Dr Manmohan Singh exhorted India to seize this opportunity to grow. Both these expressions are somewhat different from what Indians are used to hearing. The Indian elite is used to the assumption that the US is not a friendly factor in India’s development and that the international environment has not been conducive to India’s fast economic growth. Therefore, the above pronouncements have left the Indian political class, bureaucracy, media and academia somewhat bewildered.

Dr Manmohan Singh, though a towering intellectual, is not a communicator like Jawaharlal Nehru. Nor is he a very assertive leader. He believes in gentle persuasion through intellectual dialogue. Consequently, he has a major problem on his hands in making his political colleagues as well as the bureaucracy adapt to the fast-changing international environment and act effectively to maximise Indian national interests. It is easier for people to remember a catalogue of events of the last 58 years and carry out a linear extrapolation of those trends than to foresee developments ahead and devise policies and strategies to maximise gains and limit damages.

We have lived through a period of history when unprecedented changes have taken place. Since continuity is more easily understood, and favoured, by our elite than change, they have failed to grasp the enormity of the change we are now undergoing. Therefore, there is a lot of scepticism about unfamiliar developments and the benefits flowing from these for the country. For instance, there is not adequate appreciation of the end of the Cold War when two blocs of nations — armed to the teeth, with enough nuclear weapons and missiles to destroy our civilisation several times over, in confrontation for 40 years — finally concluded a peace treaty and agreed to cut back on their armaments. There is no precedent for this in history.

Positive approach

Similarly, the phenomenon of globalisation and its impact on the future of international relations, too have no precedent. Dr Manmohan Singh has been repeatedly stressing that globalisation is an irreversible phenomenon and, therefore, instead of resisting it we should attempt to adjust ourselves to it and reshape it to suit our interests. It is a waste of time to compare it to obsolete imperialism.

Not only is such comparison inapt but also actions in pursuance of such comparisons will be futile. The phenomenon has many adverse effects, but there have to be new remedies for it. Time-worn shibboleths would not help in mitigating the negative effects of globalisation, which is an inevitable outcome of the revolutions in transportation, communication and knowledge.

While denouncing the harsh aspects of globalisation, the positive aspects tend to be overlooked. Globalisation has reduced the chance of war among major powers, and has made the major nations interdependent. It has increased the possibilities of outsourcing; improved the prospects for economic growth of countries like China and India; compelled nations to take a global view of issues like energy, diseases, pollution etc; and, create conditions for likely migration of populations from developing to developed countries.

Powerful player

A world of six balancing powers and balance of power politics among them is altogether a new experience for the Indian political class, bureaucracy, media and academia. Over the last 60 years, this nation has been conditioned, to denigrate the politics of balance of power. It never occurred to our politicians that non-alignment was balance of power in a bipolar world where the two powers that constituted the opposing poles could not go to war because of nuclear deterrence. Already, India is fast learning to play the balance of power politics.

There are strategic partnerships between India on the one side and Russia, the US, EU, China and Japan on the other side as individual partners. The balance of power relationship is a dynamic one that needs continuous adjustment in the relationships to ensure an equilibrium. Unfortunately, without understanding this need for an overall balance there is talk of containment of a single power like China. In fact, balance of power and containment are antithetical concepts.

In the 21st century, nuclear weapons and missiles are not likely to be the currency of power as there is little probability of war between the major powers. While wars between a major power and a medium or small power cannot be ruled out, the prospect of a war involving nuclear-weapon powers is very remote. Conflicts in the future will be over intellectual assets. It is knowledge that would drive inventiveness, and competitiveness, which will be the currency of power. Hence the global focus on intellectual property rights.

In this context, it should be noted that China has a strategy for rising to global power peacefully. The US sees China as a potential rival, not a military one but an economic one, in terms of global competitiveness and inventiveness.

In his address to the US Congress, Dr Manmohan Singh referred to the need for Indo-US cooperation if the US were to sustain its competitiveness. Secretary of State Condoleezza Rice has also referred to India as a natural friend of the US in dealing with its long-term economic problems. Since the US perception, of India as a much-needed partner in the future, is not recognised in India, there is a lot of skepticism about American overtures and a tendency to think of US moves in Cold War terms.

Therefore, to effectively tackle the foreign policy and defence problems of the 21st century, India needs to replace the old, Cold War mindset, develop a new understanding of the emerging world and come to terms with both balance of power politics and globalisation. Some of the shibboleths of the last 50 years such as non-alignment, unipolar world, the public sector at the commanding heights of economy, autarchic economics and technology etc. have to be shed. This is not an easy task.

It is difficult to educate our politicians, bureaucracy, media and academia as could be done in China, for the very concept of such education or re-education is anathema in our democratic culture. The kind of complete change in mindset as has been carried out by countries like China cannot be accomplished in India. Here, it has to be a slow process and the initiative has to be taken by the government.

Security strategy

On the subject of government initiatives, it would be pertinent to dwell on the role of the National Security Council. The concept underlying the setting up of a National Security Council was that it should be the engine of long-term assessments and follow-up strategies. Unfortunately, though the NSC was set up in 1999, it did not make much headway in its role during the NDA regime. As it happens, some of the radical changes on the international scene such as the US declaration of its intention to help India in its moves to become a world power in the 21st century came about only this year. So did the Prime Minister’s acknowledgement that the external environment is conducive to Indian development.

Thus, the task is clearly cut out for the NSC staff to prepare strategic assessments and submit them to the Council to enable it to direct the ministries concerned towards the long-term objectives for India in the 21st century. Since Prime Minister Manmohan Singh has been in the forefront of the new thinking, the initiative to energise the NSC on such a course will also logically be his. The necessary intellectual resources for the task may not be available within the government, and, therefore, to begin with, it may have to consider setting up task forces of experts drawn from outside the administration.

Attention needs to be paid to the generalist approach inherited from British Raj to the very complex issues of today — especially in areas of international relations and national security. The bureaucracy tends to be guided by precedents and is not in a position to take the initiative to adjust Indian policies to the fast-changing international climate. Further, the compulsions of coalition politics, in which partners are either ideologically mired in early 20th century thinking or more interested in promoting their own parochial interests than national interests cannot be avoided. That is an inevitable price of democracy, which makes it all the more necessary for the NSC to be the driving force of change in terms of political thinking on national security and international relations.

Given the constraints he has had to deal with, Dr Manmohan Singh has done well on the foreign policy front and reasonably so in the economic sphere. As he himself acknowledges, this has been mainly due to the conducive external environment. While that favourable factor will continue to prevail, the possibilities of India growing faster and achieving effective governance (a vital pre-requisite for India’s further progress) depends largely on our domestic politics. And that happens to be this nation’s Achilles’ heel. With the exception of Dr Manmohan Singh, who is not strictly a politician, one does not see a visionary leader equipped to deal with the 21st century either in the UPA, the NDA or in any of the regional parties.

Nevertheless, our democracy, our private sector, our increasing integration with the rest of the world and our brain power are likely to move India forward, even though not at the speed of which it is capable.

-K. Subrahmanyam

— The writer is an expert on strategic affairs.

