Times Group boss Vineet Jain paid himself about Rs 50 cr as remuneration in FY14 and gave truckloads to others too

Charity begins at home, some say. Veritable media mogul Vineet Jain, 50, who holds the position of Managing Director in Bennett, Coleman & Company Limited (BCCL), literally laughed all his way to the bank in fiscal year ended March 2014 after he got an extremely fat, (no, almost obese), remuneration.

'Jain Zen'

26 years into country's largest mass media company, Vineet has made a name for himself for many things but most of all for "steering" BCCL into the money way. Running an ever-expanding business is no child's play and he has done that, I dare say, with elan! In 2014, he finally paid himself one of the biggest salaries in Corporate India history. He paid himself an eye-popping Rs 463,767,952 (Rs 46.37 crore) as remuneration in this year!

My wife, a journalist herself, says what's the big deal in this? "He practically owns the company along with his brother Samir. It publishes The Times of India, kumar. THE TOI, ET, NBT...," she reasons. Nevermind, I am still in awe.

This Rs 46.37 crore remuneration means every day that Mr Jain, who has a MBA in Marketing, spent in FY14 was billed at a staggering Rs 13 lakh for whatever he gave the firm. I can't even earn that amount in one full year. Every day, Rs 13 lakh. For 350 days. Fantastic!

Unlisted Bennett, Coleman & Company Limited (BCCL) as you know is primarily engaged in the business of publication of newspapers. It publishes the highest selling English broadsheet daily in the world, i.e., The Times of India. Apart from this, the company publishes newspapers like The Economic Times, Navbharat Times, Maharashtra Times, etc. It also houses television channels zoOm, Times Now and ET Now. BCCL has subsidiaries which are engaged in the areas of internet, e-commerce, radio, television, out of home, etc.

Let me explain the reason behind my long-lasting awe. From what I gather, BCCL made about Rs 5,700 crore in FY14 year with about 821 crore in net profits. Mr Vineet Jain, by that measure, all by himself got about 5.5 per cent of the company's bottomline. At the absolute level, this Rs 46.37 crore remuneration ranks with the best of the best of the best of the best ...

SAP old hand and now CEO of Infosys, Mr Vishal Sikka thought (and we all did) landed a great deal with Rs 30 crore pay packet with India's most loved IT company. Mr. Anil Manibhai Naik of Larsen and Toubro got about Rs 21 crore in a year. Sun Group promoter and chief executive Mr Kalanithi Maran got Rs 56 crore. Kumarmangalam Birla, who lords over the Birla empire, also got Rs 50 crore. So you see, Mr Vineet Jain is right up there. In that August company of rich men...

Comparisons of Jain's pay with others in the 'Media' industry are virtually pointless. A true Goliath among dwarf davids. India Today Group CEO Ashish Bagga got about Rs 4.4 crore as pay packet last year. BCCL CEO Ravi Dhariwal took home a whopping Rs 11 crore in FY'13 financial year (including performance pay), CEO Rajiv Verma of HT Media earned Rs 4.68 crore in 2012-13 while newly appointed CEO Of Kasturi & Sons CEO Rajiv Lochan is contracted to earn Rs 1.75 crore. Clearly, Mr. Jain is the big daddy when it comes to earning big bucks. He is the undisputed King of kings!

Jain had got Rs 14.90 crore in FY'13 and Rs 14.57 crore in FY'12. What exactly led to his remuneration rising manifold this year is not clear. However, a large part of his Rs 46.37 crore could be in form of 'commissions'. No idea what that was for. If any of you do, give me a shout.

There Are Others

Last year -- that is in FY13 -- the highest paid in the firm was Indu Jain, BCCL, Chairperson -- mother of Vineet and Samir. She was paid Rs 15.56 crore for the period 1st April 2012 to 31st March 2013. This appears to be marginally higher than Rs 15.45 crore paid to her in FY'12. In FY14, the 78-year old Sahu Jain family matriarch received about Rs 155,257,652 = Rs 15.52 crore.

