Saturday, December 21, 2013

Want To Save The Indian Economy? Get Married

If you are of my age then you would probably empathize with me. Every time I login to Facebook, I see the wedding pictures of some or the other friend of mine. Though I had anticipated this scenario long back but I could have never anticipated the fury with which it would strike upon me. If you are not going through this phase, then brace yourself. Because sooner than later, those pics are coming. It is bound to happen. With 1.25 billion people and almost 50% of the population below the age of 29, the 'wedding pictures flood' is unavoidable. So sit tight, coz as they say, winter is coming. 

But it is not just about the wedding pictures. After a couple of weeks, people follow it up with the 'honeymoon pics' post. These posts are like 'click baiting'. I click on the pics, super excited, only to see a fully dressed couple with mountains/sea/highway/FatUncle in the background. Not much of a view if you ask me.  

Free Tip : Unless you are planning to post some indoor pics, do not imagine too many people getting interested in your honeymoon pics. 

Also, what is with people going on wildlife safaris and trying scuba diving on honeymoon. Din't they have an overdose of adventure recently. Do they forget that they just got married. And is watching tigers eat, in company of a guide and 20 other people, even considered romantic? 

The fact is, if you are having too much 'fun' on the beach or on the hills, then the trip is less likely to serve its true purpose. Get the priorities straight.    

Anyways, enough of introduction. This post isn't really about couples and wedding pictures. Its more about the economics of it. Recently, I read an article about online matrimony classifieds space. With players like and BharatMatrimony, it is poised to become a Rs. 1500 crore industry. This got me curious and I tried to read more about the Indian wedding industry. And this is my conclusion:    

If you think you should do something about the sorry state of Indian economy or want to help in the fight against poverty, then this is what you should do

Get Married Now. Make it Grand. Do it as often as you can. 

If, because of such behavior, your spouse kills you one fine day, you will die a martyr.

Apart from enjoying the obvious benefits of having multiple life partners, a 'serial' groom or bride does a big favor to the country. Well we all know how important is the rotation of capital for any economy. The faster money changes hands, the better it is. But also, its important to understand that weddings probably have the highest multiplier when compared to other government/private spendings. The amount of activity induced by every rupee spent on a wedding is staggering. Let me tell you why.  

Let's see some simple facts first. 

Indian wedding industry is worth $25.5 billion (Almost INR 158062 Crore). This is more than the GDP of Afghanistan and 20 times of the Indian cloud computing industry.

  • No. of Indian marriages in a year: Approx 1,00,00,000
  • Gold and diamond jewellery market worth: Rs 60,000 crore
  • Apparel market (wedding) worth: Rs 10,000 crore
  • Durable goods market worth: Rs 30,000 crore
  • Hotel and other wedding related market worth: Rs 5,000 crore 
  • Pandal and venue decoration market: Worth Rs 10,000 crore
  • Wedding invitation card market : Worth Rs 10,000 crore 
  • Bridal Mehendi market in India: Worth Rs 5000 crore

And guess what, this this is just the tip of the iceberg. These figures only indicate the amount of money spent by the families of groom and bride. But we all know how much preparation guests do before attending a wedding. 

An invitation to a wedding invokes more trouble than a summons to a police court. - William Feather 

Remember the cute girl who swept you off your feet at your cousins wedding? Well that kind of cuteness does not come for free. There is a lot of preparation that goes into it. Everyone tries to look their best. Money spent on looking good in someone else's wedding is an investment they say. (I tried this at my brother's wedding. No ROI yet)

Add to it the boost to tourism which wedding related travel provides. Apart from pilgrimages, no single category boosts tourism more than weddings. Travel agents make a killing and traveling by bus or train becomes an adventure sport. 

Then there is the gifting market. Largely due to the concept of giving return gift to close relatives. Though its going out of trend fast, it still beats valentines day and other such festivals hands down.

And we've got a toaster and everything. So there is no reason for the wedding. - Karl Pilkington  

But the numbers only tell you half of the story. The fascinating thing about a wedding is the number of people involved in the event and the number of lives it touches. 

If we try to create a list of all people involved, it will take forever. The 'tent house waala', florist, eunuchs, match makers, wedding venues, event manager, DJ, caterer, bus operator, car rental guy, IRCTC, everyone who makes money on railway stations, beauty saloons, clothing stores, accessories stores, fragrances stores, pandits, printing press, mithai waala, Ghodi Waala, band baaja, dhol, dance trainer, stage decorator, electrician, gardner, camera man, hotels. 
The list can go on and on.

