SUGGESTIONS SENT TO JUSTICE VERMA COMMITTEE FOR THEIR DUE CONSIDERATION 

MESSAGE FOR : Justice Verma Committee

MESSAGE FROM : S.K.Sengupta .

SENT : 31st Decmber , 2012 . 12:10 p.m.

1. The lower rung police has to deal so much with criminals , that their behaviour becomes rough and aggressive . They habitually fail to recognize that their job requires to deal differently with criminals and differently with general public who basically approach them for help . When an aggrieved girl approaches a police station for support , she desperately needs the uniformed government servants to behave like a friend and not like a foe . Her first requirement at that moment is an immediate courteous attention and may I say even emotional support . The police personnel must be trained to this effect , because this is the moment of first contact of an aggrieved citizen with authority after the crime . It must not leave a bad taste in mouth !
2. Lodging an FIR is a citizen's right . It must not be denied by authorities . Lodging an FIR should not be the discretion of the police personnel , it must be obligatory for them .
3. CCTV cameras should be placed in every police station , and ensured that the recordings of the cameras cannot be tampered with . Action must be taken against the police personnel who misbehave with public or refuse to lodge FIR .
4. The Police as well as the Judiciary must work within reasonable time-frame .
5. The victim-girl should not suffer further loss of honour while seeking justice , neither while dealing with police nor in courts ( which we would like to call our temples of justice ) .
6. Legislation needs to be amended to act as a deterrent to crime considering the ground realities of crime against women in India today ( not forgetting the KHAPs ) . Eve-teasing , vulgar comments , lewd gestures , unwelcome touching , molestation etc. should be severely punishable .
7. Necessary Police Reforms and Judiciary Reforms need to be implemented as soon as possible . Accordingly recruitment of more police personnel , female police personnel , their end-result-oriented training , patrolling , security arrangements and other brass-track bandobast has to be taken care of without losing any further time .

              

MON AMI

                                                                   MON  AMI

                                          by  S. K. SENGUPTA 

The small island of Mauritius looked beautiful in the Indian Ocean , as the plane began to encircle it to land on the Plaisance Airport . Looking through the window , Anita fastened the seat-belt . She was here on a brief trip to meet her close friend Himla .

“Hi!” Himla was all smiles as she kissed and embraced Anita . “ How long is your stay , you did not mention .”

“ A long time . Five days .”

“ Not very long . But you can see the island well . And I’m on leave . So , we can have a great time .”

As the car moved along the wide streets , the green open fields and the jagged mountains presented a captivating sight .

“ I’ve cooked octopuss and tortoise meat for you .”

“ Aha !” Anita chuckled .

“ We will be home by 9 AM . Freshen up a little . We will then pack-up our lunch and leave for Mon Choisy Beach .”

Anita sipped through the orange juice . “ It’s a beautiful restaurant” , she remarked as she looked at the enchanting ocean-waves breaking on the Mon Choisy Beach .

“ You wanted to meet Monami , Anita . I have invited him here .”

“ Oh ! yeah . I have heard so much about him .” Anita was excited .

“ You know , Anita , Monami is not his real name . He is a trainer in applied psychology . He gives simple tips . If you follow them , they prove to be very powerful .So , friends call him Monami . Mon Ami is a French expression .It means My Friend .”

“ Sounds like a great guy , Himla . I would like to have some tips from him.”

“ There he comes ,” Himla exclaimed . “ Talk of him and …..”

Anita turned around to look . A tall , handsome man in his early fifties was approaching them.

“ Hi Himla !”

“ Hi Monami ! Meet my friend Anita .”

“ Hi !”

“ Hi ! I am so excited to meet you .” Anita shok hands with him .

“ Hi Anita ! Himla told me about you . I came here just to meet you . In fact I’m leaving for London tonight . So now was the only time that I could meet you .”

“ I heard so much about you from Himla . You give simple tips to people which go a long way to improve their lives . In fact , I’m looking for some such tips from you .”

Monami smiled . “ Maybe my tips were useful for Himla , and she is praising me out of all proportion . All the same , Anita , what’s your occupation ?”

Himla meanwhile called the waiter and ordered an orange juice for Monami. “Anything to eat ?”

“ No . Thanks Himla .”

