“Global Imbalances & the Impending Dollar Crisis” by Mr. M.R. Venkatesh, CA, Columnist and an Author

Moolyankan Diversified Fund (MDF) in association with Corporate Wisdom recently organized an interactive session with Mr. M.R. Venkatesh. Moolyankan, which has recently received many accolades from corporate, is a stock market investing fund house, managed by students of DoMS, IIT Madras. Mr. Venkatesh is a Chennai based Chartered Accountant who addresses the business concerns relating to International trade and business strategies. He is also an accomplished writer and columnist with the Hindu Business Line, Industrial Economist and Rediff. Mr. Venkatesh has authored many books including “A handbook on anti-dumping” and “Global Imbalances and the Impending Dollar Crisis”.

Starting the session, Mr. Venkatesh pointed towards the debate which has been in talk for quite some time. The debate pertains to idea, that fundamental assumptions that have governed the world economy so far, were true of not. The issue before us is so profound that it is impossible to believe that we will have a safe landing. Talking about Global Imbalances, Mr. Venkatesh said, www meant world without walls and with it world looked seamlessly integrated. But then in 1997 Southeast Asian Crisis struck, which was popularized as Southeast Asian currency crisis. But that actually was a political crisis that manifested itself into a currency crisis. Investment from various parts of the world flew to Southeast Asian Nations, whose currency was pegged at a fixed level. But as soon as a few billion dollars were removed, the exchange rates collapsed. Every currency in Southeast started devaluing and moreover, every Nation entered into a competitive devaluation mode to keep its exports going. The result of all this was only one beneficiary, the importer (US in this case).

Indian finance ministers started aligning the monetary and fiscal policies with the global standards and exports were given a boost. But these exports brought US dollars that led to currently accumulated Forex reserves. But our policy makers did not know how to utilize this fund. As a result of which the reserve found its way back again to US in the form of investment in US treasury bills which give paltry return of 2-2.5%. This whole activity was known as Global Flow of Funds. The current dollar crisis first became evident in 2006 when Fed refused to give M3 figures of dollar. Now people are selling dollars buying everything else mainly commodities like Gold, Silver, Tin etc. That is the reason behind strong Gold prices in spite of falling dollars. With outsourcing, even the job of defending the dollar has been outsourced to countries like India and China because these are the countries sitting on huge piles of Forex reserves and a weak dollar could cause substantial harm. India has close to $300 billion Forex reserves and we still want more.

US’s huge deficit, which is close to India’s GDP, is funded by India and China. Americans cannot stop consuming and reason behind this is the ever weakening institution called family in the US society. While on the other hand in India, where family is a very strong institution, we save close to 35% of our GDP. The irony is America has the option of getting the money for its consumption from countries like India and China because we save more then we consume but we do not have other option to park our money. All this is leading to Global imbalances. Mr. Venkatesh said that third world war will not be fought on a battle field but by the click of the mouse in financial markets.

Recently the China has realized the implications of global flow of funds. So in order to keep the Forex in the country, they started increasing the consumption. But this has not been very successful so far. While India, on the other hand, is a consuming Nation by Chinese standard and a saving Nation by the US standard. In India we attach a social stigma to the debt and farmers commit suicides for failing to repay their debt while US seems to be enjoying and flourishing on debt money.

India is a balanced society and that is what going to keep us safe from the turmoil in world markets but that doesn’t mean decoupling theory is correct because if it is then globalization never happened.

Vishal Chourasiya
DoMS Interface

“Is the filmmaker a Visionary?” Mr. K. Hariharan, Director, L.V. Prasad Film & TV Academy

Management Insight for Social Transformation (MIST), recently invited Mr. K. Hariharan, Director, L.V. Prasad Film & TV Academy at Department of Management Studies for a talk on the topic “Is filmmaker a Visionary?” Mr. Hariharan, who heads the department of direction, is an accomplished filmmaker and distinguished scholar. He graduated from FTII Pune. The national award winning Tamil film "Ezhavathu Manidhan", earned him International acclaim, featuring in Moscow and other film festivals. Mr. Hariharan has also made many documentaries on subjects like travel, education and social movements. He is a visiting faculty at the University of Pennsylvania since 1995, and a guest faculty at the Miami University in Oxford, Film & TV Institute in Pune, and the Asian College of Journalism, Chennai.

Mr. Hariharan started the session by recalling an incident, where few young students dragged a collage girl and the blame was put on movies for spoiling the young generation. He emphasized that society has thrust upon a social and moral responsibility on the filmmakers. The films today have probably the most far reaching influence on our society. Mr. Hariharan defined the cinema as an industrial art as much as any technological product. But the strength of cinema lies in its use value. A film can be explained in by three dimensions, its Grammar (language), Technology (projectors, Cameras, mixing technologies etc.) & the Spectatorship (common viewers). From an artistic point of view films are reproduction of sound and image but the representation, which the viewers construe and spectators pick up, makes the crux of the issue. In Cinema we all try to imagine a world that does not exist.

