Tuesday, April 16, 2013

Titanic : The story of startups in India

There are roughly 800 start ups registered in India in a year against a million in US. Of these around 30% liquidate every year claiming bankruptcy. India ranks among the world's worst countries at encouraging entrepreneurs. For ease of starting a business, India is 173rd out of 185 countries.

The Reasons?

 Well you really don't need rocket science to understand them.

Starting a start up in India is a herculean task for those who ain't familiar with the Indian Bureaucratic system.
So horrible is the situation here that if entrepreneurs refuse to pay these thugs, they assault in throwing stones at workers and beating supervisors (A Fact acknowledged by Mysore based X-Ray Entrepreneur).

Everything from registering a company to getting electricity connection to paying taxes involves a bunch of lengthy processes nurturing corruption and red tapism.
Below graph displays the dismal ranking of India in an economic survey of startup businesses.

Out of 185 countries, India lags behind more than 50% of other nations in the world. Indeed a shame!
One of the most evident failures depicting this is the aadhar scheme, India's biggest technology startup by Nandan Nilekani. While the UID scheme aims to bring the entire population under one roof, God knows how that is possible when getting a UID can take you a minimum 6-10 visits, 10-15 hours in queue and a seriously disappointing bio-metric system (took me more than 8 tries to get it right)

Inefficient government policies do play a huge role in the doom of start ups but that apart there are a major chunk of other problems in the road ahead.

1. Indian Education system is job oriented and their is almost no formal education on entrepreneurship.

2. Indian culture lacks respect for start ups. Majority of the start ups that open up every year are by people from age group 40-50.  Going by this trend, start up is more of a retirement option in India. Also a young entrepreneur faces so much cultural obligations that finding a bride/groom becomes almost impossible.

3. India lacks Venture capitalist which perhaps can be the backbone of a middle class start up. Current Govt policies continued will in future keep this scenario unchanged.

4. We in India like making things difficult. Government imposes tax regulations by which startup firms are mandated to pay income tax on the premium they have charged over their fair market, while selling shares to unregistered investors, including private equity and venture funds. Though this aims to stop money laundering, analysts say it will affect the investment scenario for start ups. 

Another nail in the head!


India is the new titanic and most of the start ups clearly are leaving this sinking ship. For those who remain here seem either over confident or Bharat Bhakts.

Start ups in other countries are because of the government whereas start ups in India are inspite of the government.

Wakeup India before its too late to mend the holes! 

Monday, April 15, 2013

How to kill a Rising Bud !

While the buzz is on with petrol prices rising every day and LPG cylinders becoming insanely limited, India is on its mission to enroll in donkey number of "Save the Environment Organizations".
For all the Doha meets that are so often published in newspapers where does India really stand now?

India has the worst air pollution in the entire world, beating China, Pakistan, Nepal and Bangladesh, according to a study released during this year’s World Economic Forum in Davos. Of 132 countries whose environments were surveyed, India ranks dead last in the ‘Air (effects on human health)’ ranking

As per the latest survey, Air pollution is the fifth leading cause of death in India. Air pollution in India is reported to cause 527,700 deaths a year.

Electric cars do pose a solution to the pollution problem.
Studies show that in some cases, certain plug-in electric vehicles can produce up to 60 percent fewer emissions than a conventional car with an internal combustion engine 

So why is it that a million dollar car market numb to the idea of Electric cars?

Why is it that India seems so uninterested in adapting the solution? 

Lets dig this out!!

The existing market in India for electric cars comes at a high cost.

Recent example - Mahindra electric car  e20 launched this month costs 5.96 lacs.

The car has a limited driving range of 100 km. 2 door makes it a low capacity car with inconsistent interior.

My call : Why not buy a sedan if I have 6 lacs in hand?

The reason why Electric cars are so costly is the higher cost of their driving component "lithium batteries" which are imported. These batteries account for almost 60% of  car cost.

US and china have tax incentive programs for promoting the sales of electric cars. This perhaps is the major boost for their sales in these nations.

Indian government however does not yet promote a single such subsidy/incentive programme.

Mahindra & Mahindra was hoping the government would provide a rebate of Rs 150,000 to every buyer, including a 20 per cent rebate on the ex-factory price or Rs 100,000. However, the subsidy ended last year and the government hasn’t renewed it.

