Say, you have a 100 rupee bill and you decide to go to a Chai Dhaba for a cup of Adrak Wali Chai. You may face problem. Chai Walah may not accept 100 bills as he might not have change. So there could be problem with “acceptability”.
You may argue that Chai Walah will lose business and he should arrange for change. Now consider that there are enough customers who come with two bills of 50 or ten bills of 10; chances are that Chai Walah won't entertain you. So despite of same capital your acceptability is in question. This is because of competition by peer player from the same sector. And you need to sustain a competitive price to maintain your acceptability.
Why am I suddenly talking about acceptability and peer player?
Opps... I forgot to tell you a story.
“आज बंटू फिर से बहुत दुखी था. होता भी क्यों नहीं, 24 महीने के लम्बे इंतज़ार के बाद उसने नयी Designation पायी थी. और पिछले 8 महीने से एक-एक दिन गिन रहा था जब उसको उसकी नयी Desg. वाली तनख्वाह मिलेगी. इतने दिन घर वालों और दोस्तों को समझाता रहा की वोह क्यों अप्रैल का इंतज़ार कर रहा है. पिछले महीने तो एक दुसरे कंपनी के HR से भी लड़ पड़ा.
बोला, देखना अप्रैल के बाद. लेकिन आज बंटू फिर से टूट गया. उसकी आखें भर आई थी.”
बंटू कोई और नहीं, मेरा एक जिगरी दोस्त है. हम सबकी तरह सपने देखता है. बहुत ही मेहनती है. Client की Appreciation mail से उसकी Inbox भरी रहती है. आज उसकी नम आखों ने मुझे भी सोचने पे मजबूर कर दिया. उसकी बरसो की मेहनत और इमानदारी का यह अंजाम मेरी समझ से बाहर था.
अरे ये क्या, मेरी आखें तो बंटू को और भी कमजोर कर देगी. नहीं, मैं बंटू को समझाऊंगा. या यूँ कहिये की उस बंटू को जो हम सबके अंदर है और कही न कहीं अपनी नम आखों के साथ छुपा बैठा है.
Bantu this Chai Walah was for you. I was trying to explain - Why a company splits a stock?
Wait! I know I am trying to explain why and when water drop should separate from an Ocean, I am taking the longest route to convince you for same thing. लेकिन मैं तो तेरा दोस्त हूँ ना. You have waited for years. Can't you wait for some time? Let me explain.
Hmmm… so back to stock split. Apart from these, there are dozens of financial angle to a stock split.
Splitting a stock is to increase a stock's liquidity, which increases with the stock's number of outstanding shares.
Market sees one more reason to it in the form of psychological advantage. As the price of a stock gets higher and higher, some investors may feel the price is too high for them to buy, or small investors may feel it is unaffordable. Splitting the stock brings the share price down to a more "attractive" level. Even though actual value of the stock doesn't change one bit, but the lower stock price may affect the way the stock is perceived and therefore entice new investors. Splitting the stock also gives existing shareholders the feeling that they suddenly have more shares than they did before, and of course, if the price rises, they have more stock to trade.
Some financial Pundit who always have contra view may term this split concept baseless as they feel split doesn't change any of the business fundamentals. In the end you have 100 in bank either in the form of 50X2 or 100X1.
Though split may change the Face value but not necessarily and dividend does not have direct relation to face value so this potential side effect of split could not find the support.
Hence, just one comment for those Pundits - Sir, split has no side effect either. You are paid to think contra. I should not waste time to convince you.
Bantu, these are few theories that market expert puts behind the splits. Now come to your employer. I see a very different angle which may not be digested easily, but let me put some fact here.
Your employer, TCS has declared dividend in all the Qtr since it went public.
See the dividend history
TCS share saw many splits which are not so common among blue chip as price level was not that higher to suggest any need for the same nor even peers were psychologically priced at much lower to this one. The reason I see is, dividend is never proportional to share price and shareholder got more share from split and hence more dividend and more money in the promoter’s pocket.
A WIN-WIN-WIN situation for shareholders.
Now check this link for the shareholding pattern on page 99 from 2008-09 Annual report (latest is yet to be available) to know who are major shareholder of your organization. 73.75% are held by promoters.
