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.

Having a bad day in the stock market ? Meet the forgotten Apple founder who missed out on $35 BILLION after selling his shares for $800 in 1976

The unluckiest man in the world: Meet the forgotten Apple founder who missed out on $35 BILLION after selling his shares for $800 in 1976

• Ron Wayne was one of the original founders of Apple
• 
  
• He sold his shares for $800 in 1976 - today they'd be worth $35 billion
• 
  
• Wayne left Apple because he found Jobs difficult to work with
• 
  
• He describes Jobs as stubborn, cold and argumentative

Ron Wayne was one of the three original founders of Apple in 1976, along with Steves Wozniak and Jobs. Forty-two at the time, Wayne provided much-needed adult supervision in a company of young creatives.

Wayne drew the first Apple logo, wrote the three men's original partnership agreement, and wrote the Apple I manual, but his name is virtually unknown, and in the Ashton Kutcher biopic of Steve Jobs, his role in the tech giant's past is glossed over. 

Wayne, 79, hopes Jobs will reveal that the late design genius' darker side - a side Wayne clashed with and which eventually resulted in him selling his share of Apple for $800.

Wayne founded Apple Computer alongside 21-year-old Jobs and 25-year old Steve Wozniak on April 1, 1976. The three worked together at Atari.

Not even two weeks later, Wayne relinquished his 10 per cent stock share of the company for just $800. Had he retained his company shares, they would be worth $35 billion today.

'I made a decision that allowed me to pursue my interest. I honestly don’t regret walking away at all,' Wayne said.

'I knew the Wozniak design for a personal computer was going to be a successful product. But who could have anticipated it would be what it is today?

'If I had stayed with Apple and accepted the limitations on my philosophy of life I could have well ended up the richest man in the cemetery. I was in my 40s, these kids were whirlwinds. It was like having a tiger by the tail.'

The face-value trap

Consider this: Suppose you are planning to invest in stocks and if you had to choose between shares of two equally good companies from a particular sector, one priced below Rs 100 and the other at Rs 500, which one would you pick? Common sense will dictate you opt for the first one simply because it’s cheap compared to the second one. There lies the pitfall: what looks cheap at first sight may not actually be so. The first company could well have a face value of just Re 1 compared to Rs 10 for the latter. Most investors end up getting the raw end of the deal simply because they do not bother to check the face value of their stock or simply take it to be Rs 10. Out of 5,228 listed stocks, 4,600 have a face value of Rs 10. In other words, one out of every 10 stocks has a face value of less than Rs 10. No surprise then, many small investors face the brunt of this simple miscalculation.

Lookalikes That Aren't
1. Two equally-priced stocks in the market can have very different face values, or vice versa
2. Retail investors often tend to ignore this fact when making price comparisons
3. Face value of your stock is mentioned in nearly all investing websites, including BSE
4. Experts, including those on SEBI panels, argue for making face value uniform across all stocks

Indeed, it’s a growing problem as more small investors warm up to investing in equities. Retail investors usually buy stocks in small quantities. Often, they compare the stock price a company to the price of its peers and make buying decisions. This can sometimes prove disastrous. Let’s take real examples now. Infosys Technologies, Tata Consultancy Services (TCS) and Wipro have different market values and are among the top-tier software companies. Investors would be tempted to compare their stock prices of Rs 1,212, Rs 2423, Rs 557 respectively (as on April 22) and conclude that TCS is more than four times expensive than Wipro, or that Infosys is the second-cheapest stock.

In reality, that’s just not the case. If you adjust the face value of these stocks to their market price, there’s a remarkable difference. Infosys’ adjusted stock price is just 2.1 times more than Wipro, and TCS, it turns out, is actually the most expensive stock. That’s because Infosys has a face value of Rs 5, TCS Re 1, while Wipro’s at Rs 2.

Although, investors should study other parameters like earnings per share and growth potential to arrive at an investing decision, retail investors usually make a price comparison first. At first glance, at its price of Rs 557, Wipro might appear to be more than 100 per cent cheaper than Infosys, but in reality Wipro is 10 per cent cheaper. Such confusion is rare at the institutional investors’ end. Experts like Prithvi Haldea, Chairman & Managing Director, Praxis Consulting, have been calling for a uniform face value for shares. “Face value is not an issue for well-informed investors and institutions. But it is for the small investor who buys at market price, and not at the real value. There should be a uniform face value so as not to confuse him,” he says.

It’s not as if no effort has been made at the policy level to address this issue. In the early ’80s, the Ministry of Finance came out with a guideline fixing the face value of shares in the denominations of Rs 10 and Rs 100 to sort the maze - the Tata Steel share then used to have a face value of Rs 75 while it was Rs 125 for many Ahmedabad-based companies. Since many companies then chose to have a face value of Rs 10, this stuck on most investors’ mindset.