For three years running (atleast), she appears to have adopted the mantra of India's wealthiest man Mukesh Ambani. Reliance Industries Chairman Mukesh Ambani kept his annual salary capped at Rs. 15 crore for the sixth year in a row even as the remuneration of key executives went up. Mr. Ambani has kept salary, perquisites and allowances and commission at Rs. 15 crore since 2008-09, foregoing almost Rs. 24 crore per annum.

Coming back to Samir Jain , the eldest son of late Ashok Jain. The 60-year old, also the Vice Chairman and MD of BCCL, got good money as well in FY14. Clearly, the brothers struck a pot of gold in 2014, the year which will be remembered for having been the stage for Mr Narendra Modi storming to power at the Centre as PM on the back of the strongest mandate from the public in last 30 years. Many, not just me, feel big media played the role of a second fiddle too well in getting Mr Modi at 7 Race Course Road.

Samir took home Rs 375,142,883 or a staggering Rs 37.51 crore as remuneration. The chief architect of BCCL in 1980s, Samir -- famous for being the more spiritually inclined between the two brothers -- had got Rs 15.17 crore in FY'13 against Rs 14.82 crore in FY'12.

The youngest member of the Jain family Trishla Jain, an artist who held the post of executive director, had received Rs 3 crore in FY'13 compared to Rs 2.8 crore in FY'12. In FY'14, thirty something Trishla got about Rs 2.7 crore. About the same in the previous two years. Eleven years into BCCL, Samir's daughter is said to have played a key role in business development. Trishla resigned from company directorship from March 31, 2014.

Satyen Gajwani, Trishla's husband, got about Rs 51 lakh but this doesnt reflect a full-year's pay.

So, all in all, the Jains got over Rs 100 crore as remuneration from BCCL in the fiscal year that has gone by or about 12 per cent of bottomline. The 'family' was paid about Rs 50 crore in FY'13 or loosely 6.5 per cent of standalone profits. Clearly, the rich haul in 2014 is not just from remuneration. The directors recommended a dividend at the rate of 6 per cent (Rs 17.22 crore) on the paid-up share capital of Rs 286.96 crore. Assuming the promoters i.e. Jains hold 90 per cent of beneficial interest in BCCL, that makes it another Rs 15.5 crore in dividend income.

Growing Inequality

BCCL CEO Ravi Dhariwal has retired. Naturally, his pay this year at Rs 5.57 crore reflects that. For the record, he was paid Rs 11.34 crore in gross remuneration (FY'13) compared to Rs 3.4 crore in the fiscal ended FY'12. Dhariwal had a great stint at BCCL after being with the group for more than a decade. Bharti Retail's chief executive Raj Jain has now taken his place. Hope Jain finds solace in the company of more Jains!

Before delving deeper into this ever-widening salary chasm of non-editorial and editoral guys, lets look at some more numbers. Non-editorially speaking. 49-year old Shrijeet Mishra took home Rs 2.9 crore as COO. He has about 25 years of professional experience.

In FY13, Arunabh Das Sharma, Executive Director & President Response, got Rs 2.92 crore. In FY14, its Rs 3.6 crore for the former Whirlpool hand at BCCL. 22 years of experience including 4 in BCCL. Joy Chakraborty, Director-Response (Response is the prime mover among all other media marketing solution providers in India. It just not the advertising department!) received Rs 2.2 crore. Another Director - Response R Sundar took home Rs 2.64 crore in FY14 compared to Rs 1.84 crore in FY13. These are good hikes at good levels.

Lets look at non-editorial VP level salaries in BCCL. Indira Dinesh, Vice President - Response, got Rs 79.25 lakh in FY14 vs Rs 72.80 lakh in FY13. C G Varughase, Vice President - Response, got Rs 78.65 lakh vs Rs 70.39 lakh. Teena Singh, Vice President - Response, got Rs 73.97 lakh vs Rs 66.42 lakh. Jnan Prakash Dsouza, Vice President - Response, got Rs 72.45 lakh vs 62.01 lakh. VP people are guys with 20-30 years of solid experience.

At AVP levels, which is like above 15 years experience, BCCL executives get about Rs 60-89 lakh a year. For example, Diwakar Dadoo, AVP - Brand Capital, got about RS 64.4 lakh in FY14. Kuldeep G Mantry, AVP - MAS, took home Rs 63.19 lakh. At the higher end of the spectrum is 48-year old Rasesh Pushpabadhan Gandhi who got Rs 89 lakh as AVP Response.  