मानो या ना मानो, shareholder are the one's who need to be cared not you Bantu. If you remember, in Q4, 2008-09, they did not pay the Qtr variable to you but gave Rs. 5 dividend per share (on Avg. Qtr dividend was Rs.3, 67% increase in dividend paid from previous Qtr).
And more shocking was the fact that, this was the Qtr which saw the deepest shit of the recession (Sensex below 8k) and hardly any investor on this planet expected a penny dividend forget the increased dividend.
In the same Qtr dozens of blue chip stock could not even afford Rs. 1 dividend.
To me there were 2 things to it. Firstly, employees were too scared to retain their job so attrition would not even have jumped by half a % even if TCS took such decision of pay cut.
Secondly, as usual shareholders got the money and market got the impression which they always get.
This time they have given a special dividend of Rs. 10 taking the 2009-10 figures to Rs. 20. Where as its peer (they always talk about peers so I mentioned else I don’t want to) did not do that and instead gave something to employee.
For next 2 days, you will see every fucking channel and news paper with the headlines as if TCS has donated half of this year’s sales to its employee.
Bantu I took such a long route to prove that why TCS always give dividend even by cutting wages or when market expect the least and also why they splits so often. Let’s explore some more facts.
Later, in next 2 Qtr, they gave 150% variable which gave reputation boost and you got your money back. But again think on organizational basis. How much interest they got by holding 10% of the variable for 3 months and 10% for 6 months.
Just calculate with minimum 10% interest rate on those VA amounts which are approx 25-30% of the entire wages expense.
If they cut salary, Media talk for a day but when they pay 150% from the same, Media talk for weeks. They always get more than they lose.
Bantu, don't get confused from such facts. I just want to tell you, why the fuck should a company not pay more when they are able to sustain profit growth at this rate.
I'm not sure quantitatively how much sense this makes or put pressure on balance sheet but still let me tell you. If they reduce the hour billable rate by .5% instead of increasing the wages by few %, customer would be more happy and profitable. That would quantify in terms of more business and better CSI. There is no term as ESI (Employee Satisfaction Index).
Bantu, did you say PULSE? Is this the same which is increased every year by few % despite how many people cry like you?
Why the heck should they give you more wages that you think you deserve or even what their peers pay. Bantu you would quit, Chantu and Mantu are already in queue. They might lose one module because of you. But you know they lose Million $ project and get Billion $ project every other Qtr. There are guys at the top, paid in Million to do that.
Let me use the hostel language, sorry for it though, if you see a night queen on road without clothes will you close your eyes?
Intensity of the fact does not need to bare here but sentiments has the same urge.
If they are getting thousands of people at cheaper rate and equal number of optimist who wait for years to see some penny hike, why they would press the panic button.
Remember, if required, they can always open their wallet to get the skills. Unfortunately, this service industry does not need it so badly.
Hence, they don't need or want to keep you here. You are here because you want to be or you love to be treated as clothed night Queen.
Why the fuck would they even care for someone with respect probability quotient of
1\160429 (total headcount)?
Yes, your six digit identity is generated by an simple database procedure. How do you expect the management to work on morals rather than proven business model which generates Billions every Qtr?
The other day I was telling you about one of my friend. He was rated poorly enough to let him realize that it’s enough and he is quitting. Yes! He is quitting. By this time, he might have even put the paper.
Earlier I told you about water drop and Ocean. I feel water drop get the opportunity to separate from Ocean only when there is a big problem in the Ocean, may be like Tsunami. Tsunami is bad for some and opportunity for others. Decision is YOURS!!
No one can make you feel inferior without your consent. If you let the tears come to your eyes frequently, it’s only you who is responsible for it. Damn YOU!!!
Let’s take it this way, they care for you. They gave you signal to go ahead and think about your career or a place where even if you don't get a deserved cheque, your heart won't bleed like this.
Bantu, you may feel unconvinced by some of my logic but the point is you can negate these facts only if you have a micro level view on the financial spectrum of the company or this industry. तो यार इतना समझदार होके भी रोते हो. Go and enjoy your beautiful ergonomically built fucking cubicle.
If by any chance you agree then do something to make yourself happy and now let’s watch some laughter video. I don’t prefer the crib way.
