■ TAKING WINGS

ABOUT ME

MY BUSINESS

NUMBER CRUNCHING

ARPIT PARIKH, SOMENDRASHARMA & KUNAL SHUKLA

AdiAnant Greens Private Limited

AdiAnant Greens is a company focused inGreen Rural marketing. The Team consistsof marketing and financial experts all ofwhom are alumni of XLRI, Jamshedpur.

The main idea of the company forGreen Rural Marketing is that solar powerindeed has emerged, but it is not reachingthe final consumer. We visited many vil-lages in Uttar Pradesh and Jharkhand andnoticed that solar powered devices wasstill a distant dream here. We found thatthey are the ones who want it most, andthat they do have the capacity to pur-chase these products. But the issue was alack of effective marketing and distribu-tion channel for the manufacturers of so-lar products.

We at AdiAnant Greens are workingon a rural retail model by opening upAdiAnant Shoppe in the rural areas. Thiswe do with the help of local villagers, inturn creating job opportunities, alongwith gaining the confidence of the othervillagers for these products.

AdiAnant Shoppe is a one-stop modelstore for display, demonstration, market-ing, sales as well as after sales service ofthe various solar products such as solarlanterns, solar fans, solar mobile charger,solar inverters, solar street lights, solarwater pumps, solar water heater andother such useful products.

AdiAnant Shoppe in Shaktinagar,Renukoot, Waidhan and Basti are nowopen. These shops are solving powershortage issues in these villages. Theynow having direct access and are benefit-ing from the abundant solar resources.

Name Arpit Parikh,Somendra Sharma,Kunal Shukla

Age 24, 28, 26Hometown Mumbai, Shaktinagar,

KanpurFamily background First gen entrepreneursMore than 1 company? NoEducation All - Post Graduate

Program in entrepreneurship managementIndividual - CA, AFP,MBA Marketing

Graduated from PGPCEM- XLRIFormer employer Deloitte, Titan,

Adani WilmarFormer designation Audit Assistant,

Business Development,Accounts Manager

Area of responsibility Audit,Marketing,Accounts

Favorite book/movie The First Twenty Millionis always the Hardest

2010 2011No. of employees : 3 7No. of locations : 3 7No. of customers : 16-20 20- 50Turnover : R 12 Till date

lakh R 15 lakhProfits : R 2 lakh Till date

R 3 lakh

The best advice I got...Eat. Sleep. Drink. Think… Business.Have a very clear focus. Your idea might notbe very unique, but it should be somethingthat will have an impact. Select your teamwith great precision, without any bias.

The defining moment…When we opened our first store and whenwe had repeat orders from our customers.It is very satisfying when customers saythat our products have brought about achange in their lives.

What keeps me awakeat night…Business. Business. Business. And how wecan take this idea to the next level

I thought I would give up...There were times when we were not ableto convince people about the technology.They used to come up with questions wewere not able to answer. We workedaround the problem and were successfulthe next time we met them.

My word of advice for others...Do not get into business if: you want to runaway from your job; you want to engagein social service without the thought ofmaking money; you want to spendmore time with your family.

Business should be done with passion,with the objective to earn money. Onlythen can you scale up, attract investorsand after that actually uplift the societywhere you business has made an impact.◆

MY GAMEPLAN

National Entrepreneurship Network, anon-profit organisation that supportshigh-potential entrepreneurs,contributes to this weekly feature

Company Name : AdiAnantGreens

Founded in : 2010Headquartered in : Mumbai,

KanpurCompany : www.

adianantgreens.com

Industry : Green RuralMarketing

Stage of the company : Initial scale-upSource of idea : A visit to the

rural areasconcept doingvery welloutside India

E quity as an asset class isknown to give best returnsover longer period. It doesgive good returns in short

periods as well, as short as single day.However, every game has its own setof rules and equity is no exception.Rules start from identifying the timehorizon and deciding whether one isa trader, investor or just a momen-tum player.