Among other key BCCL businesses, S Sivakumar, CEO - Brand Capital, received a lower Rs 1.66 crore vs Rs 2.01 crore. Also, Ashok Raparia, Director - Human Resources, got Rs 1.13 crore vs Rs 1.40 crore.

Coming to editorial staff now. Jaideep Bose, 51, (Editorial Director - TOI) got roughly Rs 1.9 crore in FY14 compared to Rs 2.45 crore in FY'13. Bose has spent 22 years in BCCL out of the full 28 in the profession with his last employment being with Ananda Bazar Patrika. Some could say top notch-editorial talent at BCCL didn't even earn Rs 2 crore when the largesse is quite clear from non-editorial salaries. Comparing to verticals like Response, Bose, aka Jojo, got 33 per cent less than Arunabh Das Sharma, Executive Director & President Response.

Next up is Rahul Joshi, Editorial Director - ET. His remuneration was Rs 1.39 crore vs Rs 1.34 crore. Joshi is Economic Times' Jojo in a loose sense of the word although Joshi would despise such comparisons. The salary chasm, as I had referred to earlier, now gets wider. Santosh Ramachandra Menon, Assistant Executive Editor, with 21 years of experience, including 6 in BCCL, earned Rs 69 lakh.

Bodhisatva Ganguly, Deputy Executive Editor, got about Rs 68 lakh. Shailendra Swaroop Bhatnagar (Chief Editor-Markets & Research), apparently responsible for Editorial Content during the Morning Band of ET NOW, earned Rs 92.8 lakh in FY14 vs Rs 86 lakh in FY13. Bhatnagar has 19 years of experience and going by his job description, he handles the time when financial markets are alive. Out of the 81 people BCCL has disclosed remuneration details, only 7 are journalists.

A word on salaries of the ordinary journalist. The Aam Journalist. Always getting the short end of the stick. Why? Because he gets the news, not the ad money.

The salaries of big editors in BCCL are actually huge compared to the little guys who actually make the papers happen day after day. Talk about misplaced priorities, barring a select few top journos, when it comes to salaries. Why peanuts to almost everybody when that aam journalist is actually doing the most work?

The theory of a space seller i.e. marketing guys being more valuable is deeply flawed. That space which gets you easily over a crore is the space where yesterday's headline just became archived material. Nobody remembers a paper or a channel by the ads they show, its the news, It always has been 'the news' and it ain't gonna change soon. The crowd puller or the show stopper is news and the news guys.

The Year 2014 That Just Went By

BCCL had a great year from the looks of it. Total income grew about 10 per cent to Rs 5,659 crore. A ten per cent growth kind of year after a marginal rise in FY13 vis a vis FY12 is actually a lot to cheer for. Out of FY14 revenues, sale of publications accounted for Rs 583.25 crores, television distribution revenue about Rs 21.6 crore and the cash-cow, advertisement revenue was about Rs 4,684 crore.

Key takeaways -- both sale of publications and advertisement revenue grew at about same pace of 8-odd per cent year on year. However, BCCL's focus on space utilisation indicates why its after all more of an advertising firm. There's no harm in it. Almost everybody in the market, is trying to copy that ad-first approach. 

This momentum showed up in profits as well. BCCL's bottomline grew to Rs 821 crore in FY'14 compared to Rs 740 crore in FY'13.  

In the print business, during the year under review, its flagship brand, Times of India achieved an overall growth in circulation. The Newspaper in Education (NIE) segment is said to have registered an impressive growth of over 8 per cent as compared to previous year. Economic Times maintained its market share for Business Dailies. The company took a major step forward in languages through launch of Navbharat Times in Lucknow. This launch is supposed to have opened up a significant

opportunity for NBT in the Hindi heartland. 

Maharashtra Times launched two new editions in Jalgaon and Ahmednagar, further consolidating its position in the Western markets with a total of 8 editions. The company recently launched Nav Gujarat Samay, a general interest daily in Gujarati language in the cities of Ahmedabad and Gandhinagar. This launch makes BCCL the only newspaper group to have major publications in 5 Indian languages - Hindi, Marathi, Kannada, Bengali and Gujarati. 