“ Okay .” The waiter went away . Himla paused and then spoke up ,                

 “ Monami , Anita is a business person . She is also active with some social groups . She has to keep on interacting with a stream of people .”

“ Fine .” Monami looked straight into the eyes of Anita . “You want some tips ?! Here it is . Ask two questions to as many people as you can .”

Anita asked searchingly , “ What are the two questions ?”

“ Ask what do they admire in you , and ask what do they dislike in you .”

“ Okay . What more ? Is that all ?”

“ Yeah , that’s all !”

“ How’s it great ?”

“ Try it . You’ll know it .”

Anita looked puzzled . Himla smiled and addressed Anita , “ That’s  Monami ! His tips sound too simple to be of any good use . But they are gunpowder .”

Meanwhile the boy served orange juice . Monami lifted the glass . The expression on his face was as profound and unfathomable as the Indian Ocean spread before their eyes .”

Anita still looked perplexed . “ But , Monami people may not tell me frankly about my weaknesses on my face .”

“Ensure that .”

“ How ?”

“ Tell them that you have specially selected them for your growth . Tell them to be blunt and open with you . Tell them that you are asking for their frank comments and you won’t be upset to hear the truth . Tell them that you will be grateful to them if they take courage in hand and tell you all about your weaknesses . Tell them to take their time and think before giving their frank and complete replies .”

Anita looked thoughtful .

Monami continued : “ It is not an easy exercise . It may shock you and may rock your entire world . You will learn much about yourself that you are not aware of .”

“ How should I use the feedback ?”

“ Don’t work on it . Let it work on you !” Monami gave a deep look to

 Anita . “ And after the interview is over , thank the person who has given you the feedback . Let him know that you did not mind his frank and courageous views . In fact , tell him again that you are grateful to him .”

The brief , straight words of Monami were having a profound hold on Anita.

“ I have to go now . I have to catch the evening flight .”

“ Thanks for your words , and that you came to meet me .” Anita shook hands with Monami with a grateful look . Himla and Anita waved as Monami slowly walked away .

Five days later Anita was at the airport for her return-journey . “Remember Monami ?” Himla asked smilingly .

“ Yeah , I’m serious . I’ll try out whatever he said .”

“ Yes , do that . And let me know what happens .”

“ There’s time for the flight ,” Anita said . “ Why don’t I begin with you ?”

“ What d’you mean ? You want me to answer your two questions ?”

“ Yes , give me a straight talk . What d’you like in me ?”

“ You are so pretty , lovable and friendly . You are a great friend , very reliable . And you are very committed to people and your work . That makes you a great person .”

“ Thanks . You make me feel great .” Anita took a long breath . “ And what do you hate in me ?”

“ You are very argumentative and loud-mouthed at times . You become rigid on issues and antagonize people . Often you hurt people with rude remarks . I guess that’s the only thing which I would like you to give up .”

Anita was disturbed . She never thought she is that way . Himla’s words pierced through her and made her visibly uneasy . She had not realized that the exercise would really shake her up . But she knew she owed thanks to Himla . “ Thanks Himla . It really takes courage to give frank comments which you did for my good . Thanks to you . Thanks to Monami .”

Soon there was a call for the passengers . Himla and Anita hugged each other .

As Anita headed for the aircraft , the words of Himla were ringing in her ears : “ You are friendly , lovable , pretty , reliable and committed . But you are argumentative , loud-mouthed , rigid and rude at times .” Anita shook her head as she remembered the words of Monami : “ Don’t work on the feedback , let it work on you .” It was indeed working on her , so she thought .

As the plane took off , Anita looked down through the window . The island below looked beautiful .

Anita was still thinking of Monami . 

The author , Shri S.K.Sengupta , is a Management Consultant ,

Behavioural Scientist and Personal Counsellor .He can be contacted at :

Mobile : 9810002413 .

E-mail : d2wd2w@rediffmail.com

Website : www.d2wd2w.com

EFFECTIVE  PARENTING

Our children are the apples of our eyes . They are the future of our families . Here we will discuss what we can do to ensure that they grow into responsible and competent human beings .

There are six areas which call for our attention : Extensive Communication , Ongoing Education , Leading from the front , Discipline , Motivation , and Home-School Bonding . We will discuss them below .

