Do not blame MFIs

Over the last month or so there has been huge debate around how and to what extent Micro finance institutions (MFIs) in India be regulated. Quite surprising to note that despite having SEBI and RBI as active watchdogs of Indian economy, we are debating on issue of regulation which otherwise should have been like a breath within a living being.

Criticizing MFIs for charging higher interest rate needs to be scrutinized from the perspective of cost of servicing such a credit- which has no collateral, is small in ticket size, lent to borrowers with no credit history and in most cases the first charge on assets is hypothetical. MFIs need to hire enough manpower to service the loans and ensure collections.

Note this- Manpower cost as a percent of revenue is 24-28% for MFIs compared to 12-15% for public sector banks and 5-8% for private Indian banks.

I am silent on lending practices and NIM of 2 X approx. compared to traditional banks.

A Case for Contract Sales Outsourcing Companies

Will you consider outsourcing sales function of your organization? If yes, what will prompt you for such a decision? Do such service providers exist? Premised on the principle of core competence, contract sales organizations (CSOs) take on the onus of managing your sales process and help you achieve your sales objectives while you may focus on your core strengths.


Consider the case of a start-up company in software application space intending to sell its product on SAS model. One of the key determinants of success for such a company is its ability to sell effectively and efficiently. Should a start-up consider outsourcing the sales process?

Digging deep into what constitutes a sales process, three key elements- Resourcing, Distribution and Execution, help decide what to outsource and what is to be managed within. 
‘Resourcing’ pertains to hiring right sales personnel, their payroll management, attrition management and career development. ‘Distribution’ details distribution model, its length, distribution hierarchy and reward structure. ‘Execution’ is deployment of resources to task of distribution and sales management. No matter how good or effective is the distribution channel, a sustained relationship with members of distribution channel including customers is critical. 
Usually companies are seen (atleast a majority of them in India) outsourcing only ‘Resourcing’ to Professional Employer Organizations (PEOs) or staffing companies. While hiring, payroll and statutory compliance is PEOs’ responsibility, internal sales team take on the onus of driving the outsourced resources to pre-defined sales objectives. PEOs end-up charging for such services anywhere between 5-8% of the total salary cost. 

One of the key motivations to outsource ‘Resourcing’ to PEOs is cost optimization without losing control on quality of personnel and their productivity. Hence, outsourced resources operate as extended arms of the internal sales team. Companies in India are known to outsource its IT functions, logistics to an extent, payroll management, customer service, marketing and PR activities. 


A 100% outsourcing of the complete sales process is what I still need to come across. What would stop companies to do consider outsourcing? Do we have vertical specialist CSOs to whom a core function like sales can be outsourced to?

Do Dooni Chaar- pointers and personal experiences

After failed attempts to get an original CD/DVD on rent to watch the Do Dooni Chaar, I finally decided to download the movie from internet. Downloading may not be illegal but unethical for sure. Readers will understand my statement better at the end of this post. Though Sunday was planned for watching the movie, downloading took time and hence we managed to see today since I was not working.

Often, we (Monica and I) end-up relating incidents of our life to stories of some movies. DDLJ (Dilwale Dulhaniya Le Jayenge) movie was our first date. DDLJ was Monica’s first outing of her life. Quite similar to the situation of Simran (played by Kajol) leaving for her first European trip, Monica was on her first trip to Patiala and was out with me without her parents’ knowledge. ‘Love Aaj Kal’ was shot in Patiala where we fell in love. Passion and commitment for a relationship shown in the movie was similar to ours. For a detailed review please visit my earlier post. ‘Do Dooni Chaar’ (DDC) was also a fun to watch and to which we relate a part of our lives.

We both began our career as teachers. Monica worked as a school teacher while I took tuitions. Out monthly income was Rs 6000. Rent took away 35% of our income and balance spent on fuel expenses of 3rd hand Bajaj Chetak that was bought to me by parents. Rishi Kapoor in DDC is shot riding a Bajaj scooter in the movie and is a school teacher. Neetu Singh is an ex-librarian just like Monica. Monica completed her Masters in library science when I secured a permanent job for myself in a management college. She worked as a librarian for sometime with a couple of schools but not to forget that she was well leveraged by school management to use her teaching and librarian skills.