In a challenging business environment for Media industry, newspaper advertising spends grew by only 5 per cent as per Group M report 2014, BCCL achieved a growth of 8 per cent. for the year 2013-14. This is because the company pursued a strategy of growth both in volume and yield. 

In the TV segment, BCCL got good 'response' as well. zoOm channel maintained its viewership share while the segment saw lot of competition. The channel continued to grow on the social media networks and became the first Indian TV brand to cross the 7 million mark on Facebook. In April 2013 zoOm launched a new digital channel on YouTube Telly Talk India which has grown to over 2.3 crore views by 31st March 2014. 

During the year under review, ET NOW continued to remain a good choice of viewers in the English Business News category and dominated the genre. On the content and programming front, the channel continued to add newer formats both during weekdays and weekends, even as it strengthened

its core proposition of market-moving stories and superior stock recommendations based on technical analysis. ET NOW also hosted its first-ever India Economic Conclave, which is a national thought leadership platform meant to spotlight and address key economic challenges facing the country. It was well received by all the stakeholders, including the government, industry and civil society.

During the year a new channel Romedy Now was launched on 22nd September 2013. Romedy NOW is a first of its kind Premium English Entertainment Channel ushering Love & Laughter together for the first time on Television. The channel caters to the Urban affluent audiences across all 8 metros and has established its leadership in a span of just 7 months from its launch.

Also, during the year under review, Times Music continued its leadership in Indian Classical, Devotional, Spiritual and Wellness genres with an impressive turnover. 

Comments/critique all welcome.

Images: Have been sourced from the Internet

What's Mutual about mutual funds seriously ?

Jellyfish is not a fish. Guinea-pigs ain't pigs either. These are called misnomers. And let me add another word - mutual fund. 

Every name has a meaning. It's supposed to, at least, reflect what it is about. Not India's about Rs 8.8 lakh crore mutual fund industry. There is actually nothing mutual about this, aha -- to borrow a famous tagline. It's your money. It's your risk. It's your loss. The list goes on ...

At the core of this industry was and still today is a beautiful solution for small investors. Everybody tracks the BSE Sensex. You would know it's a barometer that is composed of 30 blue chip companies. At current prices, it would cost you a total of Rs 27,000 to buy one single share of these 30 Sensex constituents. 

However, a mutual fund allows you to buy the same portfolio of stocks with as little as Rs 100. Isn't that beautiful yet convenient?

Fractional ownership. Yes. That's it. You can buy as much as your finances allow. Somewhere between this idea and now, lots of things went horribly wrong.

And the mutual fund industry cannot say it never saw this coming. Because truth be told they were the ones who started the malpractices in the first place. So, today what you see is a pale and impoverished shadow of what it was destined for.

Mutual would mean at least a part of everything would be shared. Here's how nothing is MUTUAL ...

A MIRAGE CALLED MUTUAL FUND

When asset management companies take your money and manage it, they put nothing on the line from their end. That's why there is nothing mutual, according to me.

Look around yourself. Your family, friends or colleagues are there perhaps. Ask them about their experiences with mutual funds. I guarantee just 2 out of 10 will have something good to say.

Mutual fund portfolios may be swelling thanks to the regular dose of corporate money chasing that extra bit of yield but retail investors as measured by folios are falling fast.

Over the past few months, the market regulator Sebi has practically done everything to make the mutual fund industry happy.

Fund houses have often complained about regulatory issues and operational difficulties in attracting investors, although the Securities and Exchange Board of India (Sebi), which also regulates the country's mutual fund industry, has made advertisement code risk-based, given them extra incentives to go beyond top 15 cities, provided for new sets of mutual fund distributors and even allowed provision for up to Rs 20,000 being accepted in cash to make it easier for the fund houses. Its a long list...

It would not be too much to say that Sebi bent itself backwards to accommodate the demands of the blue-eyed boys i.e the mutual fund industry. But have any of those wide-ranging and significant steps really made your life as an existing or a potential investor better? No! That's the resounding answer.  

