A theory of valuation

Having sat through the jokes of Dr. Panda in the first term and having actually enjoyed his classes (and of course, the jokes) for the most part, I had been more or less swayed towards Marketing as a specialisation. Coming into Term 2, and having heard so much of Prof. Uday Damodaran, I was prepared for another assault on my sensibilities in the form of something which I had absolutely no idea about. I mean...come on, marketing is more of common sense and related, in a lot of ways, to what I had been doing at college and work for the past six-odd years (festivals, talking to clients, and so much more). However, finance has been one fish I had never laid the line for.

As I write all this today, I am still under the effect of today's class, which to me, has been a revelation, both in terms of the content in absolute financial jargon as well as in a more philosophical way which I will talk about in a little while. As far as the basics of corporate finance go, my eyes have been opened (even literally :-) unlike Ravi, who was dozing off right in the next seat)...to ratios, like they were never opened in the accounting classes...to criteria for evaluating the financial health of companies, which never came across while doing the analysis of ITC for the marketing project. I just hope that this goes on for another little while and I don't have much to do in terms of thinking while making a choice for my electives...a Mark and Fin MBA...hmm...sounds good, what say?

As for the philosophy in today's class, as UD would say, with the relativity of things in Finance, most of the things are decided more on the basis of philosophy and intuition rather than plain science and logic. Perhaps so...however, that is not what I want to mention right now. It is more about an example that UD gave in today's class about why it is important to have a theory for valuation. He said that almost all of us are able to associate certain values to things, events, and people but as long as we do not really know the guidelines, the process, and the theory involved in making that valuation, we will never be able to succeed. He gave the example of how all of us gave up something or the other to come to IIMK...existing jobs...probable jobs...other security...so much more. It may be true that at some point, we may find that the decision we took in coming to IIMK was actually wrong (some people like Karfa rue leaving their jobs and coming to IIMK) but the real regret will not be felt at that realisation. The real regret will be caused due to the realisation that when we made the decision of coming here, we did not have a theory to value IIMK...no way to find a clue about why we are doing what we are doing.

I am not really sure if I did all this analysis before coming to IIMK, at least I did not do this on pen and paper, not in so many words. However, I did have certain things in mind, based on which I decided to leave Infy and come to IIM Kozhikode. Perhaps it makes sense (even now, after a term is over!!!) to just list them down so that if, at a later stage, God forbid, I regret my decision to come to IIM Kozhikode, at least I will know why I had taken that decision in the first place. So here goes, my reasons for coming to IIM Kozhikode and what I wish to achieve from this place:

I wanted to acquire an asset that will differentiate me from others 10 years down the line when I am competing for a position in a firm. I believed that because of its brand, IIMK will help me do that.

I wanted to get access to a network that is going to help me leverage my contacts when I need them the most...in getting a contract...an appointment...a favor. I believed that IIMK will make me a part of the IIM group, an elite gang of go-getters.

I wanted a job that is more than the mundane, a job that gives me more return, both in terms of the challenge as well as the compensation, as compared to what I could expect to get from Infosys in another two years and perhaps even later. I believed that IIMK had the reputation in recruiters' minds to give me that kind of a job and perhaps even more.

I wanted to do things that I had not been able to do during my college and professional life because of lack of knowledge...opportunity...reason. I wanted to be able to pursue things that are closer to my heart and not get bogged down by technical mumbo-jumbo but actually get down to brass tacks and work in the field. I believed that with the resources of IIMK, both material and human (especially the senior batch, alumni and faculty), I shall be able to achieve this.

This actually turns out to be quite a big list of expectations if one looks at it cynically. However, as far as philosophy goes, I can still hold my water, or at least that is what I hope. As UD says, I still have to see whether my decision turns out to be right or wrong vis-a-vis my valuation of IIMK on the above criteria...I just hope and pray that IIMK damn well sticks to what I had thought of it :-)