Extensive Communication : Make friends with your chidren . Listen to them and see their world as they see it . Don’t force them to become ‘little adults’ and fit into your world . Encourage them to speak to you and to ask questions freely . Try to read their concerns and anxieties behind their simple words . They may ask , “Mumma , d’you love me ?” “Yes , darling , I do !” may not answer the query . You must wonder why the little one asked that question : of late maybe you didn’t give enough one-to-one time to the child , or maybe an undercurrent of sibling-rivalry is coming out .

Ongoing Education : The growing up of a child involves his moral , emotional , social , intellectual as well as physical development . Whatever a child does from a very young age will gradually develop into permanent habits . So , make him do the right thing from an early age . Don’t allow him to study in the bed-room with the T.V. on . Let him have a study- room or a suitable study-corner with comfortable furniture , bright light , agreeable temperature and serene surroundings . Don’t let him spend his leisure time entirely on T.V. or Computer games . Ensure that he jumps , runs around and engages in vigorous physical activities like playing cricket , football or badminton . Teach him pleasantly whenever you are with him : read stories to him from Mahabharata , Ramayana , Panchtantra ; tell him about great men , about history or science or geography ; tell him about our country , about our world ; or show him the sky in a clear dark night and tell him about the moon , the sun and the stars ; and tell him also about principles , human values and God .

Lead from the front : Do what you want your child to do . Stand before him as an example , so that he can watch you and learn from you . Mummy wakes up Raju at 5.30 a.m. for he has to catch the 6.30 a.m. school-bus . Raju rubs his eyes and finds his father snoring comfortably in the warm bed , and he is reluctant to go to school . If the parents rise at 5.15 a.m. , switch on the light , begin to arrange the school-bag and tiffin , put on the music and then wake up Raju , the little boy will find that the whole world is up and doing , and will go to school in a pleasant state of mind .

Discipline : Help your children realize that life goes haywire without discipline . Make some rules – not more than three or four – rules which are absolutely essential for the welfare of the kids . Tell them that if they violate the rules , they will face specific consequences . The punishment has to be heavy but positive , like increased hours of study , or withdrawal of some pleasure or permission . It is very necessary to be consistent and immediate in awarding the punishment . Any delay or concession in the matter , and the system will fall flat . The parents of Anita gave her ample freedom , but instructed her to return home definitely by 7 p.m. One evening she returned at 7.30 p.m. The parents remained calm , but told her to return home by 6 p.m. for the next one month . Anita was told in advance that this would be the punishment if she ever violated the 7 p.m. rule .

Motivate : Your children are unique . Let them blossom to their full potential without pressurizing them to become what you want . Assess their liking , their potential , their aptitude and their inborn talents . Let them follow their own dreams . It will be easy for you to talk to them in terms of their own passion , and motivate them into having a high goal and work for that .

Home-School Bonding : Always talk high about the school and education , and praise their teachers . This will influence your children to love and enjoy their studies , and to respect their teachers .

Students , who are regular and up-to-date , excel in studies . Don’t let your child lag behind . Don’t take away your child on a holiday when classes are on , and don’t let his home-work pile-up . If it happens for some unavoidable reason , work with your child and help him to catch-up with the class as early as possible .

Moreover , join hands with the school-functionaries . Be warm to the teachers , share feedback with the school , and discuss how you can help each other in keeping the child on the right track .

Keeping pace with a growing child is a difficult task , and it calls for a lot of time , patient listening and empathy . Give your child more of you , love  him , take the help of teachers , and he will develop into an excellent human being .

                                                                                             ( 842 words ) .

The author , Shri S.K.Sengupta , is a Management Consultant ,

Behavioural Scientist and Personal Counsellor .He can be contacted at :

Mobile : 9810002413 .

E-mail :  d2wmvt@gmail.com

d2wd2w@rediffmail.com

Website : www.d2wd2w.com

THE HAPPINESS QUOTIENT ( GLOBALLY BROADCASTED RADIO TALK : COPYRIGHT RESERVED )

THE  HAPPINESS  QUOTIENT
By S.K.Sengupta .

( GLOBALLY BROADCASTED RADIO TALK : COPYRIGHT RESERVED )

How happy are we as a nation ? People may be wealthy , but they are not necessarily more happy . In a bid to measure the happiness quotient of people , The World Values Survey Association carried out a survey of 97 nations . According to this survey , the people of Denmark are the happiest people in the world . Puerto Rico stood second and Colombia third . USA was sixteenth in the list .