WHAT CAN MAKE IN TRULY MUTUAL

In an ironic sort of way, mutual funds operate 'schemes'. An investment pool is made from collecting money from entities -- individuals, corporate houses etc etc. The collected funds are invested in a way that has been pre-disclosed and there you have become a fund investor. Hooray! At least this is what the fund industry would like you to believe.

If you are a mutual fund investor, an industry official, a regulator or simply curious ... here are a few things that would make the mutual fund industry really MUTUAL.

1. EVERYBODY INVESTS, YES EVEN THE FUND MANAGER - For every dime you invest, the professionals managing your money should have some similar stake too. The easiest way is they should invest their money as well. There's no shame in this game. Everyone should be an investor first. Instead what is happening is we have a system where the  preacher does only preach. They don't pray. They are far removed from products they sell. Would you like to buy a Honda car knowing that the manufacturer drives an Audi? I think not. Not just investors, the fund managers should also invest their money in that scheme. That's being truly mutual. 

2. STOP CHARGING INVESTMENT FEES FOR LOSSES - The mutual fund should not charge any investment management fee in a period say 3, 6, or 12 months you lost money. If your Rs 1 lakh became Rs 75,000 in a market crash, a real friend would not rub salt into your wounds by charging a so-called investment fee. But that's unfortunately what is happening. They are your friends when it comes to wanting your money but not when you lose. You win or lose, they want their fees. This needs to change and the industry needs to have a conscience. Deliver the right message that we don't want bonuses in a year our loved investors lost money. That's being truly mutual.

3. BE MONEY MANAGERS FOR THE LITTLE GUY - We all know rich and influential people have many people managing their money. A mutual fund is about giving the little guy a big shot. But is that happening? Approach any mutual fund company and the moment they hear you will invest a "few thousands"...oopsie daisy. There must be a reason why global investors are continuing to buy Indian assets and simultaneously domestic retail Indian investors are not interested. The answer is simple -- little guys are not made to feel welcome.  A real mutual fund company would just be about retail guys and they should go out of their way to make little guys feel welcome. That's being truly mutual.

4. A MIRROR, NOT A SHADOW IN TERMS OF DISCLOSURES - Do you like a mirror which becomes hazy whenever you look at yourself closely? Don't know about you but a lot of mutual fund investors feel that about their investment schemes. Rather than having full disclosure of the distribution costs - which is most often borne from by the little guy aka retail investor - the fund houses have supported the efforts of industry lobby AMFI to work for the benefit of distributors and have opaque commission system. Over the past few years, the frequency and quantum of mutual fund industry data disclosure has diminished. Compare that to the data the companies want when they enroll us as investors. Be fair and practice no double standards.  That's being truly mutual.

5. RATIONAL WORKLOADS MEAN GOOD INVESTMENTS - The human body has limits. So, does the human mind. But look at the mutual fund industry. One fund manager would be overseeing and managing 10 schemes.  That itself is a big 'scheme'. You ask them and they would tell you that it's about processes - not just about people. This is the official tom-tommed. In effect, this should mean people are less important than processes. In practice, however, things are very different. The moment you are putting same person in different schemes, it's stretching the limits and diverting their attention. Similarly, while one scheme would be having a size of Rs 10 crore, another one would be worth Rs 3000 crore. If I didn't know any better as money grows bigger, funds become very difficult to manage in an efficient way. The sweet spot is between Rs 100 crore to Rs 500 crore. That isn't happening. Like old bosses who refuse to retire, giant funds exist. Be nimble and have more people service the fund since investors expect you do a fab job. That's being truly mutual.

6. CHUCK MONTHLY OBSESSION - The business and structure of mutual fund companies is a monthly kind of thing. They run on a monthly basis - targets, incentives etc. Why should the investor then be motivated to stay put for years? Why should the distributors be paid fees as soon as they get an investor? These are just questions am asking loudly. The short point is if investment is a long term business, collection of assets is the wrong word to use. Instead, return on assets under management is the only answer. And when give returns, share them on a post tax basis. It's a real world. Taxes matter. The investor and the fund management company need to be on the same page which includes time frame. That's being truly mutual.

