JIT

JIT stands for Just In Time.

A ship is safe in the harbour, but it is built to move goods from one place to another. Likewise, a lorry
which moves goods from one place to another has to be constantly on the move.

When I was studying Materials Management, a friend from Lucas TVS stated that the lorries which
came to their factory to unload raw materials sometimes used to be parked for two or three days waiting
to get their turn in unloading.

The science of Logistics management was born.

Inventory build up should be minimal in a factory and after the advent of computers companies
were able to forecast the quantity and time at which such inventories were needed.

JIT was born. If we needed to make 50 cars today, then we need 200 wheels out of which
100 could be delivered the previous day evening and 100 by 12 noon today. Something like
that. So the delivery schedules were made out is such fashion and the lorries were expected
to arrive at such-and-such time at such-and-such gate number.

I do not know how far these exercises have been successful in our country.

Gold and silver - China and India

CHINA

Population: 135 crores    GDP: 5.93 trillion dollars

* CHINA is now believed to have exceeded Peru and Mexico to become the number one
    in production of silver.
*  CHINA is the largest producer of Gold.
*  CHINA imports more and more of gold and silver.
*  Shanghai Futures (SHFE) has started trading in silver futures.

INDIA

Population: 126 crores   GDP: 1.73 trillion dollars

* INDIA does not produce any gold or silver worth mentioning.
* Gold imports might plunge by 50% since demand remains lack lustre because of high
    domestic prices.

The population of India will surpass China some years down the line. What about other
things??

What you may not know about GOLD

Everyone knows about gold and many have at-least a small quantity of it.

Governments hold a portion of their reserves in Gold and top ten nations according to the
quantity of gold that they have in their possession:
USA (8,133 tons), Germany, Italy, France, CHINA(1,054 tons), Switzerland,
Russia, Japan, Netherlands and INDIA(558 tons).

Now let us see the top ten Gold producing nations:
CHINA(355 tons), Australia, USA(237 tons), Russia, South Africa,
Peru, Canada, Ghana, Indonesia and Uzbekistan.

India till recently was the largest importer of gold. But during the course of this year (2012) China
is going to surpass India in this aspect.

China produces the maximum amount of Gold per year. It is going to become the largest importer
of Gold per year. And it has 1,054 tons of Gold as reserves which represents only 1.6% of its
total reserves. It also has 3 trillion dollars as reserves.

India has begun purchasing oil from Iran by effecting payments in Gold.
Because of the rising price of Gold the off-take is dampening.

Investors in India will be better of by investing in silver bullion.

Comments are welcome.

Old is Gold

It is said that old is gold. Old silver coins (why call them junk) are gold. Yes, these silver coins have increased in value many times above the face value.

Back in India, when I was a young boy, there used to be a regular news item in the local papers. It was the quote for New York cotton (or some such item). I believe people used to bet on the next day prices or something like that. 

Even today the papers carry the daily prices of eggs, bullion, whole-sale vegetable prices and the exchange values of the currencies of various countries.

In most stores we see the pictures of vegetables and the corresponding prices. So, in this internet age it is not difficult to put up the value of the old silver coins on a day-to-day basis (maybe along with the pictures).

One can surely save and put aside some of these coins every month. One hobby could be to open an XL sheet in our computer and work out the day to day value of our coins and get some kick out of it!!


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My above post has been published in the Mini blog at www.silver-coin-investor.com
of Dr. Jeffrey Lewis

Tough times!

The AC business (any business for that matter) is facing tough times:

(1) Inflation.   55 Rupees to Dollar.
(2) Increase in Petrol price: Price of everything will go up. Since technicians work involves
going to customers places costs will increase.
(3) Price disparity: Prices of machines vary from dealer to dealer, retailer to retailer, retailer to dealer
and so on.
(4) Non-availability of skilled man-power. High attrition.
(5) Massive power cuts: Leads to loss in productive work. Technician goes to customer's place
only to find that there is no power to test the unit.

There could be some fall outs.

New Post - - Post-dinner humour

We are spending our weekend here in Austin.

A few days back , after dinner, we were talking about this and that and narrating a few jokes.

I narrated a joke told by my neighbour in Madhurima, Dr. Mohan.