In fact, in 1999, the Securities and Exchange Board of India (SEBI) briefly toyed with the idea of completely doing away with the concept of face value of shares, taking a leaf from the US where companies only have a specified number of shares that change in the event of bonus or rights issues. However, in June 1999, SEBI in a bid to broaden the investor base allowed companies to fix their own face value subject to a minimum of Re 1. Since then, companies have had varying face values. For instance, RPG Life Sciences has a face value of Rs 8, while it’s Rs 4 for IGate Global Solutions. This has led to further confusion at investors’ end.

Companies since then came out with initial public offerings at a face value of Re 1 and other denominations depending on the market conditions. Companies also split their shares to improve liquidity, increase demand of theirmosimage shares from the retail investor and improve the company’s valuations. Says Rajesh Krishnamurthy, Managing Director, iFast Financial, an integrated wealth-management solutions company: “The general reaction from the Indian investor has been to buy more if there is a split. So, a stock split most often leads to an upswing. But a stock split is akin to giving someone a Rs-100 note and asking for two Rs-50 notes. Investors tend to behave as if the two Rs-50 notes are more valuable than Rs 100. But it isn’t logical, is it?” A concomitant area of confusion for investors relates to dividends. Companies so far had been declaring dividends as a percentage of their face value. SEBI recently issued a notification that companies must declare dividends in rupees and not in percentage format. For example, assume company XYZ’s face value is Rs 10 and it declared a dividend of 1,000 per cent last year. From now on, if it maintains the same dividend rate, mosimageit should report dividend per share as Rs 100. This step will help investors know what is the actual dividend received in their hands. But Haldea contends that this will further confuse lay investors. For example, when a company declares a dividend of Rs 100 on a face value of Rs 100, it is the same thing as a dividend of Re 1 on a face value of Re 1. That’s where the confusion lies. “Small investors will not be able to distinguish between the face values and then compare the dividend per share. Further, it will mean more calculations to rework their percentage values,” says Haldea.

Financial advisors are all for having uniform face value (UFV), say, of Re 1, which used to be the case in the ’90s. Says Krishnamurthy: “I am all for UFV. It brings absolute clarity in determining returns and simplifies comparison of any scrip, any dividend declared.” But implementing the same might get a tad difficult. There are many stocks with a face value of Rs 10 that are trading at prices that are in single digits. Says Amar Pandit, a financial planner: “It’s good to have a standard face value, but I am not sure whether it can be practically implemented.” The world over, too many countries follow a standard practice to standardise comparison among companies.mosimage

In the complex world of financial products, it just does not get any simple for the retail investor. If all goes well and if the uniform face value becomes a reality, then things might get a little easier. For now, it’s always better to do your homework before buying a share, and the best place to start is by knowing your company’s face value and how it affects the finances of your company. Another area to focus on is to compare the dividends paid to the face value. This will determine what the company is paying to you. You can also compare it to the market price of the stock, to find your investment’s true dividend yield

True inspiring story of a physically challenged lady trader who made 6 lakh in a single day

Sujata Burla’s life took an ugly turn on June 9, 2001. On a pilgrimage to Shirdi, where the Sai Baba temple in Maharashtra is located, from Hyderabad, she met with an accident.

Four months later, the doctors and physiotherapists treating her told her she could not walk for the rest of her life. The accident had turned her into a paraplegic. It meant Sujata was immobile below the shoulders. She was just 21.

Soon people who she thought were her friends abandoned her and Sujata was left alone. Compounding her tragedy was her father’s death in March 2004. Not one to be easily cowed down by her circumstances, she started learning about the stock markets that year.

Now she trades like a pro and earns anywhere between Rs 200,000 and Rs 250,000 every month. On a day like Wednesday, September 19, 2007, when the Nifty was up 186 points, Sujata made a cool Rs 600,000 in a single day. She has still not sold her position.

“I expect the Nifty to touch 4800 in the next two, three trading days. I will sell my position then,” Sujata told this correspondent in a telephone conversation from her home in Hyderabad.

Sujata moves around in a wheelchair and does not regret this fact. Financial independence is what she strove for and that is exactly what she has got through sheer determination and discipline.

How do you cope with such a trauma?

Before, I could not even write or type. Now I have got used to it. I can easily type and trade on my computer and laptop.

In the first four months after my accident I did not even know I would never be able to walk again. I went into a depression feeling that this was the end of life for me.

Does your condition make you dependent on others?

