Thursday, July 24, 2008


To all young students of Carnatic music:

Popular vocalists Sri.T.M.Krishna and Smt.Bombay Jayashree Ramnath in association with YACM (Youth Association of Carnatic Music), Tamil Nadu Government Music College - Adyar, Kalakshetra and Music Academy - Madras are organising a 6 day workshop on carnatic music. Many popular artistes are giving concerts, lecture demonstrations, talks on Carnatic Music.

This event from Matrka (Founded by Jayashree and Krishna) will be a platform to learn more for many youths interested in music.

For more details, visit their blog -

Wednesday, July 23, 2008

88888 Campaign

This is an initiative of EXNORA, as a movement to save our Earth. The idea behind this initiative is to save electric power and there by reduce the heat generated by glowing lights.

We are contributing towards global warming in many ways. When electrical appliances are running, it generates heat. The air conditioner, computer, television, refrigerator etc., emits lot of heat while functioning. Many of us will just lock our computers in office instead of turning it off. These heat will affect the atmospheric stability and will in turn lead to global warming.

An article related to we not turning off our computers says:

More than 30 billion kilowatt-hours of energy is wasted because many of us simply forget to shut down our computers when we’re not using them. Even with a screen saver on, when you’re not using it, it’s STILL using up to 280 watts/hour of completely wasted power this power pumps out 1.5lbs of CO2 emissions into the atmosphere for every KWh. For very 24 hours that’s 9lbs of CO2 every day and 3,285lbs per year. That’s more than 1.6 tons of CO2 thrown up into the atmosphere just to keep one single PC working.

This CO2 is one of the cause for global warming. Consequence of global warming is known to us. The antarctic and arctic ocean, ices will start melting, there by affecting the lives there. This will also affect our eco system, by allowing more UV rays to enter Earth's surface which will lead to skin ailments and other health hazards.

Its our duty to save our Mother Earth. Lets join our hands together for this mission.

All we need to do is, to switch off the power to your home or office on August 8, 2008, for exactly eight minutes starting 8 p.m.

Lets all co-operate and save Earth from global warming.

For more info, visit:
88888 Campaign Website

Class room humours

Humour #1

Teacher - Ramu, if you add 10,24,45,67,89,76 what will come?
Ramu - Total will come teacher.
Teacher - ??!!

Humour #2

Teacher - What is 5 + 6?
Student - 10
Teacher - How is that possible?
Student - If I add it wrongly!
Teacher - **??!!??**

Humour #3

A teacher asks a student to copy a poem of Wordsworth on the black board. The student finishes it and sits in his place. Now she asks a student who wrote it? The naughty student replies - "Anita wrote it".

Humour #4

Lecturer - What do you call a person who keeps on speaking irrespective of others listening?
Student - A Lecturer!

Humour #5

Teacher - How old is your father?
Student - As old as I am.
Teacher - How is that possible?
Student - He became father only after I was born.

The same teacher while handling class for another group of students asked the same question.

Teacher - How old is your father? Dont tell me as old as you are.
Student - No teacher. He is as old as my elder sister is.
Teacher - ??!!

More to come....

Laws for Software Engineer

First Law:
Every Software Engineer continues his state of chatting or forwarding mails until and unless he is assigned work by manager.

Second Law:
The rate of change in the software quality is directly proportional to the payment received from client and the deadline time, and it takes place at the quick rate as and when deadline force is applied.

Third Law:
For every bug a software engineer fixes, there arises another bug.

Law of Conservation of Energy:
Bugs can neither be created nor be removed from software by a developer. It can only be converted from one form to another. The total number of bugs in the software always remains constant.

Speak out only good things

See good things alone
Say good things alone
Hear to good things alone

Sounds to be heard some where. Well, the idol or picture of the popular 3 monkeys will depict the above sayings.

If we see good things, we will be happy. If we hear good things, then also we will be happy. But does saying good things, will make us happy? Whay not? It will.

Why to say good things alone? Here is the explanation for this.

"Energy can neither be created nor be destroyed. It can be changed from one form to another form, but the total energy of the system remains the same".

This is the popular law of conservation of energy.

Similarly, the words we utter is the sound. Sound is a form of energy. So if we say good words, the goodness will come to us in another form. If we say bad things, only bad results will come to us, not in the form of words, but as some other event. What ever we say is a sound. Going close with the law,
sound can neither be created, nor be destroyed. It can be changed from one form to another form, but the total result remains the same.

Thursday, July 17, 2008

Type of Deposits

There are two major type of term deposits that are normally used by people, in banks.
1. Fixed Deposit (FD)
2. Recurring Deposit (RD)

In FD, we deposit a fixed amount, for a fixed period of time, earning some interest, based on the rate declared by the bank. The amount we put is called the principal. We can either get the interest amount at the end of every month or quarter as declared by the bank or accumulate it till the end and add it with the principal and get. The latter type is called cumulative fixed deposit scheme. Once the period is over, we can take the entire amount or renew it again. i.e. put the earned amount in the same bank for some more time.