Many people enter the equitymarket thinking that they wouldmake a quick buck riding on somenews or momentum without having atime horizon in mind. However,once the stock they invested in startssliding, they tend to keep increasingtheir time horizon and refrain fromcutting losses. It is dangerous to buy“stocks in news” without regard tofundamentals.

Typically picking up a ‘tip’ andbuying without any information is acommon mistake many investorsend up making. The stock markethas seen excesses in the past wherestock prices are whipped up in frenzyby ‘operators’ after planting newsabout the growth prospects of thecompany. Castles get built in the airand an atmosphere of belief iscreated and it is too late before anunsuspecting investor figures out thetruth about the company.

IDENTIFY THE TYPEEvery individual while entering themarket has to determine the expo-sure s/he is willing to take and thetime horizon s/he would like to investthat money for.

Many entrants into stock marketsare not clear of their risk appetite andthe time they expect to be in themarket. “Rather than taking a disci-plined approach to investing or trad-ing, many times individuals are look-ing to make a fast buck from themarket and this approach lands theminto deep trouble as there is no suchthing as a free lunch, especially in the

stock market,” says Sandeep Nayak,ED & CEO, Centrum Broking.

EQUITY TRADINGA trader has a short term horizonwhere each purchase may be anintra-day trade where the transactionis squared off and profit or lossbooked by the end of the day.

A trader uses the help of technicalanalysis tools to identify the trend inthe stock price and it is necessary todetermine the price upside (or down-side) one is playing for anddetermine a stop loss level. One mustrecognise that technical analysis is nota perfect science and is known to failone at crucial times. It is thereforenecessary to identify a stop loss strat-egy and recognise pattern failures and

accept them and book losses.“A trader or momentum player needsto decide a stop loss level upfrontbefore entering the trade. There is nohard and fast rule and the stop loss isa matter of risk appetite. A rule ofthumb a trader may follow is that thestop loss should be less than a third ofthe gain one is aiming for. For exam-ple, if a trader buys a stock with anexpected gain of Rs 6 then an oppos-ing movement in stock price ofRs 2 should be his or her stop loss,”adds Nayak.

MOMENTUM PLAYERA momentum player identifies anunderlying trend in the price of asecurity and rides the trend as long

as it is profitable and the time hori-zon could be a few days to a fewmonths depending on how long thetrend lasts. “As a momentum player,an investor invests on the assumptionthat a company is ‘hot’. Typicalstreaks do not last beyond 5-10 percent,” says Sandeep Tyagi, MD andCEO, Estee Advisors. Traders andmomentum players trade on bothsides of the market i.e. long and shortside both depending on whether theoutlook for the market or stock isbullish or bearish.

The “trend is your friend” strategyis best adopted by these players withtwo key things to be kept in mind —stop loss must be strictly followedwithout fail and exposures keptunder control — keep taking moneyoff the table when you are winning.

“A common mistake made by mostof the traders is increasing exposuresby ploughing back trading profitsleading to large exposures which canlead to higher losses when themarket whipsaws contrary to expec-tation. About 90 per cent of thetraders/momentum players end uplosing money as they mix emotionsand let their ego influence theirbuy/sell decisions. Exiting timely isextremely important to makemoney,” suggests G Maran,executive director, Unifi Capital.

INVESTORAn investor is in the stock marketwith a long-term horizon intent oncapital appreciation. The dividend

yield is also a relevant considerationbut largely an investor is in the gamefor a reward through handsomecapital appreciation.

According to the experts, aninvestor is likely to get best resultsfollowing a buy and hold strategywith a horizon of three years andabove. Identifying the rightcompanies to invest is a greatchallenge faced by an investor.

Understanding the fundamentalsof the company, judging thequality/competence of the manage-ment and the corporate governancestandards followed by them requireexpert guidance and a good qualityadvisor or wealth manager is a handyhelp in this process of stock selectionand investment.