He once said that in the Royapettah hospital, the doctors used to narrate jokes while they were operating.

They got so used to hearing the same jokes and therefore they numbered the jokes and from then on
someone would just say: Joke No.4.   And everyone would laugh aloud, remembering the joke.

Well you see this is a joke arising out of a real life situation and I thought that it was unique!

But similar situations arise around the globe, it seems. There is a large collection of books in my niece's place
in Austin and I picked up Isaac Asimov's Treasury of Humor. (I was always under the impression that Asimov
only wrote Science fiction).

As I am reading, came across this:

A newcomer to a certain summer resort was surprised to find a group of men gathered on the lawn one
evening shouting numbers at each other.
"Sixteen," one would yell, and all would laugh.
"One hundred and thirty-five," another would say, and all would laugh.
"Twenty-seven," a third would say, nearly choking with glee, and all would laugh.
"Two hundred and three," shouted someone, and this time every-one fell off his chair howling. The laughter
continued till some turned blue in the face and had to be pounded to keep them from suffocating.
Numbers continued to be called thereafter, and laughter, now more subdued, also continued.
Finally the newcomer spoke to one of the men on the fringes and said, "Pardon me, but tell me what's going on."
"Well," said the other, "this group meets every year at this resort, and night after night we swap stories.
Naturally, we all know the stories, so we gave them numbers and save time by calling the numbers."
The newcomer nodded. "I see. But tell me this, When someone shouted, "Two hundred and three," everyone laughed particularly loudly. Why was that?"
His informant chuckled. "Oh well, you see, that one we had never heard before".

World Geography

I was going through the McDougal Littell World Geography book.

It is a very interesting textbook and I love reading through the book. You may refer
www.classzone.com.

Here is some interesting comparison between US and India:

Area:
India: 1,195,063 sq. miles
US: 3,787,319 sq. miles

Population:
India: 1,002,142,000 ( year 2000 estimate)
US: 281,422,000

Doctors per 100,000 population (1992-1999)
India: 48
US: 251

We talk of population explosion, healthcare and housing, etc.

Just looking at the above figures we understand a lot!

Franchisee model of business

My friend Mohan became a dealer for Voltas air-conditioners way back in 1979. His was the fourth dealership awarded in Chennai and at that time the company thought that three was more than enough. He had to convince them a lot to get the dealership. His financial strength, business and technical acumen, willingness to
abide by the Tata ethics and culture; A whole lot of things were considered.

Today the picture is quite different. The company operates on a franchisee model and they only thing spoken
of is volume business. Sell, sell and sell. This the mantra today. Since the margins are very low my friend is
losing interest in the business.

Yet another friend of mine, Muthukumar, joined his father in the business of tyre selling. They were
selling MRF tyres and they were the first authorised shop selling only MRF tyres. They had their shop
in G.P. Road - the automobile spares hub of chennai city.

I have visited MRF tyres factory in the early 70's when they had only two large sheds in Tiruvottiyur.
By phenomenal growth the company achieved a turnover of 5,000 crores in 2007 and this went up
to 10,000 crores by 2011.

But there was a tremendous amount of pressure from the company to my friend asking them to
invest a huge lot of money and make theirs a very big show. The margins being very low, my friend
and his family opted out of the business.

Why? The companies want their franchisees to be adventurous.

Companies want their franchisees to sell more and more as they earn less and less.

I am reminded of something my father told me years back: A genius is one who knows more and
more of less and less - until he knows everything about nothing.

No comments from my side.

Humour - are we moving away from it?

I was always under the impression that Americans have a good sense of humour and enjoy it.

But of late I am beginning to doubt it.

Two days back I went to Walmart in North Carolina and the person in the gate was a
very humourous person. He was a jolly good person and was welcoming everyone in
a rather loud voice and enjoying himself. Actually his behaviour should put everyone in
a good mood, it did to me. But hardly anyone cared. Or exchanged a few pleasantaries
with him.

Today I took the Southwest Airlines flight from NC to Austin, Texas. The guy who
checked the boarding passes in Nashville was extremely humorous. I laughed loudly.
But no one seemed to care. When he continued in the same strain, a few smiled.

