ENTREPRENEUR SPECIAL................... At Debt’s Doorstep

At Debt’s Doorstep 

Debt’s Doorstep is where the dreams of thousands of aspiring entrepreneurs in India are stuck, caught in a grip of loans, equated monthly instalments and other financial commitments,

    In the Mahabharata, Arjuna’s son Abhimanyu knows how to enter the Chakravyuha—a multi-tier arrangement of troops employed by the opposing Kaurava army—but not how to exit it, leading to his death. The starting up ambitions of thousands of aspiring entrepreneurs in India meet a similar fate after being trapped inside the deadly formation of debt and EMIs. For these young men and women, the sleek automobile that was an absolute must-have or the cosy apartment with a fantastic view suddenly do not seem that appealing anymore—the loans taken to buy these “assets” are now the biggest obstacles for executing their entrepreneurial plans. Almost a dozen startups are launched in India every week. But for every startup idea that sees the light of day there are at least four more that remain in the dark due to prior financial commitments of the would-be entrepreneurs. “Equated monthly instalment obligations are the biggest hurdle for a young professional today to live their dream of entrepreneurship,” says Sunil K Goyal, founder and CEO of YourNest Angel Fund. Goyal has personally invested small sums in startups such as mobile engagement platform ZipDial, hospitality software provider Hotelogix and online baby product retailer Hoopos. “Almost daily, we come across young executives who cannot venture into starting up or joining a start-up as their EMIs become a threshold for monthly earnings,” he says. And the biggest culprit is the home loan. About 6.3 lakh crore worth of real-estate mortgage was taken in India last fiscal, according to credit rating firm ICRA. Most of these loans are taken by salaried professionals—the source of the most exciting startup ideas in the country. “The biggest hurdle to my startup dreams was the 40-lakh home loan for an under construction apartment I had taken in 2007,” says Neeraj Biyani, cofounder of Hector Beverages. In November 2010, on the day his daughter was born, Biyani decided to take the plunge. “I requested my wife, who had wanted to quit her job, to continue working,” recalls Biyani, 33. His wife Eeti, working in a NYSE-listed business process outsourcing firm, took charge of even his daily expenses, from her monthly salary of about 1 lakh at the time. “We kept all household expenses to a minimum; we stopped eating out or going for movies.” In four years, Hector Beverages has gone on to build two national brands—its energy drink Tzinga, and a range of traditional Indian beverages, Paper Boat. Hector now sells about a million packs each month totally. Financial planners advise entrepreneurs to be debt free before launching businesses. “Short-term and costly liabilities, such as credit-card debt and car or personal loans, should definitely be retired,” says Pankaaj Maalde, head of financial planning at ApnaPaisa, a comparison site for financial products. “Under construction houses which may take over two-three years to build, should ideally be surrendered.” Swati and Rohan Bhargava, cofounders of discount coupon site CashKaro, decided to forego the dream of owning a house in London, when starting up. “Instead, we started transferring a bulk of our savings into fixed deposits in Indian banks, to build a corpus on which we could live off for a year,” says Swati Bhargava, 31, an London School of Economics graduate and an alumnus of Goldman Sachs. The Bhargavas also pumped about £150,000 of their savings into the startup, and moved to their parents’ home in Gurgaon last year. “We have even delayed having a child,” she says. However, not all entrepreneurs are financially savvy. In 2011, UK-based Explara founder and CEO Santosh Panda, 39, went bankrupt from his humungous credit-card dues. Panda was using his personal credit card to pay the salaries of his five employees and borrowed cash to pay back the debt. “We often meet entrepreneurs who believe in their idea so deeply, that they fund their startup with personal loans, gold loans, or credit card loans. This is dangerously risky,” says Goyal of YourNest, a chartered financial analyst. “Instead such people should get a like-minded investor.” Education loan is another big hurdle. “An education loan of 12 lakh for my PG at IIM-B has become a nightmare, as my startup is yet to turn break even,” says IITian Gandharv Bakshi, 30, founder of Bangalore-based Lumos Design. Lumos Design makes solar fabric laptop bags with an inbuilt battery that gets charged through sunlight. Bangalore-based Lumos was funded last year with about 30 lakh by angel investors such as Google India managing director Rajan Anandan. The funding helps Bakshi to manage his EMI of 20,000 per month. Financial planners also advise taking the early in life. “Starting up is a lot easier when you are single,” says Sai Chaitanya Gaddam, 33, who started Kernel Insights last year. Bangalorebased Kernel Insights offers analytics on a customer’s intentions and needs. It is also prudent to take adequate insurance cover. Something that Alok Bhatnagar, founder CEO of online insurance aggregator EasyPolicy, did soon after quitting his job. “Though, I won’t get the money back at the end of the term, it has given me immense peace of mind.” He took 2-crore term cover at just 25,000 per year premium. “My family will be taken care of if something happens to me,” says Bhatnagar, who started EasyPolicy in 2010. But the most important financial decision for an entrepreneur is to decide the amount of reserve cash a startup needs. “Before starting up, one should build a reserve equal to at least 18 months of household expenses,” says Srikanth Bhagavat, MD of Hexagon Capital Advisors, a wealth management company. The amount should last double the time of the expected breakeven point feel some. Pune-based Shachin Bharadwaj and his cofounder Sheldon D’souza saved 2 lakh between them to start online food ordering venture TastyKhana in 2007. They made a business plan where cash would begin flowing in within two months. “Our plan was woefully short sighted. In six months money hadn’t come in and we had just cash for one week,” says Bharadwaj, now 32. A propitious angel investment of 1 lakh saved them. TastyKhana now aims at revenues of 12 crore by fiscal 2015. As the cash pool dwindles the entrepreneurs need to be realistic. “Once the cash extinguishes, entrepreneurs should get back into a job, build reserves and start all over again,” says Bhagavat of Hexagon Capital Advisors. “Remember, you might have lost the battle but you do not want to lose the war.” Golden Rules of Money Management

