Presentation of Doom

Techcrunch managed to get their hands on the presentation of doom, that Sequoia sent to the CEO's of the companies where they have put their monies. The presentation has a detailed analysis of how the situation became this bad, suggestions to manage in the turbulent times and their take on what might happen in M&A world.

Get Real or Go Home .....
is what their last slide tells.

You may also want to check out Guy Kawasaki's latest post How to tell whether your CEO is clueless.

RamP!

How not to organize a classical music concert

Times of India, the most popular daily in Bengaluru, is doing all sorts of things to stay in touch with the general public, who they feel are behind their success. Few weeks back, they had organized Ganesha festival and last week they celebrated Time Bangalore Festival. The grand finale was a hindustani classical music concert by the Santoor maestro Pt. Shivkumar Sharma.

I never miss Panditji's concert, for this man is as divine as it can get. His concerts, for me, are more a spriritual experience than a musical one. So I grabbed the opportunity to attend Panditji's concert again.

Trouble started at the first step itself. The passes were available, it was announced, at the Forum Mall. After asking several people over there I found a gentleman who had these passes. I needed passes for 3 of us, self and two of my sons aged 11 and 7. However, he'd give only one pass per person. No amount of begging and cajoling would help. I asked him would be give me another one if I came back little later - he said "NO" and said I'll have to wait till the new person takes over after his shifts get over in 45mins. He had tons of passes with him and that gave him a sense of power over me (these are free passes, you can't pay and buy any number of tickets and therefore I felt helpless). I had two options - first to go back home and get my wife or someone or the second one was to beg any stranger that is in the mall to get a pass for me. I took the second approach and a kind soul helped me out to get another pass.

Armed with the passes, we went 30mins before the specified start, only to see that the doors were closed and more than that, we were told that the general pass holders like me, would have to be seated in the balcony and the entire ground floor is only for VIP pass-holders. The balcony at Ambedkar Bhavan is simply not suitable atleast for classical music concerts where artists sit and perform, as you can only see the heads of the artists at best. The balcony was quickly full (about 400+), whereas hardly any VIPs turned up. The ground floor was looking pathetic with a max 100 of VIPs present in a hall that could accomodate about 500 people. I'm sure Panditji would not have liked it. Better sense prevailed on the rude people that were managing the show and they allowed people from balcony to come down.

OK, everyone settled, but the concert started full 30mins behind schedule, with the compere talking like a DJ, which is very alien to how the classical music concerts are held. Other gaffe was incorrect pronunciation of Pt. Yogesh Samsiji's father, the renowned vocalist and composer Pt. Dinakar Kaikini (she said Samsiji is the son of Dinakar Kai-niki). All these irritants quickly took a back-seat as soon as Panditji started fine-tuning the Santoor. At the end of the first piece (Raag Kalavati), Pandiji complanied that he was sweating and no one from ToI took notice. After the second piece (Raag Pahadi), all of us wanted Panditji to play one last song and he politely refused as the stage was not conducive and he was sweating.

What a waste!! There are a good number of sabhas in Bangalore that have dedicated themselves to Indian Classical Music and have been organizing such concerts for decades. ToI can easily rope in one of them.

The SEZ vs STPI debate

I'm continuing my learning on setting up an India Development Center, after a gap of few weeks.

Once it was decided that I'd be joining this set-up, I started to get the center incorporated, which is the first step. And the first decision was whether to be in a SEZ or whether to get into STPI. Here is a debate on SEZ vs STPI.

My main concern for registering under SEZ is that typically such units are on the outskirts and commute is going to be a major factor. Also, I'm not too confident that any SEZ would even entertain us for our requirements of 3-4K sq.ft. SEZs are typically for huge operations of >1K enggs. On the other hand, any building in the country could be "bonded" under STPI and we will enjoy tax benefits anyways till 31-Mar-2010 (whether or not this would continue beyond this date is pure speculation as we will have a new govt early next year, which would take the final decision).

