Tuesday, December 07, 2010

Significance of the number 1089

Every number has something fascinating and a unique property about it. One such number that came to my mind was 1089 when I was about to write (tweet) my 1089th status message on twitter.
The message reads (The tweet has been elaborated here as there is no 140 character constraint)
Take any 3 digit number, difference between first digit and last digit should be greater than 1. Reverse the digits. Find the difference. Reverse the digits in this number (difference). Add them to get 1089 always.
For example, let the number as 109, reversing the digits gives 901, difference between them 901 - 109 = 792, reversing the digits in the difference gives 297, adding them gives 792 + 297 = 1089.

This is not something that I discovered, I just know about this property through some source long time back. But I will attempt to show why this happens.

Let the random 3 digit number be abc. Its value is 100a + 10b + c
Reversing the digits gives cba. Its value 100c + 10b + a.
Difference between them assuming that a > c (for sake of simplicity of analysis)
|abc - cba| = abc - cba = 100a + 10b + c - (100c +10b + a) = 99 x (a-c)

Let, |abc - cba| = xyz (another 3 digit number)
xyz, then is a multiple of 99 i.e. of both 11 and 9.

Properties of multiples

• In multiples of 9, the sum of digits is divisible by 9
• In multiples of 11, the difference between sum of all odd and even digits is divisible by 11

In this case,
Since xyz is divisible by 9, x + y + z is divisible by 9 or x + y + z = 9 or 18. It can't be 27 or more.
Since xyz is divisible by 11, x + z - y = 0 or 11. It can't be 22 or more.
If x + z - y = 0, then x + z = y, then x + y + z = 2y
2y cannot be 9, it can be 18, so 2y = 18 or y = 9
If x + z - y = 0, then x + z = y or x + z = 9, this is possible
If x + z - y = 11, then x + z = 11 + y or x + z = 20, this is not possible
So, we can conclude that, y = 9 and x + z = 9.

Reversing the digits in xyz, we get zyx.
Adding the 2 numbers, xyz + zyx = 100x + 10y + z + 100z + 10y + x
Total = 101(x + z) + 20y
Substituting for x + z = 9 and y = 9, we get,
Total = 101 x 9 + 20 x 9 = 909 + 180 = 1089!

By the way, 33 square is 1089. 99 x 11 is 1089 and 121 x 9 is 1089.

Wednesday, August 18, 2010

Should I change my name to 'C'eshava?

While working at Tata Elxsi, we had a client manager whose name is now Chris Malakapalli. He is basically an Indian who went to US for his higher studies and settled down there. His name was Krishnakanth which was later Americanized to Chris.
Now my reason for changing (just thinking ;-) from Keshava to Ceshava is somewhat different. My uncle (@gmsbhat) in one of our twitter conversations suggested this because I have a liking for things that start with letter ‘C’.

Cricket/Cricinfo – I am a diehard fan of cricket which for me is Test Cricket and First Class Cricket. I now read and comprehend all the articles written in cricinfo. I always used to start reading the newspaper from last page where the sports section is covered, unlike others who read the 1st page headlines, political news, Page 3 etc. I wouldn’t just read all the words, I would also read between the lines, analyse, interpret and think about them. I pride myself in remembering the various statistics, records and results. During my school days, I used to play underarm tennis ball cricket from dawn to dusk. In my bid to learn overarm leg spin bowling I developed a unique Paul Adams style of delivery.

Coconut/Cocoguru – The business that I am into is about Coconuts.  The brand and company name is Cocoguru. I entered this sector because of the value Coconut offers. Also it is made easy by the fact that my father has already started coconut oil manufacturing more than 30 years ago. Every part of Coconut tree is valuable and is called ‘Kalpavriksha’. Coconut oil is the most complete oil, edible, cosmetic, medicinal and industrial. In short it is simply nectar.

Computer/’C’ – I am a Computer Engineer by qualification. I used to enjoy the course because my creative juices found good opportunity while programming in it. I used to write simple game programmes, simply browse through linux source code appreciating its beauty. I used to program them in ‘C’ language though I had learnt a bit of C++, JAVA, PERL, Shell script, html etc. Somebody used to call me K&R (K&R stands for Kerninghan and Ritchie, the founders of ‘C’ language), my name being Keshava Ram also has K & R in it. People who were jealous of my programming skills used to criticise saying I was only good at ‘C’. They think it is just about knowing the language, but I think more about understanding the computer hardware, proficiency in mathematics and logic, efficient use of Data Structures and Algorithms and writing clean code using the principles of Software Engineering.

