True inspiring story of How This Coolie’s Son Set Up A 100 Crore Company Will Inspire You To Follow Your Dream

P C Musthafa hails from a remote village in Wayanad, Kerala. His father was a coolie, and his mom a homemaker who never set foot in a school. He failed his class 6 and later quit school.

This same boy later went on to graduating from Regional Engineering College (now the National Institute of Technology), Calicut and the Indian Institute of Management, Bangalore. And today, he is the owner of a 100-crore company called ” ID Fresh” that delivers fresh idli and dosa batter to homes in Bengaluru, Chennai, Pune, Mumbai, Delhi, Hyderabad, Mangaluru and even Dubai.

 

Credit: rediff.com

So how did he do it?

Musthafa is the eldest in the house with three younger sister and he failed class 6 because of disinterest in studying. Also he couldn’t have studied anyway because at night there was no electricity at their home, only kerosene lamps.

The boy who had dropped out of school, later went back on the insistence of his maths teacher, Matthew sir. Being junior to his friends, Musthafa felt embarrassed and that fueled his will to work harder. He went on to top his school in class 7 and 10. And after that for the first time, he left Wayanad to pursue a higher education. Since his father could not afford his education, Musthafa survived his college life on the free meal and stay plan by his college. He cracked his engineering entrance exam and went on to study computer science at

Regional Engineering College (now the National Institute of Technology), Calicut.

After job opportunities at companies like Motorola and Citibank, in Ireland and Dubai, he came back to India to be with his parents and to give back to the society. “I sent Rs. 1 lakh in cash to my father through a friend. I was told he cried seeing so much cash in a bag sent by his son. He paid off his debts and started planning my sister’s wedding.” he told Rediff.com

He quit his job to study MBA at IIM, Bangalore. Musthafa’s cousin Shamshuddin had seen dosa batter being sold in plastic bags tied with a rubber band in nearby stores and suggested they make and supply dosa batter. That was an Aha! moment. He invested Rs 25,000 and started the company immediately. And that’s how “ID Fresh” or Idli Dosa Fresh was born.

From selling 10 packets a day to a 100 a day, the company has grown in leaps and bounds since their humble beginning in 2003. At ID Fresh, they make sure to employ people from the rural areas. Their education doesn’t matter as much as their hardwork and dedication does.

To budding entrepreneurs, this successful man has a few words of advice –

If you have the passion to start something, do it immediately. Don’t wait for tomorrow. I had the passion to be an entrepreneur, but it took me a few years make that decision. I still regret the delay. I wish I had started five years earlier.

My words may sound like management jargon, but it is very important to maintain the quality of the product to be successful.

The three things that worked for us were that we were in the right city with the right product at the right time.

Ask yourself this question :
"when will you work for yourself and make yourself rich ?" 

What is circuit limits for stocks in NSE or BSE?

Circuit limit/ daily price bands are nothing but the high and low limits within which the stock orders can be placed for the day. If you try to place order above or below the limit, the order won't be accepted.

In NSE, there are generally 4 types of bands.

2%

5%

10%

20%

Circuit limits of any stock will in one of the above. This limit is decided by the stock exchanges- NSE and BSE

(BSE has different categorisation. However, for individual stocks, the circuit limits in both BSE and NSE will more or less be equal or with negligible differences)

Based on the previous day's close price, the current trading day's circuit limit is calculated.

For eg, 

previous day's close is Rs.55.7

5% above this price is 58.45 which is the upper limit for the current day

5% below 55.7 is 52.9 which is the lower limit.

Hence, the circuit limit for the current stock is 5%

This circuit limit % is constant for the stock and will be reviewed by the exchanges periodically.

Need for Circuit limits:

Circuit limits curb the excessive volatility of a stock. News about the companies are watched by huge number of people and any news will affect the prices of the stock in either way. Some very bad/good news will create panic in the market and the urge to sell/buy will make the stock price go for a toss in either situation.

Generally,stock prices normally consolidate over a price that the market perceives as a   valid multiple of its Earnings per share(EPS). This multiple is what you will see as P/E ratio. Normally the P/E ratio is based on the industry and the expectations from the company.

So when some panic is there in the market, the volatility will affect the price soon before these ratios are calculated and a consensus is created in the market.

This price bands ensure that any erratic order(out of the bands) placed by any trader/investor doesn't get executed and create a sudden drop/jump in the price.

This circuit band is decided by the liquidity(number of shares traded per day) and the current trend in the stock.

If there are excess volatility in a stock, the price band will be reduced to 5% or even 2%. If the stock is a large cap one or blue chip ones, the value will be 10% or 20% as the liquidity of these ones are really high and panic wont affect the stock even with very big news.

Why a circuit hits its limits?

Bad news will create panic pushing many people to sell the stocks. When the panic extends for more time, the stocks price will go down soon and will hit the lower band. Some very good news will create enthusiasm in the market, pushing the price upwards. Prolonged enthusiasm will make the price reach the upper band.

On 22 Jan,2016, due to a bad news Interglobe Aviation(Indigo)'s share price tumbled by 20% and it couldn't go lesser than that. This allowed the market to settle, thus preventing the erosion of the rest investor's wealth.