In RD, we deposit some amount (which may be fixed or variable) every month and it will keep on adding till the tenure gets over. It will also fetch some interest for the amount deposited. If the amount paid is variable, it is called Variable RD (VRD), which was started very recently by banks.

Some more saving scheme popular in India is NSC (National Saving Certificate). Here we put some amount while we start the scheme and we can close the scheme and get money only at the end of deposit period. But if we need in the middle, we can pledge the certificate and get loan from financial institutions namely banks.

Tuesday, July 15, 2008

Investment in Mutual funds

Mutual funds are another type of investment where we can gain money. If we apply our minds and analyse and then invest, we can get maximum profits. There are two types of mutual funds, namely open ended and close ended.

Open ended funds can be closed any time we need. Close ended funds can be closed only after the stipulated time is over.

There is another type of classifying funds - sector specific, diversified.

Sector specific funds are raised to invest only in a particular sector. i.e if there is a mutual fund for the power sector, started by a company say X, the fund invested by us in that power sector mutual fund of X, will in turn be invested by X in the shares of the power sector companies like NTPC etc.

Diversified funds section of the company X will invest the funds got from its investors like us, in several segments. It is not bounded to one particular sector.

Diversified mutual funds are better than sector specific funds. The reason being, if the sector say, power is performing low, then the value of the sector specific fund will become low and it wont yield much results for us. But the diversified fund will invest in other good performing sector and will keep on earning money and there wont be much danger for our money, as optimum value will be maintained by the diversified mutual fund.

The value of a mutual fund on a particular date is called as Net Asset value (NAV). It is similar to the share price. It will be calculated based on the transaction that the company X has performed on the other companys' shares. If the shares of the company in which our company X has invested performs well, the NAVs will also be higher. Else NAVs will be lower.

Once we invest some amount in a mutual fund company X, in a particular scheme (sector specific or diversified), we will be alloted some units (similar to shares) based on the NAV at that time. For example NAV of a scheme is Rs.10, and we have invested Rs.5000, we will get 500 units. Again here also the brokerage comes. Here we call it as load (entry load - amount paid while buying and exit load - amount paid while selling). So we will get 5 or 10 units less while purchasing.

If the NAV increases, say to Rs.20, we will get profit. If it decreases, we will incur loss. This is obvious.

This mutual fund investment can be made in two ways:
1. One time investment
2. Systematic Investment Plan (SIP)

One time investment is same as share investment. SIP is like this. Every month or every quarter, we will invest some amount. Based on the NAV at that time, we will be getting permissible units. And we can close the investment any time we need if it is an open ended fund. As a result we can get some profit or loss based on the NAVs.

Investment in mutual fund is subject to risk like the share market trading.

Investment in shares

In my previous post on banking, I mentioned that by depositing in bank or in shares or mutual funds, we can multiply our money. This is possible in banks, as we acquire interest for the money we deposit. But what about, shares?

Shares - This is belonging of a public limited company that we can buy by paying some amount. To be more clear, we have the money earned by us. Let us assume there is a company, whose worth is Rs.10000. The company needs Rs.5000 urgently. It can either get by borrowing from bank (called as debt financing) or from the public, by offering shares (called as equity financing). The company wishes to sell half of it to the public. So it announces 500 shares, each costing Rs.10. This is called the face value of the share. This first offering by the company is called as Initial Public Offering or IPO.

So I wish to invest my money in this IPO. I wish to invest Rs.200 in the company's shares. So I will get 20 shares. This 20 shares is 4% of the company's share. So I am one of the owner of the public limited company. My ownership percentage is 4%.

The price range of the company's share is controlled by SEBI (Security and Exchange Board of India) in India. The key index is the SENSEX that is operational at the Bombay Stock Exchange. Depending upon the buy or sell call initiated by investors on the company's share, the price will rise or fall. If the price of the share increases to Rs.15 on some other day and then, if I wish to sell my 20 shares, I can do it. There by I will get Rs.300. That is a profit of Rs.100. Thats great right?

But now a days these transactions are taken care by intermediate parties called brokers, who will buy or sell shares for us. So for every transaction we need to pay them some amount. So taking the brokerage into consideration, we need to decide on selling the share.

For example, if a broker charges 10% (10% of 300), we will get only Rs.70 as profit from the above example. Also we may need to pay the broker, some amount for buying a share. In the above case, we need to pay Rs.20 for Rs.200 to be invested in a company.

So actual profit will be Rs.50.

Cost of share - 200
Borkerage - 20
Total (from our hand) - 220

Sold for - 300
Brokerage - 30
Total (received by us)- 270

Net profit = 270 - 220 = 50

If I had sold the share when its price has been Rs.20, I would have got an amount of Rs.400. Subtracting brokerage of Rs.40, There would be a profit of (360 - 220 = 140).

Also we will get some amount as dividend from the company. Suppose the company records a profit of Rs. 1000, this amount is divided based on the proportion of shares held by the investors and given to them. The company will declare that it will give some amount for each share held by the investor. For example, if it says that it will give Rs.1 for each share held, I will get Rs.20 as dividend in this case.

Thus we can earn in share market.