Pre- startup Phase

Prepare the family to get in the bootstrapping mode for 2 years Build a reserve equal to about 18 months of household expenses, which should include groceries, utilities, fuel, rent, school fees, medical expenses (see pie chart) Build a reserve towards capital contribution for your business If you do not already own a home, plan to move in with your parents or in-laws! Build a financial plan to figure out how much of your savings is to be kept apart for critical family goals like children’s education Better to know when to call it quits, get back into a job or assignment and build reserves to start all over again

Startup Phase

Do not assume that you will be able to draw a salary till the venture is funded
Keep 12 to 18 months household expenses in a liquid fund
Do not take on systematic investment plans till you draw a salary
The house you live in should be mortgage-free and the provident fund must remain untouched
Keep company and personal funds / accounts separate.
If your venture gets funded, keep it in liquid cash.
Be thrifty, avoid spending on lifestyle.
Try working out of a less expensive city

Share resources and space with other entrepreneurs

Tips and Tricks

Take Insurance
Buy Term Cover for yourself ( 1 crore cover costs just 15,000 per annum) Insure yourself and dependents adequately Get adequate medical insurance for parents before quitting your job, or before they turn 60 Insurance firms charge very high premia (upto 50,000 for a 2 lakh cover) for parents above 65 years Set aside a pool (at least 10-12 lakhs) for their exigencies

Go Debt-free
Aim to retire all debt before starting a venture Pay off all auto, personal loan and credit card debts before starting up Increase limit of credit card before you quit your job, for emergency use Never mortgage the house you live in to raise funds for business

Renting is Better
Home loan tenures extending till 20-30 years eat up precious working years, when a person can pursue his entrepreneurial dreams Rentals are 2%-3% of residential property costs in Metro Cities It’s much cheaper to live on rent in a CBD than pay EMI to buy it If you are a property owner, letting it out on rent, may never cover the cost of its EMI Investing proceeds of an exit, in another venture may give better returns than using it to buy another property

Fix the Loan
If it is an under construction house and may take 2-3 years, sell it rather than wait. If you are staying in the house that is mortgaged, plan a contingency fund to pay EMIs Get your spouse to manage mortgage payments for at least 2 years. Determine the break-even point, and start saving a pool of cash for EMIs till that point. If property prices are stagnant, it is better to sell than pay an EMI on them.