And this is exactly what makes weddings so special. This is what gives it a huge multiplier. The fact that the money goes to so many different people. The fact that many industries rely fully on the wedding season. The fact that the industry is recession proof. The fact that the nature of the wedding season is cyclic yet not uncertain. 

So go ahead, celebrate consumerism, raise a toast to the 'big fat Indian wedding' and keep it coming.  

Thursday, July 4, 2013

Why Family Owned Businesses Are More Sustainable Than We Think

Few weeks back I read a book by Devdutt Pattanaik where he touches the debate between family owned businesses and the, now more acceptable, professionally run businesses where we do not necessarily have an owner but instead a CEO who can be fired by the board anytime. This led me to write the below post and explain why the former style creates more sustainable businesses than we think.

Imagine a CEO of a large organization and what he personally must thrive for. I am not talking about the founder and CEO of the company but a man who has climbed his corporate ladder and then reached the position after years of turmoil and job switching. He knows that that his son/daughter is not going to inherit the position from him. He also knows that he might not remain the CEO of the organization forever. So clearly, his incentives to create a long lasting and ever-growing organization have somewhat reduced. He is less likely to take decisions which will prove valuable only 25 years from now. Instead his first objective would be to prove to his board members and share holders that he can help the company achieve a better growth rate than his predecessor.

Now lets see who the share holders and board members are. Like the CEO, the board members too have a limited tenure. This would mean than it is in the interest of everybody sitting in the board room to prioritize on creating value in the next 10 years rather than in the next 25. The CEO wants to get a larger bonus by improving the bottom line and so do the rest of the employees. Even the investors, be it retail or institutional, want their money to grow as fast as possible. As an investor you don't want the company to shrink today so that it can grow 25 years from now. You would rather exit now and reinvest later. This way even the investors put pressure on the board to show year-on-year growth and fast improvement in bottomline. So for the CEO and the employees, it becomes a must to relentlessly thrive for growth which is better than last year and so on. 

Structure Of Family Owned Businesses

What this leads to is the scary avoidance of steps towards creating sustainable businesses. Power companies would not worry about running out of coal 100 years from now. Mining companies would not worry about protecting the community around their mines. The tough decisions which an owner will take in his company to ensure he passes something valuable to his grand son would never be taken. 

This loss to the ecosystem does not get into the accounting books of any company and does not necessarily affect their valuations. Though we do see organizations giving equity to top management and running the ESOP programs, it somehow does not force you to take those tough decisions. It is probably time that we discuss and rethink the whole structure and come up with a better structure.   

Thursday, June 13, 2013

Why I Want Narendra Modi To Win and Why It Has Nothing To Do With The Man Himself

There are thousands of articles floating in the media about the Gujurat CM and about his PMO ambitions. Such atmosphere of debate about our PM candidate itself is an achievement for India and promises of a much more informed voting population than ever before.

In this article I am not going to act like a NaMo fan boy nor am I going to be super secular and talk about him being a mass murderer. I will try to explain why the 2014 election is not just about Modi or Rahuls of the world, why the results will have a long lasting impact with much more at stake than party politics. 

There is more to it than just UPA vs NDA

Lets concentrate for a second on the things stressed upon by the NaMo campaigns. He has turned no stone unturned to inform us about the improvements he has done in Gujurat. There are efficient Public relations companies monitoring each and every post on social media. Millions is spent on managing FB pages and generating content for all forms of media. Gujurati societies around the world are lobbying hard to get him some international acceptance to flaunt back home. Consulting firms are sweating day and night to create a perfect manifesto and great video presentations for him. To back all this up he has the fact and figures supporting him. There is no doubt in anyone's mind that the development in Gujarat  has been nothing short of exemplary. 

In such a scenario, if NaMo becomes the PM and rules for a long time, his strategy will start to become considered as a success mantra. Politicians around the country will try to replicate his strategy. Chief Ministers in all states will drive growths in their states to help their cause of becoming national leaders. MPs an MLAs will try to make their constituencies excel in order to gain attention of party leaders and media. The Kejriwals of the country will get encouragement and a hope that growth coupled with publicity in the most lethal combination in Indian politics. We will move towards a country where elections are fought based on development agenda and not false promises of upliftment of Dalits. And with this change in the mindset we will see, maybe, the next election fought between Modi and another leader who is as pro-development as he is secular. We will get a PM candidate who has the track record and the vision to lead a country and still is acceptable to the minorities as well. 