Thursday, October 12, 2006

Fight Against Corruption

A World Bank defines corruption as use of public office for private profit. When the world was divided between the two superpowers and the Cold War was on, the World Bank did not focus on the issue of corruption as a significant issue. The reason is obvious. So long as the Cold War prevailed, what mattered was the ideological orientation of the country receiving the aid. It used to be said by the superpowers, "We know that so and so is a son of a bitch, but he is our son of a bitch".

This approach underwent a massive change when the Cold War ended. The taxpayers in the aid-giving countries started questioning whether the aid given was reaching the beneficiaries in the recipient countries. That the issue of checking corruption and thereby ensuring good governance was an important pre-requisite for development and removal of poverty in developing countries is now widely recognised. Corruption, therefore, has become an issue of global concern.

It is not only in the area of public governance that fighting corruption became a central issue. Even in the area of global business, thanks to the scams in the year 2000, when Fortune 500 companies like Enron and universally reputed companies like Arthur Anderson were exposed as having indulged in financial engineering and window-dressing of accounts misleading the market and the investors, the issue of corporate governance assumed equal importance. Honesty is the best policy, is a discovery the world made once again in the 1990s. Stringent legal steps, like the Sorbonne Oxley Act in the United States, were taken.

Matter of concern

For us in India, corruption has been an age-old phenomenon. Chanakya is supposed to have said in the Arthashastra that there are 40 different methods by which public officials can indulge in corruption. "The Mahamatras are like fish. Does one know, when the fish is drinking water?" he is supposed to have said. Indira Gandhi, when asked a question about corruption, passed it off with a comment that it was a global phenomenon.

But here is the rub. It is true that corruption is a global phenomenon, but the degree of corruption is not the same. The non-governmental organisation called Transparency International, in Berlin, publishes every year the Corruption Perception Index (CPI), and ranks the countries in their order of corruption. The least corrupt country, according to the CPI 2004, is Finland and the most corrupt is Bangladesh. Out of the 146 countries listed, India ranks a poor 91. Fiftyfive countries are more corrupt than India but 90 countries are less corrupt than India. India certainly belongs to the more corrupt countries of the world.

Corruption becomes a matter of concern because of its negative consequences. Corruption is anti-national. The hawala scam of the 1990s exposed how anti-national forces like the Kashmiri terrorists were getting funds through the hawala route, and it is the same route by which the corrupt bureaucrats, politicians and businessmen also were getting and laundering their funds. The 1999 UNDP report on Human Development pointed out that if India’s corruption level can be brought down to that of the Scandinavian countries, India’s GDP will grow by 1.5 per cent and FDI increase by 12.5 per cent. Corruption is, therefore, anti-economic development. The PHD Chamber of Commerce also made a study in 2001 which pointed out that if there was a 15 per cent reduction in corruption, then there would be 300 per cent enhancement of investment.

As we look ahead, the question before us is will corruption continue to plague the country?

Corruption is anti-poor. In a country, where 26 per cent of the population is below the poverty line, corruption hits the poor very badly. Many of the development schemes meant for the weaker sections do not benefit them at all. Rajiv Gandhi remarked that only 15 paise out of every rupee meant for the anti-poverty programme reaches the beneficiaries. In fact, the major point of criticism about the Government of India’s Employment Guarantee Act, which visualises a Rs 1,50,000-crore scheme — to ensure that all citizens in the rural areas are assured of a minimum 100 days of work with a daily wage of Rs 60 — is seen as a tremendous opportunity for corrupt elements among the bureaucracy and politicians to siphon off huge funds.

Even the Maharashtra Employment Guarantee Scheme on which the Central Government’s scheme has been modeled, also offers no hope. Even in that scheme, there are false muster rolls. Aruna Roy through her Mazdoor Kisan Sangharsh Samiti brought home in Rajasthan the extent of leakage in development funds.

As we look ahead to the next 10 to 15 years, what is it that we can hope for on the corruption front? It is very easy to be pessimistic. The pessimist can always argue that corruption has always been with us like the poor and it is a global phenomenon.

Nevertheless, the fact is that while corruption is a global phenomenon, we have seen countries which were corrupt, reforming themselves and getting the benefits of corruption-free, good governance in our own lifetime. Singapore is a classic example.

Botswana has also been quoted by the World Bank as a good African country, which has done well on the issue of fighting corruption. If we look at history, thanks to the highly ethical William Gladstone, four times Prime Minister of Britain, the UK which was a corrupt country in the 19th century became a well-governed country by the beginning of the 20th century.

Right attitude

As we look at the future, we should not take a pessimistic and negative attitude. As Central Vigilance Commissioner for four years, from September 1998 to September 2002, day in and day out, I was dealing with this issue of corruption. I had an opportunity to reflect and talk on this issue extensively all over the country. At the end of my tenure, I felt that one can be optimistic that India can also come out of the perennial trap of corruption and move ahead. There are silver linings in the dark clouds of corruption haunting us today. I will list three of them. The first is the Supreme Court judgment which forced candidates in elections to declare their criminal records, educational qualification and wealth while filing their nomination. It is still true that our politics has become criminalised and tainted ministers are sticking on to their chair in the Union Government, thanks to the legal fig-leaf that everybody is innocent under our law till proved guilty. The degree of transparency sought to be brought about by the Supreme Court is the first step in our long journey to fight political corruption.

The second positive development is the application of information technology in the railway reservation system in the past few decades and the enormous relief and benefit it has brought to the one crore travelling public every day in India.

The third positive development is the use of electronic voting machines in the General Election which has reduced significantly the scope for corruption and malpractices in the election process.

The passing of the Right to Information Act itself is a healthy development, thanks to the initiative taken by the Mazdoor Kisan Sangharh Samiti (MKSS) in Rajasthan. Aruna Roy of the MKSS has gone on record to say that in the rural development projects of Rajasthan, where the muster rolls are in the open and could be effectively monitored by the villagers, the scope for corruption has been reduced drastically.

These developments give us hope that we can move systematically towards a cleaner environment in public life. This calls for an understanding, first, of the dynamics of corruption and, also, what have been the effective tools for fighting corruption. If we have succeeded, in certain areas, in fighting corruption, perhaps the same technique can be replicated elsewhere.

Societal values

The degree of corruption in any organisation or society depends on three factors. The first is the individual sense of values. The second is the value cherished by society and the third, of course, is the system of governance. So far as the first issue is concerned, today our society is in a flux.

Thanks to modernisation and the tremendous impact of satellite television and the media and the policy of liberalisation, we are seeing the vigorous growth of the consumer culture.

In India, traditionally, the ascetic who gives up things was honoured. Today, the models before the younger generation are those who earn money by means fair or foul and have tons of it to splurge. Lifestyle has become very important. This consumerist culture is probably strengthening the philosophy of "get on, get honour and get honest". Can we afford to give up our consumerist culture? I am afraid not. What we can do is to at least see that certain basic values like integrity, honesty are inculcated in the educational system. In any society, values, by and large, are inculcated by the parents. They, in turn, are influenced by tradition and religion. After all, religion is nothing but crystallised tradition that upholds the ethical codes of conduct which is in the interest of society.

Begin with schools

In India, this whole concept of good behaviour got crystallised in dharma, or the set of duties every person has to perform. In the Bhagvadagita, Lord Krishna says in Chapter 3 "swadharme nidhanamshreya paradharmo bhayapaha". Doing one’s own duty is the most desirable and if one cannot perform duty, death is a better option. This inculcation of values in the educational system is possible. This, in turn, would mean referring to the sources of tradition which will involve a reference to some religion.