Market research company Ipsos Social Research Institute also carried out a similar global survey . According to them , the people of Netherlands are the most satisfied and happy in the world , followed by Canada and Australia . Despite widespread poverty , Indians came out as very happy people and stood fourth in the list , followed by Germany and then USA . According to this study the South Koreans are the least happy people in the world .

The ranking of nations in such studies may vary depending upon the norms of measurement and the method of the survey . Yet the results provide a very good broad idea about the level of happiness of people in different countries .

Happiness is an individual pursuit . It depends on seven areas in the life of an individual . The seven areas are : 1. personal interests , 2. happiness of near and dear ones , 3. welfare of the groups of people in the person’s life , 4. well-being of human race in general , 5. development of animal and plant life for ecological balance , 6. development of infra-structure and environment , 7. inner growth of the individual .

 The first area is personal interest , but personal interest is not all in all to make a person happy . Criminals , anti-social elements and selfish people don’t understand that . When one concentrates only on selfish interest and ignores all other six areas in his life , one is bound to become unhappy .

 The second area of happiness is our near and dear ones including our immediate family . When these people are more happy , we become more happy . If we add to their happiness , we also add to our own happiness in the process .

In the third area of happiness , we have groups of people who are in our life like our friends circle , social circle , religious circle , circle of relatives and circle of colleagues in office . If these groups are vibrant and positive then we will be more happy . So to increase our own happiness we must do whatever we can to keep them happy .

The next area is humanity in general . We all know that at cosmic level we all are connected to each other . Pain anywhere is a threat to happiness everywhere . If we all work for humanity , we all taken together will become more happy .

The fifth area , which follows , is animal and plant life . There is a fine divine balace between different forms of life on planet earth . If we take care of all forms of life , only then we can survive well and only then we can live a rich and complete life .

The sixth area next is the inanimate world which supports life . Our well-being depends on clean rivers , clean air , healthy space , development of infrastructure and making this a beautiful world to live in .

The seventh and final area of happiness is our inner spiritual growth . If I can truly tell myself that I am a good human being , only then I can be truly happy .

Happiness therefore is a 360 degree concept . If I want to be happy I must maximize my happiness in all these seven areas .

The more I practice this 360 degree concept of happiness in my life , the more I will also work to make others happy around me . So in a group if every member practices this 360 degree concept , they will all try to make each other more happy , and the happiness of the group will race ahead . However , a criminal or a selfish person in this group will pull down the happiness level of the group in a significant manner .

With clear understanding of this reality the former king Jigme Singye Wangchuk of Bhutan set out to improve the happiness quotient of his people . He decided to put happiness at the very heart of government policy . He knew that happiness is an individual pursuit and therefore wanted to empower the individual . For this , when he handed over the throne to his son , he made him the constitutional monarch without executive powers , and converted the kingdom into a democracy .

Bhutan is a Budhist kingdom in Himalayan mountains with a population of only 700 thousand people . They have taken exemplary steps to augment their happiness . Tobacco and plastic bags are banned , traditional clothing and architecture are enforced by law , television was only recently introduced with several channels banned which they thought will have a negative impact on happiness , consumerism makes one unhappy and so advertisements are banned , there are no traffic-lights except one crossing manned by a traffic-officer as they believe that stop-lights add to frustration , and also spiritual development has been put at par with material improvement . Every activity of the government is assessed by the happiness that it produces and not by economic benefits .

The goal of government in Bhutan is creation of happiness and not creation of wealth . Therefore , they want to measure and maximize Gross National Happiness and not Gross National Product . To ensure that they don’t ignore any component of National Happiness , they have come out with an intricate model of 4 Pillars , 9 Domains , and 72 Indicators of happiness . The 4 Pillars are : Economy , Culture , Environment , and Good Governance . The 9 Domains are : 1. Psycological well-being ; 2. Ecology ; 3. Health ; 4. Education ; 5. Culture ; 6. Living-standards ; 7. Use of time ; 8. Community vitality ; and 9. Good governance . All these 9 Domains have their own weighted and unweighted index which are analyzed by using the 72 Indicators . For example , the Domain of Psychological well-being has Indicators like jealousy , calm , compassion , generosity , as well as frustration and suicidal thoughts . The Use of time has similarly been broken down to time spent on work , time spent with family and so on . Mathematical formulas have been devised to quantify and measure even the tiniest component part of happiness . Moreover , every two years these Indicators of happiness are reassessed by carrying out a nationwide survey .