Apart from Indian Government playing such a spoil sport, their indeed are some more reasons.

Firstly , Cars play to be more of a  fashion statement in India.With almost no brand ambassadors and low cost advertising campaigns, the idea of using an electric car has failed to embark the Indian mentality.

Secondly, Electric cars can involve huge maintenance costs. A battery that might need replacement after 2-3 years will cost a grand of 1-2 lacs loosing more money than you ever saved using an electric car.

We need to focus both on technology and price front to mark a niche in this space.
Since technology improvements need government impetus , both the above cannot be achieved without govt support.

If only a government that is engaged in feku (akka Modi on twitter)  versus pappu (akka Rahul on twitter) fight can find more time and money to learn how not kill these rising buds!!

Saturday, April 6, 2013

The new Beginining : Cyprus

Previously, In the Cyprus series : Cyprus : From Riches to Rags we saw how a small island which nobody knew before rocketed the news charts in few weeks. We discovered the reasons for rise and fall of this European nation and how government measures led to the misery of Cypriots.

Mar 25' 2013

Cyprus is in a state of distress. Its economy is on the verge of collapse. The EU bailout package ain't sufficient and the government has laid the burden on banks. Banks- already cash stripped are in no position to pay this grand from their own pockets and in turn have decided to levy taxes on savings of people - The very people who trusted them with their money and never dreamt of it being used to pay govt debts.
People are on streets. Some protesting, some angry. ATMs are out of order. Banks are closed so no one can withdraw their savings..
This indeed is a black day in the history of Eurozone. EU is worried about the precedent it will set for other countries if it let this happen. Cyprus govt is worried coz people on streets are furious.
The government finally comes to a decison. It shall reject this bailout plan and try find out a new alternative. Following this, Parliament rejected the bailout bill by EU.

17 billion euros is a huge debt to be borne by Cyprus Govt. In this event of misery their ain't any donors .

The government now has only 3 options.

1. Leave the Euro. Start a new.
2. Try renegotiate the bailout deal with EU.
3. Turn to Russians for help who perhaps are the major stake holders in Cyprus banks.

Lets dig deeper into these 3 options.

Leave the Euro. Start a new.
This means Cyprus will have to leave the Eurozone and establish a new currency , start a fresh. This will lead to a complete collapsal of existing economic system in Cyprus which indeed will make the situation worse. Rising unemployment, skyrocketing inflation and zeroing pensions will be too much to handle for an already  grief striken government. Option 1 ruled out. Consider option 2.

Try renegotiate the bailout deal with EU.
Well this seems to be pretty tough coz EU never wants any of its countries to separate out so it already offered a good bailout package.
Threatening EU to leave the Eurozone might however prove some help to Cyprus. But it seems pretty soon to try this out. Option 2 rethink later. Consider option 3.

 Turn to Russians for help who perhaps are the major stake holders in Cyprus banks
Russians have been a help before to Cyprus offering huge loans at below market rates of 4.5%. Besides they are major stake holders, they might prove some help.
So, Option 3 it is. Voila!

With this in mind, Cyprus Finance Minister Michael Sarris flew to Moscow to raise money for the debt crisis. However, he was promptly turned down.  Who wants to risk investing in an economically troubled nation?
Reverting back to EU for renegotiation seemed the only way out.

Over the weekend the Govt. of Cyprus negotiated feircly the deal with EU. It came close to Cyprus leaving Eurozone, but managed to attain a cease fire at the eleventh hour.

A new deal was laid out with new terms.

Country's second largest bank Laiki will be shut down.and all viable assured deposits below 100,000 euros will be transferred to country's largest bank "Bank of Cyprus." From now on this bank shall be considered more stable bank, Good bank. Around 4.2 billion euros of uninsured deposits shall be placed in the bad bank "Laiki" which will be disposed off to pay off the debt.
In order to safeguard the plan more capitalist rules shall be laid down on banks so that people cannot just take out all the money. Limits were placed on per day/per month withdrawal from bank. Cash withdrawal from check was banned. Limits to withdraw amount from ATM were also cut short.

What lies ahead?

If above measures help restore economy the stake holders might as well be able to recover the money in the process. But the question is even if Cyprus manages to pay the entire debt,  Will it be able to recover its economy anytime soon? The Russians have lost a lot of money. Cyprus is the last place on earth anyone would like to open an account in. Natural gas resources ain't yet operational. They cannot be yet relied on.
Tourism ain't at spur for disappointed Russians won't visit the place anytime soon.
The future still looks dim and unpredictable.