Today, for example, these values of good conduct, based on Hindu traditions, are taught in the DAV and the Ramakrishna Mission schools. In Christian missionary schools, the moral lessons are drawn on the basis of Christian teachings.

But our government having been secular, it has been remarkably successful in totally eliminating any induction of values in our educational system. We have, therefore, a whole lot of students coming through the schools where they do not learn any values. This big defect has to be rectified. I am happy that this seems to have been realised especially after the scams of 1997 and 2000 in global business. In the institutions like Anna University, engineering ethics has been introduced as a separate subject. But what about other streams of education? If we want India to become less corrupt, if not corruption-free, we must start with the educational system and ensure that moral values are inducted.

Role models

The second factor which decides the level of corruption is a set of social values. Here, opinion makers in society have to become role models.

Unfortunately, our politics has become criminalised. Law-breakers are lawmakers today. The only people the youth probably look upon as role models are politicians and media stars who collectively represent what is called the Page Three culture. So far as professions are concerned, every professional association can uphold ethics and codes of conduct, and thereby build role models and benchmarks for guiding society.

The third important factor is the system. In any society, from the ethics point of view, 10 per cent may, by nature, be ethical and 10 per cent will, by nature, be corrupt, and 80 per cent will modify their behaviour depending on the system. One simple example of this is how, while an Indian may throw rubbish on the streets without batting an eyelid, the same Indian, when he reaches Singapore, is on guard and may not commit nuisance or throw rubbish on the streets.

We must redesign our system of governance to check corruption. Corruption today is a game in which five major players are involved. They are the corrupt neta, the babu, lala, jhola and dada—the corrupt politicians, the corrupt bureaucrats, the corrupt businessmen, the corrupt NGOs and criminals. For tackling each of them, I would suggest the following:

Political corruption is at the root of all corruption in our country. Our politics is corrupt because it is based on black money. Every political party collects cash, which is black money. Black money is oxygen for corruption and corruption is oxygen for black money. Therefore, we must focus on electoral reform and reducing black money.

Simultaneously, we must also bring greater transparency in the raising of funds by the political parties. Some steps have been taken for removing restrictions on political contributions. We should try to create a situation similar to that of the United States or Britain in so far as fund-raising is concerned. This would provide an opportunity to reduce corruption.

Dr Jayaprakash Narayan, a very committed IAS officer who resigned and set up an NGO, Lok Satta, in Andhra Pradesh, has highlighted the need for changing our electoral system itself. Instead of the British system of first past the post, which only nine out of 47 countries have adopted, we should opt for a system of proportional representation. He also suggests direct elections for the post of chief minister, who can then appoint a cabinet of talent. It is an interesting idea and worth trying. To begin with, it is necessary to build a consensus in the country on this idea.

A simple reform that can be implemented immediately to check corruption and criminalisation of politics is to disqualify any candidate against whom charges have been framed in court. The police may be pliable but the courts apply their mind and frame charges, and hence, they are likely to be more objective.

Today, the criminal politicians take advantage of the principle that they are innocent till proved guilty and also the delays in our judicial system. Corruption has become a low- risk, high-profit business in India because our judiciary is so slow and the conviction rate is only six per cent.

There is need to change the judicial system in so far as corruption cases are concerned, so that like election cases, corruption cases, too, are required to be decided within one year. For this, the system of summary trial procedure can be introduced and the appeal limited to one court. Today, at any given point of time, around 4,000 CBI cases are pending. CBI cases, by their very nature, are supposed to be very serious and yet some of them are pending for more than 25 years. The speeding up of the cases and effective punishment will go a long way in improving the situation.

Winning formula

So far as bureaucratic corruption is concerned, the following three-point formula must be adopted.

—Simplification of rules and procedures to reduce the scope of corruption;

—Transparency and empowering of public, and

—Effective punishment.

There is an urgent need to bring a sense of accountability in bureaucracy. Article 311 provides so much protection to the public servant that it is very difficult to take action effectively and in time against corrupt officials.

Fighting corruption is a hard task. There cannot be a single-point approach to the task. We have to adopt a multi-point approach, some of which I have indicated above.

We then come to the basic question. The powers that be, whether in politics or bureaucracy or business, are benefiting from the corrupt system. Can there be a situation where these beneficiaries of corruption will initiate action to check corruption? That may amount to causing hara-kiri. My perception is that as far as our politicians are concerned, they act only under two circumstances: One, where the TINA (There is no alternative) factor prevails; and two, where there is a vote bank advantage. The TINA factor can be created in our country by broadly two methods. One is by using the route of the public interest litigation and activating the Supreme Court so that the persons concerned have no alternative but to implement it. The enactment of the CVC Act and the practice of the candidates declaring their criminal record while filing nominations are examples of this type.

However, there are also limits to judicial intervention. The second instrument that can create the TINA factor is technology, particularly information technology. We have seen how in the railway reservation system, the use of IT has brought down corruption. I understand that even in the issue of passport, computerisation has helped in bringing down corruption. So greater use of IT and reforming and simplifying the procedures can be the second broad strategy to help create the TINA factor.

Finally, we have to practice the advice given in the Taitreya Upanishad to arrive at constructive solutions to our problem:

Sahana vavatu Sahanau


Saha Viryam kara va vahai

Tejas vina maditha vastu

Ma vidh visha vahai

Om Shanti! Shanti! Shanti

(Let us come together. Let us enjoy together. Let our strengths come together. Let us move from darkness to light. Let us avoid the poison of misunderstanding and hatred. That way lies progress.)

Adopting this strategy, we can definitely see India becoming a less corrupt, progressive and developed country in the next 10 to 15 years.

N. Vittal

— The writer is a former Central Vigilance Commissioner

Tuesday, August 15, 2006

Happy Independence Day !!

Happy Independence Day to everyone! Enjoy this Great Day!

India. the world’s largest democracy, turns 59 today!

In this great day I think of our heroes b'coz of whom we are here and we all are proud of them. They have shaped India before 1947 and Independent India through 59 long years.

Where the mind is without fear
and the head is held high;
Where knowledge is free;
Where the world has not been
broken up into fragments by
narrow domestic walls;
Where words come out from
the depth of truth;
Where tireless striving stretches
its arms towards perfection;
Where the clear stream of reason
has not lost its way into the dreary
desert sand of dead habit;
Where the mind is lead forward by thee
into ever-widening thought and action-
Into that heaven of freedom, my Father,
let my country awake."
-Rabindranath Tagore

Sunday, June 11, 2006

Great companies with great names

This is how certain company names came into being........

Mercedes : This was actually the financier's daughter's name.

Adobe : This came from name of the river Adobe Creek that ran behind the house of founder John Warnock.

Apple Computers : It was the favorite fruit of founder Steve Jobs.He was three months Late in filing a name for the business, and he threatened to call his company Apple Computers if the other colleagues didn't suggest a better name by 5 O'clock.

CISCO : It is not an acronym as popularly believed. It is short for San Francisco.

Compaq :This name was formed by using COMp, for computer, and PAQ to denote a Small integral object.