Taking such measures to maximize happiness is perhaps easy for a small kingdom like Bhutan . But there is a lesson to learn for every nation which is plagued today by erosion of values , economic crisis and deteriorating mental health and happiness of its population . Maximising wealth is not an answer to these tragedies , neither at national level nor at personal level . Happiness is a 360 degree concept , and life is not commerce . It is well said that money can buy medicines but not health , money can buy workers but not friends , money can buy bed but not sleep . It is good to have wealth  , but please ensure that you are not losing in the process what money cannot buy ! 

INVESTING IN SHARES

INVESTING  IN  SHARES
By S.K.Sengupta

 INDIAN  SCENE

  

    Largest companies in India :   SBI , Tata Steel , ITC , Reliance Industries , Hindustan Lever , TELCO , ACC , ONGC , HINDALCO , Tata Motors , SAIL , L&T .

    Well-known Core companies :  Hero Honda , Bharat Forge , Infosys Technologies .

    Well-known diversified companies :  Hindustan Lever , Nestle , ITC , L&T , WIPRO , Reliance Industries , Apollo Hospital .

    Growth Areas :  Pharmaceuticals , Textiles , I T services , Farm produce , Steel , Aluminium , Processed & semi-processed food , Personal Care items , Home appliances .

    Some Growth companies :  ABB Ltd. , Bajaj Auto , Siemen , TISCO , Gujarat Ambuja Cement , WIPRO , Indian Hotels , Indian Rayon , Infosys Technologies , L&T , TELCO , Reliance Industries .

    India is Internationally competitive in the following fields :  I T , Health Care , Silk , Cotton Textiles , Milk products , Two Wheelers , Tea , Leather products , Mushroom , Fruits , Floriculture , Pharmaceuticals , Poultry products , Vegetables , Auto ancillaries , Gems and Jewellery .

    Petrochemicals , Fertilizers , Consumer Durables and Electronic goods are threatened by global competition and receding profit-margin .

    Power , Hotel & Cement are not open to international competition and their domestic market in India is growing .

                                                                  

GENERAL  ADVICE 

    A company should have at least 5000 shareholders , equity capital Rs. 10 crores , and turnover of Rs. 50 crores .

    Diversify your share investment in different companies , different fields , and different geographical locations . However , do not over-diversify . ( Invest in about 10 different companies . )

    Core competence companies are fast growing . Large diversified companies are slow and sluggish and not best investment .

    Core companies that are monopoly or near monopoly and/or whose market is growing are safe investments . But invest in diversified core companies .

    Growing companies are in growing sectors of the economy .

    Identify growth areas of the economy . Next identify companies in this area that have impressive past growth record .

    Turnaround stocks , Defensive stocks , Blue chips , Growth stocks , and Sunrise stocks are safe and good investment .

    Keep track of monsoon predictions , agricultural boom , and economic trade cycles .

    Inflation , Transport cost , Power , and Steel affect most of the companies . Also Interest , Customs , Excise , Foreign Exchange   rates , EXIM and Govt. policies affect the companies .

    Inflation foretells taxes , controls , and credit squeeze , which lead to recession and bearish pressures .

    The following economic factors have a negative impact on Stock Market : Bad monsoon , Fall in Industrial growth , Inflation , Rising Interest rates , Falling Forex Reserves , Deficient Balance of Trade , Rising Budgetary Deficit , Falling employment level , Rising taxes , Govt. policies not pro-business , Unstable Govt. , Unfavourable International developments .

     Interest rates in U.S rise > Foreign Direct Investment flies back to U.S.A. affecting Indian Stock Market adversely .

    Internationally competitive industries alone can do well with growing globalization . Value and nature of exports of a company indicate its global competitiveness .

    Keep an eye on neglected or overlooked companies which have good future . Also keep an eye on bluechip companies which are temporarily out of favour . However , be very prudent and cautious before any bargain hunting .

    One may disinvest in a company , in a whole industry , or one may even disinvest from the entire Stock Market .