In the movie Neetu Singh says, “Had I been allowed to work as a librarian I would have earned enough to help you and also allotted a chauffeur driver car.” Quite surprisingly this dialogue of hers is very close to what Monica told me when we were in Indore. Her perseverance made me take up PhD and then reach Mumbai.

With her wishes, support and luck I managed to make a transition to corporate world from academics. Despite the fact that I may end-up being a servant of corporate world for a major portion of my life, I will always be a teacher from heart and in my actions. In fact this is true for both of us though Monica has decided not to pursue teaching profession any further. Reason for this is very clearly stated in the dialogue from the movie which goes something like this, “Teacher makes an engineer, a doctor, with starting salaries of Rs 1.5 lakh per month, but a teacher struggles to have enough savings for make down payment for purchasing a car.” An un-disputable fact and also very painful. The halwai wallah in the movie while paying 1 year advance for his grandson’s tuition fees says, “I sell mithais which once eaten are gone. You as a teacher make people’s career and hence you deserve much more than what you are paid for as a teacher.”

Listening live to Abida Parveen

मन कुन्तो मौलाह…. Ali you are the supreme master
How much more fortunate one can be than listening to above lines sung by Abida Parveen.

She was in Delhi to sing at Indira Gandhi National Centre for the Arts on Nov 13 2010.

For years I have been listening to Abida Parveen but this was my first instance of listening her live. The energy, passion with which she sings and the power of her voice qualifies her to be a much more than just a gifted singer, may be a living sufi/saint.

Its difficult for anyone to match the levels of spirituality that she has attained for herself. Can we just imagine what is takes to sing verses as old as 1300 BC? 

When she sang chap tilak sab cheena…, Aamir Khusaro and Hazrat Nizamuddin would have heard her lying in their tombs in Nizamuddin, New Delhi, which was close to venue of the event.

Why is high-growth phase of Indian economy short lived?

Ashima Goyal’s article on Dyamics of Inflation and Output provides an good insight into how inflation and growth are related and what impacts them. I agree intuitively with the logic that inflation in India is supply determined while output is closely correlated to demand.

Increase in crude oil prices or monsoon failures in India, all have lead to increase in prices of products for consumers. Inflation starts to increase and Index of Industrial Production (IIP) shows a decline. At that instance RBI steps in to actively manage inflation rather than worry about fall in industrial growth. This is where political economy seems to dominate policy making rather than pure economics.

I believe something in policy-making goes wrong at times of high-growth. Else why is GDP growth not sustainable at or above 9%? Within 6 months of a high-growth phase, coupled with two or more instances of increase  in interest rates by RBI, IIP begins to fall.Uncertainty with regards to monsoon adds to the volatility further.

Answers may lie in understanding the transmission of monetary policy, premised on existence of bank lending channel.

Firm-level financial data sources

Two major sources of firm-level financial data for firms in India, atleast the ones that I am aware of are: Prowess from CMIE and Captialine from publishers of Captial markets magazine.

In terms of usability, Prowess scores ahead of Capitaline, however, my feedback may be biased since I have not used Captialine database since 2003-04.

Where can research students access these databases? For full time students at universities (not sure about Deemed universities) and autonomous institutes like IIMs, IITs etc. its easily accessible as most of these institutes have subscribed to either of the two or both, in most cases.

For part-time or offsite students, despite being enrolled with a university/institute (that has subscribed to the databases), access is a challenge since remote access is not permitted.

Options left are either pay huge sum for subscription to these databases or approach universities’/institutes’ librarians requesting access to these databases. While most of them say No, some may permit you with a nominal security deposit and user fee.

Are there any other sources from where we can get firm-level data for Indian firms?