HOW A POET MADE A TYRANNICAL GOVERNMENT KNEEL-DOWN ( The most significant piece of history in today's India)

The decision to effect the partition of Bengal was announced on 7th July, 1905 by the then Viceroy of India, Lord Curzon. The devilish plan was to separate the Muslim dominated eastern areas from the Hindu dominated western areas. This caused widespread dissent across Bengal and there was an atmosphere of tension and mutual animosity everywhere. The reason behind the partition that was officially announced was that the Bengal province was too large to be administered by a single governor and so it would be partitioned on administrative purpose. The real reason behind the partition was political and not administrative. East Bengal was dominated by the Muslims and West Bengal by the Hindus. Partition was yet another part of the divide and rule policy. The following excerpts from Curzon's letter of 2 February 1905 to St. John Brodrick, Secretary of State for India, give an idea of his aims in partitioning Bengal:

"Calcutta is the centre from which the Congress Party is manipulated throughout the whole of Bengal, and indeed the whole of India. Its best wire pullers and its most frothy orators all reside here. The perfection of their machinery, and the tyranny which it enables them to exercise are truly remarkable. They dominate public opinion in Calcutta; they affect the High Court; they frighten the local Government, and they are sometimes not without serious influence on the Government of India. The whole of their activity is directed to creating an agency so powerful that they may one day be able to force a weak government to give them what they desire. Any measure in consequence that would divide the Bengali-speaking population; that would permit independent centres of activity and influence to grow up; that would dethrone Calcutta from its place as the center of successful intrigue, or that would weaken the influence of the lawyer class, who have the entire organisation in their hands, is intensely and hotly resented by them. The outcry will be loud and very fierce, but as a native gentleman said to me – 'my countrymen always howl until a thing is settled; then they accept it'."

There were widespread protests everywhere especially in the form of resistance by the Hindus which sparked off the Swadeshi movement entailing a complete boycott of British goods and services. However the Muslims in East Bengal hoped that a separate region would give them more control over education and employment, which were previously availed by the Hindu gentry and landlords, hence they opposed those movements. The plot hatched to divide Bengal along communal lines was beginning to succeed.

A lot of eminent figures from the political and literary arena protested against Government's partition policy. Apart from the Boycott which was in full swing, the opposition to the movement manifested itself in multifarious ways. One person who played a prominent role in this movement was the Country's renaissance giant, Rabindranath Tagore. He spearheaded a number of protest rallies, organized the grieving sections to launch a full fledged movement against the British. He was extremely vocal about the issue and also channelized his literary endeavours as a weapon of this agitation. He wrote Banglar Mati Banglar Jol as a rallying cry for proponents of annulment of Partition.

During August, when the vehement opposition was gaining a strong foothold amongst the political machinery, the festival of Rakshabandhan arrived. Although it was a Hindu festival, Tagore deftly used the concept of brotherhood, togetherness and ‘the thread of protection’ as a medium to protest against British’s partition policy by showing a picture of unity among the two communities.
He was again the steward of the movement and with a band of likeminded co-agitators went straight to Nakhoda Masjid in Kolkata on foot to give effect to his intentions. A lot of well-wishers forbade Tagore to do it as it might not go well with the Muslim community. They feared that amidst this environment of turmoil and distrust, even a request for participation in a Hindu festival for the Muslims can trigger hostility. When he reached the Mosque, the Imam himself came out and to everyone's dismay expressed his desire to get knotted with the blissful thread. Following Tagore’s call, Hindus and Muslims in Kolkata, Dhaka and Sylhet came out in large numbers to tie Rakhi threads as a symbol of unity. He transformed the religious tradition of Raksha Bandhan to a secular motif of unity among diversity and resisted Banga Bhanga (Partition of Bengal). A string of protests ensued in the upcoming years in both parts of Bengal and the British Government finally withdrew its plan in the year 1911.

However on account of a short lived vision of the movement, it ultimately failed to prevent the amputation of the Nation in 1947.

WAHH TAJ

The construction of the railway lines and railroad tunnels in America started in the 18th century. As Karl Marx said “that the  railways would act as the very plinth on which the edifice of modern civilization would stand and this eventually would give birth to official labour communities all over the world”, the construction of the communication lines heralded the era of massive development which US witnessed in the next century. If one digs a bit deep, he would uncover a bit of filth and squalor behind the history of these railroad constructions. The history is horrific, ugly and blood-stained. The progressive white Americans mostly employed the comparatively sturdy Afro-Americans as labourers to build these tracks. These labourers were taken as bonded slaves and treated like dirt. They were forced to work for long hours with scanty food and water supplies, tortured vehemently and many died working on the site due to austere physical strain. A good lot got themselves killed for not being able to live up to their boss’s command and some even committed suicide. This inhuman treatment from the white bosses went on for years and the rail roads, tunnels and everything else bear silently the dark history of centuries till date. Those who are a bit inquisitive to know about this ghastly piece of history can simply type “John Henry” in google.