Talking about the historical significance of the cinema in our country, Mr. Hariharan made a reference to the pre-independence era when India did not exist. What existed was hundreds of princely states divided by culture, language, believes and nothing common to share. Films brought together and integrated these separate states into one Nation which was just a notion till then.


Mr. Hariharan also emphasized on the fact that Cinema, to a certain extent, was responsible for the industrial growth in the country. In 1895 when the first film was shown in New York, there was already high level of industrial growth in US and cinema delivered on the dreams of consumerism. But back in our country when the first movie was screened in Bombay, country did not even have electricity. People saw movies running on generator, saw motors in movies and that was the beginning of urbanization in the country. But Cinema had to deliver on the message of National movements also and now post-independence, we have a new kind of brown empire, cinema has to deliver on the message of Indian at heart.

About 95% of films today in our country are love stories, even if it is a mythological, historical or social movie there will be a romantic angle to it. Mr. Hariharan questioned the obsession with romantic movies even if most people don’t seem to follow the idea of love stories as most marriages in our country are still arranged. He came up with the explanation that romantic movies are symbolic to our love for the land, the country and our determination to safeguard it from ill intentions of the state including Politicians, Police & Lawyers. Cinema in our country has adopted the Gandhian approach and says Nation is something to be romanced with.

Three things bring a nation together – Religion, Language & Political Leadership. This is a common standard around the world and India is the only exception to it. Cinema brings that commonality. The exchange of actors/actresses/directors between regional movies is so prevalent. Initially many south Indian actresses went to Bollywood for acting and now many north Indian actresses are working in south Indian movies. This is an indication of culture marriage that is happening in the country. People are increasingly defying the regional chauvinism, which was so rampant earlier.

Mr. Hariharan also pointed to the fact that we make about 900 movies a year and we are probably the only country where regional cinema is so developed. In France, most of the theaters show English movies and the French cinema is dying. In India, Cinema fulfills a cultural need. Our country was never integrated before like the way it is now. No film maker has done this keeping in mind the societal cause but unintentionally films have achieved what others failed to. In the end, Mr. Hariharan said “The Indian filmmakers have been Visionary except they did not know it.”


Vishal Chourasiya
DoMS Interface

Admission process for 2010 Batch - GT/PI dates are out

The JMET results and GT/PI shortlists are out!! The GT/PI are slotted in March end. We at DoMS, can't wait to see the new batch come in. Welcome to one and all!

Prospective students! Please check out our pagalguy forum for details and discussions.

All the best to all who got the call for GT/PI. Please feel free to post your queries in the blog too..

Learn more about us from the official site www.doms.iitm.ac.in

CEO Connect : Mr C. Venugopal MD & CEO, Krysalis Consultancy Services Pvt Ltd . on Econometrics and more.

The first speaker of another fresh quarter at the Department of Management Studies (DoMS), IIT Madras, under the auspices of the CEO Connect forum, was Mr. C. Venugopal, MD & CEO of Krysalis Consultancy Services Pvt. Ltd. He is an IIT Kharagpur and JBIMS pass out and has had a diverse and rich experience of having worked in many companies across multiple domains. He represents Nathan Associates, an Econometric Consultancy in US that uses econometrics and related models to add value and better the businesses of its clients.

Mr. C. Venugopal, at the very start, announced that he would rather have an informal session of give-and-take, so he asked students to barge in with their questions and queries any time they felt fine. He began by describing the background of consulting through the means of econometrics, based on sound economic theories. He gave the difference between a business consultancy and a consultancy using econometrics. A conventional consultancy would be primarily hired to give creative solutions using its client’s resources. In contrast, an econometrics consultancy would gather transaction data of its clients that includes customer information and invoices; try to understand the nature of the customer through demographic and physiographic data; and then would create econometric models using economic theories. He emphasized that econometrics is a mathematical methodology that questions the data and asks whether the data is unveiling any trend or information that may go undetected to the naive eye.