The difference between share market and bank is the steady return. We can get fixed amount as interest from bank. If a bank says 8% per annum as interest, I will get Rs.8 as interest if I had deposited Rs.100, at the end of one year. So I will have Rs.108/-. This will be steady.

But in share market, I may get profit if the company performs well. If it under performs, I have the risk of losing the money that I had invested. In the same example, if the price of the company's share falls to Rs.8, The value that I may get on selling is (20 x 8 = 160). Brokerage will be Rs.16. So Net amount that I will get is Rs.148. But I have invested Rs.220 (including brokerage). So I am reporting a loss of (220 - 148 = 72).

This is a speculation. We need to take risk and multiplying money needs lot of analysis.

Banking Fundamentals

What to do with the money earned? How to invest it? Why should I invest my money?

These are the questions that will come up in our mind when we start to earn money. We can spend the money that we earn or we can save it. But for saving it, do we need to keep it in a secure box? "Secure" means, to what extent? So goes the question. If we keep the money in a box, what happens if any thing happens to the box, like box catching fire or attacked by rats or stolen by thieves? So to avoid these situations we need to invest our money in some financial organisations like Banks, Mutual funds.

The advantage behind investing our money is that, it will multiply. We will acquire interest for the money invested. Sounds good right? Yes. But how are the banks managing to give interest or extra money for our money? Do they have any tree that will yield money?

The banks will circulate the money invested by depositors to other people, called as borrowers who need money in the form of loan. For this loan, they will charge interest. That is, if they give Rs.100 as loan to the borrower, they will collect Rs.110 from them. This means that the bank has charged 10% interest. So for the investor, they will give 7% interest, i.e 7 rupees for every 100 rupees they deposit. The remaining 3% is the profit they earn. These will amount to huge figures when transaction happens at levels of thousands or lakhs or crores.

The banks are controlled by government agency. So they cant escape away with our money. It is the safest place to keep our money.

Also we can take our money any time we need, from the bank.

So, all those who have started to earn, dont keep your money idle. Deposit them in bank or do some investment in shares or mutual funds or bonds. This will strengthen our economy.

Friday, July 11, 2008

Need for declaring public offers or shares by a company

"Share" - This has been a buzz word with many people for the past 15 years or so. What is this share? Why do companies offer share?

Share or stock as called popularly is a share in the ownership of a company (its assets). This means, "one who holds stock of a company is one among the others owners who are owning shares or stocks of the company".

Obviously, the owners should also get proportionately, the profits that the company makes. Yes, this is given in the form of dividends. This can be compared to the interest that a depositor gets when he invests some amount in a financial organisation.

Why do the companies offer shares?

Well, the company requires money to run its operation. There are many ways a company will get money. Either through its earnings by the sale of its products or service or by getting loan from bank or by getting money from the public.

Getting loan from banks is called as debt financing.

Getting money from public is called as equity financing.

But will the public give money without getting or expecting anything in return? The answer is a clear NO. So as a reward, the company offers ownership to all who had come forward to offer money. The degree of ownership offered to a person or even another company is directly proportional to the amount invested by the investor.

It is important that the distinction between a company financing through debt and financing through equity is well understood.
When we buy a debt investment such as a bond, we are guaranteed the return of our money (the principal) along with promised interest payments.

This isn't the case with an equity investment.
By becoming an owner, we also need to accept the risk of the company not being successful.
Shareholders earn a lot if a company is successful, but they also stand to lose their entire investment if the company isn't successful.

Three important ratios in share market

There are three important ratios for assessing a company's share, whether we can buy or not. They are:

1. Earnings per share (EPS)
2. Price to Earning ratio (P/E)
3. Price to future growth ratio (PEG)

1. Earnings per share (EPS)

EPS = (Net income of the company - dividend declared) / No of shares
Dividend declared = Amount declared as dividend by the company
No of shares = Average outstanding shares.. i.e if the company has 10 billion shares in first half of the year and if it has 15 billion shares in the second half of the year, we need to take average number of shares as 12.5 billion.

Three types of EPS -
Trailing EPS - Company's last year's number.
Current EPS - Company's this year's number. But are still projections.
Forward EPS - Future projections of the company's number.

2. Price to Earning ratio (P/E)

P/E = Stock Price / EPS

If P/E is high, that stock is called an over priced stock.
If P/E is low, then that stock loses the confidence among the investors.

P/E tells us, what the market thinks of a stock.

3. Price to future growth ratio (PEG)

PEG = (P/E) / (projected growth in earnings)

A stock with low projected growth in earnings has a high PEG ratio. So its not a good stock. But a stock with higher projected growth will have lower PEG. So we are in favour of low PEG numbers. This ratio helps us in deciding our stand for a public issue.

All these ratios are theoritical one. These can serve its purpose to some extent. But share market is subject to people's mind set. Its all completely in the hands of the investors to bring the share prices up or to pull it down. For example if all investors start selling a share as it has reached a price level where they can get a good amount of profit, eventually the price will come down. On the other hand, if the investors start buying a company's shares as it got quoted very low, but future projections has been very good, then the price of the shares will increase.

These ratios can be used to take the initial decision.