SOME NAMES
Shachin Bharadwaj, cofounder, TastyKhana In 2013, a few months after Shachin Bharadwaj, cofounder of TastyKhana got married to banker Shweta Ramesh, they thought of buying a home. On realising that they would need to make a down payment of 10 lakh, Bharadwaj shelved the idea. But not his wife. “Every month she would ask me for some money for some expenses or the other,” recalls Bharadwaj. However, instead of spending it Shweta put that money and more into savings. By end of the year they were able to make the down payment of 10 lakh. “Thanks to her we have a home now,” says Bharadwaj.

Neeraj Biyani, cofounder, Hector Beverages Neeraj Biyani was able to start up as his wife Eeti dropped her plans to quit her job after their daughter Kanushi was born in 2010. Until 2012, most of their salaries went into paying a monthly home loan EMI and repaying a 10-lakh loan taken from Neeraj’s family. In 2012 post-funding, the four founders began drawing salaries to meet just the basic expenses. Neeraj’s first investment was a child savings plan to take care of Kanushi’s education. “I prefer equity investments, but I wanted a safer plan to ensure my daughter’s future was taken care of.”

Swati and Rohan Bhargava, cofounders , CashK aro Entrepreneur coupl e Swati and Rohan Bharg ava quit their jobs in London to start CashKaro, an India focused discount coupon site for e-commerce purchases. “We became extremely cautious on what holidays we take and where we spent our savings,” says Swati Bhargava, 30. The couple even delayed buying a house or having a child, to focus solely on the startup. “A house in London would have meant sacrificing our risk-taking years to pay for the mortgage,” adds Swati, an ex-Goldman S achs associate.

 Harsimran Julka and Radhika P Nair ET140124

JOB SPECIAL................. 5 ways to prepare for appraisal

5 ways to prepare for appraisal  Appraisal conversations, besides being the most anticipated, can leave one tongue-tied. But some amount of preparation and research can assuage employee anxiety 1 Gather Data One of the problems with Indian appraisees is the sheer absence of data collection before appraisals, says P Thiruvengadam, senior director, human capital at Deloitte. “Professionals must take stock of KRAs or other essential performance records before heading to an appraisal chat. This can help remove biases,” he says. 2 Understand your Manager   Understand and make an attempt to anticipate the manager’s questions, expectations and requirements. “Talking to fellow employees or people who might have been appraised by the manager before the discussions can give an idea of the manager’s mind map and conversation style and what he or she seeks from juniors,” says Thiruvengadam. If one has been appraised by the manager before, one can refer to notes of one’s experience from the previous year. 3 Maintain Regular Contact  Show employees the ‘big picture’ of the organisation. Share the good news as well as the bad. “Create visibility, use plain speak, talk about the challenges and explain what you are still trying to figure out in an open and transparent manner,” adds Madappa.   4 Highlight Work Since the manager’s performance and KRAs are closely linked to the employee’s, Thiruvengadam says one of the most powerful tools to engage the managers is to have a conversation on work matters or projects that would have impacted the team’s or manager’s individual performance in a positive way. “Subtly highlighting such aspects can help one gain a positive impression for the work done for the team,” he says. 5 Emphasise Skills The emphasis on behavioural skills will gain greater significance in the future, says Tarun Katyal, chief human resources officer at MTS India. “Many global reports are suggesting how performance targets are going to be enhanced and many of these professionals may end up landing far more complex roles and assignments,” he says. It is important to emphasise how one gets the work done. This could about networking or getting the team together — there is a greater emphasis on how targets were achieved, he adds.