History is past. We can memorize it, take lessons from it, lament it, get livid, feel elated or oblivious about it but we can't amend it. Similarly we don't have the power to erase it. We can at the utmost deny it or make unwarranted aberrations. No amount of sugar-coating can justify the deplorable actions of the tyrannical minds like in the case we read above. It should be condemned and remembered with a heavy heart. But what's the point in scrapping the piece of history altogether? Should the Americans blow-up the railway tracks or stop using the railroads as a gesture of atonement? Any rational mind won't give an affirmative nod in this case and rightfully so.

Taj Mahal indeed was erected by the Mughal ruler Shahjahan in memory of his beloved wife Mumtaz Begum. It's one of the wonders of the world, a marvel of marbles, and a great tourist attraction for Indians as well as foreigners. What the Statue of Liberty is to US or the Eiffel Tower is to France, Taj Mahal is to India. Every Indian restaurant in Europe and America has a picture of the Taj inside. It has become integral to the concept of Indianness. It's completely unwise to treat it as a “blot” or forcefully establish the unverified theory of “Tejo Mahalaya”. May be Ustad Isa’s men met with a dreadful fate but we must not forget that the structure was created by the blood and sweat of Indians. Belittling it or ignoring it would tantamount to an insult to those departed souls who made the miracle happen. It's because of their toiling we are able to say today -

“Gar firdaus bar-rue zamin ast, hami asto, hamin asto, hamin ast.” (If there is a heaven on Earth, it's here, it's here.)

DSCR - The guiding parameter

DSCR- Debt Service Coverage Ratio

The debt service coverage ratio (DSCR), also known as "debt coverage ratio" (DCR), is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's (person or corporation) ability to produce enough cash to cover its debt (including lease) payments. The higher this ratio is, the easier it is to obtain a loan. The phrase is also used in commercial banking and may be expressed as a minimum ratio that is acceptable to a lender; it may be a loan condition. Breaching a DSCR covenant can, in some circumstances, be an act of default.
In corporate finance, DSCR refers to the amount of cash flow available to meet annual interest and principal payments on debt, including sinking fund payments.
In personal finance, DSCR refers to a ratio used by bank loan officers in determining debt servicing ability.
A DSCR over 1 means that (in theory, as calculated to bank standards and assumptions) the entity generates sufficient cash flow to pay its debt obligations. A DSCR below 1.0 indicates that there is not enough cash flow to cover loan payments. In certain industries where non-recourse project finance is used, a Debt Service Reserve Account is commonly used to ensure that loan repayment can be met even in periods with DSCR<1.0

In general, it is calculated by:

DSCR = Net Operating Income/Debt Service

where:
Net Operating Income = Net Profit + Depreciation and Amortization + Interest paid + Non Cash Expenses other than depreciation and Amortization.

Debt Service = Principal + Interest + Lease Payments

To calculate an entity’s debt coverage ratio, you first need to determine the entity’s net operating income. To do this you must take the entity’s total income and deduct any vacancy amounts and all operating expenses. Then take the net operating income and divide it by the property’s annual debt service, which is the total amount of all interest and principal paid on all of the property’s loans throughout the year.
If a property has a debt coverage ratio of less than one, the income that property generates is not enough to cover the mortgage payments and the property’s operating expenses. A property with a debt coverage ratio of .8 only generates enough income to pay for 80 percent of the yearly debt payments. However, if a property has a debt coverage ratio of more than 1, the property does generate enough revenue to cover annual debt payments. For example, a property with a debt coverage ratio of 1.5 generates enough income to pay all of the annual debt expenses, all of the operating expenses and actually generates fifty percent more income than is required to pay these bills.
A DSCR of less than 1 would mean a negative cash flow. A DSCR of less than 1, say .95, would mean that there is only enough net operating income to cover 95% of annual debt payments. For example, in the context of personal finance, this would mean that the borrower would have to delve into his or her personal funds every month to keep the project afloat. Generally, lenders frown on a negative cash flow, but some allow it if the borrower has strong outside income.
Typically, most commercial banks require the ratio of 1.15–1.35 times (net operating income or NOI / annual debt service) to ensure cash flow sufficient to cover loan payments is available on an ongoing basis.