     THREE critera of minimizing risk :                                                                   * Liquidity ( so in case of need or emergency , you can quickly sell ) .                * Diversification of Portfolio .                                                                           * Long-term Investment Strategy ( to balance out temporary swings . Stock markets are irrational in the short-run , but rational over the long-term ) .

    Dividend is usually 1% to 2% p.a. of Market Value of shares .

   

                                                           

FINANCIAL  ANALYSIS

    Huge reserves – particularly twice the amount of equity capital -  ensures that it’s a growth-company , and it may issue bonus   shares , and the price of its shares are likely to go up .

    Book Value per share =  Share Holders’ Funds / Total No. of Equity Shares issued .                                                                                                 Share Holders’ Funds = Net Worth of the company = Assets – Liabilities = Equity Capital + Reserves .                                                                           [ Market Value of share is usually much higher than Book Value . So , if Market Value is very close to its Book Value , then the shares are undervalued .                                                                                             If Market Value is more than 3 times its Book Value , then the shares are over-valued .                                                                                           Moreover , in case of new companies , Market Value is close to its Book Value  –  if it’s more , the shares are over-valued . ]

    Earnings Per Share ( EPS ) = Profit After Tax / Total No. of Equity Shares issued .                                                                                                   EPS – Dividend per share = Profits ploughed back per share .                       ( Real returns on investment is EPS . )

    Price / Earnings Ratio ( P / E ) = Price of the share / EPS .                          ( P / E  denotes approx. how many years it will take to recover the price of the share . )                                                                                                      A company with high present earnings and dim future will have lower share price and hence very low P / E  ratio . But it won’t be a good investment .                                                                               Blue Chip companies normally have a high P / E ratio because of high price of its shares .                                                                                                    ( Good future prospects of a company , where its P/E is not that high is a good investment . )

    Important Ratios :                                                                                   Yield = Dividend per share / Market Price per share x 100                              ( Normally 1% to 2% in India . )                                                           Actual Return = EPS / Market Price per share x 100                              Return on Capital Employed ( Overall Profitability ) = Operating Profit           ( before tax , depreciation etc. ) / Net Worth + Outside Liability  x 100 .                                                                              

Return on Net Worth = Net Profit / Net Worth x100  ( = EPS / Face Value of each share x 100 )                                                                                       Debt-equity Ratio = Outside Liability / Net Worth x 100

    P / E  ratio 15 ( to 20 ) ~ Purchase shares . They’re underrated if the company is large , well-known ,and growth-oriented .                                                          P / E  > 25 ~ Avoid buying . There’s bullish overrating of shares .                     P / E  < 8 ~ Avoid buying . The company is bad .

    Average P / E  for last 3 to 5 years normally does not fluctuate . This average P / E  multiplied by EPS for this year gives a rough idea about the legitimate average price of this share for this year .

    Fundamental ( Ratio ) Analysis is always on a strong foundation . Trend ( Graph of  Market Price ) Analysis is always on a weaker ground .

                                                                 

  

SELLING

    Four simple rules of Selling :                                                                            1. Don’t wait for the  Highest Price .                                                                2. Have a target and sell when your target-price is reached .                               3. Once you realize you have made a mistake – Sell .                                         4. Sell a share if you won’t buy it at its prevailing price . ( With proceeds , you may buy the shares of newly emerging high-growth sector companies of the economy .

GOOD  TIMING

  

    When to buy and at what price ( not only which shares to buy ) ?                  When to sell and at what price ?

    What to buy is an easier decision than when to buy . When to buy is an easier decision than when to sell .

    In a growing economy the high and low of share prices this year will be higher than that of last year . Yet last year’s high and low give indications of undervaluation and overvaluation of shares now . Sell in boom , buy in recession , because stock markets always over-react . However , buy in recession only when the company is sound and only its shares are undervalued .

   Buy dear and sell dearer is another golden rule .

   Average up . Buy some shares , buy more and more in stages as long as price keeps on rising . Don’t average down i.e. don’t buy more and more as price keeps on going down . Better wait until you feel that the bottom of the downswing U is reached .                                                                       Always buy on the upsing and never on the downswing .       ( See the Trend Analysis for this . )

    After a steep rise , normally there is a fall which is about 50% of the rise . So don’t buy when it rises . BUY when it falls 50% .                                         SELL a share when it rises steeply . After a steep fall , there is normally a rise which is about 50% of the fall . So don’t sell when the price falls steeply – rather that’s the time to buy , if the company is good and you are sure of its fundamentals .