Corel : The name was derived from the founder's name Dr.Michael Cowpland. It stands for COwpland REsearch Laboratory.

Google :The name started as a joke boa! sting about the amount of information .The search-engine would be able to search. It was originally named 'Googol', a word for the number represented by 1 followed by 100 zeros. After founders - Stanford graduate students Sergey Brin and Larry Page presented their project to an angel investor, they received a cheque made out to 'Google'

Intel : Bob Noyce and Gordon Moore wanted to name their new company 'Moore Noyce' but that was already trademarked by a hotel chain so they had to settle for an acronym of INTegrated ELectronics.

Lotus (Notes) : Mitch Kapor got the name for his company from 'The Lotus Position' or Padmasana'. Kapor used to be a teacher of Transcendental Meditation of Maharishi Mahesh Yogi.

Microsoft : Coined by Bill Gates to represent the company that was devoted to MICROcomputer SOFTware. Originally christened Micro-Soft, the '-' was removed later on.

Motorola : Founder Paul Galvin came up with this name when his company started manufacturing radios for cars. The popular radio company at the time was called Victrola.

ORACLE : Larry Ellison and Bob Oats were working on a consulting project for the CIA (Central Intelligence Agency). The codename for the project was called Oracle (the CIA saw this as the system to give answers to all questions or something such). The project was designed to help use the newly written SQL code by IBM. The project eventually was terminated but Larry and Bob decided to finish what they started and bring it to the world. They kept the name Oracle and created the RDBMS engine. Later they kept the same name for the company.

Sony : It originated from the Latin word 'sonus' meaning sound, and 'sonny' a slang used by Americans to refer to a bright youngster.

SUN : Founded by 4 Stanford University buddies, SUN is the acronym for Stanford University Network. Andreas Bechtolsheim built a microcomputer; Vinod Khosla recruited him and Scott McNealy to manufacture computers based on it, And Bill Joy to develop a UNIX-based OS for the computer.

Yahoo! :The word was invented by Jonathan Swift and used in his book 'Gulliver's Travels'. It represents a person who is repulsive in appearance and action and is barely human. Yahoo! Founders Jerry Yang and David Filo selected the name because they considered themselves yahoos.

Understanding Introversion and Extroversion

Dear all here is a good article by naomi karten. Hope you would enjoy it.

Understanding Introversion and Extroversion
By Naomi Karten

Summary: Personality differences often pose challenges for people who need to work together. One such difference is that which separates introverts and extroverts. Just by being themselves, introverts and extroverts can drive each other crazy. But they can also benefit from each other's strengths. In this column, Naomi Karten explains this personality difference and helps introverts and extroverts better understand and appreciate each other.
== ==== =-=

During lunch with several teammates, Margie vented about a coworker, Kevin. "He's so quiet. I never know what he's thinking," she said. "Sometimes, I think he's judging me. I wish he was more of a team player, but he's too aloof. He never even comes to lunch with us."

Meanwhile, in the meeting room to which Kevin often sneaks away for a few minutes of cherished silence, he mused, "Being with Margie is so draining. She never stops talking and never wants to know my ideas. Everything she says seems to lead to something else, and she keeps changing her mind as she yakety-yaks."

Many factors could account for the frustrations people experience as a result of others' behaviors, but a key factor in this case is that Margie is an extrovert and Kevin is an introvert. This is not to say that extroverts always talk non-stop or that introverts are invariably reserved. In fact, both introverts and extroverts can talk your head off. And both need down time to recharge. But what, when, and how each communicates can at times annoy or confuse the other; and as in Margie and Kevin's case, this leads to misinterpretations of the other's intentions.

Both introversion and extroversion concern where people get their energy, and that's the key to understanding the difference. Extroverts are oriented to the outer world of people and things. As a result, they thrive on interaction, generally enjoy being with lots of other people, and tend to be animated and expressive.

Introverts tend to be oriented to the inner world of ideas and thoughts. As a result, they generally thrive on quiet time, prefer interacting one-on-one and in small groups, and tend to be reserved and reflective.

Notice that I'm deliberately using terms like "tend to," "usually," and "generally." It would be seriously misleading to claim that all introverts and extroverts always behave a certain way in a given situation.

Extroverts also tend to think aloud, hearing their thoughts for the first time when they express them to others. It's understandable, therefore, that they sometimes appear to be changing their minds as they speak, because that's exactly what's happening--they're working through their ideas. Introverts tend to process thoughts internally. It's often only after they've done internally what extroverts do externally that they speak their thoughts--if even then. Though it may take only moments for introverts to organize their thoughts, the conversation may have moved on by then, so they don't chime in.

An especially important difference is that extroverts tend to gain energy from interacting with others. As a result, they may seek opportunities to talk with others, and they are more likely than introverts to look forward to an after-work outing after a people-intensive day. By contrast, introverts tend to lose energy from interacting with others. They tend to find constant interaction fatiguing, even when they like the people they're with and the things they're talking about.

Though it may at times seem otherwise, the behaviors associated with introversion and extroversion are neither motivated nor premeditated--and aren't meant to drive others crazy. Brain research demonstrates that introverts and extroverts differ in the quantity and pathways of blood flow to the brain and in sensitivity to certain neurotransmitters. For example, a research study led by Debra Johnson and reported in The American Journal of Psychiatry (February 1999) found that extroverts require a large amount of the neurotransmitter dopamine; the more active the extrovert is, the more dopamine is increased. By contrast, introverts are highly sensitive to dopamine; getting too much of it feels like an overload.

The research is much more complex than any brief description can convey. But once you consider the differences in how the brain functions, the behavioral differences between introverts and extroverts are exactly what you'd predict. Fortunately, both approaches are just fine; what's important is that coworkers respect each other and draw from everyone's strengths to create a better outcome for all concerned.

Remember, though, that it's not always obvious from someone├»¿½s behavior whether that person is an introvert or an extrovert. Some introverts are talkative; some extroverts are reserved. Just as there are differences in behavior between extroverts and introverts, there are
differences between any two introverts and any two extroverts. We are multi-dimensional beings, and our introversion or extroversion is just one small aspect of who we are.

If the introvert/extrovert dynamic has posed challenges for your team, I suggest you get together and discuss these differences. Help each other understand what your introversion or extroversion is like for you. Discuss the strengths you bring to the team by virtue of your introversion or extroversion. Ask each other questions to deepen your understanding. Describe what you need from each other in order to do your best work. I guarantee you'll learn some things in the process. I've seen teams make striking improvements in the way they work together through discussions of this kind.

In a future article, I'll elaborate on the positive and negative perceptions introverts and extroverts have of each other, and I'll offer additional ideas on how they can work together effectively.

Further Reading
Debora Johnson, Ph.D., et al., "Cerebral Blood Flow and Personality: A
Positron Emission Tomography Study"

About the Author
Naomi Karten is the author of
1.How to Survive, Excel and Advance as an Introvert: A Guide For
Introverts--and Extroverts Who Want to Understand Them Better.
Her books,
2.Communication Gaps and How to Close Them and Managing Expectations,
offer practical tools and advice for carrying out projects, delivering
superior service, implementing change, and building strong relationships.
Her newsletter,
Perceptions & Realities, has been highly acclaimed as practical,
informative, and a breath of fresh air.
Contact her at naomi@nkarten.com.