“A good company tends to grow at15-20 per cent. The market volatility isabout 25 per cent. So your holdingperiod should be at least 2 years insimplistic terms. The stop lossesshould be decided when the lossesare more than the market volatility(so if the market is down 5 per centand your pick is down 10 per cent, netloss of 5 per cent is what shoulddetermine that you exit),” adds Tyagi.

An investor needs to spendadequate time tracking the perfo-rmance of portfolio. It is necessary toreview each company one holds inthe portfolio and ensure that the ratio-nale for purchase still exists. Com-pany performance is available on aquarterly basis and researchers putout updates on the company aftereach result and explain the variationsin performance.

A prudent investor would do wellto at least review portfolio everyquarter and take a call in conjunctionwith an advisor/wealth manager onthe prospects of the stocks.

But before that, do identifywhether you are a trader, momentumplayer or an investor and play by therules, for that should be the first stepwhen investing in stocks. ◆

ritukant.ojha@expressindia.com

LOOK BEFORE INVESTINGCompany Date of High High Close % Change

REL CAPITAL 07 Oct 2010 882.00 344.20 -60.98REL COMM 14 Oct 2010 188.50 72.20 -61.70DLF 04 Oct 2010 397.35 176.10 -55.68JET AIRWAYS 10 Nov 2010 926.35 250.15 -73.00REL INFRA 07 Oct 2010 1,132.00 416.05 -63.25(Source: Centrum Broking)

NAME: RAJAT TALUKDAR, 46RESIDES IN: MUMBAI

PROFESSION: SELF EMPLOYED - ELECTRICAL CONTRACTORN E T A N N U A L I N C O M E

(R18LAKH)OTHER DETAILS: REEMA (HOUSEWIFE),DAUGHTERS -SUCHITRA (14), APARNA (9)

STATUS & GOALSHAVING COME UP IN LIFE THE HARD WAY, RAJAT HAS MOSTLY INVESTED HIS SAVINGS INBANK FIXED DEPOSITS, PPF, INSURANCE AND POSTAL SCHEMES WITH VERY LITTLE EXPOSURETO SHARES OR MUTUAL FUNDS. HIS PRIMARY CONCERN IS TO FUND HIS CHILDREN'S FUTURE

EDUCATION AND CREATE A DECENT RETIREMENT CORPUS.

NEEDEDA financial planthat can guaranteegood returns andalso provide for allhis goals

R65,000NETMONTHLYSURPLUS

PLAN BY: STEVEN FERNANDES,CERTIFIED FINANCIAL PLANNER,

MEMBER OF THE FINANCIAL PLANNERS’ GUILD, INDIA(www.fpgindia.org)

For expert guidance on your financial planning email us your details atexpressmoney@expressindia.com

EXPRESS CLINIC

OBSERVATIONS

Though Rajat has some savings andinvestments he has not diversifiedenough with most of his investments be-ing in debt with very little exposure to equity.His insurance policies also do not provide suf-ficient coverage considering the high pre-mium that he is paying. Rajat needs to reviewhis asset allocation keeping his goals in mind.FINDINGS

EMERGENCY FUND:Rajat maintains R3 lakh in his savings account atall times along with an additional amount of R12lakh in short and medium term fixed deposits

HEALTH INSURANCE:

R 3 LAKHCovered upto R3 lakh through a family floatermediclaim policy

LIFE INSURANCE:

R 15 LAKHcover from 6 different insurance policies

EXISTING INVESTMENTS:Investments have been done mostly in safe av-enues such as FD, Postal, etc with the intentionof using it to fund children's educational needs.PPF is being rightly utilised upto R70,000 peryear for the retirement goal. Other FDs andPostal investments are not providing inflationbeating returns and are also not tax efficient.Only R3 lakh invested in various diversified mu-tual funds as lumpsum investments.