For this purpose, he presented the example of a major US transport corporation that had a profit insurance cover that would pay it in case its profits dipped below certain levels. Post 9/11, when the profits started to dip, the corporation approached its insurance company for a monetary claim which was denied. Enter Nathan Associates. It requested for the transaction data from the corporation and build econometric models of revenues before 9/11, some days post-9/11 and much later after 9/11. With such data, Nathan Associates’ client was able to prove in the law of court that its revenues had certainly dipped and it had a genuine claim to the insurance money promised. The judgment went in their favour, garnering a couple of million dollars for the transport corporation.
Sensing a similarity between econometrics and business intelligence exercises, a student raised a doubt. Mr. C. Venugopal answered that econometrics is different from analytics as analytics offers only tools for problem solving while econometrics’ scope is grounded much more in theory. Also for a person to work in econometrics apart from analytical skills required in analytics, he would need economics, particularly microeconomic knowledge.

Another doubt raised was how was a start-up to be helped by econometrics if it couldn’t come up with data on its business, as start-ups really don’t have many customers. Here, Mr. C. Venugopal highlighted the difference between data collection in the US and India. He said that while in US it was common to be able to access business information on consumer behaviour and corporate activities on even the most niche areas, in India such practices and services hadn’t picked up. In this light, he stressed that econometrics would need some form of primary data before it could help transform an SME’s business.
From econometrics, Mr. C. Venugopal moved to discussing the difference between working for a large corporation and running one’s own enterprise. Describing his own case, where he worked for almost 25 years across functions such as marketing, sales, strategy and IT, he said that the greatest difference was an entrepreneur previously employed by a company would be shorn of the protective shield of its employer. As someone working for a firm, you take things for granted and are assured that someone will take care of the other functions and aspects of management. However, none of this matched the heady feeling of working as an entrepreneur, of being your own boss and feeling secured in the fact that your time is your own now.
Probably wanting to stimulate another thought through the minds of the attendees, Mr. C. Venugopal asked the audience what is the most important thing as an entrepreneur. He said that he couldn’t agree more when a student answered that you need to have strong determination and confidence in your ideas. Another issue while operating as an entrepreneur, he asserted, was the lack of finance and the management of cash. Mr. C. Venugopal said that more than 50% of SMEs end up unsuccessful because they cannot manage their cash. This insight was something that he himself used while acting as a consultant to his clients, as a series of answers to this question lead to the core problems that plague a business.Mischievously smiling, Mr. C. Venugopal then questioned the audience whether MBAs were overpaid or not. While the class stood divided, he stressed that MBAs start becoming useful only after 3-4 years. Carrying on from there, he listed the traits that would make an employee invaluable to its employer. He said that a person must have credibility, possess high energy levels, be willing to learn, be bright and have a good attitude. These characteristics help a person integrate better with his/her organization and add value. Also, one must underpromise and overdeliver.
From the topic of adding value to a firm, Mr. C. Venugopal segued to the difficulty of an MBA graduate in selecting whom to work for, especially during placements. He asserted that 8 out of 10 MBA graduates he had met choose pay package as a differentiating factor between their prospective employers. This was a wrong decision. Such a decision had another dimension, when it came to an experienced MBA graduate selecting between multiple offers, as he/she would have worked in some domain before and would be swayed to join back the field he/she would be comfortable with. He underscored the worthlessness of looking back at the 3 years of work experience that one has had and the importance of looking forward to the next 30 years that lay ahead and their potential.
Mr. C. Venugopal, perhaps sensing the next question that would come, came forth with the type of profile and company that one should choose for one self. He maintained that one should take up an assignment that enriches your portfolio of knowledge, gives learning, new skills, gives chance to interact with people and challenging opportunities. He said that one should work with an organization that has good systems of cash management and exemplary processes and great people. So even if you get lower salary levels but a chance to work for a firm that offers the above mentioned traits then let go of the offer given by the other company that tries to lure you by a higher CTC or a snazzy designation.

To his advice of trying to work across different functions and sectors, a student asked if such a candidate would be deemed unstable in following a single career path. Mr. C. Venugopal replied that he had himself worked in many roles, so when he took up a different role he knew what the person on the other side of the table was thinking and this helped him transact business better. He said that after working in such a manner for about 10 years one would become a well-rounded manager as it diverse roles would ensure that you try to learn the roles of each profile quickly and this makes one stronger and definitely counts for something in today’s rapidly evolving business scenario.

A student then asked Mr. C. Venugopal to shed light on the right time to become an entrepreneur. He answered that it was preferable that one starts only after some work experience. Also doing so without any work experience would make it difficult as you would be bereft of a business network of known associates. Success without experience was only possible with solid financial backing and a passionate idea. Taking this idea forward he told that in fact you didn’t really need a passionate idea as most businesses of the world have achieved success by implementing someone else’s idea better.
At the end of the talk, Mr. C. Venugopal said that he hoped that students gave more importance to knowledge outside the books and gave Shuba D. of MBA I Year a prize for asking her question on the perception of instability in changing job roles, adjudging it to be the best question of the session.

KUNAL LAL

DOMS INTERFACE TEAM