Monday, April 10, 2006

Web 2.0 - The Basics and what it is?

Today I was surfing through wordpress blogs and I found extreamely good article on web 2.0 by Shreyas a.k.a Chrono Cracker

Web 2.0 is everywhere around us, simply everywhere. Whether it is the latest news about the World Wide Web, or a review on any blog, or the latest website buzz, Web 2.0 is ruling the world today. Web 2.0 is the most powerful force in the web today, a force that relies purely on innovation than invention and a force that is growing every single second. Yet, Web 2.0 had it’s humble beginnings.

What exactly is Web 2.0? Is it some kind of new software? Is it AJAX enabled websites or is it just innovative services? Nope, Web 2.0 is just a buzzword, a catch-phrase, however you like to call it. Infact after the initial dot cot bust the WWW was suffering as people had seriously no real interest in it and it was starting to get lame. It was then that the concept of “Web 2.0″ really began in a conference brainstorming session between O’Reilly and MediaLive International. Dale Dougherty, web pioneer and O’Reilly VP, noted that far from having “crashed”, the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What’s more, the companies that had survived the collapse seemed to have some things in common. The dot-com collapse marked that the web was not about just websites, it was a turning point for the whole of the web. The people agreed to call it Web 2.0, spicing it up and making it sound all-important in the first Web 2.0 conference and thus was born Web 2.0.

So let us come back to our original question. What is Web 2.0? The World Wide Web is continously evolving, 24/7. It is not a new technology which fuels this evolution but instead interaction and attitude. Simply said, Web 2.0 is the collective term for the evolution of the web from simply websites to interaction and innovation. It is the 2nd generation of services available on the world wide web. That’s all!

Tim O’Reilly defines Web 2.0 as such‘Web 2.0 is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an “architecture of participation,” and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.’ If you don’t understand it, don’t try to! These guys are known to confuse the heck out of normal people, so stick with what I have said above.

There are tons and tons of elements and characteristics that are part and parcel of Web 2.0 and at the same time help it to further evolve - AJAX, Tags, Blogs, Podcasts, Wikis, Feeds, social networking, social bookmarking, Memes, social news, etc. A few best examples of Web 2.0 services/websites are Digg, Del.icio.us, Flickr, Netvibes, Gmail, etc. The original web dubbed Web 1.0 used to be just websites and surfing. Web 2.0 is different, it’s very base is interaction and communication. Democracy and Public Participation are what Web 2.0 is really about. Web 2.0 is about the individual and not the group, it aims to serve benefit to every single person surfing the web, the person with different thinking and not just the mid-section. Web 2.0 also depends on Hyperlinks more than content and flash more than static images.

Web 1.0 is nothing but just static HTML pages without the option to comment. What about Web 2.0? Take a look around, it’s just about everywhere, even this very blog is an example of Web 2.0. The main purpose of Web 2.0 is that the web must change to something that really enhances our life. Web 2.0 aims at developing the whole web into an enormous brain, a true democracy that is run by the people and people alone and so far it is succeeded. One factor that really has fuelled Web 2.0 is broadband. With unlimited broadband penetrating a large portion of the world, the use of the internet increased drastically and with it the interest in Web 2.0.

Today most of the things that we do offline can be done online as well thanks to 2.0 - Documents, Spreadsheets, Images, Animation, Designing, Formatting, storage, music, videos, your own desktop and whatever that you can think of. Infact the need for a Web based Operating system based on Web 2.0 has been chorused by many groups.

Web 2.0 has definitely redefined the Web that we live in. Infact, it is the one of the main reasons for the re-growth of the Web from around 2003. Though the term may have been coined just as a buzzword, Web 2.0 is best exemplified by it’s services. Web 2.0 will probably never be complete, change is the only thing constant in this world… Web 2.0 will continue and and continue and in the end the people will be the winners!

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Saturday, March 18, 2006

Impact of Dematerialisation and Depository


Dematerialisation of shares is an important milestone in the annals of Indian Capital Markets. Understanding and measuring the impact of it on various segments is necessary since it stirred the microstructure of Indian capital markets in general and stock exchanges in particular. Demand and Supply forces determine prices of a product. Liquidity plays an important role in the interplay of demand and supply forces. The impact of dematerialisation on liquidity in the Indian stock exchanges is quantified and analysed. Quality of shares changed for better owing to dematerialisation and thus investors are expected to earn higher returns as a natural step, albeit, for sometime only. Changes in quality of shares are expected to cause changes in demand and supply for shares, which in turn, influences the levels in share prices (volatility). All these three issues are studied in the present paper. Liquidity and returns improved substantially in the post-demat period while volatility was very much below the daily changes permitted.


Dematerialised securities trading, settlement and custody has changed considerably the market microstructure of Indian stock exchanges. Dematerialisation is the process by which "physical certificates of an investor are converted to an equivalent number of securities in electronic form". The converted securities are owned, traded and utilised like physical securities. Order routing, trading and settlement, that is delivery and payment in demat form, changed the way markets started functioning. These changes have brought tremendous impact on the behaviour of investors, stock exchanges, depository participants and custodians.

Generally, an investor would look for more liquidity to less liquidity in a stock. Higher liquidity means lower transaction costs and easy entry and exit options. Therefore, higher liquidity is preferred. Ownership transfer of demat shares is quite fast. Investors would be able to churn their portfolio many a times over, contributing to the increase in turnover and liquidity. This paper attempts to measure post-demat increased level of activity (liquidity). Whenever a new product is made available, there will be an additional demand for that particular product. Dematerialised shares are definitely superior to physical (paper) form of shares. Physical form of shares are fraught with fake, forgery, stolen and duplicate problems. Logically speaking, higher demand should emanate for demat shares, which is expected to push up (pull down to a lesser extent) shares prices resulting in higher returns (lesser losses) to the investors compared to pre-demat period.

This higher demand will continue for sometime (adjustment period lasting, sometimes, a few months) only. Once all investors understand the merits and value of demat shares or when all shares of all stocks are demated, then the superior or higher returns will disappear or will not be there. Some markets are quite quick enough to discount the new information while some other markets take longer time (a few weeks to a few months) to discount the new information. In this period, investors can make abnormal profits. In terms of abnormal returns, dematerialised shares produced positive returns which are significant.

What is Dematerialisation?

Dematerialisation (“Demat” in short form) signifies conversion of a share certificate from its physical form to electronic form for the same number of holding which is credited to your demat account which you open with a Depository Participant (DP).

Dematerialisation is a process by which the physical share certificates of an investor are taken back by the Company and an equivalent number of securities are credited in electronic form at the request of the investor. An investor will have to first open an account with a Depository Participant and then request for the dematerialisation of his share certificates through the Depository Participant so that the dematerialised holdings can be credited into that account. This is very similar to opening a Bank Account.

Dematerialisation of shares is optional and an investor can still hold shares in physical form. However, he / she has to demat the shares if he / she wishes to sell the same through the Stock Exchanges. Similarly, if an investor purchases shares, he / she will get delivery of the shares in demat form.

What is a Depository?

A Depository (NSDL & CDSL) is an organisation like a Central Bank where the securities of a shareholder are held in the electronic form at the request of the shareholder through the medium of a Depository Participant.