As we were getting down in Austin, one of the crew members said over the PA system:
Hope you had a nice journey. And do come back. Because if you don't we are the ones
that will miss you the most!

Sense of humour - where are you bound?

Adakkam (Self-control)

Those of you who have read and who keep reading the Thirukkural  know Adakkam.

Adakkam in tamil means self-control.

My friend Muthukumar came and settled with his family in Madhurima apartment complex which
was built by demolishing our old house and a few adjoining houses of our relatives.

He endeared himself to one and all and we used to call him MK, Muthu or Kumar.
Another friend of ours Selladurai always used to refer to him as "Muthu engal sotthu"
(Muthu is our wealth).

He liked to pluck a few flowers here and there without spoiling the plants (meaning not
plucking all the flowers) everyday in the morning to offer to Mother.

Something he liked very much was whistling. But he was not whistling with gay abandon.

I asked him: "Why".  He replied that someone may mistake him.

What I said:

Not a problem. We like to listen to your whistling. You may please whistle loud. (Only keep
looking at the plants and the compound wall and not towards the residences!!!!!!)

He was very fond of going to music concerts and I had the pleasure of accompanying him many
a time as long as I was in Madhurima.

A place for everything and.....

A place for everything and everything in its place.

This is one of the most important things that should be adhered to in the business atmosphere.

Unfortunately it is not being taught or followed in most places nowadays. Some of the staff
members want to make themselves important and keep the papers in all sorts of odd places.
If the particular staff member absents himself/herself it poses a serious problem.

I had been to a government office sometime back. I told them that I had occasion to
deal with them two/three years earlier. The concerned officer got up and pulled the file
containing papers pertaining to the transaction within minutes. This is part of the legacy
left behind by the Britishers.

Last month in Virginia I went with my daughter to renew the lease agreement. We gave
the signed lease agreement and the assistant said: "Let me go and bring your file". She was
back within a minute!

Wish all of us could be like that!

Fin-ti / Office humour

In the year 1992 I rejoined Prabal Electricals and my friend PRS (Mani) and the decade 1992-2002
was one of the most enjoyable periods in my business life.

My friend's residence was just above our business premises. Our office phones had extension to
residence too.

After a day of my joining, my friend rang up and asked someone: What about fin-ti.

I could not understand what he meant. So I asked him what is "Fin-ti"?

He got up and asked me to follow him. We went to his house and were served hot puris and coffee.

To maintain the office decorum Tiffin had become Fin-ti!!!!!

We are like a sandwich.....

At Crystopal we became dealers for Voltas air-conditioners in 1979.

I took over the reins of Crystopal in January 2002 and the years 2002 to 2004 were good years
for our business. I was delighted to celebrate the Silver jubilee of Crystopal and Golden jubilee of
Voltas (which commenced operations in 1954) in 2004.

Business tapered from 2005 onwards due to various reasons. Air-conditioners became to be
sold like a commodity. There was hardly any revenue worth mentioning from AMCs, repair work
and renting of air-conditioners. Sales margin dwindled due to fierce competition and customers
became more demanding.

My friend Mohan came back to India in 2007. By then the company also became more tight-fisted.
On one side a  company requesting to increase sales volumes and on the other side demanding customers.
This made him to remark: We are like a sandwich pressed on both sides!

Smile in adversity (Idukkann varungaal naguga)

There is a saying in Tamil: Idukkann varungaal naguga.

It means one should smile in adversity ( that is to say, not to take the situation too seriously).

Our company Prabal Electricals commenced business in late 1965 when I was still in school. My friend
PRS (Mani) joined in late 1969. In the hey days of the seventies and eighties we used to have well over
thirty workmen at any point of time. But due to strong urbanisation and other factors the strength dwindled
in the nineties. And another problem came up. Large scale absenteeism.

My friend Mani used to say: If we want 15 persons to take care of our workload, we should employ atleast
20, so that we have atleast 15 on any given day. But where was the force? And that too, skilled?

Some guys used to absent themselves at will. My friend Mani got sick of the situation.

One fine morning he told our workers: I no longer want to listen to your reasons. I am allotting the
numbers. If anyone is absent hereafter, just tell the number and get going. Don't waste our time and
patience!!