Here are some technical points we need to keep in mind:

1. The STPI Unit is Exempt from payment of Income Tax U/s 10A upto 31.03.2010. This means any profit earned after 01.04.2010 will be taxed in the hands of STPI. A SEZ Unit will be exempt U/s 10AA from 100% Tax exemption for First 5 years after commercial production- & 50% of profits are exempt for the next 5 years (subject to certain conditions)
2. Eventhough an STPI Unit is exempt from payment of tax as aforesaid in point 1- It still needs to pay Minimum Alternate TAX (MAT)- In effect 10% of its books profit effectively will be paid out as MAT which can be treated as advance tax and set off when it pays regular income tax after 01.04.2010. A SEZ unit will be exempt even from payment of MAT.
3. An STPI unit when Distribute dividends to its shareholders will have to pay a Dividend Distribution Tax (DDT) of 12.5%- However an SEZ unit will be exempt from payment of DDT.
4. The input services received by an Export Unit under the STPI Scheme will have to opt for Refund/Rebate of Service Tax paid. In other words, when an STPI units pays service tax for Rent, Professional charges, consultant fee etc.,- They have to pay the service tax and ask for a refund which is very cumbersome and difficult to get back. Therefore there will be cash flow issues. SEZ unit will be exempt from payment of service tax on inputs services. In other words, the vendor will not even charge Service tax to an SEZ Unit.
5. The SEZ unit has to be located only in the designated SEZ. Under STPI Scheme the unit can be located anywhere in India. Custom bonding will be carried out for STPI units so that duty free imported goods can be bonded.

Having listed the comparison- there are certain points that needs to be kept in mind.

• A Small company wanting to grow to less than 25-30 people, would find it difficult to get an area in SEZ of about 3-4K sq ft Area. The rentals are also on the higher side.
  
• Employee Travel costs to/from SEZ would be an additional cost for the company as generally SEZ's are located at far off places. Since we are a small unit and typically have enggs coming in all parts of Bangalore, the costs of transportation would be lot higher than an organization like say Accenture which has thousands of employees.
  
• NASSCOM is lobbying in a big way to extend the sun-set cluase of Sec 10A. Originally the exemption is supposed to have been ended on 31.03.2009, However, the Govt has extended that by one year to 31.03.2010. In all likelihood, after the fresh election, the exemption will continue for some time atleast for Small and Medium software companies.. ( Please note this is speculative)
• STPI as Quasi Judicial administrator has taken extremely company friendly steps. STPI approvals/permissions are generally given across the table and they work on a strict SLA's.SEZ's being controlled by Development commissioner's one is not sure of how effectively/efficiently they will be able to help the Units.. (Red tapism?) Again my Guess.

Based on all these things we felt that we may not save much by taking the SEZ route and decided to go with STPI, with which we are little more comfortable.

Reading List for Oct'08

The Undercover Economist: Exposing why the Rich are Rich, and the Poor are Poor
I buy lot of books and music albums. One thing that I never understood was how the pricing was done. Few parameters that come into mind are: the popularity of the author/artist, the size (of the book or #songs/length of the album), the quality (of the paper or the medium) etc., But I could never understand why CDs are priced 5-6 times higher than the respective tape. Other similar things that I never understood were the steep price of branded shirts (or branded anything for that matter. In what appears to be an entertaining and informative book by Tim Harford, I hope to find answers to my above questions and little more.


Boeing vs Airbus: The Inside story of the Greatest International Competition in Business
I'm always fascinated by airplanes of all shapes and sizes. I can spend hours just watching the airplanes take-off and land. In terms of innovation and research, Aerodynamics industry occupies the top slot. Its always fun watching from the sidelines the players in the industry - the airplane makers, the carriers, the governments and to a lesser extent other people in the eco-system (the engine makers, numerous sub contractors including the software people and the people that run the airports). The other important thing is the long (often several years) cycle time to develop a new aircraft and the International Politics that play a major role for the sales. (You'd recall that AirIndia, which had planned to buy several AirBus planes during 2004-05, reversed its decision and instead opted for Boeing, causing much heartburn for the Europeans, its alleged that the Nuclear Deal signed yesterday was one of the carrots thrown in to influence India into buying Boeing planes).

This book by John Newhouse throws light into the thinking behind the strategies, moves and counter moves, politics and other things that makes Boeing and Airbus.



What do you Really Want for your Children?

Someone said "before marriage I had six theories of raising children, now I have six kids and no theories". Raising kids is a humbling experience. Wayne Dyer has had a significant influence on my thinking (the best amongst his several good books are: Your Erroneous Zones, Pulling Your Own Strings, You will see it when you Believe it and The Power of Intention). Hope to learn a few things to be a better father.

Munnar

Took one complete week and Sat and Sun on each side of the week for a vacation in Munnar and later in Mysore. Enjoyed the drive upto and within Munnar. The only uncomfortable thing was that Munnar was pretty hot and there were hardly any clouds and was disappointed to an extent. Here is the travelogue: Part-1 and Part-2, mostly photographs.