If an investor wants to utilise the services offered by a Depository, the investor has to open an account with the Depository through a Depository Participant.

Depository Participant

Similar to the brokers who trade on your behalf in and outside the Stock Exchange; a Depository Participant (DP) is your representative (agent) in the depository system providing the link between the Company and you through the Depository. Your Depository Participant will maintain your securities account balances and intimate to you the status of your holding from time to time. According to SEBI guidelines, Financial Institutions like banks, custodians, stockbrokers etc. can become participants in the depository. A DP is one with whom you need to open an account to deal in electronic form. While the Depository can be compared to a Bank, DP is like a branch of your bank with whom you can have an account.


1. Institutional Structure
There are quite a few institutions that are directly and/or indirectly connected with dematerialised operations of securities. Understanding the inter-linkages and functional responsibilities of these institutions will help us to have correct and holistic perspective about functioning of dematerialisation. The institutions connected with demat operations include; a) Depositories, b) Stock Exchanges (SEs), c) Clearing Corporations (CCs) / Clearing Houses (CHs), d) Depository Participants (DPs), e) Registrars and Transfer Agents (RTAs). Both the depositories NSDL and CDSL are primarily promoted by the two leading stock exchanges viz., National Stock Exchange of India Ltd (NSE) and The Stock Exchange, Mumbai (BSE) respectively. Besides, there are many other institutional promoters in both the depositories. Both are registered as organisations-for-profit and professionally managed. Inter-connectivity between these two depositories has been established, thus DPs and investors can transfer smoothly their shares from one account to another between the depositories. Most of the stock exchanges are connected with the depositories to provide trading in dematerialization segment. Eventually, all the exchanges will be connected to either of or both the depositories. Resultantly, functioning of exchanges altered with the commencement of depositories; shorter trade cycles, negligible bad-deliveries, immediate transfer of beneficial ownership and lower transaction costs. An in-depth study on transaction cost for equity shares in India by Raju (2000) revealed substantial decrease in transaction costs and observed that the dematerialisation as one of the important factor for this trend.

Functioning of clearing corporations / clearing houses materially changed after the entry of depositories; reduced manpower requirements and faster clearing operations. It also helped them to diversify into related businesses such as on-line stock lending. Depository participants are the new commercial intermediaries that sprang up. They interpose between investor and depository. It can be stated that they are the back-bone for the success of dematerialisation. RTAs facilitate dematerialisation and rematerialisation of shares.

2. Market Microstructure
Trading in dematerialised shares brought in many changes to the entire structure of the capital market functioning. With the introduction of demat, stock exchanges switched over (with a choice) from five day accounting period to T + 5 trading and settlement for demat stocks. Even for demat stocks dual settlement is in operation: fixed account period as well as rolling settlement. This partial change to T + 5 rolling settlement system is a major shift in the market. Thus dematerialisation smoothly paved the way for rolling settlement and India joined other developed markets that are following T+ settlement system. In the physical segment there is a long gap between delivery and payment. This gap narrowed down, and it is almost on Delivery Versus Payment basis (DVP). This near real time DVP reduced market risks considerably. Clearing corporations / clearing houses and stock exchanges are able to smoothly coordinate and settle the trades effectively and timely. Clearing corporations / Clearing houses are electronically directly connected to depositories that make settlements faster and easier. Trading in dematerialised shares attracts lesser brokerage and custodial charges, as a result. Reduced transaction costs prompts investors to trade more frequently resulting in higher volumes.

This also makes bid-ask-spreads narrower, which reduces implicit transaction costs.

3. Review of Literature
The usefulness of an event study comes from the fact that, given rationality in the market place, the effect of an event will be reflected immediately in asset prices. Thus the event’s economic impact can be measured using asset prices observed over a relatively short time period. In the academic finance field, event study methodology has been applied to variety of firm specific and economy wide events. The event studies are also used in the field of law and economics by Schwert (1981) to measure the impact on the value of a firm of a change in the regulatory environment. The first published event study is by Dolley (1933) which examined the price effects of stock splits, studying nominal price changes at the time of the split. Over the decades from the early 1930s until the late 1960s the level of sophistication of event studies increased. Mayer and Bakay (1948), Baker (1956, 1957, 1958) and Ashley (1962) are examples of studies during this time period. The improvements include removing general stock market price movements and separating out confounding events. In the late 1960s seminal studies by Ball and Brown(1968) and Fama, Fisher, Jensen, and Roll (1969) introduced the methodology that is essentially still in use today. Ball and Brown considered the information content of earnings, and Fama, Fisher, Jensen, and Roll studied the effects of stock splits after removing the effects of simultaneous dividend increases.

4. Methodology
The event of importance in the present study is the start-date of compulsory dematerialised trading in equity shares. Therefore, task of conducting an event study and identifying the period over which the event started having its impact on various variables are of interest to. In order to measure impact of the event (demat) on the behaviour of various identified variables (liquidity, returns and volatility), there is a need to consider equal lengths of time periods, as much as possible, before and after the event. Therefore, data on various variables before and after the compulsory trading in dematerialised shares are obtained for various lengths. Trading and settlement in shares, for all classes of investors, is made compulsory starting from January 4, 1999 in select group of companies. Thereafter, gradually, more number of companies are added to the list of compulsory demat trading and settlement.

4.1 Data and Sample Characteristics
Demat was introduced in phased manner in India. For different classes (institutional and retail) of investors varying levels (compulsory and optional) of dematerialisation has been introduced at different points of time. Compulsory dematerialisation is one where all classes of investors (institutional as well as retail) need to trade and settle only in demat form with an exception that a small investor has been permitted to deliver in physical form who has 500 or fewer shares. Second category of dematerialisation is only for institutional investors who are required to trade only in demat form but not the small investors. Yet, another class where almost all the investors by their own volition trade in demat form. The study considered the first style of demat (compulsory) for the analysis because in this category all investors are required to trade and settle in the demat form while in other categories exceptions are granted to some classes of investors. If exceptions are granted, then certain classes of investors have options. These investors trade and settle in physical segment also. Trading and settling in physical form, however, distorts the full impact of demat. Owing to this reason, the study did not consider non-compulsory demat trading and settling segments. In order to measure the full impact of demat, it should be applicable to all classes of investors.

4.1.1 Demat Companies
Compulsory trading in the demat form for all classes of investors was introduced starting from January 4, 1999 in a phased manner. In each phase, a number of companies were added to compulsory demat category. In the first phase 12 companies on January 4, 1999, in the second phase 19 companies from February 15, in the third phase 33 more companies from April 5, and in the fourth phase 40 scrips were included with effect from May 31, 1999. Study considered first three phases only starting from January 4, 1999 till April 5, 1999. Further, it is intended to have minimum of six months of post-demat period which will give reasonable number of data points for statistical and econometric analysis. Selection of the companies for the study is made by using random sampling technique.