7. BUILD THE BUSINESS AROUND THE SMALL INVESTOR - Lastly, mutual fund companies need to be just one thing -- investor oriented. Today asset management companies are building themselves on assets. Start with the investor as the centre-piece. Build the company, processes, investments and everything else around the little guy. Think of it like building a house. Today, they are building the house (however good-looking it may be) with minimal attention to the final resident. Now, think of a house which starts with the room being built only after taking the size and needs of the final resident. The walk-ways, the room height, the open space etc are all modelled on the basis of the wishes of the final resident.

The apprehensions that mutual funds are more focussed on institutional investors and not very concerned about retail investors is actually very real. Today, the country's mutual fund industry is only about the big guy and the assets he/she brings even though profits are negligible. There is no little guy and so nothing mutual.

Till the next time.

Feel free to criticize. I am okay with it. Write whatever you want about this post in the comment section (below)

Why Virtual Currencies are not for the Aam Aadmi and certainly not a good investment

Kumar Shankar Roy

Virtual currencies, a form of unregulated digital money that is not issued or guaranteed by any financial authority, worth over USD 13 billion (Rs 80,400 crore and counting) are floating around.

Chances are high that you would have listened about it, heard or read about it. Considering it as just another investment option? I WILL TELL YOU WHY YOU SHOULD NOT.

Brass tasks

Money making is a boring process and often time-consuming.

But virtual currency advocates will quickly ferret out stats like the eye-popping 32,81,500 pc gains (yes you read that right) in their brand ambassador Bitcoin, or tell you stories of how people are paying for pizzas, condoms and even room rent at motels etc. by paying via these virtual currencies. 

Sounds tempting, right?

They will, when provoked, also tell you how the mainstream governments and central banks are printing money day in and day out yet the 'elite' balk at the thought of letting people control their own money! It’s about having an open mind...blah blah. Please don't fall for this sermon.

When pushed to a corner, they would even say virtual currencies represent the ultimate form of freedom. You get to choose which currency you want and use it for any purpose without going through any of the conventional blood-sucking monsters lurking behind the guise of bankers. How convenient is a lie...

The ugly truth: All this could not be farther from the truth.

While I admit virtual currencies have come in many forms, beginning as currencies within online computer gaming environments and social networks, and developing into means of payment accepted 'offline' or in 'real life' -- such formal but 'informal' methods of payments have long existed. Hawala is one of them. It's a fact.

While it is now increasingly possible to use virtual currencies as a means to pay for goods and services with retailers, restaurants and entertainment venues, they expose you to fantastic risks that you won't even understand unless all of it goes in a blink. 

For instance, in December a prominent virtual currency wallet service was attacked by cyber criminals or hackers, leaving hapless investors poorer by USD 1.2 million.

Truth hard and cold

I am sure you must be chuckling and saying such things happen in banks as well. What's the big deal? Well...But, first the illusion of freedom that virtual currencies needs to be popped.

Things like Bitcoin represent the ultimate hierarchic system that channels money into the hands of a small elite.

Who are these elite? 

To understand who these elite are, lets understand a few things first. 


While virtual currencies can be bought for cash, the supply of this 'free' money comes from using complicated and heavy computer processes that lead to emergence of a coin or any such unit. 

Don't be sad when I tell you that fidgeting on that mac book pro or Dell inspirion won't let you manufacture even 0.01 of a full bitcoin.

If you don't understand what terms like a distributed timestamp, a valid hash or computing power (which means you are like me), you can't produce any. You have to buy them. 


There is no other way. That's all about freedom.

Money is serious business

In the real world, a central bank has a monopoly right to issue of coins and banknotes (fiat currency) for its own area of circulation (a country or group of countries such as Eurozone). 


They do this by regulating the production of currency by banks (credit) through a monetary policy. 

It’s an organised system of money supply and creation.

An organised system has checks and balances that would not let anybody be robbed off or fooled unless they threw caution to the wind.

Last week, a TV anchor got 'robbed' on prime time when he showed a virtual currency backed gift card to viewers.

On Friday, December 20, Matt Miller surprised his two fellow anchors – Adam Johnson and Trish Regan – with bitcoin gift certificates during his “12 Days of Bitcoin” segment. 


Johnson then flashed his certificate on the screen for roughly 10 seconds - more than enough time for a user to scan the digital code with his phone and take the gift for himself. Miller isn't amused. Neither should you.