RECOMMENDATIONSEMERGENCY FUND: Presently R3 lakh isbeing maintained in savings account forcontingency purpose which is adequateExpress Tip: Emergency expenses shouldideally be maintained in savings accountwith ATM facility so that you can avail of itduring emergency requirements even afterbanking hours.

HEALTH INSURANCE: Take a super surplusmediclaim policy of R10 lakh with a deductibleof R3 lakh covering the entire family. Premiumoutgo per year will be R8,000Express Tip: Medical costs are on the riseand its necessary to have an adequate coverto prevent oneself from using other savingsto fund medical costs.

LIFE INSURANCE:As per the expense replacement methodthere is a shortfall of R1.8 crore in life cover.This can be covered through pure term insur-ance plans. Annual premium will be aroundR50,000 for online term plans. Make tradi-tional policies paid up and use premium sav-ings towards the new cover.Express Tip: Term insurance is the cheapestform of insurance. Low yield policies shouldbe discontinued only after you have been is-sued the suggested term policy to preventloss of cover during the application stage.

EDUCATIONAL FUNDING FOR SUCHITRA(2018) & APARNA (2023)A SIP of R16,000 in twobalanced mutual fundswith a good track recordfor 7 years for Suchitra,and R11,000 in equity andbalanced funds for 12

years to fund Aparna's higher education.(Rate of return assumed:10 per cent.)Express Tip: SIPs in equity mutual funds arethe best way to invest in equity, which usu-ally beats inflation over longer investmentperiods along with minimising risk.

RETIREMENT FUNDING (2025):Rajat will require a corpus of R3.15 crore atretirement. PPF account needs to be contin-

ued till retirement. PresentFD can be invested in bal-anced funds via systematictransfer plan (STP) andheld till retirement. Investthe insurance surrendervalue of R4 lakh in diversi-

fied equity mutual funds via STP. This and PPFwill yield nearly R 1 crore at retirement. Heshould invest R 59,000 per month in bal-anced mutual funds to bridge the shortfall.He will be short of R 21,000 per month afterallocating the surpluses to children's educa-tion. With rising income the additional sur-pluses can be invested for retirement goal.Express Tip: Retirement planning shouldbegin as early as possible in order to benefitfrom the power of compounding. One canconsider education loans in order to bridgeany shortfall.

CONCLUSION

Assess your financial goals early andallocate accordingly. Medium andlong term goals can be given equityexposure and short term goals todebt investments. This ensuresdiversification, tax efficient returnsand availability when needed.

MONTHLY INCOME (Post Tax)

R1,50,000TOTAL EXPENSES

R85,000

GOALSIN ORDER OF PRIORITY

SUCHITRA'S HIGHER EDUCATION(2018) (inflation at 10%)

CURRENT VALUER 10lakh

FUTURE VALUER 19.50 lakh

RETIREMENT PLANNING(2025) (Inflation at 7%, Life expectancy 85 years)

CURRENT INVESTMENTS

PRESENT RETIREMENT EXPENSESR 50,000

FUTURE VALUER 1.30lakh

CORPUS REQUIREDR 3.15crore

APARNA'S HIGHER EDUCATION(2023) (inflation at 10%)

CURRENT VALUER 10lakh

FUTURE VALUER 31.40lakh

PPF

R6lakhFIXED

DEPOSITS & POST

R12lakhEQUITY

MUTUAL FUNDS

R3lakhINSURANCE

SURRENDER VALUE

R4lakh

TheIndianEXPRESSwww.expressmoney.in

18MONDAY I AUGUST 29 I 2011

yMoneyEXPRESS

■ STOCK MARKET

Play by the rulesof the gameTo make money in the stockmarket, first identify whatkind of investor you are andthen diligently follow therules. Never let emotionsand ego influence abuy/sell decision and keeptaking money off the tablewhen you are winning,says Ritu Kant Ojha

THINKSTOCK