Cycling – I love cycling even if we ignore the fact that it is a good exercise, environment friendly and economical. I had written about it earlier in my blog post.

Chess – I also like Chess and I claim to be an above average chess player. It is a simple game (64 black and white squares, 6 types of pieces with simple movements) with infinite possibilities. It is a game that tests a players’ strategy, tactics and competitive/combative spirit. I pride myself at having those strengths. Game has no dependence on little externalities like weather, location, time of the day, toss etc. Luck has no role, it is all up to how one plays in the given game. My biggest moment in this game is winning the VTU championship for college in 2002 at Ranebennur. I couldn’t pursue this game deeply because of lack of partners, as it was perceived as a boring game. Now I keep getting addicted and withdraw from chess.com

CAT – Getting into business has been my dream career. Being from a Science/Engineering background, I wanted a formal education in business i.e. MBA. I always believed in studying at the best colleges hence wanted to have a shot at IIMs by appearing for CAT (Common Admission Test). CAT has 3 sections – Quantitative, Logic and English. I was very good at first two but equally poor at English. I used to prepare for 80% of the time on English, yet achieve poor results. This was because of my lack of aptitude for the subject. I had made 4 attempts at cracking CAT and failed each time. Though my score kept improving from 88 percentile in 2002 to 97.5 percentile in 2006, my below par score in English would prevent me from getting elusive IIM calls. Each year I used to prepare sincerely despite my day job. I had made a lot of sacrifices in those 4 years for this purpose. In the final year I decided that I am definitely going to do an MBA even if it is not from an IIM. Now, I have no regrets about the choices I made.

There will be many more 'C' words that I have been associated with, but the above mentioned words are the ones with which I have deepest association.

Sunday, August 08, 2010

India is really the No.1 Test team

Just before the final Test of the India Sri Lanka series, I had written in my facebook status that India won at least one Test in every series India played since the Pakistan tour in Jan 2006. This includes even the series we lost in South Africa (1-2), Australia (1-2) and Sri Lanka (1-2). We have shown this consistency over a sufficiently long period of 4.5 years.
Even Australia doesn't hold this record as they failed to win a test in India  when they lost the series 0-2 in 2008. In the same period Australia has lost same number of series i.e. 3 to South Africa (1-2), Ashes 2009 (1-2) and India (0-2). Ashes 2005 loss though doesn't belong to the period under consideration.

India's next series is against Australia for Border-Gavaskar trophy in October. India will start the series as favorites, does it ever happen that Australia start a series as an underdog? Such has been India's form and dominance in Border Gavaskar trophy in which India won 10 and lost 10 in 26 matches, more importantly won the trophy 5 times out of 7.

Team composition-vise India has the best batting lineup that can only be imagined in dreams. Sehwag, Gambhir, Dravid, Tendulkar and Laxman are those players who complete the lineup. Need I say more about batting? Cool headed, smart, charismatic leader in Dhoni to add to his reliable wicket keeping and batting. Highest wicket taker (355 wickets) among the bowlers still playing in Harbhajan. Mature, accurate, dead wicket bowler in Zaheer Khan. Promising spinners like Prahgyan Ojha. Still bowling needs to improve to consistently get 20 wickets. But great bowlers are rare with any team in the world not just India.

I strongly believe success in Test Cricket is not about having players with great skill, India always had them. It is about how players react to pressure, their patience, concentration, intensity in the contest over 5 days, how team handles situations. India showed enough fighting qualities over the last few years.
Taking example of the last test at Colombo.
• Arguably the weakest bowling lineup created enough chances at took 20 wickets not by bowling the best deliveries but by forcing errors in batsmen due to sustained pressure.
• New ball spins and bounces more, but once the ball gets old it is easier to play. Indian batsmen smartly used this fact to their advantage in the run chase.
• Indian batsmen have this propensity to hit boundaries to score runs but when Sangakkara spread his field, batsmen curbed their natural instincts and collected singles.
• While chasing a tricky target like 250 and having lost 3 wickets, batsmen generally get into their shell, look to defend and survive, forget about scoring runs. But Tendulkar and Laxman batted positively, scored runs briskly to ease pressure.
This Indian team grabs most opportunities and doesn't snatch defeat from the jaws of victory. Earlier we have lost to West Indies chasing 120, lost Sydney Test with 5 minutes remaining and lost Chennai Test to Pakistan by 12 runs. Instead now, we have saved Napier test by batting for 7 sessions after following on, won Chennai Test against England chasing 387, just won Colombo Test chasing 256, drew the Lord's test with 1 wicket remaining. But we haven't been able to finish matches that should have been won - against Pakistan at Bangalore, against England at Oval and against New Zealand at Wellington.