4.1.2 Control Group of Companies
Another matching sample group of companies is considered for the study. Matching is, generally, done on the basis of relevant parameters. Parameters considered consist of size of company, market capitalisation, paid-up capital/number of shares outstanding, number of shares traded, sales and others. In this study, the most relevant parameter is number of shares outstanding. In order to measure liquidity, returns and volatility, control group of companies on the basis of paid-up capital of the companies is selected. Paid-up capital has direct bearing on the number of shares issued and traded. Thus, it rightly represents liquidity. Paid-up capital is also a size parameter so that it can be used to measure returns and volatilities. Similar econometric analysis is carried out on control group to examine the impact of a non-occurrence of the event on this group. Results of control group and study group are compared and analysed. Analysis throws up impact (in this case demat) or no-impact on sample companies. Control group of companies that are not subjected to the proposed change (in this case dematerialisation). Matching of companies has been done first on the basis of industry classification and then paid-up capital. Companies from demat group and non-demat group are matched on the basis of industry classification and paid-up capital in that order. In many instances, it was always not possible to get two companies having similar paid-up capital (one from demat and another from non-demat group). Then, nearest company in terms of paid-up capital which is closer to demat company, is considered. In some instances, there was no company having paid-up capital closer to demat company's paid-up capital, therefore, for these companies where there is no matching company available. Thus, fewer number of companies are considered in control group for the analysis. Inequality in both the groups in terms of number of companies will not pose any methodological problem since the study is not a cross-sectional comparison.

For the control group also, computation of liquidity, abnormal returns and volatility by using the same methodology as is explained below. Since control group is not exposed to dematerialisation, the companies are free from demat influence. Ceterus paribus, changes in liquidity, returns and volatility should be equal in both the sets. If changes in liquidity, returns and volatility are more in non-control group, than that is recorded in controlled group, then the difference can be attributed to the demat. The hypothesis is that demat has no impact on liquidity, returns and decrease volatility. Absence of positive growth in all the three parameters in controlled group and presence of growth in these parameters in the demat groups clearly indicates that demat does affirmatively influence liquidity, returns and volatility.

Event studies pose certain research methodological challenges as to whether the changes in the behaviour of variables studied are due to, entirely, the impact of the event or there are any other exogenous factors responsible for the change. One way of overcoming of this problem is to construct and observe the behaviour of control group.

4.2 Data and Period
For each company and index, daily closing prices are taken from the National Stock Exchange of India Ltd (NSE) before and after dematerialisation period till October 8, 1999. The study considered a six months pre- and post-demat period for the analysis. The benchmark index considered for the purpose of research analysis is the S&P CNX Nifty. It is quite logical to take S&P CNX Nifty as the reference benchmark since all other relevant data are considered from NSE.

Number of shares traded for each company in pre- and post-demat period are also collected for the same length of the time. Three groups of companies consisting of seven, ten and eleven are selected from the first, second and third groups where compulsory demat trading started form January 4, 1999, February 15, 1999 and April 5, 1999 respectively. Names of the companies are given in Annexure AI. The daily closing stock prices of these companies are collected from National Stock Exchange of India Ltd starting from July 1, 1998 to July 7, 1999 for group 1, from August 17, 1998 to August 10, 1999 for group 2 stocks and for Group 3 stocks the data is collected from October 5, 1998 to October 8, 1999. The benchmark index S&P CNX Nifty data are also collected for the respective corresponding periods. Besides, information on daily trading volumes in quantity and value terms and number of daily trades also obtained for the same periods for all the stocks.

4.3 Liquidity
The data on trading volumes in both value and quantity terms and number of trades are also analyzed to see the impact of dematerialisation. In order to observe whether there is any growth (lack of it) in the number of shares traded in the post-demat period compared to pre-demat period, growth rates are calculated over the pre-demat period.

4.4 Returns
Returns from a company before and after demat should be the same, if demat has no influence on returns. If demat influences them (returns) then there should be abnormal returns. In the following paragraphs, explained methodology, adopted to measure returns, abnormal returns, significance of abnormal returns both for demat and control group of companies. These procedures are advocated by Campbell, Lo and Makinlay(1997) in their seminal work.

4.5. Volatility
Volatility has become a topic of enormous importance to almost anyone who is involved in the financial markets even as a spectator. To many among the general public, the term is simply synonymous with risk. High volatility is to be deplored, because it means that security values are not dependable and the capital markets are not functioning as well as they should. While investor protection and solvency of financial institutions are paramount concerns underlying public regulation of securities markets, it is also evident that the regulatory framework is to a considerable extent based on the premise that unregulated securities markets are fragile and prone to inefficiencies and systemic crises.

The absolute values of closing stock prices are converted into continuously compounded returns. The returns data is analyzed to compute standard deviation for each month starting from the event day for both pre- and post demat periods covering a maximum of six months period. Besides, cumulative standard deviation from the event day for pre- and post-period is also computed. In order to avoid the swings of extreme values three per cent of return observations are eliminated form both the sides of the data.

5. Abnormal Returns
It is well recorded in the literature of financial economics that earning abnormal returns consistently is impossible. There could be some occasions; short periods, during which one can obtain abnormal positive or negative returns. The occasions include macro or micro-economic as well as non-economic shocks. Dematerialisation of shares is one such a micro-economic event. In the present research study makes an attempt to study the possibility of investors earning abnormal returns. Demat stocks are better quality products compared to non-demat stocks of the same company for the reasons mentioned elsewhere.

Therefore, there will be a greater demand for these stocks. Higher demand naturally pushes up share prices resulting in higher positive returns. This is what exactly the study has tried to measure and find out whether there is any positive impact of dematerialisation on returns if so what is the extent of it. Abnormal
returns are measured for the first three months and six months in the case of group I, group II and for group III shares. Since these are expressed in terms of percentages there will not be any problem in interpretation.

1. www.utiicm.com/
2. www.indiainfoline.com

Wednesday, March 08, 2006

Tips for GD and PI from IIMC mentorship programme

Some tips for GDs and Interviews
By Jayanti Dutta (IIMC 2005 Batch)


Body Language
# Sit straight backed, feet close together and not crossed.
# While speaking, pointing fingers, pencils/pens, should be avoided.
# While it is OK to gesture with your hands while making a point, avoid waving wildly.
# Good eye contact should be maintained.
# Try to appear formal and polite, but not too rigid. Try to relax.
# Smile :) [not too much!]

# Prepare your subjects thoroughly. While it is not essential to answer every question, you should show a reasonable grasp of your main subjects.
# Read the newspapers regularly so that you are up-to-date with current happenings
# Read at least one business newspaper/magazine. They are not really very difficult to understand. While detailed knowledge may not be required, a grasp of the basics helps.
# For the time being, practice speaking smoothly in English. We tend to mix up other languages when speaking, and don't realize how difficult it is to find the right words when needed.

# Dress in formals.
- Men should dress in formal shirt & trouser and may or may not wear a tie/blazer. Wear sensible shoes, not ones with studs and decorations.
- Ladies can wear Salwar Kameez or Western Formals, wear a saree only if you are very comfortable in it. Try to make your outfit formal looking in terms of colour as well as material. Wear sensible shoes(Even if open they should have straps - no chappals).
# Avoid heavy jewellery as far as possible.
# Hair should be neatly and formally arranged. Men should have facial hair neatly clipped if they have any.
# Carry a folder with multiple flaps. Keep your certificates, photocopies, admit card etc. well ordered, so that you don't have to search for them when asked. Carry a few white sheets and a pen with enough ink, and maybe a spare one...just in case.

Group Discussions

The crucial point to remember here is that a group discussion is not a debate. Hence, aggression is very negative. The main idea behind a GD is to exchange ideas, and listening is as important as speaking.