For all we can do now is sit back and Hope for peace!

Friday, April 5, 2013

Cyprus : From Riches to Rags

April 25,2013- Cyprus is the new buzz in air today. For few weeks ago from"where on earth is CYPRUS?" to "Lets save Cyprus." Perhaps a remarkable turn of events.
To all of those who wanna know what d hell is Cyprus crisis ,  Lets dig deep into this Cyprus history.

 So where is Cyprus? Why are we talking about it?
Cyprus is a small island in  Mediterranean sea, a part of European union accounting to a mere 0.2% of EU's GDP. With its  good chunk of  natural gas resources to the east of sea which are yet to be operational , CYPRUS is an offshore economic zone -  a Tax Haven.  It has more than 37% of its investors abroad, most of them being Russian criminals and fraudulents

 So much so money flows into Cyprus banks that they thought it a good plan to invest in greek bonds. Yeah!! u heard it right! The fools paradise - GREECE. Now why on earth will  anyone invest in doomsday economy?

Well , there were 2 reasons. One ,Cyprus been ethnically Greek , banks thought it to their natural advantage to invest in Greece. The other being high rate of interests on Greek bonds promised unrealistic returns. What the government failed to realize was that these returns were unrealistic in literal sense.How come a nation already defaulting on its debt will ever manage to pay back the returns?.

Months after, Cyprus banks were in bad shape. They owed more than they had and they owned a debt of 17 billion euros more than the country's GDP. Where on earth can government find such big money?

When in need we turn to our mother - EU , hope for a bailout and promise to learn from  our mistakes.

For poor Cyprus,  EU was already tired bailing out 4 nations and was in no mood to bailout this 5th one.
As per its  proposition - EU would lend 10-13 billion euros to Cyprus , rest all shall be borne by Cyprus govt.

Government had no money. Banks had neither. There could be only 2 ways to raise this sum.
1. Force government creditors - That is foreign and domestic lenders
2. Force bank creditors

For option 1, Forcing Government creditors meant forcing domestic lenders which are the very ones in need . So it all rounds up to option 2 .i.e forcing banks to pay for the huge debt.
Banks had  savings money.That is the investors money - perhaps the only money left in the country. People who were promised earlier that in no face of economic crisis will their savings be ever touched upon were soon going to be ripped off their trust. The time had come.  Government was about to rollback its word.The worst had come.

Government decided to tax the savings of people from 6 to 10% and pay the debt, get rid of the situation and appease these people for years to withhold their trust..
As soon as the word spread, people started panicking.
Withdrawing their savings seemed the only option.

Well !! Guess wat? Government ain't so lame to let you withdraw all that it had to save it from disastrous fate. 

Public holidays were declared for a week so that people couldn't withdraw their sums from bank. Withdrawal restrictions were put on ATMS which saw lines of people waiting outside to withdraw cash. To people's misery, ATMS soon went out of cash and the Catastrophe was finally ready to land on the shoulders of common people.

                                            Things will change.

Cyprus can threaten to roll out of EU group, can discard euro altogether and start afresh.Or it can ask Russians who are the majority stake holders in bank to help. Or  it can try renegotiate the deal with EU. What will be the turn over. Will Cyprus face the same misery as did Greece or will it some how manage a grraceful exit? To find out , checkout the next piece of Cyprus series :  The new beginning : Cyprus
Facebook finds a new HOME : Google Android
April 05,2013 - Facebook is yet at another high with the launch of its "HOME" a mobile application that shall replace the desktop and lock screens of android mobile. This is a strategic step for Facebook which was previously anticipated to develop its own mobile a few months back. With new "HOME" application installed ,users on android phones can actually see live feeds from their friends and family on FB. The new HOME will also collaborate chat with message services adding another user friendly feature in this list. So allinairtoday is "Should google android be worried about FB taking over its territory? " For initials, Yes. Currently google couples mobiles with its search bars and ads that earn google a chunk of its revenue. With facebook taking over this space, fb ads and apps can draw a potential chunk away. The question that now remains is " Will google android continue to maintain its rational approach or will the new era mark a change in android philosophy?