Earlier India used to start a series as favorites, win the 1st test with ease, draw another test and somehow lose the final test to share the series that we should have won. Like at home against Pakistan in 2005 and England in 2006. Instead now reverse is true like in England in 2007, in Sri Lanka in 2010.

India does not have the best Win count or percentage as Australia does because India mostly plays in placid pitches or during rainy season when matches usually end in a draw.

Critics can say India reached the top by fluke (after winning home series against Sri Lanka) but India has stayed there for 9 months now maintaining a larger margin from the next best team.

Saturday, August 07, 2010

Why VVS Laxman isn’t in the limelight?

It is a good time to talk about Vangipurappu Venkata Sai Laxman.  As he has just helped India win the Colombo Test with an important unbeaten century.

He is always considered to be part of the golden Indian middle order batsmen (Dravid, Tendulkar and Ganguly being other) but never as an Individual great like others. To me immediate association with Laxman is his monumental 281 and his stylish wristy shots on onside. He doesn’t hold too many individual records like Tendulkar, Dravid or Sehwag. But he is a good player in crisis situations and along with Dravid form among best batting partners in world cricket.

Those who hadn’t realised his value in the team realised it when South Africa toured India for 2 tests in 2010. He missed the 1st test and India lost it, he came back for 2nd test, scored a century and India won it. It is not mere co-incidence; he was the very reason for the difference in result.

Personal records
Unlike Tendulkar, Dravid or Sehwag who have plenty of Individual batting records to their name, Laxman holds no such records. His achievements are severely dwarfed by those of his partners.
• For a player who has played 113 tests, he has scored only 7415 career runs. To put that in perspective, Sehwag has accumulated 7039 runs in only 79 matches. The main reason for this difference is that Laxman bats at No. 6 while Sehwag opens.
• Laxman averages only 47, used to average 43 some time back despite 29 not outs. On a stand alone basis it is a very good average an New Zealand/England batsmen would be extremely proud of it. Again putting that in perspective of his peer’s averages – Gambhir – 53, Sehwag – 54 (with 5 not outs), Dravid – 53, Tendulkar – 56.

But he is among the best difficult pitch players and man to handle crisis situation. How deep can a crisis get than trailing 1-0 in the series and being asked to follow on? How has he responded, scored 281 and turned the series from the verge of losing 3-0 to in fact winning it 2-1 and start a cricket revolution in India.

His best knocks otherwise aren’t those big hundreds, they are those short little cameos on difficult pitches. Here is an abridged list of few such match winning knocks that people don’t easily remember.
• 54 vs South Africa at Ahmedabad on debut in 1996
• 69 vs Australia at Mumbai in 2004 to setup a stiff 4th innings target of 107!
• 79 vs Australia at Perth in 2008 to take India’s lead past 400
• 73 vs South Africa at Johannesberg in 2006 to help India win its first test in South Africa
• 50 vs South Africa at Kanpur in 2008
• 69* and 74 vs West Indies at Trinidad in 2002
• 65 and 66 vs Australia at Chennai in 2001 where he led India to a difficult 4th innings chase of 155
• 72* vs Pakistan at Delhi in 2007 where his partnership with Dhoni helped India match Pakistan’s 1st innings score

None of these knocks would help in improving one’s records but are an immense benefit to team’s cause. Yet is questioned about his team play as he doesn't bat well with tail.

Test only player
He has been stereotyped as a player who can only play tests. Many don’t remember his series deciding hundred in last ODI at Pakistan in 2004. But one or two innings don’t make you a good player. His poor running between the wickets is his weakness that justifies his omission from one day squad. India plays close to 40 ODIs an year and only 8 tests hence Laxman doesn’t fall into majority of fan’s radar.
Laxman is not known for big hitting as he has hit only 4 sixes in each format his entire career!