On 11 Feb,2016, NSE reduced the circuit limit for Indigo to 10%.

As the panic got settled and consolidation started happening, from 11 Mar,2016, Indigo's limit was again raised to 20%

(This band limit change happened for 140 stocks in NSE and 346 in BSE in the same day)

In order to enhance the market integrity and to prevent excessive price movement in the securities listed on its trading platform, BSE as a pre-emptive surveillance measure has an additional framework of periodic price bands in addition to the aforesaid daily price band framework. These additional periodic price bands shall be applicable to securities exclusively listed and traded on BSE Equity Trading Platform including securities listed on SME and SME ITP platform. The periodicity of these price band shall be weekly, monthly, quarterly and yearly and the same is as follows;

Securities with daily price band as	Weekly  Price Band	Monthly Price Band	Quarterly Price Band	Yearly Price Band
20%	+/- 60 %	+/-100 %	+/-200 %	+/-400 %
10%	+/- 30 %	+/-60 %	+/-100 %	+/-200 %
5%	+/-20 %	+/-30 %	+/-60 %	+/-100 %
2%	+/-10 %	+/-20 %	+/-30 %	+/-50 %

In addition to the above, for monthly, quarterly and yearly limits a factor of 200 % of S & P BSE Midcap Index movement shall be applied for taking into account the overall movement in the market to the Monthly, Quarterly and Yearly price band limits. This factor shall be added in the direction of the movement of the index (rounded off to the nearest number) and the threshold of the opposite direction will remain unchanged.  

Illustration: a security having applicable price band of 20 % can move upward or downward upto 20 % in single day. In a week it can move upward or downward upto 60 % whereas in a month it can move upward or downward upto 100 % and so on. Further, if the S & P BSE Midcap has moved up by 5 % in the month, then the upper limit of monthly price band shall be adjusted by 10% i.e.  the upper monthly price band shall be 110 % whereas the lower price band shall remain as 100%.

In the event of any corporate action, the respective price of the security shall be adjusted as per the prescribed process.

Where did the bull and bear market get their names?

First of all, let's remember that bears are sluggish and bulls spirited and burly. The terms are used to describe general actions and attitudes, or sentiment, either of an individual (bear and bull) or the market. A bear market refers to a decline in prices, usually for a period of a few months, in a single security or asset, group of securities or the securities market as a whole. A bull market is when prices are rising.

The actual origins of these expressions are unclear. Here are two of the most frequent explanations given:

The terms "bear" and "bull" are thought to derive from the way in which each animal attacks its opponents. That is, a bull will thrust its horns up into the air, while a bear will swipe down. These actions were then related metaphorically to the movement of a market: if the trend was up, it was considered a bull market; if the trend was down, it was a bear market.

Historically, the middlemen in the sale of bearskins would sell skins they had yet to receive. As such, they would speculate on the future purchase price of these skins from the trappers, hoping they would drop. The trappers would profit from a spread - the difference between the cost price and the selling price. These middlemen became known as "bears", short for bearskin jobbers, and the term stuck for describing a downturn in the market. Conversely, because bears and bulls were widely considered to be opposites due to the once-popular blood sport of bull-and-bear fights, the term bull stands as the opposite of bears.

what is book value per share ?

Savvy investors are always on the lookout for stocks that are not fully valuedor, still better, are grossly undervalued. An important measure of value is the book value per share-total assets minus intangible assets and liabilities divided by the number of outstanding shares. If the price-to book value per share is less than one, it means the stock is trading below its book value.

But does this in itself make the stock a good investment? Not necessarily. For, experts say that the price-to-book value indicates just whether the stock is undervalued or overvalued, and has to be seen with other factors such as the company's earnings record. However, for most investors, it's a good starting point to look for undervalued stocks.

AN INDICATOR

Put simply, book value represents that part of the accounting value of a business that will be left after debts are paid off. You can arrive at the figure by deducting liabilities from assets (he will be left with shareholders' equity). Dividing this by the number of shares will give the book value per share.

"When compared with the market value, book value can indicate whether a stock is overvalued or undervalued. For companies with negative earnings which cannot be valued using the price-to-earnings ratio, the price-to-book value multiple can be used, especially for relative comparison, as the number of companies with negative book value is far less than the number of companies with negative earnings

"It is useful when earnings are low and the price-to-earnings multiple does not reflect the business's true worth. It is especially suited for valuing capital-intensive industries,"

Some big companies that are trading below book values are Tata Steel, Steel Authority of India, Reliance Communications

BUT WHY?

A stock may trade below its book value for several reasons, the foremost being lack of investor confidence in the company's future. If it is widely believed that the company's performance will deteriorate, its stock will possibly trade at a discount to its book value. Another reason could be belief that the company is adopting aggressive accounting policies to bloat its net worth.

SHOULD YOU BUY?

Book value should not be seen in isolation. This is because many companies create revaluation reserves to inflate book value. Many also raise equity at a substantial premium. Investors should adjust for these factors.

Also, in industries such as information technology, where the requirement for capital is low, the book value tends to be low. This does not mean that they do not offer value.

Ideally, while deciding to invest in a capital intensive industry, the investor needs to ascertain if the current market price is less than the assets' replacement cost or book value.