Pre-Tax Provision Method

Income taxes present a special problem to DSCR calculation and interpretation. While, in concept, DSCR is the ratio of cash flow available for debt service to required debt service, in practice – because interest is a tax-deductible expense and principal is not – there is no one figure that represents an amount of cash generated from operations that is both fully available for debt service and the only cash available for debt service.
While Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is an appropriate measure of a company's ability to make interest-only payments (assuming that expected change in working capital is zero), EBIDA (without the "T") is a more appropriate indicator of a company's ability to make required principal payments. Ignoring these distinctions can lead to DSCR values that overstate or understate a company's debt service capacity. The Pre-Tax Provision Method provides a single ratio that expresses overall debt service capacity reliably given these challenges.
Debt Service Coverage Ratio as calculated using the Pre-Tax Provision Method answers the following question: How many times greater was the company's EBITDA than its critical EBITDA value, where critical EBITDA is that which just covers its Interest obligations + Principal obligations + Tax Expense assuming minimum sufficient income + Other necessary expenditures not treated as accounting expenses, like dividends and CAPEX.
The DSCR calculation under the Pre-Tax Provision Method is EBITDA / (Interest + Pre-tax Provision for Post-Tax Outlays), where Pre-tax Provision for Post-tax Outlays is the amount of pretax cash that must be set aside to meet required post-tax outlays, i.e., CPLTD + Unfinanced CAPEX + Dividends. The provision can be calculated as follows:
If noncash expenses (depreciation + depletion + amortization) > post-tax outlays, then Pretax provision for post-tax outlays = Post-tax outlays
For example, if a company’s post-tax outlays consist of CPLTD of $90M and $10M in unfinanced CAPEX, and its noncash expenses are $100M, then the company can apply $100M of cash inflow from operations to post-tax outlays without paying taxes on that $100M cash inflow. In this case, the pretax cash that the borrower must set aside for post-tax outlays would simply be $100M.
If post-tax outlays > noncash expenses, then Pretax provision for post-tax outlays = Noncash expenses + (post-tax outlays - noncash expenses) / (1- income tax rate)
For example, if post-tax outlays consist of CPLTD of $100M and noncash expenses are $50M, then the borrower can apply $50M of cash inflow from operations directly against $50M of post-tax outlays without paying taxes on that $50M inflow, but the company must set aside $77M (assuming a 35% income tax rate) to meet the remaining $50M of post-tax outlays. This company’s pretax provision for post-tax outlays = $50M + $77M = $127M

LLCR – A variant of DSCR

Loan Life Coverage Ratio (LLCR) is a ratio commonly used in project finance. The ratio is defined as: Net Present Value (NPV) of Cashflow Available for Debt Service ("CFADS") / Outstanding Debt in the period. Financial modelling of LLCR is now a standard metric calculated in a project finance model and has been standardized to a large extent but always needs to be aligned with local practice of the financiers as described in the transaction term sheet.
NPV(CFADS) is measured only up until the maturity of the debt tranche.
The ratio is one of the aspects used for estimates of the credit quality of a project from a lender's perspective.

Source: Wikipedia

When the best investor in the World visited India

Some of the key takeaways from the interview of Buffet in India for a Credit Person or an Investor.

1.    Understand the Business –

We are investing in the business as a whole. So it is imperative to understand its very nature. Financials are outcome of business activities, they assist in understanding the nature, performance and also the future trends of the enterprise. But barring that, there are other factors which comprise the business – The Nature of the Product(s)/Service(s) dealt in, existing economic conditions, demand in the market, competitive edge etc. Understanding the business is a detailed understanding of all such factors.

2.    Industry knowledge –

Despite Bill Gates being a long-time pal, Berkshire has minimal investment in “IT Sector”. Buffet explains “I did not have any idea about the IT companies. I first met Bill in 1991. He was already a success by then. But I did not have any idea what Microsoft was doing. I did not knew what Google was up to. Hence I remained aloof”. We may not have the privilege to exercise such sectoral preferences. Therefore its crucial for us to research various industries. As Buffet reiterates, “In the 1930s, there were large number of automobile companies in the US. All were experiencing a boom. But few became success stories like Ford Corporation or General Motors. Majority withered away”. Therefore you should know which horse to bet on.

3.    Independence –

An investor’s work is an independent exercise. He/She is not supposed to be guided or coaxed by what others are doing. Like Ajit Jain (Head of Berkshire Insurance wing) explains, “we don’t sign a deal just because other market players are doing. Neither do we reject proposals as our competitors are doing so. Our job demands an independent evaluation”. When the world refused to lay eyes on Coca-Cola, Buffet backed it heavily. Such a conviction can only arise if one takes charge independently. Not that you will be right every-time in your decision-making, but jeopardising independence will surely have fatal consequences on the business of investing.

4.    The importance of saying “NO” –

Buffet opines that the foremost reason why BH has been largely successful is that they have been able to decline proposals which deemed unfit to them. There were huge resistances but they did not budge. Ajit jokingly remarks “There are times when I don’t approve deals for a month. When I inform Warren about the same, he also remarks humorously “I have not done anything for a month either.”. They take every care in ensuring that money doesn’t get drained as poor investment.

5.    Stick to the Basics –

Aerodynamics as well as investing follow a complex structure but the latter does not involve the application of profound intellect. Buffet remarks “You don’t need an IQ of 160 to be in investing. If your IQ is 130, you can sell off 30 with ease”. The analysis is no rocket science but it revolves around the fundamental principles of finance. Compliance or interpretation of the same may be tedious in certain cases but you don’t need anything exceptional to pull it off. So remain confident.