He had a disastrous stint in IPL, with him as captain his team Deccan Chargers finished last. He also had an ugly spat with his team-mate Shahid Afridi who no where matches Laxman’s class and stature.
He had an option to be the Iconic player for the team and get about \$ 1.5 million but opted out of it for \$ 450 K to allow his franchise select players like Symonds for \$ 1.35 million.
His reserved nature, lack of individual identity, typical south indian accent, sporadic appearance in Team India hasn’t helped him in getting lot of endorsements too.

Saturday, July 24, 2010

coco guru - more brand elements

Update
The Logo for Cocoguru has changed to a simpler one.

Tagline - "Natural Goodness of Coconut"TM
• Reinforces that the brand is about coconut
• Coconut is good naturally for your health. We will slowly start advertising to dispel the myths about cholesterol in coconut.
• Brand delivers coconut products with minimal processing to deliver its natural goodness

Logo

Colors - Only 2 colors are used, they are green and white. White represents purity, innocence and coconut meat. Green represents natural, organic and environment friendly.

Brand name in different lines - While the name appears in packaging especially bottles, there is constraint on width or horizontal space. For 8 characters in cocoguru to be in one line, the font will have to be small. Also people may have a hard time to read and remember cocoguru continuously. So, the break up into 2 lines.

Wheel - Wheel is among the best inventions by man. So, it will suggest that the brand is innovative. Spokes are so designed to show that the wheel is rotating and the brand is progressive and moving forward continuously. Circle also represents the cross-section of coconut.

Ribbon - Ribbon is used to give a platform to show the tagline. Ribbon represents silken grace.

Corporate Logo

SRI is the recursive acronym of Sri Rama Industries. Similar to OIL for Oil India Limited and GNU for GNU Not Unix. The colors brown, green and white and leaf are meant to symbolize agriculture oriented business.

Wednesday, July 21, 2010

Does buying pre-owned machines save investment/costs?

When setting up a new factory like I am doing now, one is often confronted with a dilemma, should I buy new machines or buy pre-owned (second hand, used) machines at a lesser cost?
Used machines are ready for sale by those who have either shut down their unit or expanding/modernizing their unit. Many times they have not been used for long time, in good working condition and available at half the original price. Such offers look very attractive and is tempting for many cash strapped entrepreneurs. My dad and I visited a couple of such Oil Mills in Kochi and Kangeyam and we were pretty much convinced about buying them out because of the following reasons
1. Quick Project completion - To setup a factory with new machineries requires the lengthy procurement process i.e. Seeking quotations, selection of vendor, negotiations, payment, time for making the machine, transportation and installation. Also buying of accessories for the integration of the machineries to form a production system. For used machines, time till installation is significantly reduced because all the machines are already available at one place.
2. Investment size reduces to 50% of the budgeted investment. Extra money remaining can be used as working capital.

Within a week of this I visited Chennai for a Packaging exhibition and stayed at Raghuram's place there. While discussing my idea, he advised caution. He told me to focus on setting up a state of the art factory with latest machineries. Also he pointed towards the depreciation I can claim. His ideas then didn't affect my opinion. But later while travelling back, I started thinking deeply about what he told. And I came up with the following reasons to suggest that it is not that attractive despite the apparent attractiveness.