1) Headache
2) Not feeling well
3) Death in my neighbour's house
4).....

I dare you to...

For those of you who are hesitant about silver coin investing, I dare to suggest something

which I feel might induce you into the metal.

Most of you when you step out of your houses would be carrying in your pocket 50 or 100 dollars, if not more, besides your credit cards.

I dare you to carry one or two silver coins also in your purse.

Let us imagine what might happen.  When you are away, you may suddenly have an urge to have a bite

in a restaurant, even though food would be ready in your home.

Suppose your bill amount was 20 dollars. Try taking out the silver dollar and giving it as payment. Of course it would not be accepted. You will anyway pay with paper money or by swiping your card.

But wait! When you remove that silver coin from your purse, your heart might miss a beat! You will feel that something real, something very valuable is getting out of your grip. And then you will start thinking whether the expense was really necessary. A saving habit would creep in. All for your good and for the good of your family.

Repeat the above in intervals of four to six weeks. There is every probability that the value of that silver coin in your purse would have gone up. But the value of the paper money which came in and out of the purse would remain the same.....

Did I hear you saying: " I got hooked to collecting silver coins."

"I am a fool if....."

Bounced cheque is  a rare occurrence and only very few and far between.

But small business owners should remember that pilfering happens all the time, in almost all the places.

We at Prabal Electricals were engaged in repairing small and big electric motors. The repair work mainly
consisted in removing the burnt copper wires from the motor and rewinding with new copper wire.

We had a fairly elaborate system to account for the wires. We will check when the burnt wires are being
removed, monitor when they are weighed and kept in the locked store room. Again, when fresh copper wires are issued, we will weigh and note down the measure. After they are returned, we would weigh them again and
verify. The system was excellent. Or was it....

My friend PRS (Mani) who was the owner of the business told me: "I am a fool, if I believe that there is
no pilferage in our company!"

Boys will be boys. Despite all the precautionary measures some pilferage was happening at all times. Sometimes the cat will be out of the bag. But overall things were very much in control.

"I am a fool if...." shows the business acumen of my friend, his keen observation and practical approach.

Let every businessman or woman remember this!

Bounced cheque again!

There are people out there (meaning all over the world) who issue cheques which bounce.

Today I came across a complaint posted in the web, where one customer had mentioned that
a retailer in Chennai did not supply the air-conditioner paid for even after four weeks. When the
customer demanded the money back, they gave a cheque which bounced! I sent an e-mail to the
customer to know what happened thereafter and got the reply that they paid the money after one
month.

Being interested in coins I was reading some of the news items in coinflation.com where they have
reported about travelling coin buyers taking coins from customers and issuing cheques which bounced!
The customer loses his coins, doesn't get the money and loses 7.50 dollars as bank charges.

This morning, I was speaking to my friend in Chennai who reported that the very same cheat who had issued
a cheque and purchased thirteen air-conditioners about six weeks back and issued a cheque which bounced, a few days back was bold enough to this time purchase forty five air-conditioners and issued a cheque which was
not good. Only this time he was traced and a large part of the machines were recovered. The rest he
had sold for discounts upto 40% of the mark up!

I would like to remind my friends of one thing which they should never forget. An order for forty-five
air-conditioners will mature only after protracted negotiations and we will also know at-least of one or
two of the competitors who  are in the fray to nab the order. Nobody buys 13 or 45 air-conditioners in a flash.

If you have nothing to do.....

I saw this on a friend's table:

If you have nothing to do, don't do it here.

Can anybody really do nothing? Yes, they can!

The normal working hours of our company Prabal Electricals was from 9 A.M. in the morning
until 5.30 P.M. in the evening with a half-hour lunch break.

There used to be one guy whom we used to call as T.M. On most of the days he would come late.
He would check in by 9.15 a.m. or 9.25 a.m.

On certain occasions, we would tell him to be punctual. More so since he was in the supervisory
category - it would be appropriate for him to come by 8.45 or 8.50 a.m. regularly.

He would not listen. But one funny thing. After 5.30 p.m. he would go and sit in the chair beneath
the office clock with folded hands and mutter: "I have got conscience. I was late by 20 minutes today.
I am going to make up that time. And every once in a moment he would stare at the office clock above his head to see if the minute hand had approached 10." At 5.50 p.m. he would dart out of the office.