    Be alert in foreseeing the promise in a company’s venture , and buy its shares before the good news is public . Similarly , see early and sell shares before a bad news becomes public .

    The moment a good expanding company goes into commercial production , the prices of its shares shoot up . So buy its shares a few months before production begins and sell after about 2 months of the beginning of production .

    Buy shares of good companies on the day some good news is announced . Soon its price will soar . Then sell it off .                                                

INITIAL PUBLIC OFFERING

  

    Invest only in new issues of existing large , growth-oriented companies .

    Apply for mega issues of well-known profit-earning companies                      ( because of better chances of getting a firm allotment ) .

    Invest in companies operating in high growth sectors of the economy .

    Invest in companies with well-known reputed foreign collaborator companies .

    Invest in companies that have something new to offer .

    Don’t invest in companies which are not ready to start business operations     ( the gestation period may grow long ) .

                                                                   

COMPANY  ASSESSMENT 

    GATHER THE FOLLOWING INFORMATION :                                               1. Turnover ( should be over Rs. 50 crores )                                                             2. Equity Capital ( should be over Rs. 10 crores )                                                    3. Shareholders ( should be more than 5000 )                                                         4. Book Value ( vis-à-vis its Market Value )                                                             5. EPS ( and Dividend )                                                                                             6. P / E ratio ( also Average P / E over last 3 or 5 years )                                                                                                                7. Actual Return ( = EPS / Market Price x 100 )                                                     Yield ( = Dividend / Market Price x 100 = 1% to 2% in India )                           8. Debt-Equity ratio                                                                                               9. Return on Net Worth ( = EPS / Book Value x100 )                                           Also , Return on Capital Employed                                                                                       10. Reserves ( should be twice the amount of Equity Capital )                           11. Study the short-term and long-term cycle of share-price movement

    CARRY OUT THE UNDERGOING ANALYSIS :                                              1. Economic Analysis and Future Prospects .                                                     2. In new companies , Market Value should be close to Book Value .                In old companies , Market Value should be much higher than Book Value –     but if it is 3 times or more , then it is overvalued .                                                         3. EPS measures real earning .                                                                              Actual Return measures the real return .                                                               4. ‘EPS – Dividend’ measures company’s Reserve Building Activity .               5. Equity should be much higher than Debt .                                                            6. P / E ratio should ideally be between 15 and20 . It measures :                        How many years it will take to recover the price of the share .                            7. Return on Capital employed which measures the overall profitability of the company .                                                                                                       8. Average P / E x EPS this year - -  indicates the average price of the share this year .

9. An important equation as a broad thumb-rule :

72 / Rate of Interest ( or Return ) = No. of years ( in which the money will double itself ) .

                                                               

  

Tips from Warren Buffet

   Have a portfolio of about 10 Company shares only .

   If you ain’t willing to own a stock for 10 years , don’t think of owning it even for 10 minutes .

   Purchase stable companies which are least volatile , and which will last at least 10 years surely and won’t be eliminated by an innovation .

   Go on reinvesting all dividends . The power of compounding will do the rest .

   Invest only when you get shares of great Companies at a great price . Avoid detailed mathematical systems : they are not unfailingly reliable .

   Yearly high is 30-45% higher than yearly low normally . So the knack is to buy good shares when they are at their yearly low and selling when they are at their peak .

   Actual Return in Shares Market is 11% . Because of C.I. , higher than 11% return is a good kill . Less than 11% is a bad show . In fact invest only in Companies which give you at least 15% return .

   Make a list of 20 best Companies and watch them patiently over time . The name of Companies in best 20 may keep on changing . Make their ‘list-table’ with prices at which you are ready to buy . Then wait till the price comes down to desired level or lower . Of course keep on updating the assessment price . See page 50 of Warren Buffet book to arrive at desired level prices of shares .

   The rate of growth a Company had over last several years is the best indicator of its likely future rate of growth . And that’s the rate of return you will get on your investment . [ Average EPS of a Company over last 10 years is likely to be its average EPS for the next 10 years .] Invest only in Companies which give you at least 15% return .

   Per-share Book Value of a Company is the best indicator of the true value of the Share and at what rate it is growing .

                                                                 

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