Anumeha Chaturvedi. ET140121

WOMEN SPECIAL …..WOMEN IN CHARGE ...Sunita Sharma

WOMEN IN CHARGE  ‘Never feel that you are different from men’     She dislikes being labelled a ‘woman’ achiever. But Sunita Sharma is the first woman to head LIC Housing Finance (LIC HFL), the country’s second-largest mortgage lender in which Life Insurance Corporation (LIC) controls a 40% stake.     However, she points out with some obvious satisfaction that today women are climbing the corporate ladder more in India than abroad.     “We should never feel that we are different from men. We have to stand shoulder-toshoulder with men,” says Sharma, who will have to transform the housing finance lender into a bank if its application were to be approved by the Reserve Bank of India. Sharma believes that LIC HFL has the operational efficiency and brand legacy to become a full-fledged lender and the task doesn’t seem to daunt her one bit.     Sharma joined LIC as a direct recruit officer in 1981 and has since grown with the company, helping it boost business. In 2008, Sharma was made head of Pension & Group Schemes (P&GS), a portfolio that she grew from Rs 70,000 crore to over Rs 2 lakh crore in her four-year stint. Today, the P&GS business is almost as big as the individual cover business of LIC and contributes 50% of all new business income as against 15% in 2008. Sharma, however, refuses to rest on her laurels and is reluctant to even talk about them. Her focus now is LIC HFL and she says LIC was her past. Sharma, who took over as MD & CEO of LIC HFL last November, says that success can’t be achieved alone. “It has to be team work and people have to believe in you and respond to you.”     She prides herself more as a team player than as an individual achiever and believes in the power of human potential to scale up any business.     Sharma, who has a master’s degree in science from Delhi University, believes that hard work alone is what puts a person on the path to success.     “I don’t remember a time when I was not treated equally because I was a woman. On the contrary, people would often laugh and say, ‘why can’t people think like you, like a woman’,” recollects Sharma, the only time that she in some way credited her own achievements.     Having worked for three decades and held positions in the diverse fields of marketing, personnel and HR, finance and accounts, risk management and equity research, Sharma is a strong advocate of people taking responsibility for their own decisions, especially in matters relating to work-life balance.     “If you decide to take care of your home because it is not possible to manage both home and work, then be happy about it. If you are able to manage without being at home for long and are able to devote more time to office, be happy about that too. But if you are going to carry a guilt, that you neglected your home for office, then don’t work,” she says. Anshul Dhamija TOI140120

GADGET GIZMO REVIEW................... Karbonn Titanium X

GADGET GIZMO REVIEW Karbonn Titanium X  PRICE 18,490/ SPECIFICATIONS   5-inch (1920 x 1080 pixels) IPS, 1.5Ghz quad core, 1GB RAM, 16GB storage, 13MP rear + 5MP front camera, WiFi, NFC, Android 4.2, 2,300mAh battery, 143 grams Ergonomic design, smart looks, full HD display, NFC connectivity Non expandable storage, sluggish camera, average battery life With the Titanium X, Karbonn has launched its first Android smartphone with a full HD display. Plus, it is also one of the few mid-range phones to offer NFC connectivity. It has a unibody design and an ergonomic curved back panel. The curve makes the phone easy to hold and provides a good grip. But it also makes the phone appear fat and at 143 grams, it feels bulky compared to similar offerings from competitors. The 5-inch IPS display on the Titanium has a resolution of 1920 x 1080 pixels and offers great viewing angles. The screen is bright and sharp but excessive reflections on the glass did detract from the overall experience. Also, the display is raised above the smartphone body instead of sitting flush — while this does not impact the performance, the phone feels thicker as a result. Titanium X has dual cameras — 13MP rear with dual LED flash and 5MP front. However, we felt that both cameras were a letdown. The rear camera is sluggish (lots of shutter delay) and focusing distance is poor. The front camera works fine for self portraits, but images are too noisy. The saving grace is that the rear camera records smooth, full HD video with acceptable quality. The speaker output is good for personal listening while the voice call speaker is loud and clear. The 2,300mAh battery lasted for a single day with calls, social networking, photography and multimedia — about as much as we expected. Although this a good device for the price, Karbonn’s flagship is a bit late to market when compared to competition. Consider the Intex Aqua i7 — for the same price, it has a full HD display, 2GB RAM and 32GB internal storage. KARAN BAJAJ ET140120

FOOD/ HEALTH SPECIAL ................Diet against disease

Diet against disease 
 

In addition to keeping extra kilos at arm’s length, there are some diets that also work at fending off illnesses. Here’s the master list