I and my friend PRS (Mani)  told him: You have to learn to be punctual. It does not matter if you are late by 10 or 15 minutes.But better be punctual in leaving by 5.30 p.m.!!

Be aware of copper

We all know that a 60 watts bulb burns brighter than a 40 watts bulb. So the current drawn by a 60 watts
bulb will be more than that for a 40 watts bulb.

The wiring in our houses is done with insulated copper wires (in rare cases aluminium).

In modern apartments proper wiring is provided to fix air-conditioners. But in some of the older houses,
the wiring requirement needs to be checked.

One of the first questions that I ask a customer is where he/she lives and what kind of wiring is available.
To fix an air-conditioner of 1.5 ton capacity (which most people purchase) wiring with 7/20 copper wire with suitable earth connection is required. 7/20 denotes 7 strands of 20 swg wire. A 3 phase electric supply would be ideal.

If you have a single phase supply, there are some constraints. Contact an engineer or a good wireman and get the details.

FOR THE REST OF YOUR LIFE

FOR THE REST OF YOUR LIFE

The eighties.

There were very few giant hoardings in Madras (Chennai).

This one was in Mount Road near Simpsons after the Gymkhana Club towards the end of the bridge.

It was for Dunlopillo mattresses and it said: FOR THE REST OF YOUR LIFE

The "Rest" was painted in a different colour.

After viewing this ad, I wondered why the word rest was in a different colour.

And then it dawned on me. Rest = relaxed comfort. What the mattress provides you.
Rest= remainder. To explain that the mattress is long lasting.

Very good copy. But what is the percentage of people who will get the message?

Dress code from America

I am giving details of dress code in American schools.
If you read it you will understand that dress code is universal in nature.

Let us see first the Board policy and how it is interpreted by the Cedar Fork Elementary school:

Board Policy:
CODE OF STUDENT CONDUCT

Inappropriate Dress - Principals shall exercise appropriate discretion in implementing this policy, including making reasonable accommodations on the basis of students' religious beliefs or medical conditions. Students are expected to adhere to standards of dress and appearance that are compatible with an effective learning environment.  Presenting a bodily appearance or wearing clothing which is disruptive, provocative, revealing, profane, vulgar, offensive or obscene, or which endangers the health or safety of the student or others is prohibited. Examples or prohibited dress or appearance include, but are not limited to exposed undergarments; sagging pants; excessively short or tight garments; bare midriff shirts; strapless shirts; attire with messages or illustrations that are lewd, indecent or vulgar or that advertise any product or service not permitted by law to minors; head covering of any kind; see-through clothing; attire that exposes cleavage; any adornment such as chains or spikes that reasonably could be perceived as or used as a weapon; and any attire that is prohibited by Policy 6410 Level III:2, Gang and Gang-Related Activities. Individual schools are free to specify additional examples of dress or appearance that are prohibited at that school under the terms of this policy.

If a student's dress or appearance is such that it constitutes a threat to the health or safety of others, distracts the attention of other students of staff from their work, or otherwise violates this dress code, the principal or principal's designee may require the student to change his or her dress or appearance.

This is what the school says:

We have been very fortunate at Cedar Fork that we have never had significant difficulties with the dress of our students. Student dress code is more frequently an issue of concern in middle school and high school. Still, it is important that we prepare students and families for the expectations they will face in the future while ensuring that students are dressed appropriately for the learning of all now.  One of the most challenging aspects of enforcing a dress code in elementary school is that clothing that might not appear problematic when worn by a kindergarten student might be perceived differently when worn by a fifth-grade student. Out of fairness to our students, we will do our best to enforce the dress code policy equally in all grades. If a student is not dressed appropriately, we will call his/her parents to request that they bring a change of clothes. Sometimes we have extra clothing into which students may change. Further discipline will only be considered if a student's dress continues to be a problem over time. Because the Board policy allows schools discretion, we have clarified some key points below:

1.  Shorts must be to the end of the student's fingertips when the student's arms are resting at his/her side.
Any rips in shorts must be below the end of the student's fingertips.
2.  No low-cut tops.
3.  No spaghetti straps. Straps of shirts must be at least as wide as two fingers. If a shirt is worn off the shoulder, another shirt must be worn underneath.
4.  No bare midriff shirts.
5.  No sagging pants or visible underwear.
6.  No excessive tight clothing.