I am the kind of person who doesn’t like to depend on anybody — whether financially, physically or mentally. So, it was very tough for me to physically depend on somebody. I soon realized that financial independence could get me much more freedom in life.

So I started thinking how I could earn money. I worked with my sister, who is a fashion designer, and learned a bit about it. I soon started a textile workshop where I employed 10 people. However, the workers took undue advantage of my physical disability leading to losses. I closed my workshop and moved towards stock market trading.

How did you get into the stock markets?

I realized that if at all I have to succeed in life I would have to do something for which I don’t have to depend on anybody. Through a friend of mine I came to know about the stock markets in 2004. It took me almost a year to understand the various nuances of the stock market and it was in 2005 that I actually started trading.

What was your first trading/investment experience like?

My first investment was in blue chip companies like Reliance Industries, Hero Honda, ACC and IDBI. However, the Rs 100,000 that I invested did not earn me any returns. It was my first investment and I did not know when to sell or the right time to sell my stocks. That learning experience helped me to hone my skills in the stock markets.

How much do you make from trading in stocks now?

My turnover for a month is over Rs 3 crore. But my actual investment is only Rs 15 lakhs. I make anywhere between 10 to 15 per cent per of this investment per month. It is like I earn 20 to 30 per cent sometimes and lose 10 per cent at other times. This takes my average monthly return to 10 to 15 per cent every month of my total investment of Rs 15 lakhs.

Could you share your success mantras for our readers?

* Read all the advice that you get from various business television channels, newspapers, friends who understand the stock markets but be extremely cautious and disciplined when you act on this advice.
* Never extend your trading bets beyond your means. I speak to my friends; get investment and trading ideas from my brokerages (she is registered for online trading with Reliance Money, Indiabulls and Kotak Securities).

How would you identify yourself as a stock market player?

I am a short-term trader; I am surely not a long-term investor.

Do you trade intra-day?

Well, if my bets appreciate considerably then I take home my profits on the same day. Otherwise, I wait for my investments to bear at least 7 to 8 per cent returns before I actually sell it.

Intra-day trading, though, is very risky as most traders tend to burn their fingers trying to time the market. And I have lost quite a bit of money trading intra-day in the cash market, believe me.

How much have you deposited with all these brokerage companies?

As I told you earlier, my total deposit with all the three brokers is Rs 15 lakhs. Using this amount I buy Call Options within my overall limits. There is no concept of margin money in options. Whatever money I have earned till now is only through Option trading. You can do risk-less trading in Options using a small amount.

As a safe strategy I never write a Put Option. Put Options are very risky. That way I am a very safe trader. In Puts I can even make 50 per cent a month on my investments; but then I can lose the same amount too. My principle is if I make money I make it; I shouldn’t lose money at all.

I usually write a Call Option on the Nifty. I am always long (buying first and then selling at a higher price to make profit) on the markets and whenever the market is too overbought I wait for the markets to cool down.

The last two days turned out to be very good for the stock markets. How much did you make in these two days?

Actually, it is celebration time for me. I made 80 per cent returns today (September 19, the Nifty was up 186 points or 4.09 per cent). Most of the Nifty Calls went up by 80 per cent today. However, I did not invest the entire Rs 15 lakhs because I am sitting on a bit of cash as the markets have run up too fast in the recent past. I invested only 50 per cent of Rs 15 lakhs on which I made an 80 per cent return (Editor’s note: That’s a cool Rs 600,000; don’t rub your eyes in disbelief; you read it right!).

However, there are times when I lose a big amount of money in trading. Such gains happen only once in a lifetime. The losses that I make during the year sort of offsets such gains.

But remember that these things don’t happen every other day. I have still not booked my profits. I am still holding on my positions. I plan to sell them after a day or two because I feel that the markets can still go up — at least for the next two, three days — based on the strong momentum. I am expecting the Nifty to go up to 4800 at least.

Actually, the target given by one of my brokerage houses is 4900 but I am going to book profits at 4800 levels. Too much greed is also not good, is it?

Moreover, it is the festive season and Diwali is just round the corner. Normally, the markets go up during Diwali. There will be some profit booking (a situation when a trader sells her/his stocks at a profit) tomorrow and the day after that but the general mood is likely to remain bullish till Diwali. I don’t expect a market crash or correction till Diwali.

Do you stay with your family?

I stay with my mother and cousin Priya. My father passed away on March 20, 2004. I have a sister and two brothers but they are all married and lead separate lives.

Do you have friends?

Before the accident I had many friends but they all ran away after my accident. They were all false friends. People like this go where there is money, success and happiness. People like these don’t chase failures.

After my accident I have a different set of friends. I have a few friends now but they are my true friends. They have been with me through my bad times. They really care for me.