Investment - Assume used machineries cost 50% of that of new one.
1. Bank Loan - Banks don't easily give loans to buy used machines, they are comfortable funding machines where the supplier is a manufacturer and has quotations to back the price. Required margin money on machineries is 25% of its value or the bank funds 75% of the machine. While for used machine the buyer has to have 100% of the value or 50% of that of new one. So, initial cash outlay for new machines is 25% vs used machines is 50%.
2. Subsidies - Taking the case of my project of setting up a coconut oil mill. Coconut Board gives 25% subsidy on total investment, Directorate of Industries and Commerce (DIC) gives 15% subsidy, there are a few other incentives also. In short about 40% of total investment is subsidized by government. To get subsidy the industrialist must have gone for bank loan for funding. Both banks and government fund only for new machines. So, it is 50% for used machines vs 60% for new machines scenario. Used machine's advantage is only 10% of the total value.
3. Depreciation - Claiming depreciation on assets helps in showing the investment as an expenditure, this helps in saving tax to be paid on profits. Assuming tax rate of 30%, for new machines 30% of the cost of machines can be saved in taxes while for old machines 30% of 50% value i.e. 15% is the tax saved. So, new machines help in saving 15% more tax than old machines.
After considering Subsidies and Depreciation alone, new machines have 5% advantage (-10% subsidies + 15% depreciation) over used machines! This much is sufficient to answer the question raised in the title of the post. Wait, it is not over there are lot more things to talk about in favour of new machines.
Features - New machines have more and better features compared to the old machine. More importantly, the buyer can get those features that suites his requirements.
Efficiency - New machines would be more optimised than old ones and they will perform better, faster and with lesser power and consumables.
Maintenance - New machines are less susceptible to breakdowns as compared to old machines. Some of the problems encountered with older models would have been sorted out with later versions. That means lesser downtime, better productivity, lesser cost in buying spares and service.
Warranty - New machines come with one year warranty, few free services, installation and training.
Life - New machines have longer life and gives more time to realize value out of the machine.

New machine will give peace of mind (most precious commodity) to the businessman and allow him to concentrate on his business than on the machine. This enables him to keep him ahead of the competitors and better serve the customers.
Similarly, throughout my professional course (BE and MBA), I have always bought new text books and have never been a fan of photo copies or used books.

Sunday, June 06, 2010

Does it make business sense to pay taxes?

We see most businessmen do everything they can to avoid paying taxes (I don't mean tax planning as per rules). They common reasons they cite for this are
• Our field is very competitive, other's don't pay, then how can we pay?
• We already have very low margins, if we pay taxes we will make losses
• Anyway the money we pay in taxes are wasted, then why pay?
They are right. There are also other real challenges in properly paying taxes.
• Need to maintain full accounting system - requires knowledge of accounting & tax laws, paying the chartered accountant for his services, dedicate a staff for book keeping.
• Tax officials still claim bribe even when you maintain 100% accounts. Problem is that the bribe amounts are higher than when you don't maintain 100% accounts.
• Many customers are not willing to pay the tax.
Despite all these challenges, I contend that it makes perfect business sense to pay taxes. I will stay away from moral or ethical issues here. I won't say that we need to give back to the society/government etc. My main point is that not paying taxes gets the business into a vicious cycle and severely hampers its growth prospects.

1. Consistency and Simplicity
Maintaining full accounts gives you consistency of Data. You can show the same figures to anybody be it the bank, VAT, Sales Tax, Income Tax, Investors and Management. If somebody asks for your Sales data, you don't have to worry as to who is asking it. With this consistency comes simplcity that allows you to focus on important business issues (how to increase customer value?, how to reduce operating costs? how to get the best out of employees? etc). Instead of worrying about how to escape that government official, how to manipulate data, how do we explain this inconsistency to them etc.

2. Fund Raising and Valuation
Valuation of the business is directly proportional to the sales, profits and assets. Declaring less of them to avoid taxes undervalues your company significantly when you look to raise funds. E.g, if you profits are 1 crore and tax rate is 30%, valuation is taken as 10 x profits. When you declare 1 crore profit, you pay 30 lakhs in taxes and business is valued at 10 crores. But if you instead declare only 10 lakhs as profits, you pay only 3 lakhs in taxes (saving 27 lakhs in taxes) but getting only 1 crore in valuation. In a bid to save 27 lakhs in taxes you lost 9 crore in value.

When you don't pay taxes, you need to hide your assets, hide information, do only cash transactions. In a bid to hide from tax officials you importantly hide yourselves from customers/prospects. You can't advertise, you can't transport your goods, you fear government officials.

4. Use Government Incentives
Karnataka Industrial policy this time gives Subsidy on Capital Investment & Interest payments, has no tax on electricity and no APMC cess for a few years, no stamp duty, no conversion fine and so on. All these incentives can be claimed only when the records are proper and necessary licenses are obtained. The value of these incentives are much more than the money paid in taxes.

5. Paying Tax doesnot make a Profit making business into a loss making one, it only reduces the extent of profits slightly. VAT introduced in 2003 is such that you only pay tax on the 'value added' than on the 'value sold'. So the tax paid in inputs can be offset from the tax to be paid for outputs which significantly reduces your tax burden.