Eidetic memory

Eidetic memory is also known as photographic memory.

Some persons have a very great eidetic memory. Swami Vivekananda was one such person. He could go through  a dictionary once and could tell the page number in which a particular word appears in that dictionary.

Some persons have a very good memory and some other try to develop it.

My friend PRS (Mani) had a very good memory. We used to run an electric motor repair shop in which
scores of motors will be lying in the shop-floor to be repaired. Whenever he returned to the shop after
a few hours or few days, he would go round the shop-floor and could easily spot the ones that had come in
for repairs in his absence. For me, I had to look into the receipts book and identify those motors.

We had a number of open almirahs in which items would be lying in so many rows and columns. Once when
my friend was away in Bellary, we could not locate a small coil which was to be repaired and returned urgently.
We rang him up and explained our predicament. After a few minutes he said , " the first almirah on your left
as soon as you enter the shop, fourth column, fifth row". Lo, the coil was there just behind some other item.

That, one can say, is almost eidetic memory!

TEARS OF THE MOON

You might have heard of the Incas of Peru. Ah! You remembered having read this in your history books.

But what you may not know is that Peru is one of world's largest producer of Silver. The Incas called silver
"Tears of the Moon".

MPC

In 1966 when I entered college the most preferred group was MPC. Maths, Physics and Chemistry. One could join engineering only if he/she took MPC. Even today this group is the most sought after. But what has MPC got to do with silver?

Mexico, Peru and China. These are the largest producers of silver. In 2011 Mexico produced close to 153 million ounces followed by Peru (110 MO) and China (104 MO).

There is some silver mined in India too. In 2011 the quantity was around 11 million ounces. Remember that India is one of the largest importers of silver.

Due to escalation of gold price, of late there has been very good demand for silver jewelry (costing less than 100 dollars) in US and Europe. So much so, the export of silver jewelry from India has increased by as much as 44% in 2011-12 and expected to increase by another 35% in 2012-13.

But why am I saying all this? It's a right time to invest in silver. You can expect very good returns in a time-frame of 6 to 18 months, with very little downside risk.

Working capital - the fourth M

If you wish to do business you must have the four M's. Men, Material, Management and Money.

You need working capital. This is the money with which we buy the goods that we sell or materials which we buy to turn out a product.

The working capital must be effectively used. Only the money that was obtained by using that working
capital should be spent and not the working capital itself.

If I bought an air-conditioner for Rs.20,000 with my working capital and sold it for Rs.21,000 then the
Rs.1000 is the money which I have earned and can spend for running the business. Imagine my paying rent of Rs.10,000 and say, wages Rs.11,000!

It would amount to killing the goose that laid the golden eggs, isn't it?

What is profit?

In elementary school we learnt profit and loss account this way:

Rama bought 10 apples at 5 Rupees each and sold them at 6 Rupees each. What is the profit made by Rama?

The answer is: Rama made a profit of 10 Rupees.

Unfortunately in real life, turning out a profit is much more complicated. Suppose Rama is a fruit-seller selling only apples. He has to go to the whole-sale market and buy a basket of apples. This involves transportation
cost up and down. Then he has to go from house to house to sell his apples. He may not be able to sell all of
his apples in one day. He has to throw away a bad apple or two. And so on. And if he were a bigger seller having a shop in the local market: He has to spend on rent, electricity, an assistant, some plastic bags and so on. We know all this in the back of our mind. Yes, in the back of our mind.

Similarly, if I bought an air-conditioner for Rs.20,000 and sold it for Rs.21,000 - would my profit be Rs.1000?
The answer is an emphatic NO. But unfortunately many dealers tend to think that the profit is Rs.1000 whereas in reality Rs.1000 represents the gross margin.They have to calculate all their expenses over a period of time and the revenue earned in the very same period and arrive at the margin. Profit = Gross margin minus the sum of fixed and variable expenses. They all know this at the back of their mind.

It is high time they brought it to the forefront at all times!