    While dieting is often thought of as the quickest way of shedding all those unwanted kilos, the result of a trim frame isn’t the primary goal of all diets. Some diets are specifically designed at bettering your overall health, like these five, say experts.
DASH DIET
DASH stands for ‘dietary approaches to stop hypertension’. Much of the eating plan is intuitive and based on a balanced meal rich in fruits, vegetables, low-fat dairy products, whole grains, fish, poultry, beans, seeds and nuts (pretty much encompassing the Indian meal plan). It contains less sodium, sugar, fats and red meats. Although nutritionists haven’t come up with any special recipes, the daily caloric intake and the number of allowable servings should correspond to a person’s age and level of physical activity. The blood pressure reduction can happen as early as two weeks into following the diet. The DASH diet, in combination with exercise, can reduce systolic blood pressure by 16 points and diastolic blood pressure by 10 points, the study showed. Another 2010 study by Johns Hopkins University researchers showed that the diet can also slim the estimated 10-year coronary heart disease risk by 18 per cent for individuals with pre-hypertension or stage-1 hypertension.
LOW-GLYCEMIC INDEX DIET
The glycemic index diet focuses on consuming the right carbohydrates to keep your blood sugar levels balanced. In this plan, the carbohydrates that can lead to a rapid increase in blood sugar levels should be avoided. Foods that are emphasised include lowglycemic index rye breads, large flake oatmeal, oat bran, parboiled rice, quinoa, beans, peas, lentils and nuts. People are also encouraged to eat plenty of fruits and vegetables, and few potatoes. Although a diet of low-glycemic index foods is the basis of many weight loss plans, the diet has a more significant impact on patients with Type 2 diabetes or prediabetes. Not only can the diet help control blood sugar levels and reduce overall diabetes risk, it can also increase highdensity lipoprotein (the ‘good’ cholesterol) and reduce overall cardiovascular risks. In fact, in a randomised clinical trial published in the Journal of the American Medical Association in 2008, in which 210 people followed the diet for six months, the diet was shown to be more effective at controlling blood sugar levels than a high-cereal fibre diet consisting of ‘brown’ carbohydrates like whole grain breads, whole grain breakfast cereals, brown rice, potatoes with skins and whole wheat bread.
VEGETARIAN DIET
According to the American Heart Association, studies have shown that vegetarians seem to have a lower risk of obesity, coronary heart disease, high blood pressure and diabetes. Most vegetarian diets, even ones that include eggs, often have less saturated fat and cholesterol and more complex carbohydrates, dietary fibre, magnesium, folic acid, Vitamin C and E and carotenoids than diets that include meat. Concerns that a vegetarian lacks protein and essential vitamins can be addressed by including dairy products like yoghurt, paneer and ghee as well add lots of lentils in your meals.

LOW-GLUTEN DIET OR GLUTEN-FREE DIET
Gluten is a type of protein found in grains like wheat, barley and rye. Diets that limit or eliminate gluten are often prescribed to patients with celiac disease, in which the immune system responds to gluten by irritating and damaging the small intestine. This prevents the body from absorbing important nutrients such as vitamins, calcium, protein, carbohydrates and fats.
    A gluten-free diet can have a variety of health benefits, such as improving cholesterol levels, promoting digestive health, and increasing energy levels, if you have a gluten intolerance.
    Apart from avoiding wheat, barley and rye, people who follow a gluten-free diet have to omit many breads, pastas, cereals and processed foods from their diet.
    Although there are claims that a gluten-free diet can lead to behavioural improvements for people with autism, so far there is no evidence-based research that supports them. Most of the foods you consume as part of a glutenfree diet may also promote healthy weight loss, especially if you eat a well-balanced diet that contains essential protein, carbohydrates, and fat.  

KETOGENIC DIET
Note: This diet is not for everybody. In fact, this highly specialised and carefully balanced diet is meant for people with epilepsy (especially children) whose seizures have not responded to medicines.
    Those on the diet adhere to a very specific ratio of fat, carbohydrate and protein: around 80 per cent fat, 15 per cent protein and 5 per cent carbohydrate.
    Meal plans are patient-tailored and can include heavy cream, bacon, eggs, tuna, shrimp, vegetables, mayonnaise, sausages and other high-fat and low-carbohydrate foods. Patients should not eat starchy vegetables and fruits, breads, pasta or sources of simple sugars. Side effects include constipation, dehydration, lack of energy and hunger. The diet, though unconventional, is effective at controlling epilepsy. One clinical trial published in The Lancet in 2008 showed that children on the ketogenic diet reduced the number of seizures they suffered by more than a third, compared with children not on the diet. On top of that, 28 out of 54 children on the diet suffered 50 per cent fewer seizures, and five children had better than 90 per cent seizure reduction after staying on the diet for three months, the study showed.

MM140120