The topic may be general, abstract or technical. There may also be a case study. Content would differ accordingly.

For technical topics (WTO, GATT, etc), a basic understanding of the issue is sacrosanct. This needs to be supplemented by opinions, observations and speculations.

In case of a general topic, it helps to think laterally. Different dimensions may be introduced when the GD begins to stagnate.

Creative topics are the most interesting and hence the ones candidates are generally uncomfortable with. Here again, lateral thinking helps.

For a case discussion, the best way to start is to identify the problem and state it at the beginning of the GD. As different points of the case are analyzed, conjecture should be avoided. While reasonable guesses may be made, all analysis should be based on data or information contained in the case itself.

Remember that you are allotted points for your contribution to the topic. Avoid statements like "You know, what I feel about the topic in question is that we should take a balanced view"...Long statement, but it means nothing. It may indicate that you don't know what to say, and someone else will take over.

The optimum number of entries in the GD depends on duration and the number of candidates. However, there is no need to monopolize the discussion. It is far more important to be a team person and allow everyone a chance to speak. Basic courtesy does not cease to apply in a GD. It is not essential to contradict another person to prove one's own point. If you don't agree, say what you feel. Never say "You are wrong".

There is no need for the group to come to a conclusion unless specifically directed by the person conducting the GD. Each person must direct his speech to the other members and never to the moderator. It is important to be interested in the proceedings and not sit back when one feels his quota of entries is done with. While making a point, one must be brief and not meander.
This creates an opening for the other candidates to enter the GD. It also makes an impact if one tries to restore order in an otherwise chaotic GD. This illustrates leadership abilities. By a similar logic, taking initiative helps. But while acting as facilitator(only in case the GD become chaotic), make sure that you do not keep talking about maintaining order etc. Get on with the GD. In case the moderator specifically asks someone to act as facilitator( rarely happens) don't take the advantage you have to make your points!

Style of speaking varies from person to person and there is no need to adopt an artificial manner. A relaxed, polite and formal way of speaking makes a good impact. Over animation and excessive rigidity are both to be avoided - try and strike a balance.

1. Some people prefer opening the GD. It's a good bet, but it is also a lot of risk. If you make a good opening, you win the respect of the group for the rest of the GD .Ideally, the opening should give a structured introduction of the topic, substantiated with at the most one example. It should be brief and should never carry a conclusive remark. In a case study, the introduction should strictly be the problem definition and must not include the analysis of the case.

2. Most panels give you a minute or two to think. Use it to write down your points. Don't bother with sentences, note down some keywords.

3. It does not pay to save good points for the end. The GD might end abruptly or there may be too much commotion to make a good impact at the end. Some other candidate may also speak the point before you do. Candidates who have low lung power need to time their entries so that they can get in when there is a trough in the GD. Irrespective of style, shouting should be avoided at all costs. It creates an extremely bad impact on the panel.

4. For candidates who have difficulty speaking - it is important to be heard. Try to get in when the previous speaker stops for breath. A good way to start off is to mention a keyword - which sums up your point - in a raised voice, then to come back to your ordinary voice when everyone is listening. Make it a point to frame your point in your mind before you start, so that you don't dry up in between. Also try to speak in 4-5 sentences. If you say only one sentence, half of it will be lost before people start listening. Also try to start off as soon as you can, but don't appear desperate or uninterested.

5. Summarizing helps. While making a summary, do not include new points. This is also an opportunity to prove your listening skills if you have not spoken much throughout the GD. Panelists tend to ask the not so strong speakers to summarize, which should be fully utilized. A good way to keep track is to keep noting keywords on points that others are making. Start off with "(The group)/(We) agreed..." or "(The group)/(We) (has) discussed..."

6. At the interview, you may be asked about your performance in the GD. If you had dropped technical terms, these may be followed up. In case discussions, you may be asked to further elaborate on a point you made during the GD. One must be prepared for these situations.


There are three aspects to this: Personals, academics and General awareness. The stress on each varies from one institute to another, and sometimes, from one panel to another for the same institute. Ideally, you should give the same weightage to all three.

For personals, everything mentioned in the form is important. Keep photocopies of everything you submit and remember the answers you have written to questions asked about your personal life. Everything has to be substantiated with examples, for instance - qualities you possess, incidents that have made a deep impact on you, and so on. Role model, hobbies, extra curricular activities, motto in life, ethics and values, career goals are also analyzed. The most important thing to remember here is that the panel evaluating you is highly experienced, and trying to be someone you are not will never work.

Think about and frame your career goals(long and short term), beliefs and values, strengths and weaknesses etc. Try not to say anything controversial unless you can justify it. Be sincere.(It helps to write this down and study it, not so that it sounds learned by rote, but to be comfortable with what you want to say). Don't disguise strengths as weaknesses( I am a perfectionist, I am sensitive etc.)

Questions on academics have to be prepared well in advance. The level is typically graduation and after. For people who have been working, a basic understanding of their subject matter is tested and more emphasis is given to their professional career. However, for foreshores, its is very important to know your core subjects thoroughly. While you might not be equally proficient in all your subjects, your principal area of interest cannot be compromised upon.

General Awareness is tested at a very basic level, especially about the corporate world. Since this is where most of you are aspiring to be in, you must reflect an interest to know more about what is happening in corporate India and also globally. Reading a national daily and a business daily is a good way to go about this. Magazines help you to form opinions which you may be asked to share. You must also know about the institute itself and be clear about why you want to be a part of it.

Reaching the venue well on time is important. You should be dressed in formals and carry a portfolio or folder with all certificates and other necessary documents for verification. Also carry a pen and some papers just to be prepared Try and make a note of the headlines of the day. Ease nervousness by talking to other candidates.

During The Interview:
# Be relaxed and confident.
# Don't be too rigid
# It's not important to answer all questions
# Attitude and the way you behave when caught on the wrong foot helps
# Sometimes the panel will try to stress u out, don't get unnerved if the interview seems to be going badly. Panelists may spring a surprise and behave in an unexpected manner (walk round the room), show displeasure and act like they are not interested in whatever you are saying, even remark that you don't know much etc. Don't get affected by all this, these are mostly pressure tactics.
# It is OK to say 'I don't know' sometimes. In fact it is better than bluffing outright.

Typical Questions
# Tell us about yourself. Say the basics of your background in a sentence or two, then move on to something not on your CV/form
# Why MBA. Work out the answer to this one beforehand. Be sincere, don't be flippant
# Why this institute? Find out about the institute. Go through the website/talk to alumni.
# What are your short and long term career goals? Think this one through. Even if the answer is not very technically sound, the panel is basically checking that you have thought about it.
# What are your hobbies? One or two things you are really interested in. The panel may go into details, so try to make it something you know about.
#Have you any questions for us?Have a question ready(should not be about your performance/whether u are selected)

At the end of the day, you are one of the few people to have it made this far. Remember that, believe in yourself and know that you can do it. That's all it takes. All the best!!

Jayanti Dutta is a student of the batch of 2005 at IIM Calcutta. She had final calls from IIMs A, B, C, I ,K ,L, XLRI, IIFT, MDI, XIMB, Symbiosis (all India Top rank)
She did her summer internship at HSBC, London