If you are thinking woah this guy is totally against digital currencies, I am not. What I am against are these virtual currencies hawked as the best thing after Facebook or Google!

Facebook and Google met an unmet need. What do virtual currencies such as bitcoin offer that a dollar, a rupee or an euro doesn't?

When you keep a deposit in a conventional bank, you get deposit insurance.

In India, each depositor in a bank is insured up to a maximum of 1,00,000 (Rupees One Lakh) for both principal and interest amount held by him/her in the same right and same capacity as on the date of liquidation/cancellation of bank's licence etc.

There is no such thing in virtual currencies. At the most, and very rare, they would try to give you a portion back but that's a painstaking procedure.

The traditional hard money, which can be stored online in regulated banks with ease and can be used for just about everything, is an integral part of a system that has developed over thousands of years with trial and error method.

I would like you to believe that saving money you earned and withdrawing that money are easy today. You know it. Give me a nod.

Those ordinary yet gullible people who are going after virtual currencies are mostly collecting it as a novel form of investment -- the next 'in' thing if you may call it.

With the promise of virtual currencies being limited in supply, the manufacturers are taking your real money and giving something in return.

They highlight - you pay no high charges to banks etc like in the real world.

A day not too far

Imagine a day when this bitcoin bubble, which is exactly what it is now, would burst. There would be nobody to protect your money.

As the value of these so-called coins deplete and fall like a stone, you would try to sell them further driving down the price as scores of others create a supply storm.

What happens when a note is torn?


In India, the Reserve Bank has proper facilities for exchange of soiled and mutilated currency notes. Excessively soiled, brittle, burnt notes are also taken.

As an investment option, a bitcoin or a dogecoin or a megacoin isn't really good either. None of them a good and there's a full 67 of them.

Historical returns are hardly ever repeated in future. When you buy a share of, for instance Reliance Industries, you have liquidity. You can sell it with three clicks every time without batting an eyelid.

That kind of liquidity, platform or players are not available in the market right now for virtual currencies.

Plus the value of a virtual currency isn't based on fundamentals. When you buy a share you are making a bet on continued growth of the company which translates into earnings.

However, when you buy a virtual currency, you are buying it because you hope others would buy it tomorrow and you would time the market well.

That's how simple yet dangerous the valuation theory is for a virtual currency.

The price volatility of virtual currencies is way to extreme. Are you comfortable with a 10 per cent drop today of the money in your virtual currency value?

Spare a thought for those who bought a bitcoin for USD 1200 odd some weeks ago at its peak and have seen the rate fall to USD 800 now.

I am not trying to scare you.

We are living in strange times.

The politicians are not doing what you selected them for.

Your boss probably doesn't admire or let alone recognize that you exist.

Your friends are numbered, while enemies are many. It's okay to lose hope sometimes.

And suddenly at that opportune moment something like a virtual currency comes and we feel alive. As if our ticket has finally arrived.

Bad news first -- it hasn't.

Good news -- you are reading this and asking yourself when something appears easy and quick it probably isn't?

The Verdict

The infrastructure for virtual currencies simply isn't there now.

An ATM here or a restaurant run by a virtual currency enthusiast there isn't the system that one requires to protect one's own money, often hard-earned.

The risks outweigh the rewards by a heavy margin.

Look at safety first and then returns.

Nobody made more money by investing it in untested exotic sounding schemes that haven't stood the test of time.

Till the next time.

Feel free to criticize. Am okay with it. Write whatever you want about this post in the comment section (below)

IMAGES courtesy :

1. http://watchdog.wpengine.netdna-cdn.com/wp-content/blogs.dir/1/files/2013/12/bitcoins.png
2. http://www.ccsu.edu/uploaded/departments/AdministrativeDepartments/Administrative_Affairs/images/Safety_Matters.gif
3. http://www.fakingnews.firstpost.com/wp-content/uploads/2013/12/AamAadmiSentiment.jpg
4. http://www.propwise.sg/wp-content/uploads/invest.jpg
5. http://cdn.rt.com/files/news/21/a1/30/00/screen_shot_2013-12-24_at_23.29.22.si.jpg
6.http://spectrum.ieee.org/img/06Bitcoin-1338412974774.jpg