And in a scenario where NaMo loses, try imagining what will go into the minds of his fellow politicians. To them it won't be the defeat of a mass murderer, to them it will be a defeat of an ideology of growth. They will think of a man who did not give free electricity to the farmers and instead tried to give them an economic environment where they will be able to afford electricity. They will think of a man who instead of giving reservations for females, gave them the schools and safety where they would themselves excel and get into the work force. They would think about a man who tried giving more cotton mills and dairies for employment instead of starting NREGA. They would think of man who was more concerned about his image in the public than his image in the party. And they will think of a man who lost the elections badly. They will get reassured that Raja Bhaiya can get them election victories not Ex Mckinsey employees. They will be reassured that distributing liquor gets votes not some fancy presentation by an international ad agency. They will get reassurance that development does not sell in India. 

For the next 15 years we will never again see elections fought on development agenda. No politician would dare to touch it again. We will again have the same manifestos, same reservations, same state of mismanagement which we have started to loathe. You me or the country can not afford that to happen. Inspite of all the shortcomings that he has, Inspite of him not being the perfect man to be in PMO, India can not afford to let Modi loose. 

Related post:

Wednesday, May 1, 2013

Destiny, Big Bang and Why There Isn't Much You Can Do About Your Life

Destiny is a tricky topic and often a boring one too. There are those who believe that all our lives are pre-written and then there are those who think we create our destiny by our skills and hard work. I am not going to get into a debate over this, nor am I going to impose my beliefs on you. I do come from an extremely religious family and happen to be a firm believer of destiny. But in this post I am not going to discuss about the things which I learnt from my grandparents not would I discuss our ancient scriptures. I would stick to the things we learnt in school. I will stick to the laws of motions and the chemical reactions we memorized during our JEE preparation days. I would somehow try to make sense of the things all of us learnt in school and college. Being among the "below average" performers during my college days there might be some loopholes in the below line of thinking and I would really appreciate a healthy debate. (Don't be too harsh on me as I am the only one who has the access to delete other's comments on this blog)

So let me begin with telling you why I think a bunch of smart guys with a few Param computers can predict future. Well we know that whatever we do, whether its moving our hand, picking up a book, watching television, or just sitting is governed by the instructions our respective body parts get from our brain (Spine in case of involuntary actions). The instructions are electric signal which are passed through our neurons. The electric currents are produced in the brain cells as a result of specific chemical reactions. So basically these chemical reactions govern each of our actions. Since a 'thought' too is just and an electric current, even what we think while sitting idle is decided by the chemical reactions in our brain. Similarly the actions of others too are governed by the chemical reactions in their brains. Now to go further, these chemical reactions are governed by the collision of atoms and molecules in our brain. The collision and motion depends on the trajectory and velocity of these particles and also on the external forces applied due to other atoms and molecules. Now if I know the position and velocity of each atom as of now (provided Mr. Heisenberg focuses on my intent and does not play spoil sport), and also know the strength of different field forces applied, then I can predict there velocities and positions five minutes from now. Which means I can predict what someone would think and do after five minutes. This way, by considering the situation as of now and by doing some out of the world calculations, I can successfully predict the future. But the real fun is not in knowing what lies ahead, the real fun is in going backward in time.

Big Bang and Destiny

Based on the above, I can assume that the fact that you are reading this blog could have been predicted 5 minutes ago. And if I take my calculations even further then this could have been predicted even years ago. Infact as long as were are talking in terms of forces and trajectories, we can say that what is happening today could have been predicted at the time of big bang when all the matter around us was put into motion. Looking at the position and velocities of object just after the big bang, someone could have predicted the scene and events of today. Now this scares me. The fact that what I will do or even think about doing was already decided many many centuries ago is a scary thought. What it essentially means is that we have no control on our lives or even our thoughts. It means that it was decided centuries ago that this idea would come to my mind and then I would write about it. The fact that you will be reading this too was decided at the time of big bang itself.

So, the life we are living today is just a movie which was shot long time back. Its just that we are watching it now. The only thing you can do now is to either keep trying to change the movie which was shot long back or grab your popcorn and enjoy the show.

PS: Whether you decide to watch your life as a spectator or not too was decided long back. So don't bother yourself too much with the idea.